(SMU ACCT335) AFA Cheatsheet

CONSOL ADJUSTMENTS for 20X4
CJE9 Tax eff of CJE6-8: Dr Tax expense $7.6k | Cr DTA/L $7.6k

CJE1: Elm of instm in S Co as at acq date: Dr Share Capital + RE + (FV-BV) Assets + Goodwill |
CJE10 Allocate post-acq RE to NCI: Dr ORE $2,040 | Cr NCI $2,040
Cr Investment in Subsi + DTA/L + NCI + (FV-BV) Liabs
CJE11 Allocate current earnings to NCI: Dr Income to NCI $119.52k | Cr
CJE2: Adj for R&D in post period: Dr ORE | Cr In-process R&D NCI $119.52k
CJE3: Adj for excess FV of inventory in post period: Dr ORE $50k| Cr Inventory $50k
CJE12 Eliminate dividend income from Sub: Dr Dividend income $70k +
CJE4: Adj for the 1st UP inventory txf (txf occurred in 20x2) in prior period:
Dr NCI $30k | Cr Dividend declared $100k
Dr ORE $4k| Cr Inventory $4k
EXTRA CJE (if have OCI/RR): Dr Opening RR/OCI + Curr RR/OCI | Cr NCI
CJE5: Tax effect of CJE2 - CJE4: Dr DTA/L $30.8k| Cr ORE $30.8k
CJE6 Adj for conting liab in curr period to reverse expense recognized at S Co: JV vs J-OP: J-Op: Rights to assets & obligations for liabilities (clearly specified)
-> Measure A, L, R and Exp in relation to share | JV: Rights to net assets (NOT
Dr Contingent liabilities $50k | Cr Claim Expense $50k clearly specified)-> Equity acctg
CJE7: Adj for the 1st UP inventory txf (txf occurred in 20x2) in curr period: Dr Inventory $4k
| Cr COS $4k J-OP acctg .g.: A owns 20% of S. A has right to use 20% of oil rig. Ans: FRS
(e) Conting liab paid off & recognized as exp by S in 20X3
(f) Impairment $100k for R&D exp. off in P consol FS in 20X2 CJE8: Adj for the 2nd UP inventory txf (txf occurred in 20x3) in curr period: Dr Sales $200k | 111 requires a joint operator to recognize its interests in the joint operation by
Cr Inventory $16k [40k*40% bal fig.] + Cr COS $184k recognizing: it’s A & L, including its share of any A & L held/incurred jointly;
share ofrevenue from the sale of the output by the joint operation; and• Its
EQUITY ACCOUNTING: (20-50% control) expenses, including its share of any expenses incurred jointly.
(100,000)
(60,000)
(50,000)
(50,000) (11,200) (1,600)
(60,000)
(4,000) (24,000)
(16,000)
(200,000) (7,600) (176,800)
(Inv at acq + T3 total RE) = 200k+180,320
(123,200)
Equity JEs:
EA1: Adjust for post-acq years: Dr. Investment in A $11.52k | Cr ORE $11.52k
EA2: Adjust for current year profit: Dr. Investment in A $192.8k| Cr. Share of Profit of A $192.8k
EA3: Adjust for dividend: Dr Dividend income $24k | Cr Investment in A $24k
INVENTORY TXF
PRIOR YEAR: Curr yr X4. S sell to P in X3 @ $130k, ori cost = $100k. Sold X3 – 60%; Sold X4 – 30% ->
(100,000) unsold 10%
(123,200)
(100,000)
(30,000)
T2 presentation:
(70,000)
(NCI FV at acq + T3 RE)
RE bal = P’s RE 31 Dec + RE from T3 + UNP-DN T2
(Subsi’s equity at 31 Dec = share cap+ RE + OCI) CJEs:

(from T2 end bal) CJE1: Adj for UNP on upstream txf of Inventory in prior period: Dr ORE $12k | Cr Inventory $12k
CJE2: Tax effect on CJE1: Dr DTA/L | Cr ORE
CJE3: Adj UNP on upstream txf of Inventory in current period: Dr Inventory $9k | Cr COS $9k
CJE4: Tax effect on CJE3: Dr Tax expense | Cr DTA/L
INVENTORY TXF – CURR YEAR w/ IMPAIR FIXED ASSETS TXF – PRIOR YEAR
Curr yr X6. P sell to S in X6 @ $80k, ori cost = $70k. Unsold 40%. FV 31 Dec X6 = $30k Curr yr X5. 1 Jan X4 S sell to P @ $120k. Ori cost $100k + Acc depn $60k = NBV $40k. Gain on disposal
$80k. Rem useful life = 2yrs
CJEs
CJE1: Eliminate DN sale: Dr Sales $80k | Cr COS $78k + Cr Inventry $2k
CJEs
CJE2: Tax effect on CJE1: Dr DTA | Cr Tax expense CJE1: Adj for post-period txf FA: Dr ORE $40k | Cr FA $20k + Acc Depn $20k
FIXED ASSETS TXF CJE2: Tax effect of CJE1: Dr DTA | Cr ORE
CURR YEAR: Curr yr X6. S sell to P @ $250k. Ori cost $300k +Acc depn $112.5k. Rem ufl life = 3yrs CJE3: Adj of depn for FA txf : Dr Acc Depn $40k | Cr Depn $40k
CJE4: Tax effects on CJE3: Dr DTL | Cr Tax exp
CONTRACT ASSET
(Rec as Contract asset in P’s book)

(Should)
CJEs
CJE1: Adj for UNP on FA txf: Dr FA $50k + Gain on Sale of FA $62.50k | Cr Acc depn $112.5k
CJE2: Adj curr depn of FA txf : Dr Acc Depn $20,833 | Cr Depn $20,833
CJE3: Tax effects on CJE1-2: Dr DTA $8,333 | Cr Tax expense $8,333
FA CURR YEAR w/ impair: Curr yr X4. 1 Jul X4, P sell to S @ $70k. Ori cost $120k,
NBV $100k. Rem ufl life = 10 yrs. FV = $80k
CJE1: Adj for post-period contract revenue: Dr ORE $30k | Cr FA $20k + Contract Asset $10k
CJE2: Tax effect of CJE1: Dr DTA | Cr ORE
CJEs CJE3: Elm contract rev & exp : Dr Contract Rev $350k | Cr Contract cost $270k + FA $80k
CJE1: Elm DN sale of FA: Dr FA $50k | Cr Acc depn (incl impair loss) $40k + Cr Loss on disposal $10k CJE4: Adj for cur period FA depn after completion : Dr Acc Depn $2,750 | Cr Depn $2,750
CJE2: Adj of depn of FA txf : Dr Depn $500 | Cr Acc Depn $500 CJE5: Tax effects CJE3-4:
CJE3: Tax effects on CJE1-2: Dr Tax expense $1.9k | Cr DTA $1.9k PURCHASE CONSD: Add conting consideration, subtract contingent refund

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CONSOL ADJUSTMENTS for 20X4

CJE9 Tax eff of CJE6-8: Dr Tax expense $7.6k | Cr DTA/L $7.6k

(Subsi’s equity at 31 Dec = share cap+ RE + OCI) CJEs:

(Rec as Contract asset in P’s book)

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