Need the full method and answer for the questions regarding notes, t accounts, cash flow and journal entries
ASSESSMENT 3: INDIVIDUAL ASSIGNMENT
ACFI2011 TRIMESTER 2, 2021 (PSB)
Due Date 11:59pm SGT, Sunday 25th July 2021 (Week 10)
Submission Submit a copy of the assignment through Turnitin
Weighting 20% of the final mark
Question 1 (4 marks)
A corporation with a balance sheet date of December 31 has a foreign long-term liability that is not covered by a foreign exchange contract. The foreign currency amount was converted at the closing rate on December 31, 2021, and is shown in the accounting records at the Australian Dollars (AUD) 2.0 million.
The local currency sharply decreased against the US dollar on February 27, 2022. On this date, the management decided to decrease further risk by using a foreign exchange contract, because of which the debt was limited to AUD 6.0 million. If this situation were to apply at the balance sheet date, it would result in the corporation’s liabilities exceeding the fair value of its assets.
Required:
Explain how the above event should be disclosed in face and note of the December 31, 2021 financial statements. (4 marks)
Question 2 (5 marks)
The following is a summary of the annual financial statements of Texton Ltd.
Texton Ltd.
Income Statement
For the Year Ending September 30, 2021
$
Revenue 850,000
Cost of sales (637,500)
Cross profit 212,500
Administrative expenses (28,100)
Operating expenses (73,600)
Profit from operations 110,800
Finance cost (15,800)
Profit before tax 95,000
Income tax expense (44,000)
Profit for the period 51,000
Texton Ltd.
Statement of Changes in Equity
For the Year Ending September 30, 2021
Share
capital ($) Revaluation
reserve ($) Accumulated
profit ($) Total ($)
Balance—beginning of the year 120,000 121,000 241,000
Revaluation of buildings 20,000 20,000
Profit for the period 51,000 51,000
Dividends paid (25,000) (25,000)
Repayment of share capital (20,000) (20,000)
Balance—end of the year 100,000 20,000 147,000 267,000
Texton Ltd.
Balance Sheet
On September 30, 2021
2021
($) 2020
($)
Noncurrent Assets Property, plant, and equipment
Office buildings 250,000 220,000
Motor vehicles 35,000 20,000
Machinery 6,000 4,000
Long-term loans to directors 64,000 60,000
355,000 304,000
Current Assets
Inventories 82,000 42,000
Debtors 63,000 43,000
Prepaid Expenses 21,000 16,000
Bank – 6,000
166,000 107,000
Total Assets 521,000 411,000
Equity and Liabilities Capital and Reserves
Share Capital 100,000 120,000
Revaluation Reserve 20,000 –
Accumulated Profits 147,000 121,000
267,000 241,000
Noncurrent Liabilities
Long-Term Borrowings 99,000 125,000
Current Liabilities
Creditors 72,000 35,000
Bank 43,000 –
Taxation Due 40,000 10,000
155,000 45,000
Total Equity and Liabilities 521,000 411,000
Additional information
1. The depreciation charges included in operating expenses are as follows:
Motor vehicles $25,000
Machinery $ 2,000
2. Fully depreciated Motor vehicles with an original cost price of $15,000 was sold for $5,000 during the year. The profit is included in operating expenses.
3. The chief accountant claims that the company is heading for a potential liquidity crisis. According to him, the company struggled to meet its short-term obligations during the current year.
