Reference no: EM132668064

AYB 339 Accountancy Capstone - Queensland University of Technology

PART 1: Self-Reflection

This reflection asks students to attend to the following two (2) tasks:

(i) Prepare a Professional Fee

Prepare a professional fee to submit to Bike Galaxy Pty Ltd. The professional fee should include a description of each task undertaken in this case study (being Parts 2 to 4) as well as the number of hours taken to complete each task.

Please use a charge-out rate of $200 per hour (exclusive of GST). Please ensure that the professional fee is placed on your group's letterhead. Please use your firm's letterhead to draft your professional fee on.

You can assume that your firm is registered for the GST. The ABN of your firm is 14 901 044 418. Please date your professional fee 16 September 2020.

(ii) Strategies to Communicate Complex Technical Issues to a Client

A professional advisor will often advise their clients on a range of technical accounting and tax matters. However, in many instances clients do not possess the necessary financial expertise or technical accounting or tax knowledge to completely understand the information/advice provided by the accountant.

Throughout your degree, you have acquired a range of technical and disciplinary skills that will serve you well when advising clients. These clients will come from a variety of backgrounds and, in some cases, will not understand the ‘language and terminology' that you would ordinarily use to explain (at times) complex technical accounting and taxation concepts.

Required:

Identify and explain three (3) strategies that you would adopt to simplify the content being delivered to clients. There is no need to place this part on letterhead.

In other words, what strategies could you implement to simplify the financial advice provided to a client (like David and Jake) where they readily admit that they lack the necessary financial acumen to understand what you are saying?

You must use 11 point Arial font with 1.5 line spacing. There is no need for references or footnotes. The maximum number of words for this part is 1,000.

PART 2: Enter Year-End Adjusting Journal Entries into MYOB & Print out a revised Profit and Loss Statement and Balance Sheet from MYOB - in pdf format

a. Students are required to prepare and enter adjusting general journal entries directly into the MYOB data file to take into account all of the relevant and necessary adjustments (please include cents in all of your journal entries).

The MYOB data file is available on the AYB 339 Blackboard site for students to download. The MYOB data file was created using MYOB AccountRight Enterprise (Educational Version 19). This version of MYOB is available in the student labs in both B and Z blocks.

However, students can use any version of MYOB to open the data file and make adjustments (provided it is version 19 or higher).

It will not be possible to open this MYOB data file if you use the MYOB trial versions available on the MYOB website or any version of MYOB lower than this version.

The data file has been created in MYOB 19 for Windows. However, for those students who have an Apple Mac computer or laptop, the data file will be able to be converted and opened in Mac AccountEdge Pro. For those students who do not have MYOB loaded onto their Apple computer, we have provided the link to a compressed zip file containing the appropriate software to enable you to load Mac AccountEdge Pro v15.5 on your home or laptop computer.
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These entries must be entered, produced and printed out using MYOB.

b. Adding Account Names to the Chart of Accounts

Please note that students are expected to add additional accounts in the MYOB data file provided on the AYB 339 Blackboard site, as several of your adjusting general journal entries will be made to these new accounts (eg. depreciation expense).

c. Dating your Adjusting General Journal Entries 30 June 2020

Please date all of your adjusting general journal entries 30 June 2020.

Please also include a brief narration of the adjustment in the memo field in MYOB.

d. Printing Adjusting General Journal Entries at 30 June 2020 in pdf format

Make sure that you only print out your adjusting journal entries and not all of the other journal entries already residing in the MYOB data file that has been provided to you.

Simply select the General Journal function and the date range: 30 June 2020 to 30 June 2020.

e. Accounting Depreciation Entries

For accounting purposes, each depreciable asset listed on pages 19 and 20 of this case study should be depreciated over their useful lives based on the following straight-line rates (rate shown in the final column).

There are 11 individual assets (listed above).

Instead of putting through 11 separate depreciation/amortisation journal entries, students are asked to only record five (5) journal entries in MYOB for each of the four classes of assets, namely:

• leasehold improvements (1 asset);
• property, plant and equipment (total of 7 assets);
• computer software (1 asset);
• leased motor vehicle (1 asset); and
• lease business premises (1 asset).

This means that you should enter five (5) depreciation/amortisation journal entries into MYOB.

As AASB 16 Leases will be applying, students are referred to Items 3 and 16 of this case study for more information about these "right-of-use assets".

For taxation purposes, being a small business entity (SBE), Bike Galaxy Pty Ltd will depreciate those eligible depreciating assets under Division 328 using the simplified depreciation regime (refer rules on page 30 of this case study).

f. Print out a Revised Profit and Loss Statement and Balance Sheet from MYOB as at 30 June 2020

Finally, students are required to print out a revised Profit and Loss Statement and Balance Sheet from MYOB for Bike Galaxy Pty Ltd for the year ended 30 June 2020 taking into account their adjusting general journal entries and include it in their submission.

In MYOB, your print range for the Profit and Loss Statement should be 1 July 2019 to 30 June 2020.

For the Balance Sheet, please print this report out as at 30 June 2020.

PART 3: Prepare the 2020 Annual Report for Bike Galaxy Pty Ltd in Microsoft Word

a. Students are required to prepare the Annual Report for Bike Galaxy Pty Ltd for the year ended 30 June 2020. The annual report should include the following documents (in the following order):

- the external financial statements excluding the Statement of Cash Flows, but including all of the notes to the accounts;
- the Directors' Declaration; and
- the Accountant's Compilation Report.

There is no need to prepare a Directors' Report or an Auditor's Independence Declaration, as the financial report was not audited.

For the Accountant's Compilation Report, please use the name of the firm that you created and used throughout the semester for your PBLs.

b. Which Accounting Standards Apply?

