Learning Outcome Details

Unit Learning Outcome (ULO) Graduate Learning Outcome(GLO)

MAA716 – Financial Accounting 2 Sample

ULO 1:
Explain, discuss and integrate the technical and theoretical knowledge about the regulatory environment relating to Australian corporate accounting and reporting, and apply the relevant concepts to “real” situations.

GLO1: Discipline-specific knowledge and capabilities
GLO2: Communication
GLO6: Self-management
GLO8: Global citizenship

ULO 2:
Identify, discuss, evaluate and apply the relevant accounting standards relating to definition, recognition, measurement and disclosure requirements of a reporting entity’s assets, liabilities, equity, income and expenses.

GLO1: Discipline-specific knowledge and capabilities
GLO2: Communication
GLO8: Global citizenship

ULO 4:
Apply and demonstrate the appropriate technical knowledge in analysing company accounting information and problem solving; provide justification for their decisions by making references to relevant accounting standards; and communicate them to relevant stakeholders.

GLO1: Discipline-specific knowledge and capabilities
GLO2: Communication
GLO6: Self-management
GLO8: Global citizenship

Assessment Feedback:

Students who submit their work by the due date will receive their marks and feedback on CloudDeakin on 21 May 2018.

 

Description / Requirements

Section A

Theoretical Discussion – Asset Measurement

There has been a general trend for accounting standard setters to issue accounting standards that measure assets at ‘fair value’. Other valuation approaches including historical cost, net realizable value and present value are also required for particular classes of assets and liabilities as stipulated by particular accounting standards. Thus, we have a ‘mixed approach’ in measuring a company’s financial performance and financial position in Australia.

In light of the above statement, you are required to:

1. Briefly explain the various measurement models mentioned (max.150 words).
2. Describe two accounting standards that utilize the fair value valuation model (max.100 words).
3. From the Australian Security Exchange (ASX) website, select two companies’ 2017 annual reports. Identify valuation model/s adopted by these companies in measuring their non-current assets (note: please focus on tangible non-current assets rather than intangibles or financial assets) and comment on whether the adopted valuation model/s enhances the information used for the various users of the annual reports, by referring to the qualitative characteristics of financial information defined by the AASB Framework (max.750words).

Presentation Guidelines:

• To enrich your discussion, please choose the annual reports from the two companies engaged in two different industries, apart from financial institutions such as listed banks or insurance companies.

• Make sure you adhere to the total word limit. A 10% tolerance will be applied. A penalty of 20% will be applied to excessive length.

• Evidence of research is required. Any material used in this section of the assignment must be acknowledged and appropriately referenced. Plagiarism by any student is a serious matter and, if it occurs, it will be dealt with on a case-by-case basis with penalties imposed. You must correctly use the Harvard style of referencing. The reference list is not included in the total word count and this gives flexibility as to the extent of the research that is necessary to form opinions.

• When completing Requirements 2 and 3, please refer to the following meaning of the command words:

o Explain: To give the meaning or significance of; to provide an understanding of; to give the reason for or cause of.
o Describe: To transmit a mental image, an impression, or an understanding of the nature and characteristics of.
o Identify: To establish the identity of; to show or prove the sameness of.
o Comment: To observe, remark, or express an opinion or attitude concerning what has been seen or heard about the subject at hand.

Section B

Current Tax and Deferred Tax Computation

You are required to identify the difference between profit or loss for accounting purposes and profit or loss for tax purposes. You are also required to demonstrate the understanding of how deferred tax assets and deferred liabilities arise and how they are calculated. Hunter Ltd is a Victorian-based truck manufacturer. It started its business on 1 July 2015. The income statement for the year ended 30 June 2017 and the extract of the statements of financial position of Hunter Ltd for the year ended 30 June 2016 and 30 June 2017 are provided in the next page. The Statement of Financial Performance reports a profit before tax of $762,725 for the year ended 30 June 2017.

The Statement of Financial Performance for the year ended 30 June 2017

Revenue  $1,044,350

Sales Revenue $961,350
Service Revenue 78,000
Government Grant 5,000

Expenses

Administration expenses $25,000
Salaries 35,000
Long service-leave 72,000
Interest Expense 11,000
Bad debt expense 7,500
Depreciation expenses – Equipment 26,875
Depreciation expenses – Building 56,250
Entertainment Expense 12,000
Impairment of goodwill 8,000
Insurance 28,000                                               281,625

Accounting profit before tax      (762,725)

