Reference no: EM132793322

HI6025 Accounting Theory and Current Issues

Learning Outcome 1 : Examine conceptual issues and the sources of authority for the accounting requirements which apply to reporting by Australian companies, including Company Law, International and Australian Accounting Standards, and Stock Exchange requirements;

Learning Outcome 2: Understand and evaluate different theories of accounting such as positive accounting theory, normative accounting theory, stakeholders' theory, legitimacy theory, institutional theory, and different initiatives of relevant global organisations such as GRI, IR;

Learning Outcome 3: Apply Australian Accounting Standards and Corporate Legislation to the financial reporting
processes;

Learning Outcome 4: Evaluate advanced level financial accounting problems and select appropriate accounting strategies for the accounting entity;

Learning Outcome 5: Understand different provisions of accounting standards and the compliance requirements of the professional and legal bodies in Australia;

Learning Outcome 6: Make judgments about appropriate use of accounting standards and accurately apply appropriate treatments for different advanced level accounting issues;

Question 1 Discuss the ‘primary users' of general-purpose financial reports?

Question 2 An asset having a cost of $200 000 and accumulated depreciation of $40 000 is revalued to $240 000 at the beginning of the year. Depreciation for the year is based on the revalued amount and the remaining useful life of eight years. Shareholders' equity, before adjusting for the above revaluation and subsequent depreciation, is as follows:

Share capital	600 000
Revaluation surplus	90 000
Capital profits reserve	170 000
Retained earnings	140 000
Total	1 000 000

Required:
Prepare journal entries to reflect the revaluation of the asset and the subsequent depreciation of the revalued asset. Which of the equity accounts would be affected directly or indirectly by the revaluation?

Question 3

ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration:

Cash	35 000
Plant and equipment	fair value $125 000; carrying amount in the books of ABC Ltd $85 000
Land	fair value $150 000; carrying amount in the books of ABC Ltd $100 000

There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.
On 1 July 2021 RedCarpet Ltd's statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000.

Required:
a) Has any goodwill been acquired and, if so, how much?
b) And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard.

Question 4

Ginger Ltd is marketing a ‘surfing bundle' in which, for $2200, it provides customers with a surfboard (which retails separately for $1700), a wetsuit (which retails separately for $500) and five lessons (which retail separately for $400). You are required to determine:

a) Whether separate performance obligations exist, and to explain why you made this judgement.
b) How much of the transaction price to allocate to each performance obligation?

Question 5

Discuss the inclusion of the expenses incurred in the initial evaluation and exploration stage of a project involved with oil extraction into asset or inventory. Further, when should the organisation recognise the expenses related to restoration/rehabilitation at the cessation and conclusion of the mining activities?

Question 6

Looking at different literature, discuss if there is a unique definition for the social responsibility reporting and if social responsibility has connection with accountability and accounting.

Attachment:- Accounting Theory and Current Issues.rar