ACC201: Bolton Ltd Case Study - Accounting Assignment Help

Assignment Task:

Question 1 

Recently Sea Eagle Ltd experienced a strike that affected a number of its operating plants. The group accountant of Sea Eagle Ltd indicated that it was not appropriate to report depreciation expense during this period as the equipment was not used during the strike. She stated that during the strike the equipment did not depreciate and an inappropriate matching of costs and revenues would result if depreciation were charged. She based her position on the following points. 

1. It is inappropriate to charge the period with costs for which there are no related revenues arising from production. 

2. The basic factor of depreciation in this instance is wear and tear, and because the equipment was idle, no wear and tear occurred. 

Required

1. Summarise the requirements of AASB 116 in relation to depreciation of property, plant and equipment assets. 

2. You are a part of the auditing team that analyses the accounts of Sea Eagle Ltd. Write a report to your supervisor in relation to the views of the group accountant of Sea Eagle Ltd. 

Question 2 

Bolton Ltd holds a trademark that is well known within consumer circles and has enabled the company to be a market leader in its area. The trademark has been held by the company for 9 years. The legal life of the trademark is 5 years, but is renewable by the company at little cost to it. 

Required

Discuss how the company should determine the useful life of the trademark with reference to AASB 138, noting in particular what form of evidence it should collect to justify its selection of useful life

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