The purpose of the Portfolio 2 Assessment is to authenticate students understanding of practical requirements of accounting standards examined during the course, and to verifying students’ learning on accounting and governance concepts and real industry issues. This is an INDIVIDUAL assessment and students are to show all workings. Submission requirements are listed as follows: Submission requirements and guidelines Students can attempt the assessment as an INDIVIDUAL only. Students CANNOT seek assistance from any person, company or cheat/tutorial website in completing this assessment.Students are required to tick yes to the online student declaration stating that the work submitted is entirely their own wok. (Refer Question 1 when assessment available on blackboard).Students are required to use Microsoft Word and to submit their final answers for Portfolio 2 online using the same area where the assessment was downloaded in Blackboard. Answers to each Part should start on a new page. Only ONE document should be added to Blackboard. (Upload final submission to Question 2 on Blackboard).Students are required to submit their final portfolio assessment submission to turnitin prior to submitting their final word document to Question 2. Students must add a copy of their final Turnitin report to Question 3 in the online submission area of Blackboard.This is an open-book assessment meaning students can use their notes, textbooks and references provided on the Blackboard site for this unit.Referencing in-text and end-text is required. Use Chicago referencing style.There is no specific similarity % that is acceptable. However, where the similarity % is over 20% these will be scrutinised more thoroughly. This is not to say that for example 25% is unacceptable, this % may be acceptable as long as the items that are similar are correctly referenced and they are not copied from other students work or from internet cheat websites. (Note: Higher similarities in turnitin are to be expected with practical questions and very low similarities are expected for more theoretical written questions. This will be closely scrutinised for copying and collusion).A student guide for avoiding plagiarism can be found at the following website: http://academicintegrity.curtin.edu.au/global/studentbook.cfmUniversity policies and procedures for academic misconduct and plagiarism will be applied. Further information is available at http://academicintegrity.curtin.edu.au.As this is a final assessment students can only view the marking guide in person once final grades are released. Late Submissions Late submission for this assessment will result in a 5% reduction of the final grade for each 60 minutes it is late, pro rata calculated at 30 minute intervals. If you are more than 5 hours late then you receive NIL. Date and time of the test commencement and the date and time of the submissions via turnitin and upload times will be closely scrutinized when deciding if a submission is late and to what extent. Turnitin – IMPORTANT NOTE Students should take note that Turnitin is to be used to review your similarity % and the final report is to be added to Question 3 online. The first Turnitin report is normally quite quick 5 – 30 minutes. However, if you submit a second turnitin report following a review and edit of the first turnitin report, this may take 24 hours. Therefore, students should not leave this part of the assessment to the last minute as all parts must be completed by 5pm Friday 11 June. Part 1) Leasing (25 Marks) On 1 July 2020, Bobs Building Co Ltd leased a crane from ABC Finance Ltd. The crane cost ABC Finance Ltd $657,000, considered to be its fair value, on that same day. The finance lease agreement, which cost ABC Finance Ltd $1,525 to have drawn up, contained the following clauses: Lease term: 5 years The lease was non-cancellable. Annual rental payment, in arrears: (commencing 30/6/21) $155,000 Residual value at end of the lease term: $70,000 Residual guaranteed by Bobs Building Co Ltd: $50,000 Interest rate implicit in lease: 8% The expected useful life of the crane was 9 years. At the end of the lease term, the crane was returned to the lessor who sold it for $149,000 on 3 July 2025. Included in the annual rental payment was an amount of $2,000 to cover the costs of maintenance and insurance paid for by the lessor. Required: Assuming the lease is a finance lease under AASB 16 prepare the following: (a) The lease schedule for the lessee (5 Marks) (b) The journal entries in the records of the lessee (i) for the year ended 30 June 2021 (4 Marks) (ii) for the year ended 30 June 2023 (3 Marks) (c) The lease schedule for the lessor (4 Marks) (d) The journal entries in the records of the lessor (i) for the year ended 30 June 2021 (5 Marks) (ii) for the year ended 30 June 2025 (4 Marks) (Note: Narrations are required for journal entries and show all workings.) Part 2) Employee Benefits (20 Marks) Gravel Ltd provides long service leave for its retail staff. Long service leave entitlement is determined as 13 weeks of paid leave for 10 years of continued service. The following information is obtained from Gravel Ltd’s payroll records and actuarial reports for its retail staff at 30 June 2022. Unit credit (years)No. of employees% expected to become entitledAnnual salary per employeeNo. of years until vestingYield on HQcorporate bonds16020$48 000910%25030$48 0008 9%34040$48 0007 9%43060$48 0006 9% Additional information The estimated annual increase in retail wages is 2% p.a. for the next 10 years, reflecting expected inflation.The provision for long service leave for retail staff at 30 June 2021 was $62,000.No employees were eligible to take long service leave during the year ended 30 June 2022. Required Prepare the journal entry to account for Gravel Ltd’s provision for long service leave at 30 June 2022. (Note: Narrations are required for journal entries and show all workings.) Part 3) Corporate Governance (20 Marks) Small companies have argued that corporate governance requirements are too costly and onerous and should be restricted to the large ‘top’ companies. (Note: in-text and end text references ARE required.) Answer the following questions in relation to the above statement in 800-1000 words: Do you think that corporate governance principles should apply to smaller companies? Provide examples of particular corporate governance practices or principles that you think should apply to smaller companies. (11 Marks)Explain why you think these practices or principles identified in (a) above are important for smaller companies. (3 Marks)Describe the advantages of smaller companies complying with corporate governance principles? (3 Marks)Describe the consequences for smaller companies of not complying with corporate governance principles? (3 Marks) Part 4) Consolidations (Non-Controlling Interest) (25 Marks) On 1st July 2021 Rodger Ltd acquired 60% of the share of Dodger Ltd for $310,000. At this date the equity of Dodger Ltd consisted of: Share Capital $300,000 General Reserve $15,000 Retained earnings $45,000 At this date the identifiable assets and liabilities of Dodger Ltd were recorded at fair value except for the following assets: Carrying AmountFair ValueEquipment (cost $90,000)$75,000$80,000Land 100,000140,000Inventory45,00056,000 Adjustments for the differences between carrying amounts and fair value are to be made on consolidation. The equipment has a further 5 year life. Rodger Ltd uses the full goodwill method. The fair value of the non-controlling interest at the 1st July 2021 was $166,000. Required Prepare the acquisition analysis and the consolidation worksheet entries as at 1st July 2021. Assume the tax rate is 30% (18 Marks)Prepare the business combination valuation worksheet entries as at 30 June 2022 for land, equipment and inventory assuming all inventory sold. (7 Marks). (Note: Narrations are required for journal entries and show all workings.) Part 5) Consolidations (Foreign Currency) (10 Marks) Kickett Ltd, an Australian company acquired all the issued shares of Boot Ltd, a US based company on 1 January 2021. At this date, the net assets of Boot Ltd are shown below. $ USProperty, plant and equipment260 000Accumulated depreciation(55 000) 205 000Cash 142 000Inventory46 000Accounts receivable27 500Total assets420 500Accounts payable86 500Net Assets334 000 Required: Using the information provided above, prepare the Statement of Financial Position of Boot Ltd at 31 December 2021 in the presentation currency of Australian dollars assuming that as at the 31/12/2021, the exchange rate was A$1 = US$0.73. (Note: Show ALL workings and round rate conversion to 2 decimal places and final balances in the Statement of Financial Position to whole numbers)
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