ACC210 Assignment- Financial Accounting
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ACC210 - Financial Accounting (ACC210)
Added on 2020-03-16
ACC210 Assignment- Financial Accounting
ACC210 - Financial Accounting (ACC210)
Added on 2020-03-16
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ACC210 - Financial AccountingTask 2 – Major AssignmentSemester 2 - 2017Student Name:Student ID #:Campus:
Table of ContentsQuestion 1. Ex 3.1..................................................................................................................................3Accounting Justification:................................................................................................................3Relevant Issues:.............................................................................................................................31. Determine subject of measurement..........................................................................................32. Determine valuation premise/method......................................................................................33. Determine market.....................................................................................................................34. Determine Valuation technique.................................................................................................3Question 2. Ex 5.18................................................................................................................................4Accounting Justification:................................................................................................................4Relevant Issues:.............................................................................................................................41. Calculations & General Journal Entries 1/7/16 to 30/6/17:.......................................................42. Calculations & General Journal Entries 1/8/18:.........................................................................43. Calculations & General Journal Entries 30/6/18:.......................................................................4Question 3. Ex 6.11................................................................................................................................5Accounting Justification:................................................................................................................5Relevant Issues:.............................................................................................................................51. Explain accounting issues...........................................................................................................52. Differences Internally Generated vs Acquired...........................................................................53. Reasons for Reluctance..............................................................................................................5Question 4. Ex 9.19................................................................................................................................6Accounting Justification:................................................................................................................6Relevant Issues:.............................................................................................................................61. Deficit of Fund...........................................................................................................................62. Net Defined Benefit Liability......................................................................................................63. Net Interest................................................................................................................................64. Reconciliation............................................................................................................................65. Summary Journal.......................................................................................................................6Page 2 of 12
Question 1. Ex 3.1Accounting Justification:AASB 13 deals with the provision relating to fair valuation of assets (AASB 13. Fair Value Measurement. (2016). ASB 116 provides -specification relating to Plant , Property and Equipment. Para 7-10 provides specification relating to recognition and provision relating to initial cost and subsequent cost of Property, Plant and Equipment.Relevant Issues:In present case Maple own a factory and land on which the factory stands. Due to boom inprices of residential property the price of land also increased as it is also part of residentialproperty. Thus in present scenario Para 7-10 of AASB 116 has been applied in order toascertain the value on which land and building should be recognized in books of accounts ofMaple Ltd.1. Determine subject of measurementIn present case the measurement of land and office building situated on same is to be madewhich was demolished and reconstructed. The valuation of building will be done afterassessing the fact that whether future economic cost of the asset can be reliably measuredor not. All the cost which is associated with the construction or incidental to renovation ofasset will be included in part of cost of asset. Further, any cost which is related to day to dayexpenditure which does not enhance the quality or capability will not be included in cost ofasset.2. Determine valuation premise/methodThe asset of Maple Ltd in present scenario i.e. office building and land will be fairly valuedand recognized in books of accounts at revalue amount reduced by accumulateddepreciation and any impairment loss of asset. It is necessary for every entity to value theirasset at the end of reporting period to sure that carried value of asset is not higher incomparison to its recoverable value (Basu and Andrews, 2014) .3. Determine marketAs per views of Zakaria and et.al. (2014) fair value of an asset is the value which is availablein the market between two parties having will to sell or buy the asset. In case if any asset isacquired on lease than depreciation is required to be allocated on it on a fair basis. AASB116 specifies the following disclosures to be necessarily provided relating to Plant, Propertyand Equipment i.e. amount relating to contractual obligations which are due and required tobe paid in order to acquire the asset; value of expenses which are being provided in carryingvalue of asset in its construction phase. 4. Determine Valuation techniqueValuation technique has been provided in AASB 116 and valuation of land and office on it will be conducted in following manner:Market Value of Land$1000000Cost relating to demolishing building$1000000Page 3 of 12
Cost of construction$780000Total cost$2780000Question 2. Ex 5.18Accounting Justification:AASB 116 specifies the provision relating to Plant, Property and Equipment. Para 31-42provides provision relating to revaluation model to be applied in case of revaluation andPara 43-49 specifies provision relating to depreciation to be applied to asset (AASB116.Property Plant and Equipment, 2016).Relevant Issues:In present case revaluation of assets are being done at the end of each year and impairmentloss in accordance with specified provision has been applied in order to recognize asset at appropriate value in books of accounts.1.Calculations & General Journal Entries 1/7/16 to 30/6/17:CalculationsWorking Note 1DepreciationMachine ACost of Machine / No .of expected years$100000/5=$20000Machine B Cost of Machine / No .of expected years$60000/3=$20000Working Note 2Revaluation SurplusMachine AFair Value – Book Value$84000- $80000$4000Page 4 of 12
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