Unit Guide%2c Sem 1%2c 2010

Corporate Reporting ACC2CRE

Unit Learning Guide

Semester 2, 2010

Bundoora

Associate Professor Dr Jahangir Ali

ACC2CRE / Corporate Reporting/ Bundoora of 22Faculty of Law and Management, La Trobe University

Faculty of Law and Management

School of Business

Contents

1.0 Unit information at a glance 3

2.0 Unit description 5

3.0 Learning and assessment 6

3.1 Learning objectives 7

Mid-semester examination revision question 11

Additional questions for tutorials 13

3.2 Assessment tasks 14

3.2.1 Overview 14

3.3 Assessment requirements and definitions 15

3.3.1 Passing the unit 15

3.3.2 Penalties for late submission of the assignment 15

3.3.3 Format and submission of assessment material 15

3.3.4 Academic Plagiarism 17

3.4 Special circumstance processes 17

4.0 Teaching arrangements 18

4.1 Teaching schedules 18

4.2 Tutorial schedules 19

5.0 Learning resources 20

5.1 Prescribed and recommended texts 20

5.2 WebCT 21

6.0 Feedback and quality assurance processes 22

7.0 Learning effectively in this unit 23


1.0Unit information at a glance

Academic and support staff:Unit Coordinator: Associate Professor Dr Jahangir Ali (PhD, CPA, CMA, PNA, AFAANZ) Location: 123 SS Building Tel: 9479 5177 E-mail: [email protected] Consultation: Thursday: 12p.m. – 2.00 p.m.Other time by appointment only

Tutors:Mr. Joe Lanciana (E-mail: corporate [email protected])Mr Samuel Assenso (E-mail: [email protected])Ms Joane Jonathan (E-mail: [email protected])

Delivery mode and location: 1 x 2 hour lecture per week (Thursday 9.00 am – 11.00am, Room ELT 4); and 1 x 1 hour tutorial per week.

The course is taught over thirteen weeks. Students are expected to attend all the lectures and tutorials.

Assessments:Mid-semester test 15% 1.15 Hours In week 6 Assignment 15% Due Date 8 October 2010 Examination 70% 3 hours duration Examination period

Essential texts:

Deegan C., Australian Financial Accounting, 6th Edition, Irwin McGraw-Hill, Australia, 2009

The Institute of Chartered Accountants in Australia, Financial Reporting Handbook 2010, John Wiley, Australia. or

The CPA Australia, Accounting Handbook 2010, Prentice Hall, Australia.

Supplementary references: Leo, K.J., and Hoggett., J.R., (2009) Company Accounting in Australia, 8th edition;

John Wiley. Alfredson, K., Leo, K., Picker, R., and Radford, J., (2009) Applying International

Accounting Standards, First Edition, JohnWiley & Sons Australia, Ltd.


mailto:[email protected]




Special study requirements:

Students with special needs whose participation in this unit might be limited by any study requirements are encouraged to consult the Equity and Access Unit (EAU). Further information and contact details for the EAU are available at http://www.latrobe.edu.au/equity/


http://www.latrobe.edu.au/equity/

2.0 Unit description

ACC2CRE Corporate Reporting covers corporate financial accounting and reporting at an undergraduate level. This subject is designed to meet the preliminary requirements of the Institute of Chartered Accountants in Australia and the CPA Australia. Additionally, it provides the necessary background for understanding the financial reporting requirements in Australia. The subject focuses on the Australian external reporting environment, and the role of conceptual framework and its relevance to financial reporting. It also deals with the evaluation and application of selected accounting standards for property, plant and equipment, intangible assets and income tax. Accounting for group structure, equity investments and joint ventures are also discussed in the subject.


3.0Learning and assessment

3.1 Learning objectives

The purpose of the subject is to enable you to develop knowledge in understanding the Financial Reporting Standards and their use in the accounting measurement and disclosure practices. The subject explains a broad introduction about the bodies involved in formulating, interpreting and enforcing accounting standards within Australia. It is aim of this subject that you will better understand the use of accounting standards and conceptual framework with regard to accounting for property, plant and equipment, intangible assets, liabilities, equities, income tax, group structure, equity investments and joint ventures.

