Research each of the following areas of law (or pieces of legislation) and provide a brief overview of the purpose of the particular law. Your response should be approximately 150 – 200 words for each
Chose one each from the given list of accounting principlesor qualitative characteristics and illustrate them with an example. Your response should be approximately 150 – 250 words for each. You will be required to present/ explain your example to another student in class. You will then swap roles and also you can pose questions to the presenter in order to clarify their understanding of the chosen principle or characteristic.
Accounting principles Qualitative characteristics
Matching principle Relevance
Historic Cost Principle Disclosure
Consistency Principle Reliability
Rodney has been providing demolition and excavation service for the past seven years. On the 1 October 2012, Rodney bought a new excavatorfor $88,000 including GST from Farm Machinery P/L. Its registration number was JDH 123 and he decided to keep the excavator in shed number 1.
Additional costs associated with this purchase included:
Cab air conditioning $990 (inc GST)
Delivery fee $1,100 (inc GST
Registration $600 (GST free)
Insurance $550 (inc GST)
He made a deposit of $10,000 and financed the remainder by negotiating a loan from the Farmer’s Union. The balance of the loan was due on the1 March 2013.Because the efficiency of excavator reduces over time it was decided to depreciate the excavator using the reducing balance method at a rate of 15% per annum.
January 2013 proved to be a good season for excavation work with perfect weather and large amount of road work in Melbourne. On the 1February 2013Rodney received a cheque for $330,000 which included GST for the services he had provided.
Rodney had coveted a cool new red Holden Storm HBD ute for years and with his higher than expected cheque decided that he could afford one. On the 1 April 2013 he purchased his ute registration number “Cool Wally” for cash from Nhill Cool Cars for a sum of $38,500 including GST. To protect its shiny duco Wally decided to park the ute under the carport rather than out in the paddock.
Additional Costs associated with this purchase included:
Air Conditioning $770 (inc GST)
Tow Bar $550 (inc GST)
Registration $500 (GST free)
Insurance $440 (inc GST)
The estimated residual value of the ute after 5 years was expected to be $6,200. It was decided to depreciate the ute on a straight line basis.
On 1January 2015 after Rodney’s new girlfriend had told him that she was too embarrassed to be seen in a red ute, Rodney traded in his red ute for a yellow one. Nhill Cool Cars offered him a trade in of $25,000 on his old ute. The new yellow ute’s cost was $44,000 including GST and cash was paid for the balance.
20 May 2013 An electrical fault on the ute was repaired under guarantee (no cost)
15 July 2013 Ute was serviced By Nhill Motors at a cost of $198 including GST
22 October 2013 Excavatorreceived its annual service from Farm Machinery P/L at a cost of $440 including GST
29 October 2013 Dent in ute after Rodney came home late one night from the pub and hit the gate post was repaired by Dents R Us at a cost of $1,100 including GST
20 April 2014 Ute serviced by Nhill Cool cars at a cost of $220 including GST
15 October 2014 Excavator received its annual service from Farm Machinery P/L at a cost of $770 including GST
- Please show workings as indicated.
- Record all the transactions in the general journal
- Complete the asset register cards for the Excavator.