AKUNTANSI KEUANGAN 2

2018

Notes Financial Assets: Investment – Debt Securities

• Investasi terdiri dari debt (bonds, notes) dan equity (shares) • Fungsi investasi adalah untuk generate more money / receive contractual cash flow

(inflow) • Financial Assets terdiri dari cash, equity investment, dan contractual right to receive

cash from another company • Two measurement categories:

Amortized Cost: untuk held to maturity/ held for collection Fair Value: P fluctuates affected by interest rate, for trading purpose (<20%)

• Debt Investment at FV At each reporting date Adjust the amortized cost to FV Any unrealized holding gain or loss is reported as part of net income When rate is higher, PV menjadi loss (karena menjadi kurang menarik) Berlaku juga untuk portfolio debt investments Company have the option to report most financial assets at fair value Applied on an investment-by-investment basis Available only at the time a company first purchases the financial asset or incurs a financial liability

Problem 1 Financial Assets: Investment – Debt Securities The following information relates to the debt investments of Missouri Company.

1. On February 1, the company purchased 10% bonds of Georgia Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1.

2. On April 1, semiannual interest is received. 3. On July 1, 9% bonds of Sasha, Inc. were purchased. These bonds with a par value of

$200,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.

4. On September 1, bonds with a par value of $60,000, purchased on February 1, are sold at 99 plus accrued interest.

5. On October 1, semiannual interest is received. 6. On December 1, semiannual interest is received. 7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95

and 93, respectively.

Instruction:

a) Prepare journal entries necessary (including Dec 31), assuming these investments are managed to profit from changes in market interest rates

b) If Missouri Company classified these as held-for collection investments, explain how the journal entries would be different

c) Assume that Missouri Company elects the Fair Value option for these investments as held-for-collection investments, how will the accounting change?

ANSWERS a) Journal Entries

1 Feb Debt Investments 300,000 Interest Revenue 10,000 (4/12 X 0.1 X $300,000) Cash 310,000 1 April Cash 15,000 Interest Revenue 15,000 ($300,000 X0 .1 X 6/12) 1 July Debt Investments 200,000 Interest Revenue 1,500 (1/12 X0 .09 X $200,000) Cash 201,500 1 Sept Cash 61,900 [($60,000 X 99%) + ($60,000 X 0.1 X 5/12)] Loss on Sale of Debt Investment 600 Debt Investments 60,000 Interest Revenue 2,500 (5/12 X .10 X $60,000 ) 1 Oct Cash 12,000 [($300,000 – $60,000) X0 .1 X 6/12] Interest Revenue 12,000 1 Dec Cash 9,000 ($200,000 X 9% X 6/12) Interest Revenue 9,000 31 Dec Interest Receivable 7,500 (3/12 X $240,000 X 0.1) + (1/12 X $200,000 X 0.9) Interest Revenue 7,500 31 Dec Unrealized Holding Gain or Loss—Income 26,000 Securities Fair Value Adjustment 26,000 Debt Investment Portfolio Investments Costs Fair Value Unrealized Gain (Loss)

Georgia Co.

$240,000 $240,000 X 95% = $228,000

$ (12,000)

Sasha, Inc. $200,000 $200,000 X 93% = $ 186,000

$ (14,000)

Total $440,000 $414,000 4 (26,000)

b) All the entries would be the same except the last entry would not be made.

31 Dec Unrealized Holding Gain or Loss—Income 26,000 Securities Fair Value Adjustment 26,000 (this will be irrelevant) In addition, held-for-collection investments would be carried at amortized cost and not valued at fair value at year-end.

c) If Missouri Company elects the fair value option for these investments, they would need to record an unrealized gain or loss each year. The unrealized gain (loss) would be the difference between the investments amortized cost and their year-end fair value.

