FNSACC514 Prepare Financial Reports For Corporate Entities

Task 1

1. Explain the role of Australian Accounting Standards Board and Australian Securities and Investments Commission in regulation of companies operations.
2. Briefly explain the procedures for the incorporation of a company

Task 2

1. Which accounting standard addresses the requirements for accounting for taxation? Discuss the differences between the tax payable method and the tax effect method of accounting for income tax, in accordance with current business taxation requirements.  Provide examples of each.
2. Briefly explain the steps involved in tax effect accounting.

Task 3

The following information relating to North Point Ltd is available.

1. North Point Ltd was incorporated on 1 June 2021 and five (5) subscribers undertook to purchase 10,000 $1 ordinary shares each in the company and paid for the shares on 1 June 2021.
2. $2,500 was paid to the solicitors for the formation of the company on 2 June 2021.
3. The directors resolved to issue 500,000 ordinary share payable 50% upon application. Applicants applied for 600,000 shares and 50% each share.  The unsuccessful shareholders were refunded on 10 June 2021.
4. The directors made a call of 50 cent for ordinary shares on 1 October 2021 and all call money was received except 10,000 shares.
5. On 1 November 2021 the directors issued 1000 each of 10% Preference shares at $100 each. The applicants paid full amount for the shares and the shares were allotted on 10 November 2021.
6. On 1 December 2021, the directors decided to raise $500,000 by issuing 5,000 each of 8% debentures maturing in 10 years. The debentures were fully subscribed and allotted by 10 December 2021.

In this task you are required to:

Record the above transactions in the appropriate journals.

(Posting to the ledger is not required.)

Task 4

Skylar Ltd commenced operations on 1 July 2020. It disclosed a net profit before tax of $90,000 for the year ended 30 June 2021.

This profit was determined after charging the following items:

Impairment loss- goodwill                                                       $4,000

Depreciation of Plant & Equipment                                        $15,000

Depreciation of motor vehicles                                               $5,000

Doubtful Debts                                                                        $5,000

Increase in Provision for Employee Entitlements                   $12,000

On 30 June 2021, the accounting and taxation records disclosed the following:

Additional information:

• The plant and equipment, which cost 60,000 was purchased on 1 July 2020 and is being depreciated at 25% for accounting purposes and at 33-1/3% for tax purpose.
• The doubtful debts are not allowed for tax purposes.
• There were no employee entitlements taken during the 2021 financial year.
• The motor vehicle, which was purchased on 1 July 2020 and cost $30,000 is depreciated over 6 years for accounting purposes and over 4 years for tax purposes. Assume straight line depreciation with NIL salvage value.
• Impairment loss for goodwill is not allowable as a tax deduction.

Required tasks (Use Excel spreadsheet to display your answer):

1. Prepare a statement of taxable income for the year ended 30 June 2021.
2. Calculate Deductible temporary differences
3. Calculate Taxable temporary differences
4. Prepare journal entries for income tax expense in accordance with AASB112. (The rate of company tax is 30%)