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93549660

Accounting

string(165) ‘ items in relation to goodwill be recognised directly in fairness requires that any deferred tax products for goodwill be capitalised in the carrying amount of goodwill\. ‘

RESPONSE SHEET SCHOLAR’S SURNAMEADDITIONAL NAMESSCHOLAR NUMBERTRAINING DAY & TIME TUTOR’S FULL NAMETest 1 ” Edition 2 Session 2, 2012 Course Code: ACCG 224 Course Term: INTERMEDIATE ECONOMIC ACCOUNTING Time allowed: 55 minutes plus 5 minutes studying time Total No . of questions: Three Questions Instructions 1 . You have to answer Your concerns in the check booklet.

Not any separate booklet will be supplied to answer the questions.. This is a closed-book test. You aren’t allowed to label any text message material intended for the test. a few. Show almost all workings. Handwriting must be legible. 4. Non-programmable and non-text retrieval calculators may be used, nevertheless dictionaries are not to be used. Query No . Marks 1 /15 2 /15 3 /10 Total /40 Question one particular ” Multiple Choice (15 marks) (Please circle the best answer) 1 . The main features of the Economic Reporting Authorities include: I. II. III. IV. Sixth is v. a. w. * c. d. supervising the process pertaining to the environment of accounting standards from the AASB. identifying the AASB’s broad ideal direction. onitoring and looking at the level of funding for the AASB. directing the AASB in relation to the development or producing of a particular standard. the strength to vorbehalt a standard recommended by the AASB. I, II, III and V only I, 2, and III only We, II, 4 and Sixth is v only II, III, IV and Sixth is v only installment payments on your The function of the Aussie Securities and Investments Commission is to: We. II. III. IV. a. b. c. * d. 3. I actually, II, 3 and IV I, 3 and IV only My spouse and i, II and IV simply II, and III simply Regulatory get is said to occur in which in the following situations? a. w. c. g. * four. Enforce and administer the Corporations Work.

Inform the public about Australian companies, monetary markets and financial pros who package and advise in financial tools. Issue accounting standards. Improve the performance of the financial system. If the regulated organizations ensure non-performance by the controlling body When the regulated agencies co-opt the regulators right into a mutually shared perspective If the regulated agencies control the regulations plus the regulatory human body All of the over Which of these theories may explain a move towards government charge of accounting requirements setting in Australia? a. b.. d. 2. 5. Public interest theory Regulatory catch theory Non-public interest theory All of the over a primary causes of developing a conceptual framework is: a. 2. b. c. d. To enable regulators to develop accounting standards that are consistent and rational To provide assistance to accountancy firm in areas where no standard exists To lessen the number of accounting standards had to assist auditors 2 six. According to the AASBs Conceptual Construction an asset can be: a. w. c*. g. 7. An organization incurs significant costs pertaining to a speculative project that intends to choose rocks in gold.

According to the AASBs Conceptual Framework the costs on this project are an: a. 2. b. c. d. eight. d. it is far from necessary to restate the prior period comparatives, the error could possibly be amended prospectively, it may be deferred and accepted in the future period, a retrospective modification must be made. When changing an accounting plan which of the following must be applied retrospectively? a. 2. b. c. d. eleven. Relevance, trustworthiness, materiality, regularity, verifiability, understandability Understandability, timeliness, relevance, legibility, timeliness, reliability Relevance, loyal representation, comparability, nderstandability, verifiability, timeliness Uniformity, relevance, reliability, consistency, dedicated representation Where a fundamental mistake occurs inside the recognition procedure: a. b. c. d*. 10. expenditure because there is very little probability that future economic benefits will certainly eventuate price because the reputation criteria to get an asset is not satisfied asset because the classification and acknowledgement criteria to get assets are satisfied property because the business will control the future economical benefits. The qualitative qualities for economic reporting within the Conceptual Structure are: a. b. c. 9. a contingent item depending on an additional event occurs at some time in the future a future rewards controlled by an business as the result of a future transaction a future benefit controlled simply by an enterprise as a result of past deals or situations an item which has a physical presence and can be converted into cash. a voluntary change to improve the significance of information offered a change due to the adoption of the new accounting standard an alteration due to the usage of a new interpretation each of the above. A company’s labor force went on hit for an imprecise period starting on 5 August 20X1.

