logo

ACC510(ATMC) - Financial Reporting Assignment

   

Added on  2020-03-13

12 Pages2190 Words32 Views
ACC510(ATMC) - Financial ReportingTask 2 – Major AssignmentSemester 2 - 2017Student Name:Student ID #:Campus:

Table of ContentsQuestion 1. Case Study 3.1....................................................................................................................3Accounting Justification:................................................................................................................3Relevant Issues:.............................................................................................................................31.Highest & Best Use................................................................................................................32.Application to aged care home..............................................................................................33.Two possible uses..................................................................................................................3Question 2. Ex 7.14................................................................................................................................4Accounting Justification:................................................................................................................4Relevant Issues:.............................................................................................................................41.Impairment Test 31/12/16....................................................................................................4a.Calculations:.......................................................................................................................4b.General Journal Entries 31/12/16:.....................................................................................42.Impairment Test 31/12/17....................................................................................................4a.Calculations........................................................................................................................4b.General Journal Entries 31/12/17:.....................................................................................4Question 3. Case Study 6.1....................................................................................................................5Accounting Justification:................................................................................................................5Relevant Issues:.............................................................................................................................51.Difference between two phases:...........................................................................................52.Accounting for Research & Development:.............................................................................53.Decision / Conclusion / Reasons and Justification:................................................................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.Case Study 3.1Accounting Justification:As per the provisions of Para 6.21 of the AASB conceptual framework, the fair value means the price that is agreed between the buyer and seller in the ordinary course of business. The price of assets or liability is determined by the mutual agreement between the market participants acting in their best economic interest (AASB, 2015).Further, the AASB-13 provides guidance on the use of fair value in the valuation of assets and liabilities. As per Para-27 of AASB-13, while determining the fair value of non-financial assets, it is crucial to take into account the market participant’s ability to use the asset to generate highest and best benefits (AASB 13, 2012). Relevant Issues:1.Highest & Best UseThe highest and best use principle entails the use of property being valued at its highest capacity. The highest capacity of the property is determined with reference to three dimensions such as physical, legal and financial. The physical dimension means the characteristics of the asset to be taken into account while valuing the asset such as location and size. The legal dimension means that the property under valuation must nothave any legal issues. Financial dimension relates to assessing that whether the propertybeing valued can provide the required rate of return to the market participants. The highest and best use principle values the property in accordance with its maximum capacity disregarding the current use of the property (AASB 13, 2012). This means that ifas per the current use the property is valued at $100 but it’s capacity is more and at its highest capacity it can be valued at $300, then the fair value of the property would be $300. 2.Application to aged care homeThe value of aged care home arrived at as per the highest and best use is $10 million. The aged care home is currently being used for altruistic purposes and there is no intension to knock it down to build flats. However, there is no intension to knock down the aged care home, but it could be done and it suits physically and permitted legally. Thus, if aged care home is used to its best, the market participants could reap out the value of $10 million. 3.Two possible uses The two possible usages of Highest and Best use principle are given below:1.)In Valuation of the non-financial assets such as property, plant and equipment.Page 3 of 12

2.)In the valuation of non-current liabilities (AASB 13, 2012).Page 4 of 12

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
ACC510 - Financial Reporting Assignment
|11
|2453
|135

ACC510 Financial Reporting Assignment (Doc)
|11
|2448
|36

ACC510 (ATMC) - Financial Reporting Task 2 - 2017 Major Assignment Semester 2 - 2017 Student Name: Campus
|11
|2501
|322

ACC510 Assignment on Financial Reporting
|9
|2041
|86

ACC510 (ATMC) - Financial Reporting Task 2 - 2017 Major Assignment Semester 2 - 2017 Student Name: Campus
|10
|2543
|119

ACC510 Assignment on Financial Reporting of Organization
|12
|2710
|37