ACCT2007 - Financial Accounting Regulation - Application and Theory - Accounting and Finance Assignment Help

Assignment Task

Question1

The mangos were picked on May 30th, 2019. The fair value less costs to sell the fruit immediately after picking and packing amounted to $250,000.   

On 22nd June 2019, 80% of the mangos are sold for a sales price of $205,000.  Picking and packing costs amounted to $8,000 The remaining 20% of the picked fruit are recognised as inventories at the end of the reporting period, this being June 30, 2019.

During the reporting period ending June 30, 2019, employee expenses, fertilisers, lease expenses and other expenses amounted to $11,500.      

On July 1, 2018 the mango orchard had a value of $90,000 however at June 30, 2019 the value had increased to $113,000.  

1. Provide the journal to record the harvesting of mangos. (3 marks)
2. Provide the journal entries to record the sale of mangos and the adjustment to inventory. (6 marks) 
3. Provide the journal to record the change in the biological asset.(5 marks)
Question2

Provide two attributes of biological assets and discuss how these attributes differentiate them from other assets.  Provide an example for each attributes. (6 marks)

Question3

What is a ‘temporary difference’ and what effect does a temporary taxable difference and a deductible temporary difference have on the financial accounts? 
Discuss how you might apply a set-off? (8 marks) 

Question4    
A computer has a carrying amount of $70,000 and a tax base of $60,000.

1. Calculate the amount of the temporary difference (1 mark)
2. State whether the temporary difference is a deductible temporary difference or a taxable temporary difference. (1 mark)

Question 5     
A provision for warranty costs is setup in the accounts, the carrying amount of the liability is $60,000 and the tax base is $nil. 

1. Calculate the amount of the temporary difference (1 mark)
2. State whether the temporary difference is a deductible temporary difference or a taxable temporary difference. (1 marks)

Question     

On July 30, 2019, the company discovered that an employee was engaged in fraudulent activity and had defrauded payroll of over $3 million dollars over the last 2 years.  The financial reports are due to be signed off by the directors and auditor at the end of August 2019.

1. Discuss whether an adjustment in the financial accounts is required or a note disclosure, give reason for your answer.
2. Discuss the effect the scenario has on the accounts and how they are presented. 

Question     

On July 30, 2020 Mine Co Limited reported a merger with Rio Mine which has net assets of over 3 billion dollars. 

The financial reports are due to be signed on August 2, 2020.

1. Discuss whether an adjustment in the financial accounts is required or a note disclosure, give reason for your answer.
2. Discuss the effect the scenario has on the accounts and how they are presented. 

Question     

CMA Limited is a large research companywho manufactures vaccines for the medical industry.  They employ over 2,000 staff and operate in four countries.  
1. Using your knowledge of accounting theories, provide reasons as to why CMA might want to provide details of corporate social responsibility reporting in their accounting reports. Ensure that you mention two different accounting theories and provide examples of corporate social reporting. 

Question     

On June 15, 2020 Cairns Ltd enters a non-cancellable purchase commitment with US company Mackay Ltd to supply Equipment. The total contract price is US $1 million and is due to be paid on August 31, 2020.

Due to concerns in movements in the foreign exchange rates, on June 15, 2020 Cairns Ltd entered into a forward rate contract on US dollars to receive US $1,000,000 on August 31, 2020. Cairns Ltd elects to treat the hedge as a cash flow hedge. It is assumed that the hedge is effective. 

The spot rates are provided below. The forward rates offered on particular dates for delivery of US dollars are also provided. 
Date                                          Spot Rate                          Fwd Rates
15 June 2020                             US $0.78                            $0.75
30 June 2020                             US $0.76                            $0.73
31 August 2020                          US $0.71                            $0.71

Note: the purchase is not recognised until such time as the inventory is shipped on 30 June 2020. 

1. Discuss why no journal entry is required on June 15, 2020 for the inventory transaction and the foreign instrument? (4 marks)
2. Provide the journals entries to account for the hedged item and the hedging instrument for the months ending June 30, 2020.(10 marks)
3. Provide the amount of the gain or (loss) on the hedged item, show your working. (5 marks)
4. Provide the amount of the gain or (loss) on the hedging instrument, show your working.(5 marks)

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