ACC514 - Financial Accounting
Session 1 2016
Faculty of Business
School of Accounting and Finance Internal Mode
Subject Overview
This subject, which builds upon the introduction to financial accounting provided in the prerequisite subject, begins with an introduction to the regulatory environment for financial reporting and an overview of the conceptual framework for financial reporting principles and standards. The major focus is the form and content of published financial reports and the application of generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of financial statement elements.
Learning outcomes
On successful completion of this subject, you should
be able to prepare basic financial statements for reporting entities;
be able to discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based; be able to explain the form and content of financial statements;
be able to interpret and apply generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of key financial statement elements.
Lecturer Details
Subject Coordinator Sajjad Khan Email [email protected] Phone To be advised.
Contact phone number 03 99357927
Campus Other
Building/Room number To be advised.
About your lecturer
Anna Cooshna, B.Com, MAT, CA

I'm a chartered accountant with over 10 years' experience, a registered tax agent, a registered ASIC
SMSF auditor & a SPAA specialist. I have worked for KPMG where i was responsible for the management of over 2,000 SMSFs [MLC], PricewaterhouseCoopers and Ernst & Young in their
Financial Services divisions, and Proctor Major in their business services division. In 2011, I left the Big 4 environment for the Auditing and Assurance Standards Board (AUASB), where my main role as a Project Manager consisted of drafting and revising auditing standards, more specifically the APRA superannuation standards and GS009 Auditing Self-Managed Superannuation Funds.
I'm very passionate about teaching and I have lectured at the CAANZ and various universities. In my most recent role at the CAANZ, I worked as a senior technical specialist, where I managed a team of lecturers across Australia and continuously provided ideas to improve all facets of training within the Sydney L&BS team, especially in the superannuation team. I have led exam marking panels, drafted and reviewed material and involved in writing articles in the CA charter magazine. More recently, I've worked as a senior manager / acting associate principal within the superannuation audit division of Crowe Horwath where I have managed over 3,000 SMSFs.
I have a Bachelor of Commerce / Bachelor of Business Systems from Monash University, a Masters of Applied Taxation from UNSW and a Diploma of Financial Planning from Kaplan Business School.
or
Atul Chugh, B.Com, M.Bus, CA, CPA

I'm a sessional lecturer in corporate accounting, financial reporting and taxation law and practice at both undergraduate and post graduate level. My professional experience includes more than 15 years in teaching and business advisory services on financial reporting and taxation matters. I have also held various management roles nationally and internationally from manager to being head of financial reporting for the Asia Pacific region Inter Continental Hotels Group.
Learning, Teaching and Support Strategies
Class times and location
Please refer to the most updated timetable for the class times and location.
You would have received your timetable by email. You can also obtain a copy from the timetable stand outside the academic office or via the noticeboard. You can also obtain a current copy from the link below: https://interact2.csu.edu.au/webapps/blackboard/content/listContentEditable.jsp?content_id=_452392_1
Important: It is essential that you keep checking the timetable for the latest class information. The timetable may change until the second week of the teaching session, and it is important to monitor the timetable regularly on the noticeboard.
The weekly instruction in this subject will consist of a combined lecture /tutorial lasting up to 3 hours which will occur every week. This will cover the main points from each topic.
Attendance is required at all scheduled lectures and tutorials.

How to contact your lecturer
Anna will be available during certain times every week for Classes. Please see the front page of this subject site. Her email address is [email protected] (mailto:[email protected])
Atul will be available during certain times every week for Classes. Please see the information on the front page of this subject site. His email address is [email protected]
If you are emailing your lecturer, please email from your studygroup email. This will avoid your email being treated as SPAM. Please send a brief message regarding the issue, stating the subject code and your name and ID number in the email title/subject. This will avoid your email being treated as
SPAM.
How you are expected to engage with the subject
All of your subject material is available on the Interact site under the 'Topics' link in the left hand side menu. I suggest that for each topic, you read the learning objectives carefully, read the overview, and read the sections of the text as directed before attending the weekly lectures. Once you have got a feel for what the topic is about, try and make a good set of notes and highlight/flag relevant sections in your Financial Reporting Handbook. You should then attempt the review questions selected for that topic. These questions have been designed to give you focus in the topic, and apply the requirements of the accounting standards.
In this subject there are many opportunities for you to engage with myself, with other students and with the subject. I will be holding weekly face to face classes throughout the session where we can discuss content issues and assessment items. Please attend the lectures regularly.
It is helpful to have a small assessment task to complete early in the session so that you have a focus in the subject from the very first day. I have set 5 online tests, the first one being for topic 1 and 2, and due in week 3. If you don't attempt the first test, I may contact you to have a chat about your studies and progress in this subject.
Make sure you regularly (at least 3 times per week) check the Interact site for discussion board ( forum) postings, announcements, topic information and other resources vital to your success in this subject.
Studying at university does not mean studying alone. Take advantage of collective wisdom and post your questions to the subject Discussion Board.
Information on effective time management is available on the CSU Learning Support website via the following link: http://student.csu.edu.au/
Visit the Learning Support website for advice about assignment preparation, academic reading and note taking, referencing and effective time management at: student.csu.edu.au You can also contact an adviser through Student Central on the following number:
1800 275 278 (or +61 2 6933 7507 from outside Australia).
Queries regarding the content of this subject should be directed to your Subject Coordinator.
Library Services
The CSU Library website provides access to online material and print, using Primo Search to find online journal articles, eBooks, hardcopy books from CSU Library (see Library Manager for Interlibrary Loan Requests), company & government reports, eJournals, dissertations, theses, newspapers including Business & Financial newspapers in Factiva (See Business & IT Journal Databases), and other reference resources (eg. Australian Bureau of Statistics, Australian standards, online encyclopaedias & dictionaries to be read on the computer). You will also find library guides, Subject Reserve for any readings eg. ITC100, ACC100, etc., and online assistance to help you use the Library's resources such as Ask a Librarian – Live Chat and Ask a Librarian - Web Form.
You can find Library Services on both the SGA library online catalogue: http://primo.unilinc.edu.au/primo_library/libweb/action/search.do?vid=SGA
The SGA library online catalogue allows students to Sign In, My Account shows student's current library record including all books on loan, Renew your borrowed books online before the due date, also Search and Request all books in the SGA library, even if unavailable due to high demand from students. Students can Request books when all books are on loan to other students. When the requested book is returned to the SGA library, the student who requested the book receives an email immediately to pick up the book from the SGA library. View your library record online 24/7 at the above web link for SGA library.
And also CSU Library online: http://student.csu.edu.au/library - CSU Library Services including Primo Search & Subject Reserve online with 24/7 access, online and video tutorials in research skills, finding journal articles for assignments, topic analysis, download Endnote referencing program and many other online library services to help you successfully complete your assignments for all CSU courses.
http://trove.nla.gov.au/ - Powerful search engine from National Library of Australia to access many different online resources on any subject from one search.
Contact Details for renewing loans, locating books and other information:
SGA Melbourne Library:
Marian Lees - Director, Library Services
Ph: (03) 9935 7921
Email: [email protected]
Library Help
http://student.csu.edu.au/library/help-contacts Friendly and quick assistance is available. Ask for help finding information and navigating the library's extensive eResources.
Online Tutorials http://student.csu.edu.au/library/study-research/training-tutorials-videos
Learn how to:
• use Primo Search to find eReserve material and journal articles
• search journal databases and web resources for information for your assessments
• identify appropriate sources of information and peer reviewed material, and evaluate resources.
Bookmark your Subject Library Resource Guide
Subject Library Guides are a great way to get started with research. Each online guide is tailored to a specific area of study, including Accounting, Business & Information Technology outlining how to research in your area and where to look for information. http://libguides.csu.edu.au/
Academic Learning Support Assistance
Visit the learning support website for advice about assignment preparation, academic reading and note-taking, referencing, and preparing for exams at: http://student.csu.edu.au/study
You may also contact:
Name: Monique Moloney
Email: [email protected] Phone: (03) 9935 7919
For appointments, please see Reception.
Queries regarding the content of this subject should be directed to your subject lecturer.

