Advanced Financial Accounting Assignment Solution for ACC204 Course

This document provides a comprehensive solution to an Advanced Financial Accounting assignment (ACC204). The assignment covers various depreciation methods, including straight-line, sum-of-digits, declining-balance, and units-of-production. The solution includes detailed calculations and workings for each method, addressing a scenario involving a delivery truck purchased by Sprintfast Couriers. The solution provides insights into the computation of annual depreciation charges, revaluation surplus/loss, and accounting for lease transactions. Additionally, it explores concepts such as unguaranteed residual values and the separate reporting of leased assets. This resource is designed to help students understand and solve complex financial accounting problems, providing a valuable study aid for the course.

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student:
Student ID:
Author’s Note:
Course ID:

1ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Part a:...........................................................................................................................................2
Part b:...........................................................................................................................................2
Part c:...........................................................................................................................................2
Part d:...........................................................................................................................................3
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................4
Part a:...........................................................................................................................................4
Part b:...........................................................................................................................................4
Part c:...........................................................................................................................................5
Part d:...........................................................................................................................................6
Answer to Question 4:.....................................................................................................................6
Part a:...........................................................................................................................................6
Part b:...........................................................................................................................................7
References:......................................................................................................................................8

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Answer to Question 1:
Part a:
Part b:
Part c:
Computation of annual depreciation rate:

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Part d:
Answer to Question 2:
Computation of revaluation surplus/(loss):

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Answer to Question 3:
Part a:
Working note:
Part b:
Based on the case information, the receipt of lease in June 2023 signifies unguaranteed
residual based on the expectation that the payment would be settled by the lessee and the
ownership of the truck would lie with the lessee. This clearly states that Deliveries Limited

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would incur an amount of $50,000 to City Vans Limited, as the former organisation would keep
the asset estimated to have a salvage amount of $50,000. Moreover, unguaranteed residual would
be considered within the current value of lease receivable (Henderson et al. 2015). The reason is
that the lessor estimates that the truck would be returned by the lessee, which would then have
residual amount of $50,000 after the completion of the lease term; in case, the lessee does not
want to purchase the truck.
Part c:
Working notes:

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Part d:
In the above table, the third and fourth entries are made by taking into consideration that
the lessor would no longer enjoy the ownership of the truck. In other words, the lessee would
own the truck and this mandates the requirement of reporting leased assets separately from the
freehold assets (Spencer and Webb 2015). By considering these aspects, the current leased truck
balances are transferred to the balances of the truck.
Answer to Question 4:
Part a:
Working note:

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Part b:

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References:
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Spencer, A.W. and Webb, T.Z., 2015. Leases: A review of contemporary academic literature
relating to lessees. Accounting Horizons, 29(4), pp.997-1023.