$20 Bonus + 25% OFF
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
Add File

Error goes here

ACC510 Financial Reporting

tag 0 Download9 Pages / 2,106 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Questions:

1.TDM Ltd is a manufacturing business at Mudjimba on the Sunshine Coast. You are the accountant for the company and the following items/issues relate to the financial year ending 30th June, 2016:

  1. Photographs of the company’s founders and original buildings, which are of great sentimental and historical value only.
  2. TDM Ltd is being sued for negligence by Zero Ltd and the legal advice is that it is likely the company will losethe case in court.
  3. TDM Ltd is being sued for negligence by Badger Ltd and the legal advice is that it is likely the company will winthe case in court.
  4. Obsolete plant and equipment is now (as at 30 June 2016) retired from use by the company.
  5. TDM Ltd has received a donation of $20,000.

Required:

Explain how TDM Ltd should account for each of the above items. You must justify your answer by reference to the AASB Conceptual Framework’s definitions and recognition criteria for assets, liabilities, income and/or expenses as applicable. You must also state which General Ledger accounts are to be debited and credited.

2.On 1st July, 2016, SC Airlines Ltd acquired a new aeroplane for a total cost of $10 million dollars. The following breakdown of the costs to build the aeroplane was given by the manufacturers.

Aircraft body

$3,000,000

Engines (2)

$4,000,000

Fitting out of aircraft:

 

       Seats

$1,000,000

       Carpets

$ 50,000

Electrical equipment:

 

       Passenger seats

$ 200,000

       Cockpit

$1,500,000

Food preparation equipment

$ 250,000

All costs include installation and labour costs associated with the relevant part.

It is expected that the aircraft will be kept for 10 years and then sold. The main value of the aircraft at that stage will be the body and the engines. The expected selling price is $2.1 million, with the body and engines retaining the existing proportionate value.

Costs in relation to the aircraft over the next 10 years are expected to be as follows:

  • Aircraft body: This requires an inspection every 2 years for cracks and wear and tear, at a cost of $10,000.
  • Engines: Each engine has an expected life of 4 years before being sold for scrap. It is expected that the engines will be replaced in 2020 for $4.5 million and again in 2024 for $6 million. These engines are expected to incur annual maintenance costs of $300,000. The manufacturer has informed SC Airlines that a new prototype engine with an extra 10% capacity should be on the market in 2022, and that existing engines could be upgraded at a cost of $1 million.
  • Fittings: Seats are replaced every 3 years. Expected replacement costs are $1.2 million in 2019 and $1.5 million in 2025. The repair of torn seats and faulty mechanisms is expected to cost $100,000 per annum. Carpets are replaced every 5 years. They will be replaced in 2022 at an expected cost of $65,000, but will not be replaced again before the aircraft is sold in 2026. Cleaning costs amount to $10,000 per annum. The electrical equipment (such as the TV) for each seat has an annual repair cost of $15,000. It is expected that, with the improvements in technology, the equipment will be totally replaced in 2022 by substantially better equipment at a cost of $350,000. The electrical equipment in the cockpit is tested frequently at an expected annual cost of $250,000. Major upgrades to the equipment are expected every 2 years at expected costs of $250,000 (in 2015), $300,000 (in 2017), $345,000 (in 2019), and $410,000 (in 2024). The upgrades will take into effect the expected changes in technology.
  • Food preparation equipment: This incurs annual costs for repair and maintenance of $20,000. The equipment is expected to be totally replaced in 2022.

Required:

Start by establish the issues for your analysis by addressing the following:
 
1.the advantages of a components approach versus a simple depreciation of the $10 million dollars over the 10-year period.
 
2.Since AASB 116 requires initial recognition at cost and then provides a choice between either the cost model (impairment) or the revaluation model (increment and/or decrement) – discuss the advantages and/or disadvantages in applying either model to the aeroplane as a whole – indicating which would be the most appropriate as a result or if treated as components then which would be most applicable to the components you have identified.  
 
3.Basis for selecting the method of depreciation according to AASB 116.
 
Discuss how the costs relating to the aircraft should be accounted for (treated) with respect to:
    1. Aircraft body;
    2. Engines;
    3. Fittings;
    4. Food preparation equipment.
    5. Where relevant consider/discuss issues such as:
    6. the treatment of the upgrades of cockpit equipment.
    7. accounting for inspections.
Determine the expenses to be recognised for the financial year 1stJuly 2016 to 30th June 2017.
    1. Aircraft body;
    2. Engines;
    3. Fittings;
    4. Food preparation equipment;
    5. Total Expenses.

3.In the discussion by Upton (2001, 71) regarding the lives of intangible assets it is noted that the formula for Coca-Cola has grown more valuable over time, not less, and that Sir David Tweedie, former chairman of the IASB, jokes that the brand name of his favourite Scotch whisky is older than the United States of America — and, in Sir David’s view, the formula for Scotch whisky has contributed more to the sum of human happiness.

