《中级会计辅导》

1、Intermediate Accounting,By Vivian 周卉 13286006815 ,Tutorial Class 5 Review for Final Exam,Final ExamKey points,1.Condolidated accounts -Consolidated income statement and balance sheet 2.Accounting for fixed assets: - Purpose and methods of depreciation, advantage and disadvantage of different methods. -Caculation of new depn expense after the change in useful life or revaluation of fixed asset,Final ExamKey points,3.EPS calculation, -Advantage and disadvantage of EPS. -Weighted average no. of sha

2、res calculation 4.Impairment of fixed assets or goodwill: -Definition of impairment loss; -In what situation will a company carry out an impairment review and how -Allocation of impairment loss,1. Consolidated Accounts,Example 1,Beijing plc owns 80% of the shares of Zhuhai plc. The purchase consideration was 450,000. The retained earnings of Zhuhai plc at the date of acquisition were 350,000. The summarised financial statements of the two companies for the year ended 31 December 2008 were as fol

3、lows,BALANCE SHEET as at 31 Dec. 2008,Additional information: During the year, Zhuhai had sold goods which it had bought for 200,000, to Beijing with a markup of 30%. At the end of the year 20% of these were unsold by Beijing by the year end. A review of group current accounts showed a receivables balance of 30,000 in Zhuhais accounts and a payables balance of 27,000 in Beijings accounts. This is due to cash in transit: Beijing had dispatched a cheque of 3,000 on 31 December 2008. The group poli

4、cy is to capitalise goodwill without amortisation. There has been no impairment of goodwill, since the acquisition,Example 1,Consolidated B/S,1. Goodwill calculation investment 450 Less Parents share of share capital and reserve at the date of acquisition 80%*(350+100) (360) Goodwill 90 2. Cash in transit: Beijing sent cheque to Zhuhai: 3K Zhuhais cash: + 3 Zhuhais Receivable: -3 Cancel 27K payable-receivable from both companies on consolidation,information,B/S,P/L,2.Unrealized profit Cost 200,m

5、ark-up 30%,Inter-company sales 200*(1+30%) = 260 20% in stock: unrealized profit=20%*(260-200)=12 Treatment: -reduce inventories of Arthur in B/S(12) -reduce parents share of groups reserve in B/S(12*80% = 9.6) -reduce minority interest in B/S(12*20% = 2.4) -reduce profit by adding cost of sales in income statement(12) -reduce minority interest in income statment(12*20% = 2.4,Consolidated balance sheet treatment,B/S,P/L,information,information,B/S,P/L,3.Minority Interest in B/S Minority share of

6、 net assets at the balance sheet date (100+750)*20%= 170 Reduce share of URP 12*20% = (2.4) Minority interest in B/S 167.6 4.Groups reserve Parents reserve 1110 Parents share of post-acquisition profit 80%*(750-350)= 320 Less parents share of unrealized profit 80%*12= (9.6) Groups reserve 1420.4,Consolidated balance sheet treatment,information,B/S,P/L,550 (parent only,100,550,Share Capital (1 ordinary,90,Goodwill,1450,100,200,300,850,750,1450,20,30,100,100,1200,Zhuhai,3411,2360,300 (200+100,200,

7、Payables,0 (cancel out after adjusting,27,Amounts payable to Zhuhai,373 (173+200,173,Payables,600 (300+300,300,Debenture Loans,2138,1610,Equity,167.6,Minority interest,1420.4,1110,Reserves,3411,2360,Total Assets,123 (100+20+3,100,Cash at Bank,0 (cancel out after adjusting,Amounts receivable from Beijing,350 (250+100,250,Receivables,288 (200+100 -12,200,Inventory,450,Investment in Zhuhai,2560 (1360+1200,1360,Non-current Assets,Group,Beijing,Consolidated income statement treatment,1. Eliminate int

8、er-company sales -reduce sales of Zhuhai by 260 -reduce cost of sales of Beijing by 260 2.Minority Interest in P/L Minoritys share of Subsidiarys profit after tax minus unrealized profit 300*20%- 12*20% =57.6,information,B/S,P/L,Consolidated income statement,3.retained earning b/wd for the group retained earning b/wd for parent 710 Parents share of post acquisition profit b/wd (450-350)*80%= 80 retained earning b/wd for the group 790 4.Adding sales and cost of sales sales: 3300+(2100 -260) =5140

9、 cost of sales: (1600 -260)+1200+ 12URP=2552,information,B/S,P/L,688,300,400,Profit after tax,57.6 (300*20%- 12*20,Minority interest,750,450,300,300,600,250,50,900,1200,2100,Zhuha,1420.4,1110,Retained Earnings c/fwd,790,710,Retained Earnings b/fwd,630.4,400,Profit for the year,700 (400+300,400,Income tax,1388,800,Profit before tax,1070 (820+250,820,Selling expense,130 (80+50,80,Admin expense,2588,1700,Gross profit,2552 (1600 -260 +1200+ 12,1600,Cost of sales,5140 (3300+2100 -260,3300,Revenue,Gro

10、up,Beijing,INCOME STATEMENTS,Fixed Assets,Practical example 2,Simple plc has purchased a car. The details are as follows: Cost of machine $800,000 Residual value $104000 Estimated life 4 years 1.) Calculate:the annual depreciation charge using the a) straight-line method, b) diminishing balance and b) sum of digits method 2.) Comment on which depreciation method is the most appropriate in this case and why. 3.) Explain the purpose of recording depreciation on fixed assets,Practical example 2 str

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