ACCG923/612 Accounting Standards and Practice
Session 2, 2014 Assignment Instructions:
• Assessment percentage: 15%
• Due: Week 9 classes (Week commencing 13 October, 2014)
• Prepare a letter to your client that would be accepted by an Australian accounting firm or business as ‘envelope-ready’, that is, ready to be sent to the client. This requires correct accounting information in an appropriate form of communication.
• Mark allocation: This assignment will account for 15% of the total marks towards your final assessment. The assignment will be assessed for two components: 1) Technical component will be marked out of 15, which will be converted to 10% towards your overall assessment. This mark only covers the technical content of your advice and explanations on each of the issues. You MUST answer the question mainly in your own words and ensure any references to the accounting standards or any other sources are appropriately referenced. 2) Writing skills component will be marked out of 5, which will be converted to 5% towards your overall assessment. This mark covers the following generic skills of business letter writing: layout, organisation, reference, written expressions and tone. The specific mark allocation is as below:
Mark allocation
Technical component
Issue 1 /11
Issue 2 /4
Writing skills component / 5
Layout and Format (as per ELC lecture) /1
Structure and organisation /1
Written expression
• Clarity and appropriate tone (1)
• Grammar and spelling (1)
• Appropriate referencing (1) /3
Total /20
• You must submit a hard copy of your assignment (with a completed and signed cover sheet and your originality report from TURNITIN attached) to your lecturer during your class time only. The coversheet for individual assignments can be found at:
http://www.businessandeconomics.mq.edu.au/current_students/undergraduate/a ssignment_coversheets
• The instructions on how to register, submit your assignment and prepare the originality report will be available on iLearn under the assignment folder.
• You must clearly state your lecturer’s name and the time and day of your lecture.
• Format requirements: “Times New Roman”, font size 12 with 1.5 line spacing
• No extension will be granted, except for cases in which an application for Disruption to Studies is received (with any supporting documentation, e.g. medical certificate attached) and approved. If students are unable to submit the assignment on time due to illness or misadventure, then they should contact the Unit Convenor prior to the due date and hand in the appropriate absence form (i.e. application for Disruption to Studies). It is important for students to provide proof of such circumstance (e.g. medical certificate covering absence date and subsequent days until submission). No penalty will apply if the evidence provided is approved by the Unit Convenor and covers the entire period prior to submission.
• No extension will be granted due to late enrolment in this subject.
• Any submission after your class is considered to be a late assignment and will not be accepted by your lecturer. For example, if students submit the assignment after their class time, but still within the same day, they will be penalized for late submission. For late assignment, students must submit at BEGC (E4A Level 2). Late submission will be penalized at the rate of 20% of the maximum marks per day or part thereof.
• The policy statement on cheating and plagiarism is a cornerstone of academic integrity at Macquarie University. All students are responsible for familiarizing themselves with the policy, seeking further advice if necessary and complying with it at all times. If you use any material, for example, textbooks, journal articles, etc., to support your answer, you are required to use the Harvard Referencing Style in your answer for both in-text and bibliography referencing. The instructions can be found at: http://www.businessandeconomics.mq.edu.au/our_departments/accounting_and_corp orate_governance/Accg_docs/pdf/postgraduate_coursework/Harvard_Referencing_Sy stem.pdf.
• Assignments not complying with ALL of the above instructions MAY NOT be marked.
Background Information
You are a CPA working for an accounting firm called AccPlus. One of your clients is Cairns Ltd. James Manning is the Managing Director of Cairns Ltd. He often contacts you for assistance regarding various accounting issues. Recently he has expressed some concerns over a number of current issues, as shown in the memo below, and he is seeking your professional accounting advice.
To: AccPlus
From: James Manning
Manager Director—Cairns Ltd
455 Smith Street, Notsureville, NSW, 2555
Date: 6 June, 2014
Re: Accounting Issues
1. Advertising expenditure has been previously expensed as incurred in our company. Following extensive market research, the board of directors has taken the view that benefits from advertising expenditure in the form of product awareness and increased sales will be received by the company over a 4-year period following the expenditure. The board of directors has approved to change the accounting policy for the treatment of advertising expenditure in April this year (i.e. to record it as an asset rather than an expense). However, due to a recent fire and water damage to the company’s accounting records, details of the advertising expenditure in prior years have been destroyed.
a. (i) What guidance or information does AASB 108 provide regarding the disclosures, if any, which are required for the change in accounting policy? Could you please provide an example of disclosures for change in accounting policy to assist my understanding? (ii) Based on the example you provide, critically analyse and evaluate to what extent the example meets the disclosure requirements for change in accounting policy as per AASB108? (Hint: you are required to choose a disclosure note for change in one accounting policy from the latest annual report of a company chosen by yourself, which is constituent of the ASX 200 index. You are required to attach the selected disclosure example in original layout as an appendix and use appropriate reference format. The example does not have to be the same change in accounting policy for advertising expenditure. ) (5 marks)
b. Could you please also help me prepare a draft of the disclosure note for the change in accounting policy for advertising expenditure for my company according to AASB 108?
(6 marks)
2. Australia has adopted the standards issued by the IASB as from 1 January 2005. I have been told by one of my colleagues that because of the principles-based nature of IFRS, accountants are required to apply professional judgements extensively in preparing financial statements. Could you please explain what judgements or estimates would be required in determining depreciation of non-current assets and how these judgements would be made?
(4 marks)
I would like to see appropriate references to support your advice.
Kind Regards
James Manning
PS. Your written advice regarding these issues would be appreciated.
Required:
Write a business letter giving advice to James Manning, providing clear answers and explanations to each of the two accounting issues he raised in the memo.
*You need to choose a suitable company by yourself from: http://au.spindices.com/indices/equity/sp-asx-200 which
1. is constituent of the S&P/ASX 200 index;
2. publishes audited annual reports in English, fully complying with IAS/IFRS or AASB; and
3. does NOT belong to the financial sector.
Maximum length: 1,300 words