On completion of this subject, you should be able to: Understand the regulatory framework for financial reporting in Australia Discuss the role of a conceptual framework and its relevance to financial reporting Recognize and become familiar with the form and content of published financial

reports Explain and apply accounting standards with regard to revaluation of property, plant

and equipment, intangible asset and impairment of assets Evaluate and apply accounting standards in respect of income tax Assess and employ accounting standards relating to business combination Prepare consolidated financial statements on the basis of Australian Accounting

Standards Aware of how to account for equity investments Provide the necessary accounting entries for joint ventures


3.2 Learning objectives

Learning objective 1:

To explain the Australian external reporting environment and the conceptual framework of accounting and its relevance to financial reporting

Student learning outcomes Assessments

1. Understand the scope of regulation relating to Australian external financial reporting.

2. Indentify the sources of accounting regulation within Australia and thus be able to explain the general functions of the ASIC, AASB, the FRC and the ASX.

3. Appreciate the general functions of the International Accounting standards and its direct relevance to Australian accounting standard setting;

4. Be aware the Conceptual Framework and able to explain the recognition criteria for elements of financial statements

5. Be able to critically review the existing conceptual framework

Tutorial work and Examination


To understand the presentations and preparation of general purpose financial statements to ensure comparability both with the entity’s financial statements of prior periods and with the financial statements of other entities


1. Understand that an entity is required to produce statement of comprehensive income, statement of changes in equity and statement of financial position

2. Be able to account for changes in accounting policies

3. Understand how to account for prior period errors

4. Appreciate how to deal with events after the balance sheet date

Tutorial work and Mid-semester test

Examination



To illustrate the accounting treatment for income taxes that satisfy the measurement and disclosure rules of AASB’s standard.


1. Understand the difference the difference between accounting profit and taxable profit.

2. Be able to identify the factors which cause differences between profit or loss for accounting purposes and profit or loss for tax purposes

3. Appreciate how deferred tax assets and deferred tax liabilities arise

4. Be aware how changes in rates impact on existing deferred tax balances

5. Be able to present the necessary journal entries for a transfer of tax losses from one entity to another

6. Critically evaluate the balance sheet approach to accounting for taxation and the associated asset, deferred tax asset, liability and deferred tax liability

Tutorial work, Assignment and

Examination


To explain and illustrate accounting treatments for property, plant and equipment, impairment of assets and intangible assets


1. Understand the initial recognition and measurement of property, plant and equipment, and the use of cost model and revaluation model

2. Know the meaning and accounting treatment of impairment loss

3. Identify the difference in accounting treatments for upward revaluations to fair value as opposed to write-downs to recoverable amount

4. Be able to account for revaluations that reverse previous revaluation increments or decrements

5. Explain when expenditure on intangible is expensed or capitalised

6. Describe how to account for research and development expenditure



Learning objective 5:To outline the accounting measurement and disclosure for business combination


1. Understand the nature of business combination

2. Identify the basic steps in the purchase method of accounting

3. Determine how to measure the cost of business combination

4. Calculate the allocation of the cost of the business combination

5. Explain the nature of and the accounting for goodwill and the excess on acquisition

6. Be able to recognise discount on acquisition


Learning objective 6:To describe the accounting for group structure: intragroup transactions and non-controlling interests


1. Understand the reasons for preparing consolidated financial statements

2. Identify the basics involved in preparing consolidated financial statements

3. Be able to use a consolidation worksheet to perform simple consolidations

4. Prepare the relevant journal entries to account for goodwill that arises on consolidation

5. Explain the nature of in intragroup transactions

6. Be able to make entries for the elimination of intra-group dividends on consolidation

7. Be aware about the meaning and nature of non-controlling interests

8. Calculate the non-controlling interests’ share in share capital, reserves and current period profit

9. Able to calculate goodwill or bargain gain in the presence of non-controlling interest, and disclose non-controlling interests in the consolidated financial statements

10. Prepare consolidated balance sheet



Learning objective 7:To deal with accounting for equity investments and joint ventures


