Explain the Fundamental Qualitative Characteristics

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Assignment Task

Required:

Prepare the journal entries for Esme Ltd (lessee) on 1 July 2021 and 30 June 2022. Show all calculations (Lease liability, Right-of-use Asset, Interest Expense and Depreciation Expense).

Journal Entries

Date Particulars Dr. Cr.

Workings:

Lease Liability:

Right-of-use Asset

Interest Expense for first year

Depreciation Expense

Question 3 Intangible Assets

Origin Ltd is involved in the research and development of solar panels to be used for houses. For this endeavour, Origin Ltd incurred for R & D the following:

$50,000 for obtaining a general knowledge for the efficiency of the solar panels

$30,000 for understanding the expectations of the homeowners

$90,000 for testing and refining the solar panels

$190,000 for developing and testing a full prototype of the solar panels.

Origin Ltd expects that the product will be able to generate millions of dollars in revenue.

Required:

a. What is the amount of temporary difference?

b. Does this give rise to a deferred tax asset or deferred tax liability? What is the amount of deferred tax asset or deferred tax liability?

Question 5 Earnings per Share

Summer Ltd issued 2 million ordinary shares and 1 million convertible preference shares of $0.50 each. The preference shares holders have the right to convert 2 preference shares to 1 ordinary shares at a future date. The figures below have been taken from the statement of profit and loss and other comprehensive income of Summer Ltd for the year ending 30 June 2021.

Profit after income tax $290,000

Dividends:

Ordinary($160,000)

Preference ($20,000)

Increased in retained earnings $110,000

Required:

Calculate the diluted earnings per share for Summer Ltd for the year ending 30 June 2021.

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• Posted on : December 08th, 2019

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