Corporate Reporting Case

Task: Prepare a fully-researched case study
Essay Topic: Corporate Reporting
Essay Type: Case study
Length: 4 pages
Formatting: MLA
Requirements: Prepare a case study focusing on accounting income taxes and consolidation.
Plagiarism
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unique text
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Answer 1

 
a) Taxable income

Income 3000000
Doubtful debts 15000
Entertainment expenses 15000
Depreciation -205000
Goodwill 150000
R&D 150000
Warranty -15000
Leave expense -20000
Taxable Income 3090000

Work sheet
 

Item Extract from Balance sheet ($) Tax bases($) Deductible temporary differences ($) Taxable temporary differences ($) Tax expense ($) Current tax payable ($)
ASSETS
Cash 250,000 250,000        
Inventory 350,000 350,000        
Accounts Receivable (net) 740,000 740 000        
Plant and equipment (net) 480,000 135000     205000 205000
Research and development cost 108,000 150000     150000 150000
Goodwill 600,000 150000     150000 150000
  2528,000          
LIABILIITIES            
Payables 780,000 780,000        
Provision for long service leave 115,000 85000     20000 20000
Provision for warranty expense 80,000 45000     15000 15000
Loan 1100,000 1100,000     1100000 110000
  2075,000          
NET ASSETS 453,000 (130,000)        
Temporary differences at end of period            
Less prior period balance            
Movement for the period            
Tax effect at 30%            
Tax taxable income 30%         3090000 3090000
Income tax adjustments         90000 90000

b) The journal entry for income tax purposes is:
 

Tax expense 3090000
Cash 3090000

c) Journal entries:

Tax payable 154500
Deferred taxes 154500

Answer 2

 
a) Journal entries

Dividend paid 2200000
Retained income 2200000
Revenues 80000
COGS 80000
Sales 12000000
COGS 12000000
Loss on sale 240000
Machinery write-down 240000
Interest expense 300000
Interest received 300000
Long-term debt 1000000
Long-term investments 1000000

b) Consoli dated worksheet
 

Account

Debit

Credit

Dividend paid 22000000
Retained income 2200000
Revenues 80000
COGS 80000
Revenues 12000000
COGS 12000000
Loss on sale 240000
Machinery write-down 240000
Interest expense 300000
Interest received 300000
Long-term debt 1000000
Long-term investments 1000000

c) Consolidated income statement (000s)
 

Sales 18000
COGS -9000
Gross profits 9000
Other income 5000
Operating expenses -6600
EBIT 7400
Interest 0
EBT 7400
Taxation -2960
Net income 4440
Retained profit 24410
Dividends 0
Retained profit 24410

d) Consolidated Ba lance Sheet (000s)
 

Current assets 16218
Non-current assets 34764
Investments 18688
69670
Share capital 34280
General reserve 2900
Revaluation surplus 920
Retained profit 24170
Liabilities 7400
69670
Corporate Reporting Case
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