1. Explain the reasons for making equity investments and how to account for equity investments

2. Be able to know the use of the equity method for investment in associates

3. Understand the inter-entity transactions (upstream and downstream)

4. Understand that joint ventures are classified as jointly controlled operations, jointly controlled entities, or as involving jointly controlled assets

5. Provide the necessary accounting entries in the books of the venturer to account for the venturer’s interest in a jointly controlled operation

6. Be able to define a jointly controlled entity and understand that a venturer is to recognise its interest in a jointly controlled entity by using either the equity method of accounting, or the proportionate consolidation method



Mid-term Examination Revision Question

At the end of its financial year, Jane Furniture Ltd took the following information from its accounting system.

Trial Balance as at 30 June 2010

Debit Credit

Sales Revenue $ 850,000

Interest Revenue $ 38,000

Salaries $ 105,000

Light, power & fuel $ 30,000

Insurance expense $ 8,000

Audit Fees $ 17,500

Interest Expense $ 7,125

Purchases $ 425,000

Interim dividend $ 5,000

Cash at bank $ 72,875

Inventory $ 68,000

Accounts Receivable $ 101,000

Provision for Doubtful Debts $ 3,500

Term deposit - due 30th June, 2011 $ 75,000

Marketable Securities (held long term) $ 43,000

Machinery $ 75,000

Furniture & fittings $ 50,000

Buildings $ 168,000

Accounts Payable $ 69,000

Accumulated Depreciation - Machinery $ 22,000

Accumulated Depreciation - Furn & fittings $ 5,000

Accumulated Depreciation - Buildings $ 8,400

Bank Mortgage secured over buildings, due 1st May, 2012 $ 95,000

Share Capital $ 85,000

General Reserve $ 30,000

Retained Earnings $ 44,600

$ 1,250,500 $ 1,250,500


Additional Information

i) Salaries earned but not paid at 30 June amount to $1,500.

ii) The stock-take of 30th June revealed closing inventory of $65,000 (valued at lower of cost and market).

iii) $3,500 included in insurance expense relates to the following financial year.

iv) Interest on bank mortgage is 15% pa and is payable twice yearly on 31st December and 30 June. The amount due at 30 June has not been recognised.

v) Depreciation rates on the straight line basis are as follows:Machinery 15%Furniture & Fittings 10%Buildings 2.5%

vi) The current market value of marketable securities is $50,000 at 30 June 2010.

vii) On 31st July 2009, Jane Furniture settled a $20,000 damages claim awarded to one of its customers who had suffered a broken leg due to an employee’s negligence. The case had been brought against the company on 5th July 2010.

viii) Tax expense was calculated to be $58,000 for the year ended 30 June 2010.

ix) A final dividend of $8,500 was declared and approved by the board. $7,500 was to be transferred to the General Reserve at 30 June 2010.

Required

Prepare a single statement of comprehensive income, statement of financial position and a statement of changes of equity in accordance with the requirements of applicable accounting standards for financial year ended June 2010.


Additional questions for tutorials:

1) AASB 136: Impairment of Assets

Zoro Ltd has determined that its China division is a cash-generating unit. The carrying amounts of the assets at 30/06/2011 are as follows:

Factory $210,000Land $150,000Equipment $120,000Machinery $60,000

Zoro Ltd calculated the value in use of the division to be $510,000 and net selling price of $480,000.

Required:Prepare the appropriate journal entries for the impairment loss, assuming that the fair value less costs to sell of the land are:

a) $140,000b) $145,000

2) AASB 3: Business Combination (Learning Outcome 7)

a) What is meant by a ‘business combination’ in accordance to AASB 3?

b) What is meant by ‘contingent consideration’ and how is it accounted for in accordance

to AASB 3?

c) List the key steps in the acquisition method in accordance to AASB 3.

d) According to AASB 3, how a bargain on purchase arising from business combination

should be treated.

e) How is a fair value determined?

f) Goodwill may be internally generated or acquired by purchasing an existing business.

Discuss the recognition, valuation and reporting requirements in relation to goodwill.


