Advanced Financial Accounting



Unit: ACC204 – Advanced Financial Accounting

Task Description

You are required to finish each of these questions, total 40 marks. Please give the solutions in detail, show calculations and submit the solutions to Moodle using a single file, it can be Excel format, Word format or PDF format, no requirement on word limits. If any reference was used, please refer to Harvard style. Question 1 (10 marks), Question 2 (10 Marks), Question 3 (10 Marks), Question 4 (10 Marks).
1. As explained within the Chapter 8, intangible asset, Australian accounting standards now prohibit goodwill from being subject to amortisation. Rather, there is a requirement that goodwill be subject to impairment testing. In relation to impairment testing of goodwill, Petersen and Plenborg (2010, p.420) state:
Many argue that an impairment test only approach seems a logical step in the development of accounting for goodwill. First, the underlying logic for removing the traditional amortization methodology is that the amortization on a straight-line basis over a number of years contains no information value for those using financial statements (Jennings et al., 2001). Moreover, IFRS 3 (IASB, 2004b) no longer requires that companies perform the almost impossible task of estimating the useful life of goodwill (Jansson et al. 2004). Second, the impairment approach should provide users of financial statements with better information, as goodwill is not automatically amortized (Colquitt and Wilson, 2002; Bens and Heltzer, 2005). Finally, goodwill impairment tests would be operational and capture a decline in the value of goodwill (Donnelly and Keys, 2002).

REQUIRED

You are to provide a clear argument as to why you agree or disagree with the perspectives provided in the paragraph above. 

2. On 1 July 2015 Kruger Ltd privately issues $1 million in six-year debentures, which pay interest each six months at a coupon rate of 6 per cent per annum. At the time of issuing the securities, the market requires a rate of return of 4 per cent. Consistent with the requirements of AASB9, the debentures are accounted for using the effective interest method.
Required
(a)     Determine the fair value of the debentures at the time of issue (which will also be their issue price).
(b)     Provide the journal entries at:
    (i)  1 July 2015
    (ii) 31 December 2015
    (iii)                                                        30 June 2016.  

3. Sun City Limited commences construction of a multi-purpose water park on 1 July 2014 for Pretoria Limited. Sun City Limited signs a fixed-price contract for total revenues of $50 million. The project is expected to be completed by the end of 2017 and Pretoria Limited controls the asset throughout the period of construction. The expected cost as at the commencement of construction is $38 million. The estimated costs of a construction project might change throughout the project—in this example, they do change. The following data relates to the project (the financial years end on 30 June):
2015 ($m)
2016 ($m)
2017($m)
Costs for the year
10
18
12
Costs incurred to date
10
28
40
Estimated costs to complete
28
12
–
Progress billings during the year
12
20
18
Cash collected during the year
11
19
20

Required

(a)  Using the above data, compute the gross profit to be recognised for each of the three years, assuming that the outcome of the contract can be reliably estimated.  
(b)  Prepare the journal entries for the 2015 financial year using the percentage-of-completion method. 
(c) Prepare the journal entries for the 2015 financial year, assuming the stage of completion cannot be reliably assessed. 

4. Anderson Pty Ltd is an Australian diversified industrial company with its major business activity being to manufacture flotation devices for babies and toddlers. Over the past decade, the business has been very profitable and the directors, Simon Anderson and Lisa Anderson, have kept payment of dividends to a minimum to allow the company to diversify into other activities. The following is a list of property, plant and equipment held by the company:
Investments in companies
Carrying Value ($)
Current fair value ($)
 Property, plant and equipment


 Factory (NSW)


 Land
100 000
150 000
 Buildings


 – Cost
70 000
80 000
 – Accumulated depreciation
(20 000)
–
Factory (Qld)


 Land
150 000
120 000
 Buildings


 – Cost
125 000
70 000
 – Accumulated depreciation
(45 000)
–
Mr Anderson informs you that the directors intend to revalue the property, plant and equipment during the year. The company has not revalued any assets in the past.
Required
(a)     How would you account for the revaluation of the above assets?
(b)     What would the relevant journal entries be?  

To get solution visit our website www.sourceessay.com
Location: Australia

Comments

Post a Comment

Popular posts from this blog

Assignment Help: Add Valuable Factors In Your Learning Skills

Image
The end to end process of acquiring new information and process it to meet requirements is known as the ability to learn. Learning is a combination of various skills that are required by students to process information efficiently. Broadly speaking learning skills can be categorized into four categories- critical thinking, creative thinking, communicating, and collaborating. In this article, we are going to briefly discuss the valuable factors that add essence to the learning skills of students. Critical Thinking - The careful analysis of information for better understanding is known as critical thinking. With the help of critical thinking students can develop the following abilities- Analyzing, Arguing, Classifying, Comparing & Contrasting, Defining, Describing, Evaluating, Explaining, Problem Solving, and Tracking cause and effect. In case a student faces difficulties while implementing these abilities in an assignment they can seek  instant essay help  from SourceEssa...
Read more

The Helpful Essay Writing Guide: Structure, Outline, Tips And Format

Image
Essay writing is an art that involves, skills of writing, technical knowledge, and understanding of the subject. There are various types of essays each involves different structures, tones, techniques, and even the length of it differs. Students face a lot of challenges while writing essays mostly because of language barriers and lack of technical knowledge and writing skills. Students are seen taking external help from professionals to write quality essays to overcome these barriers. This is why  essay Deutsch   has gained immense popularity in Germany among academic students. In this article, we are going to share some tips with students on how to structure, outline, and format an essay. Even though the specifications of essay writing change with the kind of essay the basic structure of the essay remains the same.  Structure Of An Essay   The basic structure of an essay comprises three parts namely the introduction, body, and conclusion. Introduction ...
Read more

Language Techniques Every Student Must Know

Image
For every student to write an impressing assignment it is important that the assignment is written in a language that makes it easy for the readers to understand whether the piece of work is an essay, story, poem, novel or a report. The elements that are found everywhere in the piece of work is known as language techniques .  Today we are going to talk about common language techniques that should be known to every student in order to write an engaging assignment. Importance Of Language Techniques In Assignment Writing Language techniques are important because it improves the quality of the assignment as a result students are able to create appealing assignments and score well. Apart from this language techniques help students create an impact with their writing. It helps them craft their work using transactional, creative, and oral presentations. Moreover using language techniques students are able to achieve unit standards that helps them to explore language about transactional, p...
Read more