2nd Group Task International Accounting PDF

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Course: International Accounting Second Task December 3, 2020 Time allowed: 90 minutes Student full name Identification number Student full name Identification number Student full name Identification number Student full name Identification number Student full name Identification number Student full name Identification number

Instructions In 90 minutes, you have to complete 4 out of 5 exercises. You have to solve the exercises using the Excel file I uploaded in the folder of Google Drive I shared with you. You have to signal which exercises you wish to be graded. You can use material from the course, and you can communicate with your colleagues of the same group through the chat of the Excel file included in Google Drive. It is forbidden to communicate with other colleagues who do not form part of your group. It is forbidden to open any webpage apart from Aula Global and Google Drive. At the end of the task, one member of the group will upload the Excel file with solutions in Aula global, and he/she will send the Excel file by email to be.

Exercise 1 Sunshine is an entity with a reporting date of 31 December 20X1 and a functional currency of dollars ($). On 30 June 20X1, it purchased land from overseas at a cost of 30 million euro on account. Exchange rates are as follows: Euro As at 30 June 20X1 3.0 As at 31 December 20X1 2.0 Average rate for year-ended 31 December 20X1 2.5 The fair value of the land at 31 December 20X1 was 32 million euro.  Please, report all the initial and final accounts if the land is measured using the cost model. Provide a brief explanation.  Please, report all the initial and final accounts if the land is measured the revaluation model. Provide a brief explanation.

Exercise 2 An entity took out a bank loan for 12 million euro on 1 January 20X1. The entity has a reporting date of 31 December 20X1 and a functional currency of dollars ($). Exchange rates are as follows:

1 January 20X1 30 November 20X1 31 December 20X1  

$1: 6.0 Euro 5.0 Euro 5.6 Euro

Report all the accounting information (to the nearest $000) on the above transactions, and briefly provide explanations. Report all the accounting information (to the nearest $000) on the above transactions, and briefly provide explanations if the company repaid 3 million euro to the bank on 30 November 20X1. Briefly provide explanations.

Exercise 3 Vance buys and sells goods in Kromits (Kr), but has a functional currency of dollars ($). Vance purchased goods for Kr 10,000 on 1 September 20X1. At Vance's year-end of 31 December 20X1 this amount remains unpaid. Vance sold goods on 1 September 20X1 for Kr 60,000. On 1 October 20X1 Vance received Kr 30,000. The remaining Kr 30,000 is unpaid at 31 December 20X1. Vance's assistant accountant estimated the tax expense for the year ended 31 December 20X1 at $43,000. However, he had ignored deferred tax. At 1 January 20X1 Vance had a deferred tax liability of $130,000. At 31 December 20X1 Vance had temporary taxable differences of $360,000.

Vance pays tax at 25%. All movements in deferred tax are taken to the statement of profit or loss. Relevant exchange rates are: 1 September Kr 10: $1 1 October Kr 10.5: $1 31 December Kr 8: $1 Average rate Kr 9: $1  

Report all the accounting information for September, October, and December in relation to the payable recorded for the purchase of goods. Report all the accounting information for September, October, and December in relation to the sale of goods.

Exercise 4 An asset (which has never been revalued) has a carrying amount of £100,000. The asset is being depreciated on the straight-line basis, with a remaining useful life of three years and a residual value of £10,000. The asset is expected to generate net cash inflows of £20,000 per year for the next three years and then to be sold for £10,000, and disposal costs are expected to be negligible. At present, the asset could be sold for £50,000, and disposal costs would be £2,000. Required: a) Assuming a discount rate of 10% and that all cash flows occur at the end of the year concerned, determine the asset's value in use. b) Calculate the amount of the impairment loss which has occurred and explain how this should be accounted for. c) Calculate the amount of depreciation that should be charged in relation to the asset for each of the next three years, assuming that the straight-line method will continue to be used.

Exercise 5 Stenberg plc is preparing its financial statements for the year ended 30 November 2018. On 1 May 2018, the company purchased a factory for the manufacture of optical disks, paying £24,000,000. The factory will be depreciated over its estimated life of 10 years using the straight-line method on a full year basis with no residual value. The asking price for the factory had been £30,000,000. However, Stenberg plc estimated the net present value of the factory’s future expected net cash flows at £28,500,000 and the price eventually agreed with the vendor was £24,000,000. During October 2018 a rival company announced that it had patented a new technology which has been enthusiastically greeted by the major players in the industry. Stenberg plc now feels that it may be necessary to revise downwards its expectations for the

factory. It now believes that the net present value of the expected net cash flows from the factory as at 30 November 2018 was £20,500,000. The net realisable value of the factory was estimated at £14,000,000 as at 30 November 2018. Required: Discuss whether or not there is evidence of impairment and report how the factory should be treated in the financial statements for the year ended 30 November 2018....