MAA 716 Financial Accounting

WRITTEN ASSIGNMENT – TRIMESTER 1, 2014
PART 1 – QUESTION 1


Submission date and available mark

Due date: 11 April 2014 before 11.59 pm
Marks: This Written Assignment represents 4 0% of the total mark for the unit and consists of three questions. Question 1 will be marked out of 20 and converted to a mark out of 10%.

Assignment instructions

1. Please monitor CloudDeakin for any instructions/announcements.
2. You will need to have completed Topic 3 and 4 to complete this question (Q1).


Submission instructions

1. This assignment is to be submitted ONLINE ONLY (You are NOT required to submit a hard copy).
2. You must type in your answer for each question.
3. The completed assignment question must be submitted into the allocated area on CloudDeakin under the Dropbox folder.
4. You are not required to upload an Assignment Cover Sheet. You will complete a Plagiarism declaration when you access the Dropbox.
5. Once submitted you cannot take your assignment back BUT you CAN SUBMIT another version. The most recent version submitted will be marked.


A note on plagiarism and collusion

Plagiarism and collusion are forms of cheating and is considered a serious academic misconduct, a n d severe penalties are associated w i t h them. Please refer to the MAA 716 u n i t guide for your responsibilities w i t h regard t o plagiarism a n d other academic offences.

Penalties applied in this assignment
1. Assignment submitted after the due date will attract a penalty of 1.5 marks per day (out of the total of 20 marks for Question 1).
2. The final examination is the only hurdle requirement for the unit. If you choose not to submit this assignment you will score zero. There is no provision for the mark to be added to the final exam mark.


Discussion area for this assignment

There is a discussion area on CloudDeakin entitled ‘Assignment Discussion’. This area is for you to discuss the assignment. It is an area to help each other – it is NOT an area for the answer to be provided to each other.


Receiving your mark and suggested solution

Your mark for the assignment will be available in Grades within 15 working days from your assignment submission date.

QUESTION 1
On 1 July 2011, Hawks Ltd acquired land for $1 500 000 and machinery for $ 1 000 000. Hawks Ltd uses cost model to account land and revaluation model to account for machinery. Hawks Ltd depreciated the machinery over its useful life of four years, using straight-line method. Disposal value at the end of useful lifetime was assessed as Zero.
The following information concerning the asset measurement was available.
Detail Fair Value Cost of Diposal Value in Use
30 June 2012
Land
Machinery $ 1 250 000
1 100 000 $100 000
Nil $1 200 000
Nil
30 June 2013
Land
Machinery $ 1 200 000
700 000 $75 000
Nil $1 200 000
Nil
30 June 2014
Land
Machinery $ 1 400 000
300 000 $100 000
Nil $1 500 000
Nil

Indicators of impairment and/ or reversal of impairment existed at relevant dates for land only.

Required:
a) Prepare general journal entries in the books of Hawks Ltd over the period from, 1 July 2011 to 30 June 2014, in accordance with the requirements of AASB 116 “ Property plant and Machinery and AASB 136 “ Impairment of Assets” (Ignore the tax effect).
(11 marks) b) Comment on the effects on the comprehensive income statement in relation to the revaluation method adopted for machinery from 30 June 2012 to 30 June 2014.
(4 marks)
c) What could be the possible reasons for impairment of land if there is any; you need to refer to AASB 136 “ impairment of assets” when explaining your answer. (5 marks)
Provide all workings necessary to derive your answer.