ninon of as much revenue as possible until the following financial year, for which the forecasts for the it would lose the $100 000 tax-free cash inflow. Freda instructed Lucia to find ways of deferring recog_ profit then the government may stop paying Vroom Ltd the grant for training apprentice mechanics, and the year ending 30 June 2019. Freda approached Lucia and said that if the company made too much $100 000 per year to employ and train apprentice mechanics. receives the maximum bonus of $30 000. Vroom Ltd currently receives a grant from the government wi progressively to $30 000 for a $3 million profit. If the profit of Vroorn Ltd excee n, Freda of the company. If Vroom Ltd makes $1 million profit, Freda receives a bonus of $2d0s 0$030mthilaitai)nerea Y by an international car firm. Her manager, Freda Chuse, is paid a bonus depending on the profitabilit LairicEiaiMwPoArkcsTasOaFnAacBcOoNunUtSanitNfCorENa ETHICS AND GOVERNANCE At the end of May, it appears that Vroom Ltd will make a profit ..„,.„——……….„.„, ,..,………………………….——_ TmlVoEtorSCveHhEicMleEeOngNinleeFipEarFtisNmAaNnCuracistuS: cffilleEadleirS0:3m.5 of approximately Lniiiii In’tfein((i)gr Ses industry were quite poor, and to accrue as many expenses as possible at the end of the current accou • period when it came to making the end-of-period adjustments. Although Lucia was not happy wo 1 t’ this instruction, she did not want to risk her own opportunities for promotion by upsetting her manage! Required (a) Who are the stakeholders in this situation? (b) Why do you believe Freda asked Lucia to do this? (c) What are the ethical issues involved? (d) Can Lucia defer revenues and accrue as many expenses as possible and still be ethical? FINANCIAL ANALYSIS Refer to the income (revenues) and expenses as shown in the notes in the latest financial report of .1B Hi-Fi Limited on its website, www.jbhifi.com.au, and answer the following questions. 1. Which of these items, if any, would have been affected by adjusting entries for deferrals? 2. Which of these items, if any, would have been affected by adjusting entries for accruals? 3. What is the total amount of expense for depreciation of plant and equipment? ACKNOWLEDGEMENTS Photo: goir / Shutterstock.com Photo: Andrey.Popov / Shutterstock.comBusiness insight: Medlin, J 2016, based on Australian Taxation Office, ‘Choosing an accounting method’, 17 June 2015, www.ato.gov.au/Business/GST/Accounting-for-GST-inayour-business/ Choosing-anaccountingamethodt Business insight: © ABC News Case study: CPA Australia first published in The Accountant http://www.theaccountant-online.com/ featureskom ment-issfinanci al -reportingssuffering-from-hamster-wheela sy ndrome-4816848/ 2016 Australian Accounting Standards Board AASB. The text, graphics and layout of this publication are protected by Australian copyright law and the comparable law of other countries. No part of the publication may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AASB except as permitted by law. For reproduction or publication permission should be sought in writing from the Australian Accounting Standards Board. Requests in the first instance should be addressed to the Administration Director, Australian Accounting Standards Board% PO Box 204, Collins Street West, Melbourne, Victoria, 8007. 194 Accounting “MOSselb•a•WeesieveSi.•••■••••-•••••laa
