MAA716 Financial Accounting T1 2017 Internal Assessment – Individual Assignment (100 marks - 40%)
This assignment is an individual task that contains two parts. The first part is a 2,000-words written essay which involves self-learning and a bit of “real-world” research. Self-learning and research skills are essential for this task, so several academic journal articles have been uploaded on Transtutors to help you better understand the research topic.
The second part is a comprehensive question on consolidation accounting which aims to help you to understand better this topic. The materials that are relevant to this part is between topic 8 and topic10.
Give the document a name using < part A ( or part B)>
Referencing
Any material used in this 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. The reference list (using APA Referencing System) 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.
Please make sure that you adhere to the total word limit - 2,000 words (excluding references list).
Each page of the report should be numbered and must show the total number of pages (e.g. Page 1 of 8), and every page must have a header that identifies full name(Chris Dan) and I.D. (214432988)of every contributing student, and the unit code MAA716.
Other relevant matters
Part A of Assignment - 100 Marks in total, 40% of the total assignment mark, assignment is 40% of total unit mark.
Criteria / Acceptable /Good
/
Well done
/
Excellent
Introduction:
Set the scene with appropriate background information while highlighting the aim & purpose.
(5 marks)
GLO2
/ The background information clearly covered the aim and purpose embedding the following aspects:
- the focus of the topic
- the outline of what was to come (2.5-2.9 marks)
•the focus of the topic
•the outline of what was to come (3.0-3.4 marks)
/ The background information has a very good coverage with clearly articulated aim and purpose embedding the following aspects:
•the focus of the topic
•the outline of what was to come (3.5-3.9 marks)
/ The background information has an outstanding coverage with clearly articulated aim and purpose embedding the following aspects:
•the focus of the topic
•the outline of what was to come (4.0-5.0 marks)
Question 1:
Integration and construction of review of literature that can discuss the pros and cons of choosing fair value method.
(35 marks)
GLO2
/ Literature were described and/or discussed at acceptable level with the following aspects:
•topic
•relevant theories (17.5-20.9 marks) / Literature were described and discussed well interweaving the following:
•topic
•relevant theories (21.0-24.4 marks)
/ Literature were described and discussed very well interweaving the following
•topic
•relevant theories (24.5-27.9 marks) / Literature were consistently and skillfully constructed and integrated with a high level of clarity and fluency. The following were effectively interweaved:
•topic
•relevant theories (28.0-35.0 marks)
Question 2:
Integration and construction of review of literature to identify and explain why some types of companies are more likely to choose to revalue non- current assets. Provide examples.
(15 marks)
GLO2
/ Literature were described and/or discussed at acceptable level with the following aspects:
•topic
•relevant theories Examples given, but are not highly relevant. (7.5-8.9 marks) / Literature were described and discussed well interweaving the following:
•topic
•relevant theories Examples given that are relevant. (9.0-10.4 marks)
/ Literature were described and discussed very well interweaving the following
•topic
•relevant theories Examples given that are highly relevant. (10.5- 11.9 marks) / Literature were consistently and skillfully constructed and integrated with a high level of clarity and fluency. The following were effectively interweaved:
•topic
•relevant theories Examples (real-life) given that are highly relevant. (12.0-15.0 marks)
Question 3:
Critically analyse and synthesise the information gathered on managerial discretions available when revaluing/devaluing non-current assets. Support the analysis by relevant theories.
(15 marks)
GLO8
/ Acceptable level of critical analysis and synthesise of policy selection and application with some aspects of the following noted:
•topic
•relevant theories (7.5-8.9 marks) / Good critical analysis and synthesise of policy selection and application with clear connections to the following:
•topic
•relevant theories (9.0-10.4 marks)
/ Very good critical analysis and synthesise of policy selection and application with many of the following effectively noted:
•topic
•relevant theories (10.5-11.9 marks) / Excellent sophisticated critical analysis and synthesise is evidenced through choice of complex policy selection and with clear connections to the following:
•topic
•critical and relevant theories
•examples from global context (12.0-15.0 marks)
Question 4:
Integration and construction of review of literature to discuss the economic consequences of asset revaluations.
(15 marks)
GLO2
/ Good review of ideas articulating the following:
•What the essay achieved
•how it met the aims
•the significance of the discussion (7.5-8.9 marks) / Good review of ideas articulating the following:
•what the essay achieved
•how it met the aims
•the significance of the discussion
•the findings and personal opinion (9.0-10.4 marks)
/ Very good review of ideas articulating the following:
•what the essay achieved
•how it met the aims
•The significance of the discussion
•the findings and personal opinion (10.5-11.9 marks)
/ Review of ideas strongly, clearly and outstandingly articulated incorporating all of the below:
•what the essay achieved
•how it met the aims
•the significance of the discussion
•the findings and personal opinion (12.0-15.0 marks)
Conclusion:
Review of ideas covered with a clear development of an appropriate overall message.
