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FINANCIAL REPORTING HOMEWORK HELP

   

Added on  2019-12-04

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FINANCIAL REPORTING 1
FINANCIAL REPORTING HOMEWORK HELP_1
Table of ContentsASSESSMENT 3..................................................................................................................................3Question 1: Financial statement disclosure......................................................................................3Question 2 Accounting for share capital...........................................................................................5Question 3 Accounting for income taxes..........................................................................................6A) Current tax liability of Asset........................................................................................................6Deferred tax liability of Asset...........................................................................................................6B) journal entries..............................................................................................................................7Deferred tax liability.........................................................................................................................7Deferred tax asset.............................................................................................................................7Question 4 Property, plant and equipment........................................................................................8Question 5 Impairment loss and its allocation................................................................................10REFERENCES...................................................................................................................................122
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ASSESSMENT 3Question 1: Financial statement disclosure(a) According to IAS 6 depreciation accounting which states that any changes takes place inthe depreciation amount due to change in number of years of asset held by an enterprise willprospectively affect and not retrospectively (Gomoi and Pantea, 2016). In the given case scenario,the change in number of years of asset from 10 years to 6 years on 1st July then the financialstatements of 2013 and 2014 are not affected as the change takes place in 2015. Calculation of depreciation2013Asset value= $500,000Number of years= 10 yearsResidual value= NilDepreciation= $500,000/10= $50,0002014$50,0002015Depreciation= $500,000/6= 83333It is disclosed in prior period items in balance sheet as per IAS 5 where any change is takesplace before finalisation of balance sheet.(b) According to International accounting standards 4, contingencies and events occurringafter the balance sheet date states that this should be disclosed in the as the invoice received in July2016 (Preferred tax, 2016). The adjustments need to be made in 2015 followed by 2016. Journal entryAccount Debit CreditAccounts payable$25000To inventory$25000Bank$7500To tax refund$7500Bank $25000To Accounts payable$250003
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The tax refund is added into the profit of an enterprise and this is to be disclosed in balancesheet defining the nature of these transactions.(c)As per accounting standards 10 of fixed asset accounting the shares of an enterprise areshowed at their gross value or book value and doesn't affect due to change in market price. In thegiven situations, the share price will be shown as $800,000 instead of $4,50,0000 as the standardform of presentation is on the book value system (Pillewar, 2016).(d)In this situation, the debt is irrecoverable from the debtor due to bankruptcy of the debtor. Itis treated as debt expenses for an enterprise in the form of bad debt. Following are the accountingtreatment of this transaction in two ways is:Irrecoverable debt= $450,000*50%= $225000Income statementParticularsAmountSales ********- bad debt$2250000This will reduce the total amount of profit and their journal entry are given below:Profit and loss A/c Dr.$ 2250000 To bad debts a/c $2250000Extract of Balance sheetLiabilitiesAssetsAccounts receivable $450000- bad debt allowance $225000$2250000Journal entryAccount DebitCreditBad debt expense225000Allowance for doubtful debts2250004
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