Corrigendum Advanced Financial Accounting, 2nd

Edition
We apologize for the omissions and errors. Please make the following
amendments. We appreciate your feedback and comments for other
improvements. Please email the co-authors pearltan@smu.edu.sg or
cylim@smu.edu.sg for feedback or comments.
Corrigendum: Problem 3.4 (1)
Journal entry to record the purchase of net assets of S Co by P Co in its separate
financial statements on 1 January 20x1: Goodwill should be $248,000 and not
$268,000.
(1) Journal entry to record the purchase of net assets of S Co by P Co in
its separate
financial statements on 1 January 20x1
Dr Intangible asset
Dr Fixed assets
Dr Inventory
Dr Accounts receivable
Dr Cash
Dr Goodwill
Cr Accounts payable

30,000
350,000
60,000
90,000
20,000
248,000
80,000

Cr Deferred tax liability

Cr Equity
798,000

18,000
700,000
798,000

20%*(470000380000)

Page 101
Repeat line to be deleted: For example the impairment loss on an acquirees
intangible asset arising from technological changes after acquisition date is not a
measurement period adjustment.
Problem 4.1
Please include the following under Additional Information:
(i)

S Co earned annual profit after tax of $2,000,000 for the year ended 30
June 20x2 and 30 June 20x3. There were no dividends or other changes
in equity during the two years. There was no change in the fair value of
investment property as at 30 June 20x3.

Page 193 Please note amended figure in bold below

Depreciation from the groups perspective ($50,000/20)
Depreciation from the legal entitys perspective ($60,000/20)
(not 3,500)
Excess depreciation to adjust on consolidation

28 January 2015

$2,500
3,000
$ 500

Corrigendum Advanced Financial Accounting, 2nd

Edition
Page 194 - Please note amended figure in bold below
31 Dec 20x2
(not 2,500)

Dr Accumulated depreciation 500

Cr Depreciation expense.500

(not 2,500)
31 Dec 20x2 Dr Opening retained earnings10,000 (not
1,000,000)
Cr Fixed
assets..10,000 (not 1,000,000)

Page 235 Please note amended figure in bold below

The entry in SubCos books shows:
Dr Inventory
60,000
Cr Amount to (not from) Parent Co
60,000
Page 276 Please note amended figure in bold below
As net profit after tax.
$800,000
Less after tax unrealized profit in the current year (80% x 1/3 x $60,000)..
(16,000)
As adjusted net profit after (not before)
tax. $784,000
Page 279 Please delete the following
A Co
A CoIncome Statement
Page 283 - Please note amended figure in bold below
The share of profit of A is shown below:
Profit after tax of A..
$160,000
:
:
Adjusted profit after (not before) tax of A..$146,000
Page 335 (Problem 6.14) Please correct the following typographical error
(a) The undervalued inventory of X Co was disposed off as follows:
Sold prior to 20x2.. 70%
:
:
28 January 2015

Corrigendum Advanced Financial Accounting, 2nd

Edition
:
:
Net unrealizable value as at 31 December 20x2$12,000
Page 538 (Illustration 9.14)

Journal entries on 1 Jan 20x5 below redundant and to be removed:

Dr Equity

1,486

Cr Investment in debt security

1,486

Dr Unamortized premium

2,514

Cr Investment in debt security

2,514

Page 672 (Problem 10.9)

Change the wordings in the question to The forward contract is designated as a
fair value hedge of the commitment and the resultant receivable.
Page 676 (Problem 10.16)
Remove the following foreign exchange rates:
Average 1st half 2010: 1.39
Average 2nd half 2010: 1.34
Average year 2010: 1.36
Average 1st half 2011: 1.25
Average 2nd half 2011: 1.24
Average year 2011: 1.24
30 June 2012: 1.28
Average 1st half 2012: 1.29
Page 677 (Problem 10.17)
Change coupon rate on the convertible bond to 0.5% per half year.
Page 809 (Appendix 13B)
The following Binomial tree should be included in the diagram.
Pu = 0.8
of option

Share price increases

by 10% at end of Year 1

Value of option
at end of Year 1

PV
value

(PVu)
$11
Start
(Now)
$10

28 January 2015

$1

Expected
$1/(1+0.02) value
of
option=
PVux0.8

Corrigendum Advanced Financial Accounting, 2nd

Edition

Pu = 0.2
of option

$9
$0
Share price decreases
by 10% at end of Year 1

(PVd)

28 January 2015

$0
Value of option
at end of Year 1

+
PVdx0.2
PV
value