Recent Question/Assignment

BUSN2036 Financial Accounting Issues Semester 1, 2017
Due Date: Monday 1 May 2017 at 4pm
This assignment will comprise 15% of the overall assessment for this topic.
This assignment consists of 5 Questions:
Question 1 25 marks
Question 2 25 marks
Question 3 25 marks
Question 4 25marks
100 marks
General Requirements
1. FOR ALL QUESTIONS – you must show all calculations and workings in addition to your answer. You must show narrations for your journal entries. Refer to the relevant Accounting Standard wherever it is requested in the question - do NOT write blocks of text from the Standard, simply quote the paragraph being applied or summarised, e.g. “… as per AASB 102 para 9”.
2. Due date – Lodgement of your assignment is expected prior to the due date and time. If exceptional circumstances lead to the requirement for an extension, this must be applied for prior to the due date via the assignment extension tool on FLO, complete with supporting documentation. Otherwise, a late lodgement penalty applies of 5% of the allocated mark per day or part thereof overdue, up until the return date of the assignment. Assignments submitted after the return date will not be marked.
3. Lodgement – Please lodge a single PDF file of your assignment. You may wish to prepare your assignment in Word, and embed any necessary tables that have been prepared in Excel, prior to conversion to PDF format for submission.
4. Presentation – Please use Arial font, minimum 11 pitch minimum for your assignment. Please note that marks may be deducted for poor presentation, formatting, and written expression (including spelling and grammar).
5. Word limit – This assignment is problem-based and thus does not have an overall word limit. Word limits specified in any individual questions must be adhered to, or penalties will apply.
6. Academic integrity – Please be aware that you MUST abide by the University policy on academic integrity. For details on academic integrity for students, please refer to: https:// Especially note that collusion, which is collaborating with another person on the preparation of answers for an assignment, is a breach of academic integrity. ALL work submitted must be your OWN. While discussing problems with other students is encouraged as a useful way to enhance your understanding of a topic, you should discuss lecture, textbook and tutorial examples for this purpose, NOT your assignment question.
Question 1
On 1 July 2017, Mining Ltd commenced operation of an oil rig site. At the end of the 10 year tenure period, they are required to restore the environmental damage done to the area. As at 1 July 2017, the best estimate to restore the environmental damage is $8 500 000. The pretax rate that reflects the current market assessments of the time value of money and the risks specific to the liability is 8%. On 30 June 2018, the best estimate is still $8 500 000, and the appropriate discount rate is still 8%.
a) Provide the appropriate journal entries (including narrations) for Mining Ltd for the year ending 30 June 2018. Show all calculations and workings. 15 marks
b) Explain your treatment of the provision by referring to the Accounting Standards. 5 marks
c) Explain why the restoration costs are recognised as a provision rather than being disclosed as a contingent liability by referring to the Conceptual Framework and/or Accounting Standards. 5 marks
Question 2
Prepare a short argument (maximum 350 words) providing reasons both FOR and AGAINST the recognition of internally generated goodwill in the financial statements of an entity. Refer to the Conceptual Framework and/or Accounting Standards where appropriate to support your argument. 25 marks
Question 3
Woobits Ltd issues $10m in convertible bonds on 1 July 2017. They are issued at their face value for a term of five years. They pay an interest rate of 3% annually in arrears. The bonds may be converted to shares at any time in the next five years. Organisations similar to Woobits Ltd have recently issued similar debt instruments (without the conversion option) with an interest rate of 5%.
On 30 June 2020, all the holders of the convertible notes elect to convert the bonds to shares in Woobits Ltd.
Provide the appropriate journal entries (including narrations) for Woobits Ltd in relation to the convertible notes for the period 1 July 2017 to 30 June 2020. Show all calculations and workings. 25 marks
Question 4
On July 2018 Double Island Ltd enters into an agreement to borrow £2 million from Point plc (UK). Point plc sends the loan money to Double Island Ltd’s Australian bank account. The loan is for four and requires the payment of interest at the rate of 8 per cent on 30 June each year. Double Island Ltd’s reporting date is 30 June. The relevant exchange rates are:
1 July 2018 A$1.00 = UK£0.48
30 June 2019 A$1.00 = UK£0.50
Provide the necessary journal entries that would be made in the books of Double Island Ltd to account for the above transaction for the year ending 30 June 2019. 25 marks