Notes Financial Assets: Investment – Equity Securities

• Equity investments represents ownership of ordinary, preference, or other capital shares

• Cost includes the price of the security and broker’s commission and other fees incidental to the purchase

• Percentage of Ownership, level of influence, valuation method

0% - 20% à little or none à Fair Value

20% - 50% à significant à Equity

50% - 100% à control à Consolidation

• Equity Method Journals: Purchase Equity Investments xxx Cash xxx Net Income Declaration Equity Investments xxx Investment Income xxx Dividend Payment Cash xxx Equity Investments xxx Declaration of net loss Investment Loss xxx Equity investments xxx

• Consolidation Method Impairment loss à difference between carrying amount plus accrued interent and the expected future cash flows discounted at the investment’s historical effective-interest rate Transferring an investment from one classification to another should occur only when the business model for managing the investment changes

• 3 Categories of Debt Investment Held-for-collection (amortized cost) Held-for-collection and selling (FVOCI) Trading (FVTPL)

• Fair Value Option Journal Debt Investment xxx Unrealized gain/loss – Income xxx

• Consolidating Have controls to subsidiaries

Not only depends on rule of >50% ownership

Soal 2 Financial Assets: Investment – Equity Securities

Wade Holdings, Inc. had the following investment portfolio at January 1, 2015.

Amelia Company 1,000 shares @ $15 each $15,000 Rory Company 900 shares @ $20 each $18,000 River Company 500 shares @ $9 each $4,500 Non-trading investments at cost $37,500 Fair Value Adjustment $ (7,500) Non-trading investments at FV $30,000

During 2015, the following transactions took place

1. On March 1, Rory Company paid a $2 per share dividend. 2. On April 30, Wade Holdings, Inc. sold 300 shares of Chance Company for $11 per

share. 3. On May 15, Wade Holdings, Inc. purchased 100 more shares of Amelia Co. at $16

per share. 4. At December 31, 2015, the shares had the following price per share values: Amelia

$17, Rogers $19, and River $8. During 2016, the following transactions took place.

1. On February 1, Wade Holdings, Inc. sold the remaining River shares for $8 per share. 2. On March 1, Rory Company paid a $2 per share dividend. 3. On December 21, Amelia Company declared a cash dividend of $3 per share to be

paid in the next month. 4. At December 31, 2016, the shares had the following price per shares values: Amelia

$19 and Rory $21.

Instructions: a) Prepare journal entries for each of the above transactions. b) Prepare a partial statement of financial position showing the Investments account at

December 31, 2015 and 2016. c) Briefly describe how the accounting would change if the Amelia investment was

classified as trading.

ANSWERS a) 1 Mar 15 Cash 1,800 Dividend Revenue 1,800 (900X$2) 30 Apr 15 Cash 3,300 Gain on Sale of Equity Investment 600 (300 X ($11-$9) Equity Investments 2,700 15 May 15 Equity Investments 1,600 Cash 1,600 (100 X $16) 31 Dec 15 Securities FV Adjustment 8,500 Unrealized Holding Gain (Loss) – Equity 8,500 Investments Cost FV Unrealized Gain

(Loss) Amelia $16,600 (1,000+100) X $17=

$18,700 $2,100

Rory $18,000 900 X $19= $17,100 $(900) River $1,800 (500-300) X $8 = $1,600 $(200) Total of Portfolio $36,400 $37,400 $1,000 Previous securities FV Adjustment balance – Cr. $(7,500) Securities FV Adjustment – Dr. $8,500

1 Feb 16 Cash 1,600 Loss on Sale of Equity Investment 200 (200 X ($8-$9)) Equity Investments 1,800 1 Mar 16 Cash 1,800 Dividend Revenue 1,800 21 Dec 16 Dividend Receivable 3,300 Dividend Revenue 3,300 (1,100 X $3) 31 Dec 16 Securities FV Adjustment 4,200 Unrealized Holding Gain (Loss) – Income 4,200 Investments Cost Fair Value Unrealized Gain

(Loss) Amelia $16,600 1,100 X $19 =

$20,900 $4,300

Rory $18,000 900 X $21 = $18,900

$900

Total of Portfolio $34,600 $39,800 $5,200 Previous Securities FV Adjustment Balance – Dr. $1,000 Securities FV Adjustment – Dr. $4,200

b) Partial Statement of Financial Position as of

31 December 2015 31 December 2016

Investments: Equity Investments, at FV

$37,400 $39,800

Current Assets: Dividend Receivable

$0 $3,300

c) If the Amelia investment was classified as trading, the unrealized holding gain would not be reported as equity. Instead the unrealized gain would be reported in net income.