For the purposes of this assignment, please treat Bike Galaxy Pty Ltd as a reporting entity. In other words, please prepare general purpose financial statements for Bike Galaxy Pty Ltd.

In other words, please ensure that the 2020 financial statements (and notes to the accounts) are prepared in accordance with the recognition, measurement and disclosure requirements of all of the AASB Accounting Standards.

However, please do not apply the following four (4) AASB Accounting Standards:

- AASB 8 Operating Segments;
- AASB 107 Statement of Cash Flows;
- AASB 124 Related Party Disclosures; and
- AASB 133 Earnings Per Share.

All other AASB Accounting Standards (including their recognition, measurement and disclosure requirements) must be complied with. This includes the suite of financial instruments standards (including AASB 7, AASB 9 and AASB 139, where applicable as well as the recently introduced leasing standard, AASB 16).

Please note that in the case of publicly-traded financial instruments, Bike Galaxy Pty Ltd has made an irrevocable election under AASB 9 Financial Instruments to present subsequent changes in the fair value of equity instruments through Other Comprehensive Income (OCI) instead of recording increases and decreases in fair value through profit or loss.

There is no need in Note 1 Statement of Significant Accounting Policies to outline or consider the likely impact of the application of new AASB Accounting Standards that may apply in the future.

Finally, even though Bike Galaxy Pty Ltd is a reporting entity, it does not wish to apply the reduced disclosure requirements (RDR) contained in AASB 1053 Application of Tiers of Australian Accounting Standards.

c. Income Statement

For the Income Statement, David and Jake have requested that you classify expenses by function instead of by nature.

Please show only those expenses on the face of the Income Statement that are specifically required to be disclosed on the face under AASB 101 Presentation of Financial Statements.

Furthermore, please group relevant individual expenses in the MYOB profit and loss statement on the face of the income statement under the following headings: "employee benefits", "depreciation and amortisation", "finance costs", "administrative expenses" and "other expenses".

d. Statement of Comprehensive Income

When preparing the external financial statements for Bike Galaxy Pty Ltd, please ensure that you prepare and include a separate Statement of Comprehensive Income in accordance with AASB 101 Presentation of Financial Statements.

The company wishes to adopt a two-statement approach in presenting their statement of profit or loss and other comprehensive income. In other words, David and Jake want you to prepare an Income Statement and a Statement of Comprehensive Income separately.

e. Statement of Changes in Equity

For the Statement of Changes in Equity, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements.

f. Balance Sheet

For the Balance Sheet, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements.

g. "Real" and "Model" Financial Statements

Students are advised (and encouraged) to download the 2020 financial report of an Australian listed public company (preferably a retailer) and review the content, structure and format of the financial report.

Furthermore, some accounting firms have published model financial statements for companies on their websites that students should consider referring to. For example, a generic Google search on the term "model financial accounts Australia" will list several hyperlinks to a range of accounting firms websites where these model financial statements can be downloaded in pdf format.

A copy of the 2020 annual report (containing the 2020 financial statements) of The Reject Shop Ltd has been placed on the AYB 339 Blackboard site to assist students.

Please make sure that you find general purpose model financial statements and not special purpose model financial statements. Several accounting firms provide model financial statements for proprietary companies. However, in most cases, special purpose financial statements are presented, and not general purpose financial statements.

A reminder that in the case of Bike Galaxy Pty Ltd, we are asking that general purpose financial statements be prepared.

Furthermore, when preparing the external financial statements for Bike Galaxy Pty Ltd, please do not include the references to AASB paragraphs in the left-hand margin of the financial statements (or notes to the accounts) like the model sets of accounts do.

Students should also prepare a Director's Declaration for David and Jake to sign as well as including the appropriate Accountant's Compilation Report.

As mentioned in Item (a) on page 9, there is no need to prepare a Directors' Report.

PART 4: Prepare the 2020 Company Income Tax Return and Tax Reconciliation for Bike Galaxy Pty Ltd - (7 marks)

a. Students are required to prepare the company's Income Tax Return & Tax Reconciliation for Bike Galaxy Pty Ltd for the year ended 30 June 2020

Students are required to prepare the 2020 company income tax return of Bike Galaxy Pty Ltd.

A blank copy of the 2020 company tax return has been placed on the AYB 339 Blackboard site for you to download and complete. No electronic version can be used. In other words, all students must complete the manual version of the form.

The company's tax file number (TFN) is: 733 000 152.

The business and postal address of Bike Galaxy Pty Ltd is:

14 Dorrington Drive Phone: (07) 3369 4127
Paddington, QLD, 4064. Facsimile: (07) 3369 4130

Do not complete the BSB and account details on the second page of the tax return.

For the purposes of the tax agent declaration (on the last page of the tax return), your tax agent reference number is 57015-006. Please put your name and contact details in this box.

The income tax return should be dated 16 September 2020. It should be signed by David as he is the company's public officer.

There is no need to prepare the dividend franking account for the company or the dividends and interest schedule. Both of these schedules normally form part of the income tax return. However, students are not required to prepare these schedules.

b. Students are required to prepare a One-Page Tax Reconciliation for Bike Galaxy Pty Ltd for the year ended 30 June 2020

David and Jake also ask you to prepare a one-page tax reconciliation.

Students should start this reconciliation summary with the accounting net profit/(loss) before income tax and then list all relevant adjustments to arrive at the company's taxable income for the year ended 30 June 2020.

This one-page tax reconciliation should be included immediately behind the last page of the company's tax return. There is no need to prepare a deferred tax worksheet for this requirement.

Furthermore, when presenting your tax reconciliation, there is no need to refer or quote sections of the ITAA (1936), ITAA (1997), cases or taxation rulings.

Finally, please round all figures in the tax reconciliation to the nearest whole dollar.

Attachment:- Capstone Case Study.rar