Required:

Outline the accounting treatment for brands under AASB 138/IAS 38, and discuss the difficulties for standard setters in allowing the recognition of all brands and formulas on statements of financial position.

4.Provisions are recognised as a liability in the statement of financial position whereas contingent liabilities are not recognised in the financial statements but disclosed in the notes to financial statements. Paragraph 12 of AASB 137/IAS 37 Provisions, Contingent Liabilities and Contingent Assets states that ‘in a general sense, all provisions are contingent because they are uncertain in timing or amount’.

Required:

  1. Discuss possible reasons as to why provisions are recognised in the financial statements whilst contingent liabilities are not.
  2. Determine whether the following items would be classified and recoded as liabilities or not (provide a brief explanation for your decision):
    1. Provision for long-service-leave;
    2. Dividends payable;
    3. Preference shares.
Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

Upload
Unique Document

Document
Under Evaluation

Get Money
into Your Wallet

Total 9 pages, 1 USD Per Page

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2021). Financial Reporting. Retrieved from https://myassignmenthelp.com/free-samples/acc510-financial-reporting/accounting-standard.html.

My Assignment Help (2021) Financial Reporting [Online]. Available from: https://myassignmenthelp.com/free-samples/acc510-financial-reporting/accounting-standard.html
[Accessed 16 September 2021].

My Assignment Help. 'Financial Reporting' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/acc510-financial-reporting/accounting-standard.html> accessed 16 September 2021.

My Assignment Help. Financial Reporting [Internet]. My Assignment Help. 2021 [cited 16 September 2021]. Available from: https://myassignmenthelp.com/free-samples/acc510-financial-reporting/accounting-standard.html.


Are you finding it difficult to write a perfect reflection essay paper that picturise your thoughts neatly? It is well understood that even when our thoughts are creative, it is difficult to put into words. But worry not as MyAsssigmenthelp.com is the best paper writing service that can give you some of the best and quickest solutions.
So you can simply seek paper help, and our experts will give you some of the smartest tips on how to write a reflection paper for your homework. Further, if you need any tips on how to write a college essay of any kind, you can easily place an order.

Latest Finance Samples

ACC00716 Finance

Download : 0 | Pages : 6

Answers: Question 1 Capital Budgeting Task The company (Initech) is a producer and wholesaler of electronic parts and have the below highlighted proposals for which we need to extend the suggestion whether they should adopt the proposals or not. 1stProject Proposal - Device Part Project 2ndProject Proposal - Conveyor System 1st Project Proposal - Device Part Project The set of information regarding proposal one is summarised and shown be...

Read More arrow Tags: Australia Sydney Accounting ACC00716 Finance University of Sydney MBA 

FNRE315 Financial Reporting

Download : 0 | Pages : 3

Answer: Introduction: The leverage ratio of Woolworths is less than that of Qantas. The dependency of Woolworths on debt and borrowings is less and the group is more dependent on equity. The capital structure of Qantas has less proportion of equity as compared to debt and this indicates that it has high leverage ratio. On other hand, Woolworths capital structure has less proportion of debt compared to equity. The share price of both the or...

Read More arrow Tags: Australia Lewisham Finance Financial Reporting University of Western Australia 

JNB159 Financial Resource Management

Download : 0 | Pages : 10

Answer: Task 1: I. Depicting principles of costing and business control systems: Costing is the collection of data that are utilized by the managerial personnel of an organisation to determine the total expenditures in the process of maintaining and delivering a particular service. It assists the managers in estimating the available resources and prioritises them in accordance with the preference. Various types of costs are fixed cost, varia...

Read More arrow Tags: Australia Harlow Management University of New South Wales Masters in Business Administration 

ACC00716 Finance

Download : 0 | Pages : 4

Answers: Question-1 Growth of JB HI FI limited in 2021: In order to figure the increase of the JB HI FI limited for the future following formula has been used: Formula for CAGR = (EV/BV) 1/n -1 Predicting Revenues of JB HI FI Limited for 2020-21 Year ($ M) Revenues of the company 2016 3954 CAGR 5% Duration (years) 5 Estimated Operating Revenues 2020-21 (...

Read More arrow

FINA6000 Managing Finance

Download : 0 | Pages : 3

Answers: Answer to A: Considering the investment prospect in Westpac Bank it can be stated that when it comes to the prospect of dividend it is hard to ignore the bank. Westpac has provided considerable amount of dividends on the Australian share market. Considering the current performance of the company with a dividend of 5.9% announced recently it can be stated that investing in Westpac could be an option (Deegan 2013). While there might be...

Read More arrow
Next

5% Cashback

On APP - grab it while it lasts!

Download app now

*Offer eligible for first 3 orders ordered through app!

ribbon
callback request mobile
Have any Query?