3.3 Assessment tasks

3.3.1 Overview

Mid-semester test 15% 1:15 Minutes 2 September 2010Assignment 15% Due Date 8 October 2010

Examination 70% 3 hours duration Examination period

Mid-Semester Test

The mid-semester test will be held on 2 September 2010. The duration of the mid-semester test is 1:15 minutes. There will be only one practical question comprising (Statement of Comprehensive Income, Statement of Financial Position and Statement of Changes in Equity). Normally the template or the pro-forma of the financial statement will be given during the exam and covering materials from learning outcome 2.

Assignment

There will be one assignment for ACC2CRE. This assignment is compulsory and is worth 15% of the marks of the subject. The assignment is due as follows:

Due Date: 8 October 2010

You must keep a copy of your assignment (in hard copy form, electronic form or both) until you receive the marked original back. The hard copy must be stamped and dated on submission day. If you assignment is lost and you fail to provide us with a copy of the assignment when requested, we will assume the assignment has not been written and the penalties for late assignment will be applied.

Final Examination

The final examination with be worth 70% of total marks. It will be based on all aspects of the course covered in seminars and the prescribed textbook, be 3 hours (180 min) in length and of the closed book type. You will not be allowed to take any notes or reference material into the examination room. You should check the central exam timetable for the date, time and venue of the final examination.


3.3 Assessment requirements and definitions

3.3.1 Passing the unit

Hurdle requirement: Students must obtain at least a mark of 40% or better in the final examination as well as an overall total of 50% to pass the subject. Final grade will be allocated based on the following scale.

A 80% - 100%

B 70% - 79%

C 60% - 69%

D 50% - 59%

3.3.2 Penalties for late submission of the assignment

Students must submit their assignments on the due date. Without prior approval from the unit coordinator, any late submission will be penalised @10% per day of the final assignment marks.

3.3.3 Submission of assessment material

Assignment

Assignment tasks must be presented in a professional manner (word processed). Submissions must be properly referenced (refer to the University Style Guide). Use of improper or inappropriate grammar, punctuation and excessive spelling mistakes will result in the assignment being returned and the student being required to resubmit the work before a mark is awarded. The resubmitted assignment will accumulate the same penalty as late submissions until it has been presented in an acceptable format.

Plagiarism is a serious matter; all students involved will be referred to the University’s appropriate authority.

Late submissions will incur a penalty of one mark per day including the weekend. Late submissions must be lodged with the Course coordinator only

Applications for extensions must be lodged with the Course coordinator before the due date in writing for granting an extension (medical problems etc).


3.3.4 Academic Plagiarism

Students should be aware of the University policy on plagiarism as outlined below.

PLAGIARISM

The following warning is issued by the University (Undergraduate Course Handbook: 2010).

“One form of academic cheating is plagiarism: the reproduction of someone else’s words, ideas or findings and presenting them as one’s own without proper acknowledgment. There are many forms of plagiarism, including the following:

direct copying of sentences, paragraphs or other extracts from someone else’s published work (including on the Internet and in software) without acknowledging the source

paraphrasing someone else’s words without acknowledging the source using facts and information derived from a source without acknowledging it using ideas directly derived from an identifiable author without acknowledging

the source producing assignments which should be the student’s own, independent work in

collaboration with and/or using the work of other people (e.g. a student or tutor).”

Plagiarism and copying the work of other students are forms of cheating and will be treated accordingly. A person found assisting another person to plagiarise may be punished as severely. To ensure that you are not guilty of plagiarism you must, in all your written assignments, declare all sources from which you have obtained materials or ideas.

The penalties for plagiarism are severe and are governed by University legislation. A student found to have plagiarised will be allocated no marks for the particular piece of work involved, or may be allocated a fail grade in that subject, or may be excluded from the University.

