Financial and reporting 1

Financial and reporting 1 Financial Accounting & Reporting 1 Assignment Trimester 3, 2014 VALUE: 25% of OVERALL ASSESSMENT DUE DATE: Friday, 30 January 2015 (11.59pm) SUBMISSION: The assignment will need to be submitted electronically through the student portal – use the link under “Assessments overview and submission” to submit the information (The portal will close at 11.59pm AEST – Students in Adelaide and Brisbane please note to adjust for the time difference accordingly). Learning Outcome 4: Develop information gathering (research) and communication strategies (letter writing) to enable the provision of professional advice to a client. Background to case study: You are a graduate accountant working for Candy Floss and Associates a public accounting firm situated at 77 666 Queens Street, Melbourne. The Manager, of your firm, John Jameson has asked you to follow up on an email sent by a client, namely; 1. Handy Halides, the managing director of Halides Ltd – his email has raised a number of issues regarding his company, and your manager would like you to research the issues and draft a response in the form of a letter – see information in Case Study Details below. Maximum Length is 1250 words (excluding any calculations) Part A: Technical Component (15%) – This mark covers the technical content of your advice and the explanation on each of the issues, the calculations and the sources used. Part B: Communication Skills - Letter Writing and Questioning Skills (10%) – This mark covers the generic skills of business letter writing; layout, clear meaning, structure and organisation, appropriate tone and grammar, spelling and punctuation. The assignment is designed to test the following skills: 1. Your knowledge and your ability to research the issues and then apply the information appropriately using judgement 2. Your communication skills - business letter writing. Please make sure you follow the guidelines noted in your subject outline especially those relating to presentation of written work, late policy and academic integrity. You should also familiarise yourself with the assessment marking rubric (attached) to guide you in how you can score marks. INDIVIDUAL CASE STUDY: Halides Ltd – (15% technical) Re: Year End Accounting Issues From: Handy Halides [[email protected]] Sent: Monday, 15 December 2014 at 8.30am To: [email protected] Cc: Peter Johns[[email protected]] Attachment: Issues Raised by the Board Dear John, Thanks for your letter suggesting we meet to plan the accounting work for the year ending 30 June 2015. As discussed with you, the board of directors has raised a number of issues in relation to the financial statements and I have noted them below for your response. Some of the directors are concerned about these issues as the company has just become a public company (from 1 October 2014) with a view to being listed on the ASX (with effect from 1 July 2016, hopefully), and they think this changes matters. To assist us in our decision making process could you please make sure that any relevant sources such as the AASBs, Corporations Act, reference books, journal articles, and/or websites are referenced so that the accounting team here could check them out when evaluating your answer. If you could kindly copy the newly appointed Financial Controller, Peter Johns in on your response he could start the review process. I will be overseas on annual leave until the end of January and look forward to hearing from you by the time I get back. I do not expect to have much of a problem as such as I am sure that all we need to do is to prepare the financial statements in the same way as we did last year that is for the year ended at 30 June 2014. That’s correct isn’t it? Best wishes and regards Handy Halides Managing Director, Halides Ltd Suite 55123, Level 42, Arcade Building 16 256 Giles Street Docklands Victoria 3008 Kaplan Business School is part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Codes SA/QLD 02426B, NSW 02913J and VIC 02887F ACCM4200/3TRIMESTER2014/MIR -2- INDIVIDUAL CASE STUDY: Halides Ltd – (15% technical) ATTACHMENT Halides Ltd: Issues raised by the Board of Directors Issue 1: When finalising the financial statements for the year ended 30 June 2014 two significant errors were made and there is debate as to whether we should simply adjust the financial statements in the current year or change last year’s financial statements as well. The IT system of the company was installed 3 years ago at a cost of approximately $3.5 million and was estimated to last 10 years. However the latest technology advancements indicate that this was a very optimistic estimate and that the maximum life span of this equipment will probably be not more than 6 years in total with little or no residual value. It was also discovered in August 2014 that a machine worth $2.2 million purchased in January 2014 was erroneously written off to repairs and maintenance instead of being capitalised. Deberella the marketing director thinks we should just adjust this year’s figures to account for these problems but Peter indicated that it was slightly more complicated than that. Could you please give us some advice on this? Issue 2: A number of employees who work on our strategic management team have been with us for a number of years - at least 12 of them have been with us since the company commenced operations in 2006. In accordance with the Employee Bargaining Agreement (EBA) all employees are entitled to long service leave of 13 weeks if they remain in service for 10 years. They are also entitled to pro rata long service leave after 6 years of service. Our usual practice is to show the long service leave expense in the income statement when the employee actually takes leave and is paid. Of course we maintain a memorandum record of the number of days each employee is entitled to. Peter has indicated to us that he thinks we should consider treating this expense in a different manner, which seems complicated. The directors are wondering why we should complicate a very simple way of calculating long service leave – why not “stick with” recognising the expense when we pay for it? What do you think we should do and why? Issue 3: Peter, the new financial controller, has also informed the board that the company will need to present a statement of cash flows with the financial statements in addition to those statements already being presented, which really attracted a lot of attention. Some of the directors thought it was a waste of time to present this statement as it was merely a summarised cash book. Others were of the opinion that it could be useful but didn’t quite know how they would use it. The structure of the statement of cash flows also came into question with one of the directors suggesting that we merely needed to “get a printout” of the cash account and attach it. Another said that we couldn’t just do that as we needed to show “operating, instigating and financing” cash flows in the statement. Could you please clarify this matter for us? Hint: Remember that your firm plans to charge the client for your advice; as a check ask yourself if you were Handy Halides would you pay for the advice you have just drafted in response to his email! ~~~~~~~~~~~~~~~~~~ End of Assignment ~~~~~~~~~~~~~~~~~~~ Kaplan Business School is part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Codes SA/QLD 02426B, NSW 02913J and VIC 02887F ACCM4200/3TRIMESTER2014/MIR -3- PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET AN AMAZING DISCOUNT :)