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
100%
unique text
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 |
Assessment
Overall Impression:
“
I think the reader skipped the reading of the instructions portion. Liked he or she didn't even care. Maybe the “writer” is depressed.”
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Grammar
F
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Formatting
F
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Organization
F
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Style
F
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