STUDENTS ARE ADVISED TO FAMILIARISE THEMSELVES WITH THE RULES CONCERNING ACADEMIC MISCONDUCT

Further explanations for ‘academic misconduct’ and for ‘plagiarism’ are available at: http://www.latrobe.edu.au/policies/ and http://www.latrobe.edu.au/plagiarism/

3.4 Special circumstance processes

Special consideration may be granted in exceptional and serious circumstances. Applications must be lodged with the Student Centre (David Myers Building) on the official form (with appropriate evidence) no later than 72 hours after the relevant examination. Further details relating to special consideration can be obtained from the Examinations Office in the David Myers Building. Please note that students who apply for special consideration do not automatically have the right to sit for a special exam. Each application is assessed individually on its merit.


http://www.latrobe.edu.au/policies/

4.0Teaching arrangements4.1 Normal schedules

Week/Lecture Topic Required readingLearning objectives addressed

Week 1An overview of the Australian financial reporting environment and the conceptual framework

Chapter 1 Chapter 2

1

Week 2Presentation of accounts and disclosure 1: Statement of Comprehensive Income and Statement of Changes in EquityPresentation of accounts and disclosure 2: Statement of Financial Position

Chapter 17

Chapter 4: 4.2-4.4

2

Week 3Presentation of accounts and disclosure: other disclosure requirements

Chapter 17 Chapter 24

2

Week 4Accounting for income tax Chapter 19 3Week 5Accounting for income tax Property, plant and equipment - Revaluation

Chapter 19Chapter 6

34

Week 6Mid – semester Test – 15% of final assessment – 2 September 2010, Thursday, 9.00a.m.Week 7Impairment of non-current assets Accounting for intangible assets

Chapter 6Chapter 8

44

Week 8Business combinationAccounting for group structure – An introduction

Chapter 28 5 & 6

Week 9Accounting for group structure – intragroup structure

Chapter 29 6

Mid-semester BreakWeek 10Accounting for non-controlling interests Chapter 30 6Week 11Accounting for equity investments Chapter 33 7

Week 12Accounting for joint ventures Chapter 34 7Week 13Revision 1-7


4.2 Tutorial schedules

Week (Tutorial) Reading

Tutorial work

RQ = Review Questions

CQ = Challenging Questions

Acc Stds Text

No tutorial

Tutorial 1 Framework

AASB 101

Ch. 1

Ch. 2

RQ: 1.1, 1.2, 1.3, 1.5, 1.9, 1.12, 1.16

RQ: 2.1, 2.2, 2.5, 2.15, 2.20, 2.21

CQ: 1.21, 1.25, 2.30


AASB 101

Ch. 17 RQ: 17.1, 17.2, 17.4, 17.6, 17.9

Additional Question


AASB 108

AASB 110

AASB 1031

Ch. 17

Ch. 24

RQ: 17.5, 17.7

RQ: 24.1, 2.4.2, 24.3, 24.5

CQ: 17.21; 24.7

Additional question (see page 13 of the Unit Guide)

Tutorial 4 AASB 112 Ch.19 RQ: 19.7, 19.11, 19.12, 19.13, 19.14, 19.16, 19.17, 19.21

Mid – Semester Exam (2 October 2010)

No tutorials

Tutorial 5 AASB 112

AASB 138

Ch.19

Ch. 6

RQ: 19.7, 19.10, 19.11, 19.13, 19.18, 19.19, 19.21

CQ: 19.22, 19.23

RQ: 6.2, 6.3, 6.7, 6.8, 6.9

CQ: 6.18

Tutorial 6 AASB 116

AASB 136

Ch. 6

Ch.8:

RQ : 6.4, 6.14 ; CQ : 6.21

RQ: 8.5, 8.7, 8.8, 8.9, 8.17, 8.18

Additional questions: (see page 13 of unit learning

guide

Tutorial 7 AASB 3

AASB 127

AASB 138

Ch.28 RQ: 28.1, 28.2, 28.3, 28.5, 28.6, 28.20, 28.22

CQ: 28.23

Additional questions: (see page 13 of unit learning

guide - AASB 3)

