ACC514 Financial Accounting Assignment Solution, 2019

This document provides a comprehensive solution to a financial accounting assignment (ACC514) focusing on financial statement disclosures. The assignment addresses several scenarios, including warranty provisions, bad debt, and error corrections, all analyzed under relevant AASB standards. The solution includes journal entries, note disclosures, and explanations for each situation, demonstrating the application of accounting principles to real-world financial reporting problems. The document covers topics such as accounting recognition, adjusting events, and error correction, offering a detailed breakdown of the financial impact and appropriate accounting treatments. Furthermore, the solution refers to specific AASB standards, such as AASB 108, AASB 110, and AASB 136, to ensure accuracy and compliance. The assignment covers the preparation of financial statements and includes analysis of fair values and their application within the organization.

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

1FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................4
Answer to Question 3:.....................................................................................................................6
Part (i):.........................................................................................................................................6
Part (ii):........................................................................................................................................7
Answer to Question 4:.....................................................................................................................8
Answer to Question 5:...................................................................................................................10
References:....................................................................................................................................13

2FINANCIAL ACCOUNTING
Answer to Question 1:
Case Situation Treatment Adjustment Journal entry/note
disclosure
1 Accounting
estimate
modification
Recognition in
income statement
at the same date,
in accordance
with “Paragraph
36 of AASB
108”
(Aasb.gov.au,
2019)
2017 financial
statements and
future reports
Warranty expense Dr
$15,400
Provision for Warranty
Cr $15,400
{$430,000 + (430,000 *
8%) - $19,000]
(Warranty expense
recorded)
2 Event after the
reporting period
Adjusting event
under AASB 110
(Aasb.gov.au,
2019)
2017 financial
statements
Bad Debt Expense Dr
$380,000
Provision for Bad Debt
$380,000
(Bad debt allowance
recorded)
3 Event after
reporting period
Non-adjusting
event according
to AASB 110
Adjustment not
required
Note disclosure about the
influence of tax rate
alteration on current tax

3FINANCIAL ACCOUNTING
(Aasb.gov.au,
2019)
amount
4 Error
identification of
the previous
period
Correction of
material errors,
as per
“Paragraph 42
of AASB 108”
(Aasb.gov.au,
2019)
2016, 2017 and
2018 financial
statements
Retained Earnings Dr
$21,000
Accumulated
Depreciation Dr $1,000
Asset Cr $22,000
(Correction of error)
Income Tax Receivable
Dr $6,300
Retained Earnings Cr
$6,300
(Tax reversal recorded)

4FINANCIAL ACCOUNTING
Answer to Question 2:
Note 1:

5FINANCIAL ACCOUNTING
Note 2:

6FINANCIAL ACCOUNTING
Answer to Question 3:
Part (i):

7FINANCIAL ACCOUNTING
Part (ii):

8FINANCIAL ACCOUNTING
Answer to Question 4:

9FINANCIAL ACCOUNTING
Note 1:

10FINANCIAL ACCOUNTING
Answer to Question 5:
Fair values are necessary to be used by all organisations for measuring their assets, which
is mandated by AASB 136 (Aasb.gov.au, 2019). Therefore, the application of standard is made
in this situation.
Note 1:

11FINANCIAL ACCOUNTING
Note 2:

12FINANCIAL ACCOUNTING

13FINANCIAL ACCOUNTING
References:
Aasb.gov.au. (2019). Retrieved 7 May 2019, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB108_07-04_COMPjan15_07-
15.pdf
Aasb.gov.au. (2019). Retrieved 7 May 2019, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB110_07-04_COMPjan15_07-
15.pdf
Aasb.gov.au. (2019). Retrieved 7 May 2019, from
https://www.aasb.gov.au/admin/file/content102/c3/AASB136_07-04_ERDRjun10_07-
09.pdf