Required:
a) Prepare the cash flow statement using the direct method. (4 marks)
b) Comment on the Chief accountant’s claim. (1 marks)
Question 3 (2 marks)
Texas Inc. is a manufacturer of suitcases that are sold at F2C outlets. The following transactions and events occurred during the year under review:
a. From the beginning of the year, the remaining useful life of the plant and equipment was estimated at 4 years instead of 7 years. (0.5 marks)
b. Bonuses of $12 million, compared with $2.3 million in the previous year, had been paid to employees. The CFO explained that a new incentive scheme has been approved since all employees are involved in increasing sales. (0.5 marks)
c. There was a $1.25 million profit on the nationalization of land. (0.5 marks)
d. During the year the company was responsible for establishing the ECA Foundation, which provided funding to welfare organizations. This foundation is part of the companys social investment program. The company contributed $7 million to the fund. (0.5 marks)
Required:
Explain how each of the transactions and events mentioned above would be treated in the current year statement of profit and loss. (2 marks)
Question 4 (4 marks)
The following information relates to the individual equipment items of a business unit at the balance sheet date:
Carrying amount $ Fair value less costs to sell
$ Value in use $
Caster Racks 119,000 121,000 114,000
Double Cone Blender (note 1) 237,000 207,000 205,000
Grinding Machine (note 1) 115,000 11 7,000 123,000
Deduster 83,000 75,000 79,000
Bus (note 2) 31,000 26,000 —
Further information
1. Double Cone Blender and Grinding Machine are carried at revalued amounts, and the cumulative revaluation surpluses included in equity for the items are $12,000 and $6,000 respectively. Both items are manufacturing equipment.
2. Bus is used for transporting employees in the mornings and evenings. It is not possible to determine the value in use of the bus separately because the bus does not generate cash inflows from continuing use that are independent of the cash flows from other assets.
Required:
Explain the major issues related to the possible impairment of the above-mentioned items. (4 marks)
Question 5 (5 marks)
The following data from Singapore Ltd accounts relates to two assets at 30 June 2021.
Asset Value Accumulated depreciation Carrying amount
Land $ 4 300 000 0 $ 4 300 000
Plant and equipment $ 600 000 $100 000 $ 500 000
At 30 June 2021, Singapore Ltd decides to adopt the revaluation model for both these assets. On this date land has a fair value of $4 000 000 and plant and equipment has a fair value of $600 000. On 30 June 2022 Singapore Ltd reviews the value of its assets. The fair value of land is reassessed as $4 250 000. Plant and equipment has no change in value on that date.
Required:
Prepare the journal entries required to revalue the assets for the year ended 30 June 2021 and the 30 June 2022. (5 marks)
APPENDIX A: PRESENTATION REQUIREMENTS (Departures may attract a penalty)
1. The assignment is required to be submitted through Turnitin by the due date;
2. It is worth 20% of the final grade;
3. The assignment will be marked on the basis of a requirement of -suitable for publication-, that is, the relevant statements/notes comprise an external report;
4. The assignment must be performed individually;
5. You are to employ an aggregated format whenever appropriate and consistent with provision of minimum line items prescribed in AASB101;
6. You are not to use specialized accounting software packages, such as are employed by professional accounting firms, to produce your financial reports. The assignment is to give you an understanding of the processes, principles and customization required in preparing a set of financial statements and the notes to the accounts.
7. You are to apply the function of expense or cost of sales method to the classification of expenses in the income statement (see AASB101 paras 97-105);
8. You are directed to use the current/non-current format for the statement of financial position (balance sheet);
9. The coversheet must have student ID and name
APPENDIX C: General Marking Criteria for theoretical/essay questions
10 8 6 4 2
Accounting Excellent Clear Accurate Limited inaccurate
Knowledge analysis analysis but limited grasp of understanding
and and knowledge accounting of
discussion competent regarding concepts accounting
of use of accounting and the concepts and
accounting accounting concepts relevant the relevant
concepts concepts and the standard standard
and the accounting relevant
relevant concepts standard
standard and the
relevant
standard
Critical Fully Developed Assertions Assertions Lack of
evaluation developed and and and assertions and
and supported analysis analysis analysis,
supported assertions exist but exist but development
assertions and are not are not and/or
and analysis developed developed support
analysis or or
supported supported
adequately accurately
Structure Particularly Consistent Paragraph Weak Lack of focus
/Language clear focus and flow and paragraph
with logical good transitions structure
transitions transition are and
throughout adequate illogical
transitions