Your workload in this subject
Each week you should spend around 9 - 12 hours studying this subject – obviously some weeks may require more time than others depending on how you work – but the following is a guide for your information.

Textbook and other supporting readings: 3.0 hours
Preparation of answers to topic review questions: 3.0 hours
Online quiz for reinforcement of learning: 1.0 hour
Participation in weekly face to face class: 3.0 hours Preparation of assessment items: 2.0 hours
Text and Learning Materials
Prescribed text(s)
Loftus, J., Leo, K., Boys, N., Daniliuc, S., Luke, B., Ang, H.N., & Byrnes, K. (2015). Financial reporting. (1st edition). Brisbane: John Wiley & Sons Ltd.
AND
CAANZ Financial Reporting Handbook 2015 or 2016. Brisbane: John Wiley & Sons Ltd.

***Replacement Classes will be required for classes running on Mondays and Fridays in lieu of the
Public Holidays on 25 March 2016 – Good Friday | 28 March 2016 – Easter Monday ?25 April 2016 (Monday) ANZAC Day***
This study schedule has been devised to assist in your planning during the session, and is intended as a guide only.
*The learning activities for each topic include:
1. Reviewing the following:
- The topic notes in Interact 'Topics'. - The topic powerpoint lecture slides.
2. Completing the following:
- The textbook and handbook readings as directed in the 'Topic' notes.
- Review questions and class activities / discussion questions as detailed in the Interact 'Topic' notes. - Revision practice quizzes available on WileyPLUS website.
3 . Attending and participating in the weekly Tutorial classes.
Assessment Information
Introduction to assessment
To protect the academic integrity of the subject, you may be asked to complete an additional test ( which may be verbal) if I or another member of the teaching staff have doubts that the work that you have submitted for an assessment item is your own. This test would be held within 4 weeks of the submission of the assessment.
Detailed information regarding:
Sample exam (for subjects with a formal exam)
Pass requirements
Grades
Presentation
Submissions
Extensions
Penalties for late submission
Assignment return
Resubmission Plagiarism
are included in Appendix 1.

* due date is the last date for assessment items to be received at the University
** applies only to assessment items submitted by the due date
Assessment item 1
5 Online tests
Value: 10 %
Due date: Variable
Return date: -
Submission method options
Interact2 Test
Task
This assessment task consists of 5 online tests, each contributing to 2% of your overall assessment mark, as detailed below. Each test will consist of 6 multiple choice questions, and advice will be given as how to access the tests at the beginning of the session. The online tests will be timed, with 20 minutes to complete each test.
Online Test 1 (covering topics 1 and 2): This test will be open from 29 February – 18 March 2016 (11:59 pm AEST ).
Online Test 2 (covering topics 3 and 4): This test will be open from 29 February – 8 April 2016 (11:59 pm AEST ).
Online Test 3 (covering topics 5 and 6): This test will be open from 29 February – 29 April 2016 (11:59pm AEST).
Online Test 4 (covering topics 7 and 8): This test will be open from 29 February – 13 May 2016 (11:59 pm AEST ).
Online Test 5 (covering topics 9 and 10): This test will be open from 29 February – 27 May 2016 (11:59 pm AEST ).
Please note that each online test can be completed at any time during the periods stated above.
Rationale
This assessment task is designed to assess your understanding of each topic, and to ensure that you are engaging with the subject content on a regular basis. More specifically, it seeks to assess your ability to:
prepare basic financial statements for reporting entities;
discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based; explain the form and content of financial statements; interpret and apply generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of key financial statement elements.
Marking criteria
A total of 6 marks are allocated to each online test, which will then be converted to a mark out of 2%. 1 mark will be awarded for selecting the correct answer to each question. No marks will be awarded ( or lost) for incorrect answers.
The following rubric applies for the overall assessment mark of 10 (i.e. based on a total of 30 multiple choice questions in the 5 tests).