Notes Accounting for Leases

• Lessor adalah menyewakan objek sewa, Lessee adalah penyewa objek sewa tersebut • If the lessee capitalize a lease, the lessee records an assets and a liability generally

equal to the PV of the rental payments Journals by Lessee Lease Equipment xxx Lease Liability xxx Journals by Lessor Lease Receivable xxx Equipment xxx

• Capitalization Criteria Transfer of Ownership test Bargain Purchase Option Test Economic Life Test Recovery of Investment Test (If one criteria is not fulfilled, it is an operating lease)

• Finance Lease terdiri dari Direct Financing Lease dan Sales Type Lease • Executory Costs terdiri dari insurance, maintenance, dan taxes • Difference in using Finance Lease instead of Operating Lease

An increase in the amount of reported debt An increase in the amount of total assets A lower income early in the life of the lease and therefore lowers retained earnings

• Classification of leases by the Lessor Finance lease (direct-financing lease and sales type lease) Operating Lease

• Special Accounting Problems Residual Value Sales Type Leases (lessor) Bargain-Purchase Option Initial Direct Cost (incremental and internal cost) Current vs Non-Current Classification Disclosure

Soal 3 Accounting for Leases

Amirante Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years and incremental borrowing rate of 10%. The normal selling price of the machine is $411,324, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,000. The hospital will pay rents of $60,000 at the beginning of each year and all maintenance, insurance, and taxes. Amirante Inc. incurred costs of $250,000 in manufacturing the machine and $14,000 in negotiating and closing the lease. Amirante Inc. has determined that the implicit interest rate is 10%. Round all numbers to the nearest dollar 1. Discuss the nature of this lease in relation to the lessor and compute the amount of each of

the following items: a) Lease receivable at inception of the lease b) Sales price c) Cost of sales

2. Prepare a 3-year lease amortization schedule 3. Prepare all the lessor’s journal entries for the first year 4. Discuss the nature of this lease in relation to the lessee, and compute the amount of the

initial obligation under finance leases. Prepare a 3 year amortization schedule 5. Prepare all the lessee’s journal entries for the first year

ANSWERS

1. It is a sales-type lease because • The lease term is for a major part of the economic life of the leased asset

[83%(10/12)] • The present value of the minimum lease payment exceeds 90% of the FV of the

property • The lease provides the lessor with manufacturer’s profit in addition to interest

revenue a) Lease Receivable

PV of annual payments of $60,000 made at the beginning of each period for 10 years, PV of an annuity due at 10% = $60,000 X 6.75902 = $405,541 PV of guaranteed residual value = $15,000 X 0.38554 = 5,783 PV of minimum lease payments = $405,541 + $5,783 = $411,324

b) Sales price is the same as the present value of minimum lease payments $411,324

c) Cost of sales is the cost of manufacturing the machine $250,000

2. Lease Amortization Schedule (Lessor) Beginning of Year

Annual Lease Payment plus Residual Value

Interest Receivable (10%)

Recovery of Lease Receivable

Lease Receivable

Initial PV - - $411,324

1 $60,000 - $60,000 $351,324

2 $60,000 $35,132 $24,868 $326,456

3 $60,000 $32,646 $27,354 $299, 102

3. Lessor’s Journal Entry At the beginning of the year Lease Receivable 411,324 Cost of Goods Sold 250,000 Sales 411,324 X-ray Machine Inventory 250,000 Selling Expense 14,000 Cash or Payable 14,000 Cash 60,000 Lease Receivable 60,000

At the end of the year Interest Receivable 35,132 Interest Revenue 35,132

4. Lease Amortization Schedule (Lessee) Beginning of Year

Annual Lease Payment + GRV

Interest on Unpaid Liability (10%)