Tutorial 8 AASB 3

AASB 127

AASB 138

Ch.29 RQ: 29.4, 29.5, 29.7,29.8,29.9,29.10

CQ: 29.12

Tutorial 9 AASB 3

AASB 127

AASB 138

Ch.30 RQ: 30.7. 30.8, 30.9

CQ: 30.10

Tutorial 10 AASB 128 Ch. 33 RQ: 33.5, 33.6, 33.7

Tutorial 11 AASB 131 Ch. 34 RQ: 34.1, 34.2, 34.3, 34.4, 34.7

CQ: 34.9


5.0Learning resources

5.1 Prescribed and recommended texts

- PrescribedDeegan C., Australian Financial Accounting, 6th Edition, Irwin McGraw-Hill, Australia, 2009

The Institute of Chartered Accountants in Australia, Financial Reporting Handbook 2010, John Wiley, Australia. or

The CPA Australia, Accounting Handbook 2010, Prentice Hall, Australia.

- Recommended Texts

Leo, K.J., and Hoggett., J.R., (2009) Company Accounting in Australia, 8th edition; John Wiley.

Alfredson, K., Leo, K., Picker, R., and Radford, J., (2009) Applying International Accounting Standards, First Edition, John Wiley & Sons Australia, Ltd.

Business Periodicals and Newspapers

You are encouraged to read widely such as newspapers, business magazines and periodicals to inform yourself about current developments in Accounting. Some relevant links to company websites and newspapers are given below.

- Companies

The Australian Financial Services Directory is an interesting and useful site for locating companies. The web address is: http://www.afsd.com.au

- Newspapers

Australian Financial Review http://afr.com

The Age http://theage.com.au

The Australian http://theaustralian.news.com.au


http://theaustralian.news.com.au/

http://theage.com.au/

http://afr.com/

http://www.afsd.com.au/

5.2 LMS

Tutorial questions and solutions, lecture slices, class materials and other student’s resources are available from the subject web page. La Trobe University’s centrally supported Learning Management System (LMS) is Blackboard/WebCT CE 6 (formerly WebCT). Use of the LMS supports the University's emphasis on blended approaches that combine face-to-face and technology supported learning.

The LMS provides academic staff with an internet based framework in which to situate unit study materials and a variety of tools with which to manage communication and interaction with and among students.

LMS is a learning management system that is used in many universities across the world. Many units taught at La Trobe University provide students with access to WebCT providing them with access to learning materials and activities, such as the Unit Learning Guide, reference materials, email, and online discussions.

To access your WebCT account for this Unit use your web browser (eg. MS Internet Explorer) to access https://webct.latrobe.edu.au/webct/entryPageIns.dowebct and enter your Username and Password to gain access.

WebCT Student Help, at http://www.latrobe.edu.au/studentlmsinfo/ , is a good place to start.

5.3 Student Learning

It provides information about the university learning environment, reading and note taking, oral presentations, writing, grammar and punctuation, referencing and avoiding plagiarism, editing, revision and examination preparation etc.

To access your Student Learning account for this Unit use your web browser (eg. MS Internet Explorer) to access http://www.latrobe.edu.au/learning/


http://www.latrobe.edu.au/learning/

http://www.latrobe.edu.au/studentlmsinfo/

https://webct.latrobe.edu.au/webct/entryPageIns.dowebct

6.0Feedback and quality assurance processes

The Student Unit Feedback Survey is important for continuous improvement of the Unit, and conducted by the Students Service. This unit is reviewed end of each semester. Students of Accounting for Managers will be requested to take part into the survey and advised to fill a confidential unit evaluation questionnaire. Students’ comments will be used for the further development of the unit for the next group of students.


7.0Learning effectively in this unit

Students are advised the following to perform well in this unit.

Students should attend all the lectures. By listening carefully to the lectures, students become acquainted with the general principles of the subject. They also learn the emphasis placed on particular parts of the prescribed reading. Students will not learn fully without listening to the lectures how the unit is structured.

Attending tutorials is also important because it will help students to learn about the subject by completing tutorial questions and comparing their answers with suggested solutions.

Students should start their assignment early. Therefore, they will have enough time for the preparation of the examination.

Students are encouraged to practice the multiple choice questions, theory questions, exercises and problems given in the text consistent with the lecture materials.


Unit Guide%2c Sem 1%2c 2010

Documents

Transcript of Unit Guide%2c Sem 1%2c 2010