Corporate Reporting Group Assignment
Question 1 -
"Although the 2005 adoption of IFRS was a major regulatory transition affecting several tens of thousands of companies worldwide, its costs and benefits were initially unclear." (George, Li & Shivakumar, 2016).
Reference: George, Li & Shivakumar (2016), A review of the IFRS adoption literature, Review of Accounting Studies (forthcoming).
Required: Critically discuss the above statement by outlining costs and benefits of adopting IFRS by reporting entities throughout the world. Do you think that culture has any influence on harmonising accounting standards globally?
Note 1: Word limit for Question 1 is 1,000.
Note 2: Professional marks will be awarded for format, clarity and expression.
Note 3: The presentation of Question 1 should include Introduction, Discussion, Conclusion and List of references.
Note 4: You will be able to collect electronic copies of articles by visiting La Trobe University Library website.
Question 2 -
The following details are taken from the accounting records of Cootamundra Ltd. at 30 June 2015.
Trial Balance as at 30 June, 2015
|
|
Debit
AUD $
|
Credit
AUD $
|
|
Sales Revenue
|
|
2,000,000
|
|
Rent Revenue
|
|
149,500
|
|
Salaries
|
240,000
|
|
|
Light, power & fuel
|
75,000
|
|
|
Audit Fees
|
30,000
|
|
|
Interest Expense
|
24,000
|
|
|
Damage due to fire
|
99,000
|
|
|
Purchases
|
1,080,000
|
|
|
Interim dividend
|
24,000
|
|
|
Cash at bank
|
228,000
|
|
|
Inventories
|
345,000
|
|
|
Accounts Receivable
|
256,500
|
|
|
Provision for Doubtful Debts
|
|
30,000
|
|
Term deposit - due 30th September, 2015
|
498,000
|
|
|
Marketable Securities (long term)
|
120,000
|
|
|
Insurance paid in advance
|
60,000
|
|
|
Plant & Machinery
|
270,000
|
|
|
Furniture & fittings
|
300,000
|
|
|
Buildings
|
435,000
|
|
|
Accounts Payable
|
|
180,000
|
|
Accumulated Depreciation - Plant & Machinery
|
|
135,000
|
|
Accumulated Depreciation - Furniture & fittings
|
|
90,000
|
|
Accumulated Depreciation - Buildings
|
|
87,000
|
|
Bank Mortgage secured over buildings, due 1st May, 2017
|
|
450,000
|
|
Share Capital
|
|
750,000
|
|
General Reserve
|
|
120,000
|
|
Retained Earnings
|
|
93,000
|
|
|
4,084,500
|
4,084,500
|
Additional Information-
(a) Salaries not paid at 30th June amounted to $30,000.
(b) Unpaid power account for June totalled $16,000.
(c) Prepaid insurance attributable to current year is 24,000.
(d) Cootamundra Ltd. uses the periodic inventory system. The stock-take of 30th June shows closing inventory of $330, 000 (valued at lower of cost and market value).
(e) Interest on bank mortgage is 10% per annum and is payable twice yearly on 31st December and 30th June. The amount due at 30 June has not been recognised.
(f) Depreciation rates on the straight line basis are as follows:
a. Plant & Machinery
b. Furniture & Fittings
c. Buildings
(g) The current market value of marketable securities is $126,000.
(h) Tax expense was calculated to be $80,000.
(i) A final dividend of 5% of paid-up-capital was declared and approved in 30th June 2015.
(j) On 21st June 2015, Cootamundra Ltd. was notified of an impending legal suit for $25,000 against the company for breach of contract. The case was settled 15th July 2015.
(k) The tax rate is 30%.
Required:
1) Prepare the necessary adjusting journal entries required by items (a) to (l) (narrations are not required).
2) Prepare a Statement of Comprehensive Income, a Statement of Financial Position and a Statement of Changes in Equity for Cootamundra Ltd for the year ended 30th June 2015 in accordance with the requirements of AASB 101.
3) Prepare at least fifteen (15) notes to the financial statements according to comply with relevant accounting standards.