Corporate Reporting Group Assignment 20% Due date: Monday (5.00pm), 23 September 2016 1. The assignment is a compulsory group assignment and is worth 20% of the marks of the subject. 2. The group must be comprised of three (3) students. 3. You must keep a copy of your assignment (in hard copy form) until you receive the marked original back. If you assignment is lost and you fail to provide us with a copy of the assignment when requested, we will assume the assignment has not been written and the penalties for late assignment will be applied. The duplicate copy of the assignment must be signed by the lecturer or any tutor before submission. 4. The assignment must be presented in a professional manner (word processed). 5. Submissions must be properly referenced (refer to the University Style Guide). 6. Plagiarism is a serious matter; all students involved will be referred to the University’s appropriate authority. 7. Late submission will incur a penalty of one mark per day including the weekend. Late submission must be lodged with Course Coordinator only. 8. Application for extensions must be lodged with the Course Coordinator before due date in writing for granting an extension (medical problems etc.). 1 Question 1 (50 Marks) “Although the 2005 adoption of IFRS was a major regulatory transition affecting several tens of thousands of companies worldwide, its costs and benefits were initially unclear.” (George, Li & Shivakumar, 2016). Reference: George, Li & Shivakumar (2016), A review of the IFRS adoption literature, Review of Accounting Studies (forthcoming). Required: Critically discuss the above statement by outlining costs and benefits of adopting IFRS by reporting entities throughout the world. Do you think that culture has any influence on harmonising accounting standards globally? Note 1: Word limit for Question 1 is 1,000. Note 2: Professional marks will be awarded for format, clarity and expression. Note 3: The presentation of Question 1 should include Introduction, Discussion, Conclusion and List of references. Note 4: You will be able to collect electronic copies of articles by visiting La Trobe University Library website. 2 Question 2 (Word limit = 500 words) (50 Marks) The following details are taken from the accounting records of Cootamundra Ltd. at 30 June 2015. Trial Balance as at 30 June, 2015 Sales Revenue Rent Revenue Salaries Light, power & fuel Audit Fees Interest Expense Damage due to fire Purchases Interim dividend Cash at bank Inventories Accounts Receivable Provision for Doubtful Debts Term deposit - due 30th September, 2015 Marketable Securities (long term) Insurance paid in advance Plant & Machinery Furniture & fittings Buildings Accounts Payable Accumulated Depreciation – Plant & Machinery Accumulated Depreciation - Furniture & fittings Accumulated Depreciation – Buildings Bank Mortgage secured over buildings, due 1st May, 2017 Share Capital General Reserve Retained Earnings Debit Credit AUD $ AUD $ 2,000,000 149,500 240,000 75,000 30,000 24,000 99,000 1,080,000 24,000 228,000 345,000 256,500 30,000 498,000 120,000 60,000 270,000 300,000 435,000 4,084,500 180,000 135,000 90,000 87,000 450,000 750,000 120,000 93,000 4,084,500 3 Additional Information (a) Salaries not paid at 30th June amounted to $30,000. (b) Unpaid power account for June totalled $16,000. (c) Prepaid insurance attributable to current year is 24,000. (d) Cootamundra Ltd. uses the periodic inventory system. The stock-take of 30 th June shows closing inventory of $330, 000 (valued at lower of cost and market value). (e) Interest on bank mortgage is 10% per annum and is payable twice yearly on 31st December and 30th June. The amount due at 30 June has not been recognised. (f) Depreciation rates on the straight line basis are as follows: a. Plant & Machinery b. Furniture & Fittings c. Buildings 10% 5% 5%. (g) The current market value of marketable securities is $126,000. (h) Tax expense was calculated to be $80,000. (i) A final dividend of 5% of paid-up-capital was declared and approved in 30 th June 2015. (j) On 21st June 2015, Cootamundra Ltd. was notified of an impending legal suit for $25,000 against the company for breach of contract. The case was settled 15th July 2015. (k) The tax rate is 30%. Required: 1) Prepare the necessary adjusting journal entries required by items (a) to (l) (narrations are not required). (14 Marks) 2) Prepare a Statement of Comprehensive Income, a Statement of Financial Position and a Statement of Changes in Equity for Cootamundra Ltd for the year ended 30th June 2015 in accordance with the requirements of AASB 101. (21 Marks) 3) Prepare at least fifteen (15) notes to the financial statements according to comply with relevant accounting standards. (15 = 30 Marks) 4
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