ACC210 - Financial Accounting Assignment
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ACC210 - Financial Accounting (ACC210)
Added on 2020-03-16
ACC210 - Financial Accounting Assignment
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......................................................................................................................4Accounting Justification:....................................................................................................4Relevant Issues:..................................................................................................................4Determine subject of measurement:...................................................................................42. Determine valuation premise/method.............................................................................43. Determine market...........................................................................................................44. Determine Valuation technique......................................................................................4Question 2. Ex 5.18....................................................................................................................5Accounting Justification:....................................................................................................5Relevant Issues:..................................................................................................................51.Calculations & General Journal Entries 1/7/16 to 30/6/17:.............................................5Working Note: A................................................................................................................5Working Note: B.................................................................................................................5Working Note: C.................................................................................................................6Working Note: D................................................................................................................62.Calculations & General Journal Entries 1/8/18:..........................................................73.Calculations & General Journal Entries 30/6/18:........................................................7Question 3. Ex 6.11....................................................................................................................9Accounting Justification:....................................................................................................9Relevant Issues:..................................................................................................................9Explain accounting issues...................................................................................................92. Differences Internally Generated v/s Acquired............................................................103. Reasons for Reluctance.................................................................................................10Question 4. Ex 9.19..................................................................................................................11Accounting Justification:..................................................................................................11Relevant Issues:................................................................................................................111.Deficit of Fund..........................................................................................................11Calculation........................................................................................................................112. Net Defined Benefit Liability.......................................................................................113.Net Interest................................................................................................................114.Reconciliation............................................................................................................115.Summary Journal.......................................................................................................12References................................................................................................................................14Page 2 of 15
Question 1. Ex 3.1Accounting Justification:Conceptual framework: Para 6.22-6.33AASB: 116 Para 15For the measurement of fair value of property, plant and equipment, it is important toconsider the applicable standard provided by the AASB. The applicable standard under thiscase will be AASB 116. This standard outlines the accounting treatment for property, plantand equipment (AASB 116.Property Plant and Equipment, 2016). Relevant Issues:In this case, Maple Ltd acquired a land in 2007 for $200 000 and the cost of buildingthe factory was $520 000. Thus, as per the above provision, the total cost of factory will bethe sum of $ 20 000 00 + $520 000 = 25 20 000. The carrying value the factory at 30 June2017 was 10 00 000. The accumulated impairment of the factory as per the standard would be15 00 000. Determine subject of measurement:The subject matter of the valuation in this case will be the land which was previouslyacquired for factory. However, due to its residential location the factory needed to bedemolished at a certain cost for making it fit for residences. 2. Determine valuation premise/methodAASB 16 does not lay down any specific unit of measure for recognition as to whatconstitutes property, plant, and equipment. However, if we use the cost model for valuationeach part of the physical asset must be depreciated separately that is in significant relation tothe total cost of the asset. The standard also recognises that some parts physical asset mayrequire to be replaced at regular intervals by inspections for any faults. The carrying amountwill also comprise of cost of replacing and inspecting the part of such an asset. 3. Determine marketRevaluations of the asset must be regularly carried out based on market projection.The carrying amount of an asset must not materially differ from its fair value at the balancesheet. The market for such asset will be any market participant which can make use of theasset better than its present use. ( AASB 13. Fair Value Measurement, 2016). Page 3 of 15
4. Determine Valuation techniqueThese non-current assets are initially measured at the cost of acquiring the asset andall the cost associated with bringing the asset into workable condition. Subsequently, thesetypes of assets are measured by either the cost method or the revaluation model, and areamortized depreciated in a way so that the depreciable amount is allocated over asset’sestimated useful life systematically on regular basis. The impairment losses arising due to thereduction in its fair value, is recognized separately in the profit and loss statement. Question 2. Ex 5.18Accounting Justification:Conceptual framework: CF 6.6 AASB: 136 The specified account deals with Impairment of assets. Para 5 of the standard specifies that asper provision of other accounting standard as revaluation model of AASB 116 Property, Plantand equipment; impairment is assessed in accordance with the fair value. In sub point b of Para it has been provided that after applying revaluation requirement; an organization will apply this standard for ascertaining whether asset is impaired or not (AASB 136. Impairment of Assets, 2016). Further Para 58 to 64 deals with measurement and accounting of impairment loss. Relevant Issues:In present case Peewee Ltd has acquired two assets A & B and further sold asset C. The company has revalued the asset at the end of year 2017 and 2018. Thus, it has been assessed that whether the assets are impaired or not and journal entry relating to same have been provided below. 1.Calculations & General Journal Entries 1/7/16 to 30/6/17:Calculations:Working Note: ADepreciation of Machine A= Cost of Machine / Expected useful life= $100000/5=$20000Page 4 of 15
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