Reduction of Lease Liability

Lease Liability

Initial PV - - - $411,324

1 $60,000 - $60,000 $351,324

2 $60,000 $35,132 $24,868 $326,456

3 $60,000 $32,646 $27,354 $299, 102

5. Lessee’s Journal Entry

At the beginning of the year Leased Equipment Under Finance Leases 411,324 Lease Liability 411,324 Lease Liability 60,000 Cash 60,000 At the end of the year Interest Expense 35,132 Interest Payable 35,132 Depreciation Expense 39,632 Accumulated Depreciation—Leased Assets 39,632

Soal 4 Accounting for Income Tax The following information has been obtained for the McElroy Company

1. The earning before tax for 2017 is $800,000,000 2. Income from rent building is $42,000,000 (permanent difference) 3. Tax Interest expense is $13,000,000 (permanent difference) 4. Benefit in Kind for company's employee is $27,000,000 (permanent difference) 5. Depreciation expense reported on the income statement exceed depreciation on the tax

return by $14,000,000 6. Interest income form time deposit is $25,000,000 (permanent difference) 7. Income tax provision is $6,000,000 (permanent difference) 8. Amortization expense according to fiscal is $20,000,000 higher than the amortization

according to commercial 9. Income tax of article 23 withheld/collected by other party is $120,000,000 10. Income tax rate is 25%

Instructions: a) Determine Taxable income for McElroy Company b) Determine the amount of Tax Underpayment/Overpayment c) Determine the Deferred Tax Assets or Liability d) Prepare a journal entry and present the transactions of the Financial Statement of

McElroy Company

ANSWERS a) EBIT 800,000,000 Revenue: Rent Building 42,000,000 Interest Income 25,000,000 Amortization 20,000,000 Expense: Tax Interest 13,000,000 Benefit in Kind 27,000,000 Depreciation Expense 14,000,000 Income Tax Provision 6,000,000 Pretax Financial Income 773,000,000 (EBIT-Revenue+Expense) Tax 193,250,000 (25% x 773,000,000) b) PPh 23 120,000,000 Tax 193,250,000 Overpayment/(Underpayment) (73,250,000) c) Deferred Tax Assets (Koreksi positif yang tidak permanen) Depreciation Expense 3,500,000 Deferred Tax Liability (Koreksi negatif yang tidak permanen) Amortization Expense 5,000,000 d) Journal Entry Income Tax Expense 194,750,000 Deferred Tax Assets 3,500,000 Income Tax Payable 73,250,000 (Kurang/lebih bayar) Deferred Tax Liability 5,000,000 Prepaid Tax (PPh 23) 120,000,000 (PPh yang sudah dibayar)

Soal 5 Accounting for Changes and Error Presented below are the comparative income statements for Pannebecker Inc. for the years 2014 and 2015.

The following additional information is provided.

1. In 2015, Pannebecker Inc. decided to switch its depreciation method from sum-of-the-years’-digits to the straight-line method. The assets were purchased at the beginning of 2014 for $90,000 with an estimated useful life of 4 years and no residual value. (The 2015 income statement contains depreciation expense of $27,000 on the assets purchased at the beginning of 2014.)

2. In 2015, the company discovered that the ending inventory for 2014 was overstated by $20,000; ending inventory for 2015 is correctly stated.

Instructions

Prepare the revised retained earnings statement for 2014 and 2015, assuming comparative statements. (Ignore income taxes.)

ANSWERS Change from sum-of-the-years-digits to straight-line Cost of depreciable assets ..................................................................... $90,000 Depreciation in 2009 ($90,000 X 4/10) ................................................. (36,000) Book value at December 31, 2009 ........................................................ $54,000 Depreciation for 2010 using straight-line depreciation Book value at December 31, 2009 ........................................................ $54,000 Estimated useful life ............................................................................. ÷ 3 years Depreciation for 2010 ($54,000 ÷ 3) ..................................................... $18,000

PANNEBECKER INC. Retained Earnings Statement

For the Year Ended

2010 2009 Retained earnings, January 1, unadjusted $125,000 Less: Correction of error for inventory overstatement

(20,000)

Retained earnings, January 1, adjusted 105,000 $ 72,000 Add: Net income 81,000 58,000 Less: Dividends 30,000 25,000 Retained earnings, December 31 $156,000 $105,000 Note to instructor:

1. 2009 Cost of sales increased $20,000; 2010 cost of sales decreased $20,000. As a result, net income for 2009 is overstated $20,000 and net income for 2010 is understated $20,000 as a result of the inventory error.

