Reference no: EM132453332
Assignment - ABC RETAILING: A CASE IN ACCOUNTING POLICY CHOICE AND ITS IMPACT ON PROFIT AND LOSS
LEARNING OBJECTIVES -
1. Evaluate the effect of accounting policy choices on the calculation of a company's profit and loss.
2. Describe why companies may prefer one accounting policy over another accounting policy.
3. Explain why auditors should be concerned with ensuring companies choose accounting policies that result in useful information.
4. Explain how the use of appropriate accounting policies results in useful information.
5. Describe current financial reporting issues impacting the retail industry.
6. Apply appropriate accounting policies in accordance with relevant standards.
7. Demonstrate oral communication skills.
THE CASE -
Your role - You are an experienced audit senior at K&M, a global professional services firm. Having lived, been educated and worked in the US your entire life, you recently transferred to K&M's Sydney, Australia office to pursue career opportunities in K&M's Asia Pacific assurance and advisory services team. Since joining K&M, you have developed expertise in preparing general purpose financial statements relevant to retail companies. No doubt, your specialist skills and thorough understanding of the retail industry made your request to transfer 'down under' quite attractive to K&M's Sydney office. The Sydney office quickly approved your transfer request as it is experiencing rapid growth in providing assurance services to the retail industry.
Case Requirements -
Prepare to discuss the following issues -
Store Occupancy Costs
1. Discuss the effect of ABC's current accounting policy for store occupancy costs on its calculation of profit and loss? Ignore any potential tax effects.
2. Speculate as to why ABC chose this accounting policy for store occupancy costs.
3. Should the auditors be concerned with ABC's current accounting policy for store occupancy costs?
4. Applying relevant paragraphs of AASB 102 Inventories, evaluate and discuss whether ABC's current accounting treatment for store occupancy costs is appropriate?
Markdowns
5. Discuss the effect of ABC's current accounting policy for markdowns on its calculation of profit and loss? Ignore any potential tax effects.
6. Speculate as to why ABC chose this accounting policy for markdowns.
7. Should the auditors be concerned with ABC's current accounting policy for markdowns?
8. Applying relevant paragraphs of AASB 102 Inventories, evaluate and discuss whether ABC's current accounting treatment for markdowns is appropriate?
Deferral of markdowns
9. Discuss the effect of ABC's current accounting policy for deferral of markdowns on its calculation of profit and loss? Ignore any potential tax effects.
10. Speculate as to why ABC chose this accounting policy for deferral of markdowns.
11. Should the auditors be concerned with ABC's current accounting policy for deferral of markdowns?
12. Applying relevant paragraphs of AASB 102 Inventories, evaluate and discuss whether ABC's current accounting treatment for deferral of markdowns is appropriate?
Intangibles
13. Discuss the effect of ABC's current accounting policy for brands on its calculation of profit and loss? Ignore any potential tax effects.
14. Speculate as to why ABC chose this accounting policy for brands.
15. Should the auditors be concerned with ABC's current accounting policy for brands?
16. Applying AASB 138 Intangible Assets, evaluate and discuss whether ABC's current accounting treatment for brands is appropriate?
Overall impact on profit and loss
17. Discuss the overall impact of your recommended accounting policies on ABC's profit and loss.
Note Need Only Store occupancy costs and intangibles questions.
Attachment:- Case File.rar