High Distinction (HD) Distinction (D) Credit (CR) Pass (PS)
To meet this level you
To meet this level you To meet this level you
To meet this level you will attain a
will attain a cumulative will attain a cumulative will attain a cumulative cumulative mark
mark between mark between
mark between 65%-74%. between 50%-64%.
85%-100%. 75 %-84%.
A mark in this range A mark in this range
A mark in this range A mark in this range indicates that you have indicates that you
indicates that you have indicates that you have selected no more than 10 have selected no more
selected no more than 4 selected no more than 7 incorrect answers in the than 15 incorrect
incorrect answers in the incorrect answers in the five tests in this answers in the five
five tests in this five tests in this assessment. tests in this
assessment. assessment.
assessment.

Assessment item 2
Assignment 1
Value: 15 %
Due date: 08- Apr -2016
Return date: 02- May -2016
Submission method options Alternative submission method
Task
Complete the 2 questions given below. A total of 50 marks are allocated to the questions below, which will then be converted to 15% in total.
All workings, when appropriate, must be shown to substantiate your answers.
Question 1 [35 marks]
The regulatory environment for financial reporting
You are a member of a large accounting firm which is responsible for preparing financial reports, including statements and notes to the accounts; and for advising staff in client firms who are responsible for preparing financial reports. The firm only deals with large Australian companies listed on the Australian Securities Exchange. One of your key tasks is to monitor the changes and developments in the financial reporting environment and summarise them in a regularly published newsletter.
Required:

Prepare a 2 page newsletter that identifies and summarises developments and changes in the financial reporting environment for the period January - March 2016, inclusive.
Detailed guidelines for completing this question:

1. Monitoring of changes and developments
This will involve regular monitoring of a number of sources over the required period. The sources should be varied in range, as you will need to identify and consider developments/changes relating to:
Technical issues such as issue of new accounting standards, exposure drafts or other pronouncements or interpretations.
Regulation and monitoring of financial reporting.
Political influences or other potential developments (such as identification of any reporting failures) that could impact or may be of interest to staff (such as Enron or Parmalat failure). 'Political' does not only mean action from politicians – it would also include lobbying/actions by other groups to promote their own interests – for example there may be articles about companies, or particular interest groups such as Group of 100, saying that if certain accounting standards are introduced this will disadvantage or have a negative impact.
You will need to consider both local (Australian) and international sources and developments. A section on 'international' items/developments must be included in the newsletter.

2. Potential sources
Given the scope of the potential influences on financial reporting you will need to monitor a range of sources. Below is a list of sources that may be of interest, note that this list is not exhaustive, you should search for sources outside of these. You should not rely on any one type of source, but a range of sources from each category, i.e. do not just look at websites, also check journals, newspapers etc. Examples of possible information sources include:

(i) Websites such as those of:
Australian Accounting Standards Board

Financial Reporting Council
Australian Securities and Investment Commission
Australian Securities Exchange
International Federation of Accountants
Chartered Accountants in Australia and New Zealand
CPA Australia
International Accounting Standards Board Financial Accounting Standards Board Websites of large accounting firms.
(ii) Professional publications :
In the Black (CPA)
Acuity (CAANZ)
(iii) Newspapers/journals
3 . Contents
The restriction of a 2 page newsletter means that you need to use your own judgement as to whether to include information about specific changes and developments and how much information to include. It is not intended that you provide complete details of changes/developments (although you may consider in particular cases that more detail is needed). The purpose of the newsletter is to alert staff to changes and developments that may impact on their work and provide enough information about these changes/developments to satisfy the following:
For staff (the intended audience) to understand the nature of the development/change and its potential impact (so staff can decide whether they need to investigate further given the nature of their own work),
Provide sufficient information for staff to be able to obtain further information on the development/change if they wish to,
The newsletter should where possible be in your own words with sources adequately referenced using the appropriate referencing system. Some examples of significant items to be considered include:
Revised or reissued accounting standards or interpretation (both national and international), ASIC reviews on financial reporting,
New ASX disclosures for listed companies.
Given the target audience, it would be assumed that they have a working knowledge of common terms and abbreviations (such as AASB, FASB) so abbreviations may be used. Don't be afraid to be creative. The effectiveness of a newsletter is impacted by how interesting the readers find it.
What not to consider?
You need to take care that the developments and the changes considered and included in the newsletter are relevant to the objective, in particular the issues/developments that directly relate to the preparation of financial reports for large companies listed on the Australian Stock Exchange. The newsletter SHOULD NOT consider areas only INDIRECTLY related to the preparation of financial reports such as (and this is not an exhaustive list):
Fraud,
Auditing,
Taxation,
Other disclosures by listed companies such as:
Industry disclosures required by peak organisations,
Voluntary disclosures in the area of corporate social responsibility, Voluntary Environmental disclosures.
4 . Format
The newsletter should be in the following format:
The top of the newsletter must include the title (you need to decide on what to call your newsletter) and details of the period the newsletter is considering.
The newsletter should not read as one continuous 'essay'. It must include headings and sub-headings that assist in identifying the nature of changes/developments and help to guide the reader, and also enable the reader to distinguish between items of interest and the relative importance of changes.
You must refer the reader to specific sources so that they are able to obtain more detailed information of the development/change.
The newsletter must be printed in minimum font size of 11 points (You may wish to use larger fonts etc for headings etc). You may wish to set your newsletter out using columns but this is optional. Apart from minimum font size, there are no specific requirements in relation to line spacing, margins etc. However, you should note that simply reducing line spacings, margins to 'fit more in' may impact on the presentation and effectiveness of the newsletter.
There is no specific 'word limit'. The newsletter must be no longer than 2 pages. In cases where the newsletter exceeds the 2 page limit, only the first 2 pages will be marked.
Do not attach actual articles/printouts of web sources etc to your assessment. You are only required to include details of these in the bibliography.
5 . Bibliography and referencing
This assessment must include a bibliography rather than a reference list (this should not be part of your newsletter and to be given on a separate page). A bibliography includes all materials used in the preparation of your assignment, not just those referenced within the paper. The reason a bibliography is required (rather than a reference list) is that this will provide an insight into the range and regularity of your monitoring activities (not just those specifically referenced within your 'paper') which is part of the criteria for assessment. It is expected that the bibliography will be quite long. The bibliography needs to include specifics of what you have actually accessed and read that is related to the area - not just a general link to a website or newspaper etc. Therefore if you use a source such as the AASB website, please reference every article that you read separately. Assessments without a bibliography will not be accepted or marked.

