1 MAA725 – Advanced Accounting Principles and Practice –Assignment 2 TRIMESTER 3 – 2016 DUE DATE: Friday 13th January, 2017, BEFORE 11.59 PM (AEST) MARKS: 20% This assignment is an individual assignment and consists of two tasks. Please complete each task by using tables and spaces provided in another document titled "Answer sheet for assignment 2" under the folder "assignment 2" on cloudDeakin. Task One It is stated under AASB 2 'Share based payment' that companies must value and record as an expense any options granted to employees in exchange for their services. Previously Australian companies recorded share-based payments in the notes to the financial statements, arguing that share-based payments did not cost the company anything. Do you think there is any logic to the argument that share-based payments did not cost the company anything? Discuss. Task Two On 1 November 2016 Cool Ltd. ordered inventories to the value of US$500 000 on FOB destination terms. On 31 January 2017, the inventories were delivered. On 28 February 2017, the invoice for the inventories was paid. On 1 November 2016, Cool Ltd. also entered into a forward exchange contract to buy US$500 000 with a settlement date of 28 February 2017 to hedge against the foreign exchange risk attaching to the purchase of and payment for the invoice. Cool Ltd. has a financial year ending 31December. Relevant exchange rates are as follows Date Spot rate Forward rate 1 November 2016 A$1= US$1.00 A$1= US$0.95 31 December 2016 A$1= US$0.90 A$1= US$0.89 31 January 2017 A$1= US$0.85 A$1= US$0.84 28 February 2017 A$1= US$0.75 A$1= US$0.75 Assume that the hedging arrangement satisfies the requirements for hedge accounting as stipulated in AASB 139 'Financial Instruments: Recognition and Measurement', and the management of Cool Ltd. adopts Cash flow hedge accounting. Prepare a table showing Gains/losses on the hedging instrument (the forward rate contract) and also provide necessary journal entries to record the above transactions from 1 November 2016 to 28 February 2017 (Rounded to the nearest integer).2 Weight (% total mark for unit): This total mark of the assignment (including task1 and task2) is 20, and equivalently takes 20% of the final grade in this unit. Unit Learning Outcomes assessed:  ULO1: Explain, evaluate and apply a range of advanced accounting theories and standards.  ULO2: Identify, define and integrate to construct explanations that can inform solutions to relevant accounting issues. Deakin Graduate Learning Outcomes assessed:  GLO1: Discipline-specific knowledge and capabilities.  GLO 2: Communication ASSIGNMENT SUBMISSION This assignment must be submitted electronically by the due date (Friday 9 September, 2016) as Microsoft Word document by uploading all documents to the respective assignment dropboxes, via the MAA725 site on CloudDeakin. Each student has to submit their own individual assignment 2 into assignment 2 dropbox. Specifically, When uploading your assignment 2, the document must be given a name using the following syntax: _MAA725.doc (or '.docx') (for example, 123456789_MAA725.doc). Assignment 2 submitted after the due date (or the extension date approved by the Unit Chair) incur a penalty of 0.5 marks per day, deducted from the final mark achieved. Submitting a hard copy of this assignment is not required. Students who anticipate possible difficulty in lodging this assignment online (for example, being in a remote place on the due date with no computer access) must contact the Unit Chair at least one week prior to the due date in order to make alternative arrangements for submission. Students who require a time extension in relation to this assignment should submit a written request to the Unit Chair, supported with documentation (for example, medical certificate). Such requests should be e-mailed to the Unit Chair. Requests for time extensions should be emailed to Unit Chair AT LEAST ONE DAY BEFORE (24 hours before) the due date of submission. After this deadline, extension requests received by the Unit Chair will not be considered. No extension exists until such time as it is approved in writing by the Unit Chair. Students are also reminded that extensions will only be given for exceptional and unusual circumstances outside the students' control. Please note, assignments that are submitted late (including those that have extension approved by the unit chair) still be able to be submitted through the Dropbox. However, the system will show the submission date/time in red. It is important that students familiarize themselves with the online submission procedures well before the due date for this assignment. The most common problem when submitting an3 assignment electronically is an improperly configured Internet browser. Students can test if their browsers are properly configured. This can be done from the CloudDeakin homepage. The Unit Chair does not accept excuses for late, incorrect or incomplete submissions of assignments due to problems with uploading them to Turnitin. Check your ability to submit electronically at the outset of this trimester and advise staff via CloudDeakin if you are having a problem. It is the responsibility of each student to keep backup copies (both soft and hard) of their assignments. The Unit Chair will not accept excuses for late submissions due to computer-related matters (e.g., lost documents, virus infected documents, hardware failure, stolen computers, etc.). Back up your draft copies of your assignment in progress often and to a remote device for safe-keeping. Feedback on assessed assignments: Feedback on assignments will be provided via CloudDeakin by 15 Deakin University business days from the due date or the approved extension date, whichever is later.4 Marking rubrics Criteria Poor Acceptable Good Well done Excellent (a) (10 marks) Share-based payments did not cost the company anything 0 points Discussion are incorrect and does not relate to the topic (0 – 4.9 marks) 5.5 points Accepted level of discussion and has a lack of flow (5 – 5.9 marks) 6.5 points Provides good discussion and has a logical flow but is fragmented in some areas (6-6.9 marks) 7.5 points Provides very good discussion and has a logical flow (7- 7.9 marks) 10 points Provides excellent discussion and has a logical flow (8 - 10 marks) (b) (5 marks) calculate gains/losses on forward contract 0 point Most calculations are incorrect or omitted. 2.5 point provide good answer with some calculations being 3 points Provides good answer with most calculations being correct. (more than 50% but 3.5 points Provides very good answer with majority calculations being correct (more than 60% 5 points Provides excellent answer with nearly all accounts and calculations being correct. (more than 80% answers correct) (did not address/ incorrect in all parts of the question) (0 – 2.4 mark) correct (less than 40% answers correct) (2.5-2.9 marks) less than 60% answers correct) (3 - 3.4 marks) but less than 80% answers correct) (3.5 -3.9 marks) (4-5 marks) (c) (5 marks) Prepare the journal entries 0 points Required journal entry is omitted. (0 – 2.4 mark) 2.5 points Required journal entry is presented but majority with incorrect account names and amounts. (2.5 – 2.9 mark) 3 points Required journal entry is presented with either incorrect account names or with incorrect amounts (3 – 3.4 mark) 3.5 points Required journal entry is presented with most account names and amounts correct (3.5 – 3.9 mark) 5 points Required journal entry is presented with correct account names and amounts (4– 5 mark) Overall Score Fail (n) 0 or more Pass (P) 10 or more Credit (C) 12 or more Distinction (D) 14 or more High Distinction (HD) 16 or more Total marks out of /20