2. 2009 expenses remained unchanged. 3. 2010 expenses decreased $9,000 ($27,000 – $18,000). Net income in 2010 is

therefore $81,000 ($52,000 + $20,000 + $9,000). 4. Additional disclosures would be as necessitated as indicated in the chapter.

5. Another acceptable presentation for the retained earnings statement for 2010 is: Retained earnings, January 1, as reported ............................................... $125,000 Prior period adjustment—inventory error ............................................... (20,000) Retained earnings, January 1, as adjusted ............................................... 105,000 Add: Net Income ................................................................................... 81,000 Less: Dividends..................................................................................... 30,000 Retained earnings, December 31 ............................................................ $156,000

Soal 6 SAK ETAP & PSAK 1. Describe definition of ETAP and the scope of entities that are allowed to use SAK ETAP.

2. Identify which entities listed below that are eligible to use SAK ETAP

1. An entity’s shares are not listed on a stock exchange but do trade “over-the- counter‟ and over-the-counter is subject to government regulation though to a lesser degree than the stock exchange.

2. An entity’s only business is earning interest on money that it lends to its clients. The entity obtains all of its funds direct from its two owner-managers both of whom are billionaires (ie the entity does not take deposits from customers) .

3. An entity is the only flour manufacture in its jurisdiction. The entity is also one of the largest business entities in the jurisdiction and its activities constitute around 4 percent of the jurisdiction’s gross domestic product.

3. Identify and describes 3 (three) differences between PSAK adopted from IFRS and SAK ETAP.

ANSWERS 1. ETAP adalah entitas yang tidak memiliki akuntabilitas signifikan dan menerbitkan

laporan keuangan untuk tujuan umum (general purpose financial statement) bagi pengguna eksternal.

Perusahaan yang diperbolehkan menggunakan SAK ETAP:

• Tidak tercatat di pasar modal • Tidak sedang dalam proses pengajuan pernyataan pendaftaran di pasar modal • Bukan lembaga keuangan

2. a. Not Eligible-The entity is publicly accountable. Its shares are traded in a public market. The regulated over-the-counter market is a public capital market b. Eligible-The entity is not publicly accountable. Its instruments are not traded in a public market and it does not hold assets in a fiduciary capacity for a broad group of outsiders. The business of lending money to the general public does not itself give rise to public accountability. c. Eligible-The fact that the entity provides an essential products (flour), the size of the entity and its significance in its local economy do not make the entity publicly accountable

3. Perbedaan SAK ETAP dan PSAK adalah SAK ETAP :

1. Tidak ada konsolidasi 2. Tidak ada laporan laba rugi komprehensif, hanya laporan laba rugi

3. Tidak ada pengungkapan distribusi dividen 4. Arus kas operasi disajikan dengan metode tidak langsung

5. Properti investasi dicatat dengan metode biaya 6. Aset tetap menggunakan metode biaya (revaluasi hanya melalui peraturan

pemerintah) 7. Tidak ada goodwill

8. Aset tidak berwujud berasal dari eksternal saja dengan umur manfaat terbatas 9. Tidak ada sale and lease back dan lease and sub lease

10. Biaya pinjaman dibebankan 11. Tidak ada instrumen keuangan, hanya investasi pada aset keuangan dengan

klasifikasi trading, AFS, dan HTM. 12. Tidak ada konsep pajak tangguhan, hanya pajak terutang.

13. Menggunakan perhitungan sederhana untuk menghitung manfaat bagi pekerja, tidak butuh perhitungan aktuaris.

14. Subsidiary dicatat dengan metode ekuitas, associate dicatat dengan metode biaya.