When citing electronic sources, please include the date accessed. If you are unsure how to cite electronic sources check the referencing guides that are available from the library or online at the student services site. APA referencing style should be used for all citing format.

Please be reminded that plagiarism is regarded as a serious issue within the University system with severe consequences for students who have been found to have deliberately plagiarised, the minimum penalty being zero for the assignment. You should ensure that they are familiar with the plagiarism policy and referencing requirements before commencing assessment.

Question 2 [15 marks]

Preparation of a statement of financial position and statement of profit or loss and other comprehensive income
The summarised trial balance of Smarties Ltd, a snack food manufacturing company, includes the following accounts at 30 June 2015:

Additional information:
All assets other than accounts receivable, cash on hand and inventories are non-current. All liabilities other than accounts payable, bank overdraft, provisions listed below and current tax liability are non-current.
There was no movement in the general reserve during the year.
Provision for annual leave includes $7,000 payable within 1 year. Of the $8,000 annual leave expense recognised, $6,000 relates to the sales staff, and $2,000 relates to the administrative staff.
Provision for long service leave includes $2,000 payable within 1 year. Of the $3,000 long service leave expense recognised, $2,000 relates to the sales staff, and $1,000 relates to the administrative staff.
Smarties Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and presents an analysis of expenses by function on the statement.
Required:
Prepare the statement of financial position and statement of profit or loss and other comprehensive income of Smarties Ltd for the year ended 30 June 2015 in accordance with AASB 101, using the line items that a listed company is likely to use. When preparing the statement of financial position, use the minimum line items specified in AASB 101 when reporting the assets and liabilities.
Sub-classifications of these minimum line items should not be shown on the face of the statement. Show all workings. Notes and comparative figures are not required.

Rationale
The purpose of this assignment is to help you further develop some of the skills and knowledge required and valued by the accountancy profession. The task that you will be required to undertake is similar to the tasks required of a professional accountant working within the financial reporting field. Accounting professionals need to ensure they are aware of current developments and that their knowledge is 'up to date'. They need to be able to identify changes that have occurred that may impact on their work and to know where they can obtain information about these changes. In this assignment you are asked to provide a summary of recent developments relating to financial reporting. As such this assignment aims to:
Develop the student's ability to identify and source changes to financial reporting requirements so as to update professional knowledge required for practice;
Assist students acquire an awareness of current developments and changes (both locally and internationally) that may impact on current and future financial reporting rules and regulations;
Develop the student's ability to provide written material appropriate to the accountancy profession;
Help students appreciate the limitations of the currency of knowledge in a technical financial reporting area;
Allow students to understand the relationships between technical issues and community attitude to financial reporting.
This assignment will assess your ability to:
prepare basic financial statements for reporting entities; and discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based.
Marking criteria
You will be assessed on the following:
QUESTION 1: Newsletter

The newsletter will be assessed in relation to the criteria specified in the following marking guide:

Element Criteria HD D CR PS
Technical Local Correctly Correctly Correctly identify and Correctly content reporting identify and identifies and report some of the news identifies some news [25%] report a large report most of relating to changes in relevant local range of news the news local financial reporting news. Provides relating to relating to environment. some level of changes in local changes in local detail but
financial financial newsletter has reporting reporting major omissions
environment. environment. or incorrect
reporting.
International Correctly Correctly Correctly identify and Correctly reporting identify and identify and report some of the news identifies some news [25%] report a large report most of relating to changes in relevant range of news the news international financial international
relating to relating to reporting environment. news. Provides
changes in changes in some level of international international detail but financial financial newsletter has reporting reporting major omissions
environment. environment. or incorrect
reporting.
EffectivenessDetail of Provides a high Provides detail Provides appropriate Provides some discussion level of detail for all news. level of detail for most level of detail
[15%] for all news. Provides of the news. for most of the Provides detailed Provides effective news.
effective summaries and summaries and further Provides summaries and further information where effective directions to information appropriate for most of summaries and
staff to access where the news. further
further appropriate for Accurately identifies information information all news. significant and minor where
where Discriminates news. appropriate for appropriate for between some of the all news. significant and news. Discriminates minor news Identifies between events. significant and significant and minor news. minor news.
Creativity Titles/headings Titles/headings Titles/headings Titles/headings [15%] provided attract provided attract provided sometimes provided
attention. attention. attract attention. sometimes
Design of Design of Design of newsletter is attract attention. newsletter is newsletter is original not based on a Design of
highly creative, creative, well standard template. newsletter is
memorable, structured, and simplistic but easy to read and is easy to read. effective. exemplary.
Academic The Accurate use of Accurate use of Accurate use of syntax, Mostly accurate writing skills newsletter syntax, spelling syntax, spelling vocabulary, spelling andsyntax, spelling meets and punctuation. and punctuation. and punctuation.
academic Correctly refers punctuation. Correctly refers to more Correctly refers standards of to an extensive Succinct and than the minimum to minimum syntax, variety of effective use of requirement of sources number of Element Criteria HD D CR PS
vocabulary, sources to vocabulary. to support arguments, sources to spelling and support Correctly refers including prescribed support punctuation arguments, to a broad range texts and recommended arguments, and reflects including of sources to readings. including an awareness prescribed texts support Bibliography lists a prescribed texts. of audience and a broad arguments, limited range of Bibliography needs [20%] range of including relevant resources used. lists a limited
additional prescribed text Reference list formatted range of readings. and a variety of in APA style, with relevant
Bibliography further minor errors. resources used.
lists an readings. Reference list
extensive range Bibliography used, formatted of resources lists a broad in APA style, used, correctly range of with some formatted using relevant errors.
APA style. resources used,
correctly formatted using APA style.

QUESTION 2: Preparation of Financial Statements
Criteria HD D CR
Question 2: financial Financial financial Financial
Prepare financial statements are statements are statements are statements are statements in prepared without prepared with prepared with some prepared with some accordance with the flaw. minor flaws. errors. errors.
accounting standards. Explanations Explanations Explanations Explanations shown are shown are clear shown are shown are basic. exemplary and and succinct. adequate. Some workings are clear. Appropriate Appropriate shown.
Appropriate workings are workings are Work shown is workings are shown and shown. presented fairly.
shown and accurate. Work shown is accurate. Work shown is logical and well Work shown is logical and well presented. logical and well presented. presented.

