be able to discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based;
be able to discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based;

Task
This assessment task consists of four (4) questions. A total of 60 marks are allocated to the questions below, which will then be converted to a mark out of 15%.
Rationale
This assessment task is designed to assess your understanding of topics 3 to 6, 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
General marking criteria
Short answer questions
In the awarding of marks for short answer questions, consideration will be given to:
• Evidence of understanding of the key issues identified in the question;
• Active analysis of identified elements as appropriate;
• Clear indication of reading of the texts, readings and other relevant references as appropriate;
• Clear and logical written expression; and
• Appropriate referencing.
Practical questions
In the awarding of marks for practical questions, consideration will be given to:
• Correctness of answers;
• Appropriate formatting and headings;
• Relevant workings;
• Approach taken to solve the problem; and
• Completeness of answers.
A detailed marking rubric has been provided in the 'Requirements' section below for each question.
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 practising to present material in a work situation. Correct formatting and referencing procedures of material should be strictly adhered to for essays. You should submit a proper reference list (using APA referencing style) for all essay type assignments. A reference list contains only those works cited or quoted from in your essay. A bibliography is acceptable for practical-type assignments.

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 be 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.

Please also note the following:
• Journal entries, ledger accounts, worksheets and financial statements should always balance. If you have to submit a piece of work that does not balance because you cannot detect your error please include some comment about the source of your problem so the marker can provide appropriate feedback.
• Include workings where appropriate. Partial marks can be allocated for workings where the final answer is incorrect.
Requirements
All workings, when appropriate, must be shown to substantiate your answers.
Question 1 [12 marks]
PART A:

Financial statement disclosures

You have been employed as an accountant at Bracken Ltd. Your role includes leading a team of accountants as they prepare the company’s financial reports in accordance with the accounting standards. One of the trainee accountants has come to you for some advice:

“If we have prepared the financial statements in accordance with the accounting standards, why do we need pages and pages of note disclosures, and why do we need notes that disclose: the accounting policies adopted, that the financial statements comply with accounting standards, the reporting framework adopted, measurement basis or bases used in preparing the financial statements, and whether the financial statements are general purpose financial statements or special purpose financial statements?”
Required:

Prepare a written response to the trainee accountant’s questions. (Word limit: 400 words)
(4 marks)

PART B:

Accounting policies

The directors of Bracken Ltd have resolved to change the accounting policy for marketing expenditure. In previous years, marketing expenditure had been expensed as incurred. Following extensive market research, the directors believe that benefits from marketing expenditure in the form of increased sales will be received over a 5-year period following the expenditure. Due to a recent fire and water damage to the company’s accounting records, details of marketing expenditure in prior years have been destroyed.

Required:

i) The directors have approached you for advice regarding the disclosures, if any, which are required for this change in accounting policy.
(4 marks)

ii) Assume that the change in accounting policy for Bracken Ltd’s marketing expenditure was due to the issue of a new accounting standard which requires marketing expenditure to be capitalised and then written off over a period not exceeding 3 years. Advise the directors of the disclosures, if any, which are required by this change in accounting policy.
(4 marks)

Marking Guide - Question 1 Max. marks awarded
PART A:
Discussion re the need for note disclosures. 4
PART B:
i ) Discussion of the note disclosure required for change in accounting policy, including appropriate references to accounting standards. 4
ii) Discussion of the note disclosure required for change in accounting policy, including appropriate references to accounting standards. 4
Total 12

Question 2 [16 marks]

Accounting for share capital

Sweet Ltd indicated issued prospectuses, offering 2,000,000 preference shares at $1.00 payable in full on application by 31 January 2015, and 5,000,000 ordinary shares at $5.00 with 50% due on application by 31 January 2015, 30% due on allotment, and 20% due on a call to be made by the directors at a later date.
By 31 January 2015, the company had received amounts due on 1,000,000 of the preference shares and on applications for 6,000,000 ordinary shares. On 20 February 2015, the ordinary and preference shares were allotted. The ordinary shares were allotted to applicants on a first-in first-served basis, and application money was refunded to unsuccessful applicants.
The amount due on allotment of the ordinary shares was due by 8 March 2015, and this was received on all shares.
The directors made the call on the ordinary shares on 31 March 2015, with amounts due by 30 April 2015. By this date, amounts due on 4,500,000 ordinary shares had been received. On 20 May 2015, the shares on which call money was not received were forfeited and sold as fully paid. An amount of $3.50 was received for each share sold. Costs of the forfeiture and reissue amounted to $12,000, and were paid. The constitution provided for any surplus on resale, after satisfaction of unpaid calls and costs, to be returned to shareholders whose shares were forfeited.

Required:

Prepare the journal entries to record the transactions of Sweet Ltd up to and including that which took place on 20 May 2015. Show all relevant dates, narrations and workings.
(16 marks)

Marking Guide - Question 2 Max. marks awarded
Journal entries 14
Dates 1
Narrations and workings 1
Total 16

Question 3 [17 marks]

Accounting for income tax

The accounting profit before tax for the year ended 30 June 2014 for Queen Ltd amounted to $225,900. It included the following income and expense items:

$
Royalties (non-taxable exempt income) 8,500
Interest revenue 9,000
Annual leave expense 5,000
Doubtful debts expense 2,200
Depreciation – plant (15% per year, straight-line) 33,000
Depreciation – motor vehicles (25% per year, straight-line) 25,000
Insurance expense 5,000
Rent expense 22,500
Warranty expense 6,000
Entertainment expense (non-deductible) 1,300 https://yourassignmenthelpers.com/wp-admin/post.php?post=1698530&action=edit

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