Assignment: Corporate Accounting
I) A compulsory winding up in insolvency order was issued by the court in respect of Rock Bottom Ltd.
The company had a capital of 65 000 fully paid ordinary shares of $1 each. The liquidator tookpossession of the company's assets which raised $873 145 on sale. Included in the sale proceeds was $221 000 from the disposal of the land and buildings.
The creditors submitted their claims and the following debts were admitted as proven:
Liquidation expenses $3 900
Liquidator's remuneration 10 400
Mortgage loan secured on land and buildings 130 000
Additional mortgage loan on land and buildings 104 000
Employees' wages 5 employees for 2 weeks at $520 per week 5 200
Secretary's salary - 3 weeks at $314 per week 942
Employees' holiday pay 6 500
Sales commission 650
Managing director's salary - 4 weeks at $780 per week 3 120
Directors' fees 3 900
Trade creditors 104 000
Unsecured loan stock 130 000
Debentures (secured by circulating security interest) 390 000
PAYG tax instalment 1 014
Fringe benefits tax 2 600
GST 2 586
Required
Show the order of priority of payment of debts for Rock Bottom Ltd and calculate the amount payableto the company's ordinary unsecured creditors.
II) i) With relation to associate companies what do you understand to be significant influence and how would you identify it? Include in your answer illustrative examples.
ii) How are inter-entity transactions dealt with when accounting for associate companies? Give examples.
iii) How would an investor account for losses made by an associate company?
III) Mandora Cement Pty Ltd owns 90% of Wagait Sand Supplies Pty Ltd and the accountant William Coxis having difficulty understanding the adjustments that are required for the non-controlling interest. Heis particularly confused over the need to adjust for intragroup transfers and cannot understand thetreatment when it comes to plant and machinery,inventoryand a charge from Mandora Cement formanagement services.
Required
Write a business report to William Cox setting out the reason for the adjustments, explaining thetreatment of the different transfers and any difference between them.
The report should take the format of a formal business report, written by your firm with yourself aslead author. Marks will be awarded for presentation style and an appropriate business format.
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.