Presentation

PS

It is essential that presentation of assignments adheres to acceptable standards in relation to neatness and layout, as you are practicing to present material in a work situation. Correct formatting and referencing procedures following the APA referencing style should be strictly adhered to for all assignment tasks. For further information about referencing, please refer to the CSU referencing website at: http://student.csu.edu.au/study/referencing-at-csu
Requirements
You must submit your assignment via TURNITIN in word format. Any submissions in other file types ( such as excel, PDF or publisher) are not supported by turnitin, and hence will not be marked.
Assessment item 3
Assignment 2
Value: 15 %
Due date: 09- May -2016
Return date: 31- May -2016
Submission method options Alternative submission method
Task
This assessment task consists of five (5) questions. A total of 75 marks are allocated to the questions below, which will then be converted to a mark out of 15%.
All workings, when appropriate, must be shown to substantiate your answers.

Question 1 [15 marks]
Accounting policies, changes in accounting estimates and errors
Blake Ltd is finalising its financial statements for the reporting period ending 30 June 2015. A number of unrelated scenarios still need to be considered and accounted for before the financial statements are finalised:
a) The company has, in the past, always recognised a provision for warranties equal to 5% of sales made during the year. Due to increasing warranty costs and the number of goods returned under warranty, the directors would like to increase the provision to 8% of sales made during the year. The provision for warranties account currently has a balance of $12,000, which is the balance carried forward from 30 June 2014. Sales for the year ended 30 June 2015 amounted to $460,000.
b) During the verification process for accounts payable, it was discovered that an amount of $80,000, incurred in May 2015 and payable to a supplier for raw materials, was recorded in the accounting records as $8,000. The $80,000 owing at 30 June 2015 was paid in July 2015.
c) During the verification process for office equipment, it became apparent that an item of office equipment that was thought to be on hand at 30 June 2014 had actually been destroyed in April 2014. The item had a cost of $40,000 and accumulated depreciation of $24,000. No depreciation has been calculated or recorded as yet for the year ended 30 June 2015.
d) During the verification process for accounts receivable, it was discovered that the sales manager had undertaken fraudulent activity – raising fake sales invoices in June 2015. The motivation of the manager was to ensure that his sales targets were met, so that he was eligible for his performance bonus. The fake sales invoices amounted to $122,000, with this entire amount included in the accounts receivable balance at 30 June 2015.
e) On 1 July 2014, the directors revised the useful life of its building (acquired 2 years earlier on 1 July 2012 for $600,000, with an estimated useful life of 20 years and residual value of nil on this date). On 1 July 2014, the remaining useful life was estimated to be 30 years. The building has been depreciated using the straight-line method over its useful life. No depreciation has been calculated or recorded as yet for the year ended 30 June 2015.
Assume all amounts are material for financial statement purposes.
Required:
With reference to AASB 108, explain whether each of the above scenarios is a change in accounting estimate or an error. State the appropriate accounting treatment (including any journal entries needed) for each scenario in the 2015 financial statements.

Classification as change in accounting estimate or error 5
Discussion to support classification decision, including references to 5 AASB 108
Appropriate accounting treatment and journal entries 5

Question 2 [15 marks]

Accounting for share capital
On 1 April 2015, Sage Ltd was registered and issued a prospectus inviting applications for 2,000,000 shares, at an issue price of $3.50, payable as follows:
$1.00 on application
$1.50 on allotment
$0.50 on first call
$0.50 on final call
By 30 April, applications had been received for 2,100,000 shares. At the directors' meeting on 3 May, it was decided to allot shares to the applicants in proportion to the number of shares for which applications had been made. The surplus application money was offset against the amount payable on allotment. All outstanding allotment money was received by 10 May. Legal costs re company formation were $7,000 and were paid on 11 May. Share issue costs of $3,000 were also paid on the same date.
The first call was made on 1 September 2015, with money due by 30 September 2015. The final call was made on 2 January 2016, with money due by 31 January 2016. All money owing in relation to the two calls was received by the due dates except for the holders of 100,000 shares who did not pay either call, and the holder of another 20,000 shares who did not pay the second call. On 10 March 2016 , as provided in the company's constitution, the directors forfeited these 120,000 shares.
On 25 March 2016, the forfeited shares were reissued as fully paid for a consideration of $2.80 per share. Costs of forfeiture and reissue amounted to $4,000, and were paid. The constitution allowed for the refund of any balance in the forfeited shares account after reissue to former shareholders, so refunds were made on 28 March 2016.
Required:
Prepare the journal entries to record the transactions of Sage Ltd up to and including that which took place on 28 March 2016. Show all relevant dates, narrations and workings.

Question 3 [15 marks]

Accounting for income tax

Frog Ltd has prepared its draft statement of profit or loss and other comprehensive income and statement of financial position on 30 June 2015. The statements are prepared before considering taxation. The following information is available:

Extract from statement of profit or loss and other comprehensive income for the year ended 30 June 2015

$ $
Gross profit 758,000
Other income:
Rent revenue 14,000
Royalty revenue (exempt from income tax) 5,000
Proceeds from sale of plant 29,000

Expenses:
Administration expenses 116,500
Doubtful debts expense 4,000
Salaries 270,200
Rent 26,000
Annual leave 13,500
Entertainment expenses (not tax deductible) 2,000
Warranty expenses 12,000
Carrying amount of plant sold 40,000
Depreciation expense - plant 14,000
Depreciation expense - motor vehicles 8,000
Insurance 10,400 (516,600)
Accounting profit before tax 289,400

Assets and liabilities as disclosed in the Statement of Financial Position as at 30 June 2015

2015
$ 2014
$
Assets:
Cash 196,500 7,000
Inventory 210,000 85,000
Accounts receivable 76,000 34,000
Less Allowance for doubtful debts (8,600) (5,000)
Rent receivable 2,000 3,000
Prepaid insurance 1,200 500
Plant - cost 70,000 120,000
Less Accumulated depreciation (46,000) (42,000)
Motor vehicles - cost 32,000 32,000
Less Accumulated depreciation (20,500) (12,500)
Deferred tax asset ? 17,160

