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Mining, explorations and other similar extractive businesses are naturally and fundamentally possess

Questions: Q 1. An item of depreciable machinery is acquired on 1 July 2016 for $280 000. It is expected to have a useful life of 10 years and a zero-residual value (straight-line). On 1 July 2020, it is decided to revalue the asset to its fair value of $150 000. Required: Provide journal entries to account for the revaluation. Q 2. A. You are provided with the following information form the accounts of BBS Ltd for the year ending 30 June 2019 Cash Sales 950 000 Cost of Goods Sold 35 000 Amount received in advance for services to be performed in August 2019 9 500 Rent expenses for year ended 30 June 2019 9 000 Rent Prepaid for two months to 31 August 2019 1 200 Doubtful debts expenses 1 200 Amount provided in 2019 for employees’ long-service leave entitlements 5 000 Goodwill impairment expenses 7 000 Required: Calculate the taxable profit and accounting profit for the year ending 30 June 2019. B. GYV Ltd has the following deferred tax balances as at 30 June 2019. Deferred tax asset $9 00 000 Deferred tax liability $7 00 000 The above balances were calculated when the tax rate, was 20 per cent. On 1 December 2019 the government raises the corporate tax rate to 25 per cent. : Provide the journal entries to adjust the carry-forward balances of the deferred tax asset and deferred tax liability. Q 3. “Mining, explorations and other similar extractive businesses are naturally and fundamentally possessing risk, in addition to uncertain outcome” consequently all expenditures of such activities should be accounted for as expenses as and when incurred. Required: Assess, evaluate and briefly discuss this statement. Q 4. Assume for a firm that budgeted production for July and August is 180 000 and 200 000 units respectively. It takes half a kilogram of direct material to make one unit of finished product. Materials inventory is maintained at 10 per cent of the next month's budgeted production needs. If the 30 June inventory of materials was 5000 kg, how many kilograms of direct material should be purchased during July? Q 5. Cultco Company Ltd has set the following direct material standards per unit of product: 2.5 kg @ $3.00 per kg; $7.50 per unit. During April, actual direct material purchased and used amounted to 8000 kg at a cost of $3.10 per kg. Actual production amounted to 3000 units. Determine the total material variance. Q 6. a. Fragrance Pty Ltd has two (2) divisions: the Cologne Division and the Bottle Division. The company is de-centralised and each division is evaluated as a profit centre.The Bottle Division produces bottles that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost per unit is $2.00 and shipping costs are $0.10 perunit. The Bottle Division's external sales price is $3.00 per unit. No shipping costs are incurred on sales to the Cologne Division. The Cologne Division can purchase similarbottles in the external market for $2.50. The Bottle Division has sufficient capacity to meet all external market demands in addition to meeting the demands of the Cologne Division. Using the general rule, calculate the minimum transfer price from the Bottle Division to the Cologne Division. Explain your answer . b. For the period just ended, Trek Corporation's Trailer Division reported profit of $54 million and invested capital of $450 million. Assuming an imputed interest rate of 10 per cent,calculate Trailer’s return on investment (ROI) and residual income. Explain what eachcalculation of ROI and RI means for Trek. Q 7. Chelonia Ltd manufactures small robot toys. It plans to introduce two products, Speedie and punkie. It is anticipated that the product mix will be 40% Speedie and 60% Spunkie. One unit of Speedie will be sold for $100, with variable cost equals $40. For a unit of Spunkie, the selling price will be $120 and the variable cost is $70. The fixed cost for producing the two products is $108 000. a. What is the break-even point in units for each product? b. The company plans to include a safety margin of $20 000 before tax. Assuming a tax rate of 30%, what should be the budgeted sales in units?

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