(5 marks)
GLO2
/ Good review of ideas articulating the following:
•What the essay achieved
•how it met the aims
•the significance of the discussion (2.5-2.9 marks) / Good review of ideas articulating the following:
•what the essay achieved
•how it met the aims
•the significance of the discussion
•the findings and personal opinion (3.0-3.4 marks) / Very good review of ideas articulating the following:
•what the essay achieved
•how it met the aims
•The significance of the discussion
•the findings and personal opinion (3.5-3.9 marks) / Review of ideas strongly, clearly and outstandingly articulated incorporating all of the below:
•what the essay achieved
•how it met the aims
•the significance of the discussion
•the findings and personal opinion (4.0-5.0 marks)
Appropriate and quality of sources
(5 marks)
GLO 1 / Acceptable choice of relevant and quality resources
(2.5 marks) /
Good choice of relevant and quality resources
(3 marks) / Very good choice of relevant and quality resources
(3.5 marks) / Excellent choice of relevant and quality resources
(4-5 marks)
Overall Score / P 50 or more / C 60 or more
/ D 70 or more / HD 80 or more
Rubic of Part B
Part A – Research Question: Asset Revaluation and Earnings Management (40% of assignment)
AASB 116 requires each class (a category of non-current assets having a similar nature or function) of property, plant and equipment to be measured at either cost or revaluation model (fair value). Under the revaluation model, equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Entities may switch from fair value to cost for justifiable reasons and provided adequate disclosures are made (AASB 116).
Using no more than 2,000 words (including introduction and conclusion, but excluding references), you are required to write an essay to answer the following questions. Support your answer by citing creditable references such as newspapers and articles from practitioner (professional) journals and scholarly journal articles.
Questions:
i. What are the pros and cons of choosing fair value method? Provide at least three for each pros and cons and explain in detail. (Suggested no. of words: 600-800)
ii. Name two types of companies that are more likely to choose to revalue non-current assets. Why? Provide examples. (Suggested no. of words: 300 - 400)
iii. Discuss any managerial discretions available to the firms when revaluing/devaluing non-current assets? (Suggested no. of words: 300 - 400)
iv. What are the economic consequences of asset revaluations? (Suggested words: 300 - 400)
Part B – Group Accounting – Consolidation (100 Marks in total, 60% of assignment)
The following information is available at 30 June 2016:
•During the financial year ending 30 June 2016, West Ltd sold inventory to East Ltd for $250,000. The inventory cost West Ltd $200,000 to produce. 60% of this inventory was sold to other entities outside the group at the end of the financial year. Both East Ltd and West Ltd use the perpetual inventory system.
•During the financial year ending 30 June 2015, West Ltd had sold inventory to East Ltd at a price of $140,000. The cost of the inventory was $60,000. For the financial year ended 30 June 2015, only 25% of this inventory had been sold by East Ltd to its customers. During the financial year ending 30 June 2016, a further 70% of the opening balance of this inventory was sold by East Ltd to its customers.
•West Ltd sold an item of plant to East Ltd for $160,000 on 1 July 2014. The original cost of this plant was $200,000 and the carrying amount was $140,000 as at 1 July 2014. East Ltd estimated this item of plant had a remaining useful life of four years with no residual value.
•East Ltd sold an item of equipment to West Ltd for $35,000 on 31 January 2016. The carrying amount recorded in East Ltd’s account was $40,000 as at 31 January 2016. The equipment has an estimated remaining useful life of five years with no residual value.
•The recoverable amount of goodwill as at 30 June 2016 was determined to be $75,000. As at 30 June 2015, goodwill has been impaired for $10,000. Prior to 30 June 2015, no impairment loss was recorded because the carrying amount of goodwill was lower than its recoverable amount.
•Dividend was declared and approved by West Ltd on 1 June 2016. No other dividend had been paid by West Ltd during the financial year.
•Income tax rate is 30% Required:
- Prepare acquisition analysis on 1 July 2011, and journal entries to record the acquisition of 70% interest in West Ltd in East Ltd’s records. (10 marks)
- Prepare the consolidated adjustments for East Ltd and its controlled entity on 30 June 2016, and offset deferred tax liabilities as at 30 June 2016 (if any) with deferred tax assets arose from the consolidation adjustments. (45 marks)
- Calculate non-controlling interest (NCI) in the profit for the financial year ended 30 June 2016, the opening retained earnings as at 1 July 2015, and the reserves and share capital as at 30 June 2016. Prepare the consolidated entries for NCI for the financial year ended 30 June 2016. (15 marks)
- Using the format of the template provided, complete a consolidation worksheet and post all consolidation journal entries into the worksheet. (30 marks)