Liabilities:
Accounts payable 17,300 12,800
Provision for annual leave 16,200 23,000
Provision for warranties 21,500 18,700
Current tax liability ? 32,600
Deferred tax liability ? 2,925
Loan payable 20,000 30,000

Additional information:
All administration, rent and salaries expenses incurred have been paid as at year end. Tax deductions for annual leave, warranties, insurance and rent are available when the amounts are paid, and not as amounts are accrued.
Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.
Rent income is taxed when amounts are received, and not as amounts are accrued. The company can claim a tax deduction of $10,500 for depreciation on plant, and $12,000 for depreciation on motor vehicles. Accumulated depreciation for tax purposes at 30 June 2014 was $31,500 for plant, and $18,750 for motor vehicles.
The plant sold during the year (sold on 1 July 2014) had been purchased for $50,000 on 1 July 2013. For taxation purposes, the plant was depreciated at 15% p.a.
The tax rate is 30%.

Required:

i) Determine the balance of any current and deferred tax assets and liabilities as at 30 June 2015, in accordance with AASB 112.
(13 marks )

ii) Prepare the journal entries to record the current tax liability and movement in the deferred tax assets and deferred tax liabilities.
(2 marks )

Question 4 [15 marks]

Property, plant and equipment

Walkie Ltd acquires a new motor vehicle on 1 July 2013 for $90,000. The motor vehicle is expected to have a useful life of six years, and has an estimated residual value of $10,000. The straight-line method of depreciation is used.
On 1 July 2014, the directors of Walkie Ltd decide to adopt the revaluation model for motor vehicles. The motor vehicle is revalued to $85,000 and its useful life is reassessed: it is expected, at that date, to have a remaining useful life of nine years. The estimated residual value remains unchanged at $10,000.
On 30 June 2015, the motor vehicle is revalued to $52,000. On this date, the directors determine that the useful life and residual value does not need to be reassessed.
On 30 June 2016, it is determined that the fair value of the motor vehicle does not differ materially from its carrying amount. It is also determined that the useful life and residual value does not need to be reassessed.
On 1 January 2017 it is unexpectedly sold for $45,000.
Required:
Prepare journal entries for Walkie Ltd between 1 July 2013 and 1 January 2017 to record the above. Show narrations and all relevant workings. Assume a tax rate of 30%.

Question 5 [15 marks]

Impairment of assets

Jack Ltd has a division that represents a separate cash generating unit. At 30 June 2015, the carrying amounts of the assets of the division, valued pursuant to the cost model, are as follows:

Assets: $
Cash 42,000
Plant and equipment 600,000
Less: accumulated depreciation (120,000)
Land 800,000
Inventory 90,000
Accounts receivable 27,000
Patent 150,000
Goodwill 10,000
Carrying amount of cash generating unit 1,599,000

The receivables were regarded as collectable, and the inventory's fair value less costs to sell was equal to its carrying amount. The patent has a fair value less costs to sell of $140,000, and the land has a fair value less costs to sell of $825,000.
The directors of Jack estimate that, at 30 June 2015, the fair value less costs to sell of the division amounts to $1,500,000, while the value in use of the division is $1,560,000.
As a result, management increased the depreciation of the plant and equipment from $40,000 p.a. to $45,000 for the year ended 30 June 2016.
By 30 June 2016, the recoverable amount of the cash generating unit was calculated to be $55,000 greater than the carrying amount of the assets of the unit.
Required:
Determine how Jack Ltd should account for the results of the impairment test at 30 June 2015 and 30 June 2016, and prepare any necessary journal entries. Show all workings and provide references to the relevant accounting standard to support your answer.

Marking Guide - Question 5 Max. marks awarded
Journal entries, calculations and workings for 2015 7.5
Journal entries, calculations and workings for 2016 7.5

Rationale
This assessment task is designed to assess your understanding of topics 3 to 7, and the following subject learning outcomes:
be able to prepare basic financial statements for reporting entities;
be able to discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based; be able to explain the form and content of financial statements;
be able to interpret and apply generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of key financial statement elements.
Marking criteria
The marking guide for this assessment task is provided below. The detailed allocation of marks for each question has been provided above for your information.
Criteria HD D CR PS
Question 1:
Apply relevant Determine how each Determine how each Determine how each Determine how each accounting scenario is to be scenario is to be scenario is to be scenario is to be principles in classified and classified and classified and classified and accounted
accounting for accounted for accounted for, with accounted for, with for, with a number of changes in without flaw; minor flaws; some errors; errors;
accounting All key references to Most of the key Many of the key Some references to estimates and AASB 108 are references to AASB references to AASB AASB 108 are errors. provided; 108 are provided; 108 are provided; provided;
Explanations shown Explanations shown Explanations shown Explanations shown are are correct, well are clear and succinct. are adequate. basic. justified and clear.
Question 2: All entries made are All entries made are Most of the entries Most of the entries made Prepare journal accurate accurate with some made are correct. but contain errors. entries to account Dates shown are minor flaws. Dates shown are Dates shown are mostly for share issue correct for the Dates shown are mostly correct for the correct for the transactions. transactions. correct for the transactions. transactions. Narrations are transactions. Narrations are shown. Narrations are shown shown. Narrations are shown. Some workings are but lack detail or are Appropriate Appropriate workings shown. unclear.
workings are shown. are shown. Some workings are
shown but lack detail or are unclear. Question 3: Determine current Determine current Determine current and Determine current and Apply relevant and deferred tax and deferred tax deferred tax balances deferred tax balances
accounting balances without balances with minor with some errors. with a number of errors principles in flaw flaws. Calculations shown are made.
recognising and Calculations shown Calculations shown logical and well Calculations are shown
measuring income are logical and well are logical and well presented. but contain errors or tax. presented. presented. Journal entries made lack detail.
All journal entries All journal entries contain some errors. Journal entries made made are accurate. made are accurate / contain some errors.
with minor flaws.
Question 4: All entries made are All entries made are All entries made are Most entries are made Apply relevant accurate. accurate but with mostly correct with but contain errors.
accounting Appropriate minor flaws. some errors. Some workings are principles in workings are shown Appropriate workings Appropriate workings shown.
accounting for and accurate. are shown and are shown. property, plant accurate. and equipment.
Question 5: Apply the Apply the Apply the requirements Apply the requirements Apply relevant requirements of requirements of of AASB136 to of AASB136 to accounting AASB136 to AASB136 to calculate and account calculate and account principles for calculate and account calculate and account for the impairment of for the impairment of impairment of for the impairment of for the impairment of cash generating units, cash generating units, assets. cash generating cash generating units, with some errors / with a number of errors units, without flaw. with minor flaws. flaws. / flaws.
All journal entries All journal entries Journal entries made Journal entries made made are accurate. made are accurate / contain some errors. contain some errors. Explanations and with minor flaws. Explanations and Explanations and workings presented Explanations and workings presented workings presented show mastery of the workings presented shows adequate shows a basic topic. show a thorough understanding of the understanding of the understanding of the topic. topic. topic.