The Statement of Financial Position as of 30 June 2016 and 30 June 2017
2017 2016
Assets $ $
Cash 7,000 58,000
Inventory 43,000 32,000
Receivables 56,000 51,000
Less allowance for doubtful debts 28,000 28,000 24,000 27,000
Prepaid Insurance 3,000 2,105
Equipment – cost 215,000 215,000
Less accumulated depreciation 53,750 161,250 26,875 188,125
Building – cost 450,000 450,000
Less accumulated depreciation 112,500 337,500 56,250 393,750
Land 230,000 180,000
Goodwill 6,000 14,000
Total Assets 815,750 894,980
Liabilities
Account Payable 42,000 48,000
Accrued Interests 15,000 15,600
Accrued Wages 20,500 18,000
Unearned service revenue 37,810 42,350
Provision for long service leave 12,000 9,000
Loan payable 100,000 100,000
Total liabilities 227,310 232,950
Net Assets 588,440 662,030

Additional Information:

1. Service revenue recognized during the year has amounted to $78,000. Income is taxed when cash is received.
2. The cost of the equipment is $215,000. The taxation office generally allows this type of asset to be depreciated over 4 years.
3. Hunter Ltd acquired a parcel of land at the cost of $180,000 on 1 July 2015. The land was revalued to its fair value of $230,000 as at 30 June 2017.
4. All administration expenses incurred for the year were fully paid on 30 June 2016 and 30 June 2017.
5. Actual amount paid on insurance is allowable for the deduction.
6. Interest expenses and salaries expense are allowed for deduction only when they are paid.
7. Impairment of goodwill and depreciation of building is not allowable for the deduction.
8. Entertainment expenses are non-allowable deductions for tax purposes.
9. Government grant is an exempt income for tax purposes.
10. There was no deferred tax for the year ended 30 June 2015. The taxable income for the fiscal year ending 30 June 2016 was $300,000.
11. The tax rate was 30% for the year ended 30 June 2016 and 30 June 2017.

Required:

A. Prepare a tax reconciliation to calculate current tax liability for the year ended 30 June 2017.

B. Create a Taxation Worksheet for the year ended 30 June 2016 in accordance with AASB 112:Income Taxes, and prepare the applicable journal entry or entries to record tax expense, current tax liability, deferred tax liabilities and deferred tax assets for the year ended 30 June 2016, including offsetting the deferred tax.
C. Create a Taxation Worksheet for the year ended 30 June 2017 in accordance with AASB 112:Income Taxes, and prepare the applicable journal entry or entries to record tax expense, current tax liability, deferred tax liabilities, deferred tax assets and tax-effect for revaluation for the year ended 30 Jun 2017.

Submission Instructions

1. This assignment is to be submitted ONLINE ONLY (You are NOT required to submit a hard copy).
2. You must type in your answer on the Proforma provided. If not submitted on the Proforma it will not be marked.
3. The completed assignment question must be submitted into the allocated area on CloudDeakin under the Dropbox folder.
4. This is an individual submission.
5. You are not required to upload an Assignment Cover Sheet. You will complete a Plagiarismdeclaration when you access Dropbox.
6. Once submitted you cannot take your assignment back BUT you CAN SUBMIT another version. The most recent version submitted will be marked.
7. When uploading your assignment, give the document a name using the following syntax: <MAA716 T1 2018 Assignment 1.doc (or ‘.docx’), followed by your name and student ID.
8. Should you require a time extension in relation to this assignment, you need to contact the Unit Chair via email (wen.qu@deakin.edu.au) no later than 3 working days prior to the due date, supported by documentation, e.g. medical certificate. Please note that extensions will only be given for exceptional and unusual circumstances outside the student’s control.

You must keep a backup copy of every assignment you submit until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.

Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.

When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment dropbox folder after upload, and check for, and keep, the email receipt for the submission.

Notes

• Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date without an approved extension: 5% will be deducted from available marks for each day up to five days, and work that is submitted more than five days after the due date will not be marked. You will receive 0% for the task. ‘Day’ means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.

• For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in the first folder next to the Unit Guide of the Resources area in the CloudDeakin unit site.

• Building evidence of your experiences, skills and knowledge (Portfolio) – Building a portfolio that evidences your skills, knowledge and experience will provide you with a valuable tool to help you prepare for interviews and to showcase to potential employers. There are a number of tools that you can use to build a portfolio. You are provided with cloud space through OneDrive, or through the Portfolio tool in the Cloud Unit Site, but you can use any storage repository system that you like. Remember that a Portfolio is YOUR tool. You should be able to store your assessment work, reflections, achievements and artefacts in YOUR Portfolio. Once you have completed this assessment piece, add it to your personal Portfolio to use and showcase your learning later, when applying for jobs, or further studies. Curate your work by adding meaningful tags to your artefacts that describe what the artefact represents.