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Account for Lease - Assignment Example

Summary

The paper 'Account for Lease' is a good example of a Finance and Accounting Assignment. According to Greuning (2005), the consolidation process will involve adding assets and liabilities of Beach Ltd to those of Sandy Ltd while excluding inter-company balances. Determination of goodwill on consolidation…

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Subject: Finance & Accounting
Type: Assignment
Level: College
Pages: 1 (250 words)
Downloads: 0

Extract of sample "Account for Lease"

Description

Dr.

Cr.

Leased asset account

Finance Lease Liability

(To record leasing of land and buildings under a finance lease)

4,334,700

Finance Lease Liability

Cash/Bank a/c

(To record the payment of the lease rentals)

600,000

Requirement (b)

General journal entries as at 1st July 2015 – Anderson Ltd Books

Description

Dr.

Cr.

Land and Buildings

Cash/Bank a/c

(To record purchase of land and buildings)

4,334,700

Cash/Bank a/c

Finance Lease Receivable a/c

(To record the receipt of the lease income)

600,000

Requirement (c)

General journal entries as at 30th June 2025 – Lisa Ltd Books

Description

Dr.

Cr.

Profit & Loss a/c

Finance Lease Liability

(To record the finance charge at the end of the period)

500,000

Requirement (d)

General journal entries as at 30th June 2025 – Anderson Ltd Books

Description

Dr.

Cr.

Cash/Bank a/c

Profit & Loss a/c

(To record the lease rental income at the end of the period)

500,000

Question 2: Account for Income Tax

General journal entries to account for tax

Description

Dr.

Cr.

Long service leave

Profit & Loss a/c

(To record the long service leave that has not been paid)

20,000

Warranty expenses

Profit & Loss a/c

(To record Warranty expenses that have not been paid)

20,000

Profit & Loss a/c

Depreciation charge

(To record depreciation expenses that have not been accounted for)

20,000

Profit & Loss a/c

Income tax expense

(To record income tax expense)

96,000

Question 3: Consolidation

According to Greuning (2005), the consolidation process will involve adding assets and liabilities of Beach Ltd to those of Sandy Ltd while excluding inter-company balances.

Determination of goodwill on consolidation

$000

Cost of Investment in Beach Ltd.

900

Less: Net assets acquired

700

Goodwill on consolidation

200

Determination of group retained earnings

$000

Pre-acquisition earnings

200

Sandy Ltd.

500

Bal C/d (Balancing figure)

600

Beach Ltd.

300

800

The following is the consolidated financial position of the group

Sandy Ltd & Beach Ltd

Consolidated Statement of financial position

as at 30th June 2015

$000

ASSETS

Non-Current Assets

Land

1,000

Property, Plant & Equipment

1,600

Accumulated depreciation

(613)

987

Goodwill

200

Total Non-Current Assets

2,187

Current Assets

Cash

120

Accounts receivable

100

Inventory

263

Total Current Assets

483

Total Assets

2,670

Liabilities & Equity

Current Liabilities

Accounts payable

110

Dividends payable

150

Total Current Liabilities

260

Non-Current Liabilities

Loan

810

Total Liabilities

1,070

Shareholders’ Equity

Share capital

1,000

Retained earnings

600

Total Shareholders’ Equity

1,600

Total Liabilities & Equity

2,670

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