Presentation
Physical presentation of assignments:
It is essential that presentation of assignments adheres to accepted standards in relation to neatness and layout, as you are practicing to present material in a work situation. You should submit a bibliography (using APA referencing style) with your assignment.
For practical questions:
All journal entries must include narrations unless otherwise specified;
Any ledger accounts should preferably be shown in 'T' account format and dates and descriptions are included;
Journal entries and ledger accounts must reflect the strict order of sequence of events; financial statements (including extracts) should include proper headings and accord with presentation standards.
Penalties will be incurred if material is not correctly referenced and if presentation is not of an acceptable standard.
Requirements
You must submit your assignment via Turnitin in Word file only. Any submissions in Excel or PDF files will not be marked.
Assessment item 4
Final Exam
Value: 60 %
Date: To be advised
Duration: 3 hours
Submission method options
N/A - submission not required/applicable
Rationale
Covering all topics, the final examination paper is designed to give you an opportunity to demonstrate the depth of knowledge and understanding of theoretical and practical aspects of financial reporting. The examination will assess your ability to:
prepare basic financial statements for reporting entities;
discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based; explain the form and content of financial statements; interpret and apply generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of key financial statement elements.
Requirements
The final exam will be a three hour exam held during the exam period at the end of session. It will consist of 6 problems, in a format similar to the format of the sample exam. All questions must be attempted.
You are required to sit and pass the final examination in this subject in order to be eligible for a passing grade. The exam is worth 60% of the total marks in this subject.
Marking criteria
Criteria High Distinction Distinction Credit Pass
Problem-solving To meet this level you To meet this level To meet this level To meet this level you questions will attain a you will attain a you will attain a will attain a
cumulative mark cumulative mark cumulative mark cumulative mark between 85%-100% between between 65%-74% between 50%-64% for this examination. 75%-84% for this for this for this examination. Overall, in meeting examination. examination. Overall, in meeting this level you will Overall, in Overall, in this level you will demonstrate meeting this level meeting this level demonstrate a basic
exceptional you will you will knowledge,
knowledge, demonstrate a demonstrate a understanding, and understanding, and comprehensive sound knowledge, ability across the ability across the knowledge, understanding, and majority of topics in majority of topics in understanding, ability across the this subject.
this subject. and ability across majority of topics the majority of in this subject.
topics in this subject.
Material provided by the University
2 x 12 page answer booklets
Material required by the student
Writing implements, battery/solar calculator (no printer, non-programmable). Ipads and other hand-held computers are not accepted as calculators.
CAANZ Financial Reporting Handbook (2015 or 2016) (bound version only - loose leaf version not permitted, unmarked except for highlighting, underlining and tagging). Writing is strictly allowed on the tags only and must be limited to brief captions such as -AASB 112- or -Income Tax-.
Appendix 1 Assessment Information
Sample exam
A sample exam paper which is indicative of the structure for the final exam has been provided below. The solutions for this sample exam will be made available on the subject's interact site.

Faculty of Business, School of Accounting and Finance
SAMPLE EXAMINATION
ACC514 FINANCIAL ACCOUNTING
EXAM CONDITIONS:
This is an open book exam - restricted materials
Battery/Solar Calculator (no printer, non programmable)
Bilingual Dictionary permitted (printed copy only, unmarked and unannotated)
The student may NOT retain the question paper
WRITING TIME: 3 hours 10 minutes

MATERIALS SUPPLIED BY UNIVERSITY: 2 x 12 page answer booklets
MATERIALS PERMITTED IN EXAMINATION: As listed in exam conditions
No electronic aids are permitted eg. laptops, phones
Textbook permitted in exam: CAANZ Financial Reporting Handbook 2015 OR 2016 (bound version only – loose leaf version not permitted, unmarked except for highlighting, underlining or tagging. Brief captions allowed on tags only)

NUMBER OF QUESTIONS: 6 questions
VALUE: 60%

INSTRUCTIONS TO CANDIDATES:

1. Enter your name and student number and sign in the space provided at the bottom of this page and on each answer booklet.
2. No written material, reference books or notes will be permitted into the examination room, except for the materials permitted above.
3. All questions must be attempted and answered in the answer booklets provided.
STUDENT NAME: ……………………………………………... STUDENT ID:
……………..........…………...

STUDENT SIGNATURE:
……………………………………………………………………………………………

Calculator model (if used):………………………………………………………………………………………….

QUESTION 1 (12 marks )

Regulatory environment and the Conceptual Framework

(A) What is the International Accounting Standards Board and how does it influence financial reporting in Australia?
(6 marks ) (B) What is the difference between a conceptual framework and accounting standards? Discuss.
(6 marks )

QUESTION 2 (15 marks )

Accounting for share capital

Noosa Ltd makes an offer of shares to the public. In its prospectus it notes that the shares are to be issued at $1.00 per share. The shares are to be paid in three instalments. The first payment, to be made on application, is $0.40. A second amount of $0.40 will be due within one month of allotment, and the third amount of $0.20 will be due within one month of the first and final call, which will be made within six months of the shares being allotted. Noosa Ltd will seek to issue 10,000,000 shares. The closing date for applications is 31 August 2012.

