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Question: question 1 accounting for debentures on 1 august 2020 candy...

Question details

Question 1

Accounting for Debentures 

On 1 August 2020, Candy Ltd issued a disclosure document inviting applications for 10,000 of $80 debentures at par, payable in full on application. The debentures carry an 8% annual interest charge and will be redeemed at nominal value in 5 years. The interest payment is made semi-annually on 31 December and 30 June each year. By 30 September 2020, Candy Ltd received application money for 11,000 debentures. On 1 October 2020, Courtney Ltd issued 10,000 debentures and refunded monies to 1,000 unsuccessful applicants.

Required: Prepare a general journal template as per example below based on the information above, for Candy Ltd for the year ended 30 June 2021. Include a narration.

Question 2

Accounting for Impairment 

Glenelg Bay Ltd has a Cash-Generating Unit (CGU) comprised of assets as follows: Asset Carrying Amount Inventory 15,000 Goodwill 30,000 Plant 80,000 Motor Vehicles 40,000 On 30 June 2020, Glenelg Bay performed an impairment test for this CGU and determined that the recoverable amount is $120,000.


a) Calculate the impairment loss as at 30 June 2020.

b) Prepare a table as provided below to allocate the above impairment loss.

(c) Prepare a general journal (as per template below) to record the above impairment loss for the year ended 30 June 2020. Include a narration.

Question 3

Asset Revaluation (14 marks) Money Ltd acquired equipment on 1 July 2021 at $105,000. The equipment is depreciated using straight-line method and subsequently measured using the revaluation model. Money Ltd expects the equipment to have 7 years useful life and a zero residual value. The information below is available regarding the equipment in the following periods. Date Fair Value Cost to Sell Value in Use 30 June 2023 $ 85,000 $ 2,000 $90,000 30 June 2025 $ 45,000 $ 3,000 $40,000

Required Assuming indications of impairment exist on the dates above, please prepare the general journal entries (as per template below) to account for the equipment on the following dates:

a. 30 June 2023

b. 30 June 2025 

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