The strike was anticipated to cause serious financial conditions for the corporation. The economic statements pertaining to the year concluded 30 06 20X1 were expected to be completed by simply 7 September 20X1. In accordance with AASB 110 Events following your Reporting Date, the appropriate treatment regarding the hit is: a. * n. c. g. disclosure as a note towards the financial claims, as it is a non-adjusting event, disclosure as being a note to the financial assertions, as it is a great adjusting celebration, to adjust the financial claims, as it is a non-adjusting celebration, to adjust the financial assertions, as it is a great adjusting celebration. 12. Distinctions between the having amounts of a great entity’s net assets decided under accounting standards and accrual accounting, and the taxes bases of these net property determined within the Income Tax Evaluation Act, happen to be described as: a. * n. c. deb. 13. CTT Limited has an asset which cost 300 dollar and against which devaluation of $22.99 has built up. The accumulated depreciation for tax functions is $180 and the firm tax charge is 30%. The tax base with this asset is: a. 5. b. c. d. 16. temporary distinctions permanent variations tax losses the current tax liability. $120 $220 $80 $20

In jurisdictions the place that the impairment of goodwill can be not duty deductible, AASB 112 Income Taxes: a. 5. b. c. d. would not permit the using deferred taxes accounting to goodwill permits the recognition of any deferred taxes item with regards to goodwill needs that any kind of deferred tax items regarding goodwill be recognised straight in fairness requires that any deferred tax products for goodwill be capitalised in the holding amount of goodwill.

You read ‘Balance Sheet and Accounting Standards’ in category ‘Essay examples’ 15. Revaluations under AASB 116 House, Plant and Equipment affect: a. n. c. g. * all assets with an individual basis individual current assets only individual non-current assets only ssets over a class-by-class basis. 4 Problem 2 , Short Answers (15 marks) Part a. The ASIC Act information that one with the primary accounting standard features of the Economical Reporting Council (FRC) should be to ensure that accounting standards serve the best interests of both private and public sector. Why is it important that the FRC ensure that the interests with the public sector are achieved? (3 marks) One of the crucial roles of FRC is to assess the continued relevance and effectiveness of accounting and auditing standards to ensure that accounting standards serve the best passions of both private and public sector.

Relevant accounting standards bring about required and appropriate accounting information disclosure. Accounting details serves a significant public plan purpose ” namely increasing the movement of information to investors in a country’s capital markets. Accounting information helps investors and also other stakeholders produce sound economical decisions, that can enhance the effectiveness of useful resource allocation and fairness of wealth syndication in the contemporary society. With the development of a country’s economy, the social welfare will increase.

The public interest means such interpersonal welfare. your five Part m. You have just lately graduated together with your Bachelor’s level and have sent applications for a position with all the Australian Accounting Standards Board (AASB) like a technical adviser. At the interview, the Leader stresses that they can often have difficulties in deciding whether the criteria they set up should adhere to ‘principles based’ or ‘rules based’ strategy. In particular they would like to implement standards to overcome creative accounting practices.

Understanding that you have lately completed research in accounting theory and standard setting, explain the Chairman exactly what the three primary differences between the ‘principles based’ approach in contrast to a ‘rules based’ approach to standard establishing? (3 marks) Principles Centered? ¢ ¢ IASB employs a principles-based approach to regular setting. Created in a wide-ranging framework that is not focussed about specific guidelines under specific circumstances Permits professional judgement in relation to material rather than kind Advantages of principles-based standards ¢ Principles-based standards are simpler. They supply broad guidelines that could be applied to many situations. ¢ They increase the representational faithfulness of financial transactions. ¢ They allow accountants to use their particular professional thinking. ¢ Data suggests that managers are less likely to attempt income management. Drawbacks of principles-based standards ¢ Managers might select remedies that do not really reflect the underlying economical substance. ¢ The judgement and choice involved in most of the decisions show that comparability among financial statements may be decreased Rules-based ¢ Currently FASB follows rules-based approach. Created in a construction that is concentrated on certain rules below specific circumstances. ¢ Improper use in corporate and business collapses signifies that FASB is usually reconsidering in the event they should proceed to principles-based specifications. Disadvantages of rules-based specifications ¢ Rules-based standards can be extremely complex. ¢ Organisations can structure orders to circumvent unfavourable confirming. ¢ Criteria are likely to be incomplete or even obsolete by the time they are issued. ¢ Manipulated conformity with guidelines makes auditing more difficult. ¢ Rules-based standards can be confusing. Part c.