By the closing date, applications have been received for 14,000,000 shares. The directors meet on 5 September 2012 and decide to allot shares on a first-come first-served basis, and application money is refunded to unsuccessful applicants.
All amounts due on allotment are paid by the due date. The first and final call for $0.20 is made on 30 November 2012, with the amounts being due by 31 December 2012. Holders of 2,000,000 shares fail to pay the amount due on the call by the due date, and on 15 January 2013 these holders have their shares forfeited. The forfeited shares are auctioned on 15 February 2013. An amount of $0.70 per share is received. The cost of holding the auction is $5,000. The shares are sold as 'fully paid'.

The balance of the Forfeited Shares Account is returned to the former shareholders on 20 February 2013.

Required:

Provide the journal entries to account for the above entries. Show all relevant dates and workings. Narrations are not required.

QUESTION 3 (20 marks )

Accounting for income tax

The accounting profit before tax for the year ended 30 June 2013 for Superstar Ltd amounted to $18,500 and included:

$
Depreciation – motor vehicles (25%) 4,500
Depreciation – equipment (20%) 20,000
Rent revenue 16,000
Royalty revenue (non-taxable) 5,000
Doubtful debts expense 2,300
Entertainment expense (non-deductible) 1,500
Proceeds on sale of equipment 19,000
Carrying amount of equipment sold 18,000
Annual leave expense 5,000

The following are extracts from the draft financial statements for the year ended 30 June 2013:

Additional information:
The company can claim a tax deduction of $15,000 (15%) for depreciation on equipment, but the motor vehicle is fully depreciated for tax purposes. Accumulated depreciation on the equipment for tax purposes was $45,000 at 30 June 2013.
The equipment sold during the year (sold on 1 July 2012) had been purchased for $30,000 2 years before the date of sale. For taxation purposes, the equipment was depreciated at 15% p.a.
Rent is assessed for tax when received in cash.
Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.
The company tax rate is 30%.
Required:
a) Determine the balance of any current and deferred tax assets and liabilities for Superstar Ltd as at 30 June 2013, in accordance with AASB 112. Show all necessary workings.
(16 marks )

b) Prepare the journal entries to record the current tax liability and movements in deferred tax assets and liabilities.
(4 marks )

QUESTION 4 (25 marks )

Statement of cash flows

Cabarita Ltd is involved in manufacturing swimming pool accessories. Cabarita Ltd's statement of financial position as at 30 June 2012 and 30 June 2013 are presented below:

Assets
Cash
Accounts receivable
Provision for doubtful debts
Property, plant and equipment
Accumulated depreciation – property, plant & equip Inventory
Total assets
Liabilities
Bank overdraft
Accounts payable
Accrued wages
Provision for annual leave Loans 2013
($000)

96
36
(12)
156
(36)
92
332

-
60
20
8
60 2012
($000)

-
60
(8)
120
(20)
52
204

40
60
16
12
-
Total liabilities128
Net assets 76
Equity
Share capital (ordinary shares) 140
Asset revaluation reserve 28
Retained profits 16
Total equity 184

The profit and loss account of Cabarita Ltd for the year ended 30 June 2013 was:

20
8
48
76
2013
($000)
Revenues
Sales
Interest (no interest receivable at year end)
Profit on sale of property (which had a written down value of $20,000)
Expenses
Cost of goods sold
Doubtful debts
Depreciation
Wages
Employee entitlements
Operating loss for the year
60
4
8

40
8
20
20
16
(32)

The bank overdraft is payable on demand and forms part of cash equivalents.

Required:

Using the direct method of presenting cash flows from operating activities, prepare a statement of cash flows in accordance with AASB 107 for the year ended 30 June 2013, including a reconciliation of cash flows arising from operating activities and profit. Show all workings.

QUESTION 5 (18 marks )

Property, plant and equipment

PART A

Under the revaluation model, how are revaluation increases and revaluation decreases accounted for?
(4 marks )

PART B

On 30 June 2013, the statement of financial position of Cook Ltd showed the following non-current assets after charging depreciation:

Building $300,000
Accumulated depreciation ($100,000) $200,000
Motor vehicle $120,000
Accumulated depreciation ($40,000) $80,000

The company has adopted fair value for the valuation of non-current assets. This has resulted in the recognition in previous periods of an asset revaluation surplus for the building of $14,000. On 30 June 2013 , an independent valuer assessed the fair value of the building to be $160,000 and the vehicle to be $90,000. The income tax rate is 30%.

Required:

a) Prepare any necessary entries to revalue the building and the vehicle as at 30 June 2013.
(10 marks )

b) Assume that the building and vehicle had remaining useful lives of 25 years and 4 years respectively, with zero residual value. Prepare entries to record depreciation expense for the year ended 30 June 2014 using the straight-line method.
(4 marks )

QUESTION 6 (10 marks )

Business combinations

Little Ltd, a supplier of snooker equipment, agreed to acquire the business of a rival firm, Mermaid Ltd, taking over all assets and liabilities as at 30 June 2013.
The price agreed upon was $40,000, payable $20,000 in cash and the balance by the issue to the selling company of 16,000 fully paid shares in Little Ltd, these shares having a fair value of $1.25 per share.

The trial balances of the two companies as at 30 June 2013 were as follows:

Little Ltd Mermaid Ltd
Dr Cr Dr Cr
Share capital $100,000 $60,000
Retained profits 12,000 $24,000
Accounts payable 2,000 20,000
Cash $ 30,000 -
Land and buildings 50,000 -
Inventory 14,000 26,000
Accounts receivable 8,000 20,000
Government bonds 12,000 -
Goodwill - 10,000
$114,000 $114,000 $80,000 $80,000

All the identifiable net assets of Mermaid Ltd were recorded by Mermaid Ltd at fair value except for the inventory which was considered to be worth $28,000.
Little Ltd incurred incidental costs of $500 in relation to the acquisition. Costs of issuing shares in Little Ltd were $400.

Required:

a) Prepare the acquisition analysis in relation to Little Ltd's acquisition.
(4 marks )

b) Prepare the journal entries in the records of Little Ltd to record the acqui