Describe an accounting policy to account

Reference no: EM132646304

Question - During January 2020, the Fair Work Commission1 commenced an investigation into Defiant Ltd for underpayment of wages. The Fair Work Commission is expected to deliver its decision in October 2020. However, Defiant Ltd's lawyers advised that it was likely that the Company would be required to compensate past and present employees for underpayment of wages.

Defiant Ltd's financial accountant estimated that the amount involved was in the range of $8,000,000 to $9,000,000. Of this amount, $1,000,000 relates to past employees. The financial accountant thought there might be some difficulty locating some former employees, and did some modelling to calculate the expected value of the cost of paying former employees to be $700,000.

The Chief Executive Officer (CEO) thought the matter should be disclosed in the notes to the financial statements for the year ended 30 June 2020. However, the Chief Financial Officer (CFO) was not convinced and has asked you to do some preliminary work on the accounting problem.

REQUIRED - The word lengths are a suggestion only, i.e., they are no strict word limits for each part.

a) What is the main accounting policy issue(s) that need to be resolved in relation to the alleged underpayment of wages?

b) i) Which Accounting Standard is most relevant to the issue?

ii) Identify one principle from that Standard that is relevant to the accounting policy issue that you identified in part a) by providing a reference for that principle (e.g., AASB XXX, para. zz, or para. z1 and z2) AND explain why you chose that principle.

iii) Identify another principle that is relevant to the accounting policy issue that you identified in part a) by providing a reference for that principle.

c) Describe an accounting policy to account for the alleged underpayment of wages in the financial statements for the year ended 30 June 2020. Do not justify your policy. Just describe it.

Reference no: EM132646304

Questions Cloud

Evaluate the role of leadership on organizational behavior : Evaluate the role of leadership on organizational behavior. Describe the organization's industry.

What is the new regular selling price : The owner marks all merchandise with new regular selling prices so that the store can offer a 20% discount. What is the new regular selling price?

Evaluate customer services strategies : Identify both the advantages and disadvantages for undertaking this. What are the risks to an organisation if this process is not in place?

What the branch adjustment account will be : Port Elizabeth at cost plus 50%. The branch sends goods to the branch at a selling price of R 260 000. The branch adjustment account will be

Describe an accounting policy to account : Describe an accounting policy to account for the alleged underpayment of wages in the financial statements for the year ended 30 June 2020

Points about kotter 8-step change model : What are the top 45 points about Kotter's 8-Step Change Model, particularly while leaders manage organizational change?

What the credit entry for the discounted amount will be : What the credit entry for the discounted amount will be entered in the and The debit entry for the discounted amount will be entered in the?

How clicking yes indicates you have entered into a contract : When asked if you "accept the terms" of downloaded software, describe how clicking "yes" indicates you have entered into a contract. Discuss whether you have.

Essential features of rules-based approach to corporate : Describe the essential features of a rules-based approach to corporate governance?

User Account

All Pages