Clarify what a conceptual framework is usually and precisely what are the benefits of creating a Conceptual Structure for the accounting job? (4 marks) Definition of a Conceptual Platform? ‘A coherent system of related objectives and fundamentals that may be expected to result in consistent standards’,? Also, costly attempt to give a structured theory of accounting that prescribes practice.? establishes concepts/ideas that underlie the preparation and presentation of economic reports,? helps standard setters, preparers, auditors, users and the ones interested in the task of common setters How a framework is employed for the accounting career? Explains the concepts/ideas that underlie the preparation and presentation of economic reports pertaining to external users , What is the purpose of financial reporting? , For who should economical reports be prepared? , What qualitative qualities should economic information have got? , Exactly what the components of financial reporting? , What measurement rules should be applied? It provides advice to the accountants when there is absolutely no specific advice given in the accounting specifications.

It also helps the accountancy firm when they simply cannot understand the application of certain IFRS due to the complexity involved. 7 Part d. Barton Ltd uses tractors as a part of it is operating products, and it applies the straight-line devaluation method to depreciate these resources. Barton Ltd has just taken over Deakin Limited, which uses similar tractors in its procedures. However , Deakin Ltd has been using decreasing balance approach to depreciation for the tractors. The accountant in Barton Limited is quarrelling that for both agencies the same depreciation method must be used for tractors. Provide arguments for and against this pitch. 2 marks) Para 50 of AASB 116 paperwork that depreciation is the systematic allocation of the depreciable sum of an asset over it is useful existence.. Arguments resistant to the Proposal? Depreciation is testing the enhancements made on value because of the use of an asset over the period. It is possible that Deakin Ltd has been making use of the diminishing worth as it was gonna use the tractor more initially of the economical life thus the choice of the depreciation method is justified. Fights in Favour? It is important that there may be consistency inside the type of the asset and depreciation approach applied.

Component e. a. Explain the difference between the price model and revaluation style under way of measuring subsequent to first measurement. (3 marks) Cost Model AASB 116 requires that way of measuring subsequent to first measurement of assets could be carried for cost less virtually any accumulated: , depreciation, , impairment losses. Revaluation style , Rather than the cost version AASB 116 allows the revaluation version to be employed for classes of assets. Revaluation is a great adjustment of PPE’s holding amount in order that it reflects their current fair value. Measurement basis is fair benefit (FV).

Rate of recurrence of revaluations is certainly not specified, yet must be performed with satisfactory regularity so that the holding amount of assets can be not materially different from their particular FV. Revaluation performed over a class basis. Accounting performed on an asset-by-asset basis. almost eight Question several ” Sensible (10 Marks) Bravo Ltd began businesses on 1 July 2011 and has provided the subsequent information: 1 . 2 . three or more. Pre-tax accounting profit pertaining to the economical year concluded 30 06 2012 is usually $150 500. The enacted tax level is 30%. Differences between your 30 June 2012 salary statement and tax returning are here: (a) b) (c) (d) (e) some. Annual leave expense accumulated for economical reporting functions amounts to $15 500. The employees are not allowed to take annual keep in the initially year of operation. Devaluation of house, plant and equipment pertaining to accounting functions amounts to $120 1000. Depreciation of such assets quantities to $80 000 intended for the taxes return. Entertainment expenses of $6 500 were contained in computing pre-tax accounting income. Tax free government scholarships of $5 000 had been recognised because income. As a small business, Salvaje Ltd chose for taxation purposes cash accounting for sales income.

Accounts receivable regarding revenue show an equilibrium of $20 000 in year-end. There was clearly no need to identify any permitting for skeptical debts. Taxable profit is expected for the next few years. Necessary (a) (b) (c) Calculate taxable income for the financial yr ended 40 June 2012. (4 marks) Prepare the journal entrance to record income tax expense, deferred taxes and income tax payable for the financial year concluded 30 06 2012. (4 marks) Draft the income statement you start with ‘Profit ahead of income tax’. (2 marks) (a) Pre-tax accounting profit $150 500 Permanent variations: Entertainment expense

Tax-exempt earnings Adjusted accounting profit 6th 500 (5 000) 151 500 Originating temporary differences: Annual Leave Provision Accounting expense Taxes deductible Surplus depreciation expense Accounting expense Tax allowable Excess Revenue Taxable revenue (b) money 15 000 (0 ) 15 1000 &gt, DTA 4 five-hundred 120 500 (80 000) 40 000 &gt, DTA 12 000 (20 000) &gt, DTL 6, 1000 $186 500 &gt, Tax payable 55 950 Income Tax Expense forty-five 450 Deferred Tax Advantage 16 five-hundred Income Tax Payable 55 950 9 Deferred tax liability 6 1000 DTA sama dengan 4 five-hundred + 12 000 (c) Profit prior to income tax Income tax expense Earnings for the time $150 500 45 400 $104 550 10

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