ACC3700 202 Std BB Flora (final) PDF

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ACC 3700 Financial Accounting Theory and Practice Alternative Assessment Task [Standard], Semester 2, 2020

Enter your name here POPLI, Sukhpreet Singh

10469675

This is your Blackboard component of the alternative assessment task for semester 2, 2020. All assessment task questions in this document must be answered in this paper, in the spaces provided. Your completed paper must be submitted by the assignment manager link [where you downloaded this document]. The link will automatically close at 9:30 AM on Thursday, November 12, 2020. You must submit your completed paper before 9:30 AM on Thursday, November 12, 2020. You must submit by the deadline. NO LATE SUBMISSIONS ACCEPTED. PLEASE DO NOT CHANGE THE FORMATTING OF THIS DOCUMENT All questions should be attempted. Rounding of values to integer must be applied (e.g., 23.2 gets rounded to 23, and 23.5 gets rounded to 24) unless instructed otherwise. GST is not applied unless told otherwise in a question. Questions 1, 2, and Student Identity Verification (SIV) question can be found in this document. Questions 3, 4, 5, 6 and 7 of the Alternative Assessment Task can be found in the Cadmus document. There is a total of seven questions (with marks) plus one SIV question (without mark) to be answered in the Alternative Assessment Task. This document consists of six pages. Question Number 1 2 SIV 3 4 5 6 7 Total Mark

Total Possible Marks 12 12 0 8 5 4 4 5 50

Marks achived

Page 1 of 7

Question 1: Answer this question in this Word document. Marks: 12 James Ltd purchased a mining drill for its fair value of $43,300 and then leased it to Shipton Ltd on 30 June 2022. Shipton Ltd spent $417 in negotiating the lease agreement. The estimated economic life of the mining drill is 5 years, after which time a residual value is expected to be $2,000. According to the lease agreement, the length of lease is 4 years and the commencement date is 30 June 2022. Annual lease payment, payable 30 June each year commencing 30 June 2022, is $13,000. Residual value at the end of the lease term is $11,000. Residual value guarantee by Shipton Ltd is $9,000. Interest rate implicit in the lease is 6%. The lease is cancellable, but only with the permission of James Ltd. Insurance and maintenance costs, which amount to $3,000 per year, are paid by James Ltd and will be reimbursed by Shipton Ltd by including it in the annual lease payment of $13,000. The mining drill will be depreciated on a straight-line basis. It is expected that Shipton Ltd will return the mining drill at the end of the lease to James Ltd. Required (a) Calculate the initial direct costs incurred by James Ltd to negotiate the lease agreement. (b) Provide the journal entries for Shipton Ltd to account for the lease for the years ended 30 June 2022 and 30 June 2023. (c) Provide the journal entries for James Ltd to account for the lease for the years ended 30 June 2022 and 30 June 2023.

Answer (a) Calculate the initial direct costs incurred by James Ltd to negotiate the lease

agreement. Marks: 2 Total initial direct costs = Present Value of the Lease + Present Value of Ungaruamteed Residual – Fair Value = 10000 (initial payment) + 10000*2.6730 + 9000*0.7921 (Garuanteed Residual) + 2000*0.7921 - 43300 = $2143

Page 2 of 7

(b) Provide the journal entries for Shipton Ltd to account for the lease for the years

ended 30 June 2022 and 30 June 2023. No post ref. required. Marks: 4 General Journal – Shipton Ltd Date Account Post Ref Debit 30.6.2022 Right of use Mining drill Dr 43859 Pre-paid executory costs Dr 3000 Lease Liability Cr Cash Cr (Recognition of lease asset and liability and first lease payment) 1.07.2022 Executory Cost expense Dr 3000 Prepaid Executory costs Cr (Executory costs for the 2023 financial year) 30.06.202 Lease Liability Dr 7968 3 Interest Expense Dr 2032 Prepaid Executory costs Dr 3000 Cash Cr (Second lease payment) 30.06.202 Depreciation Expense Dr 8715 3 Accumulated Depreciation Cr (Depreciation of the leased asset for the year)

Credit

33859 13000

3000

13000

8715

Page 3 of 7

(c) Provide the journal entries for James Ltd to account for the lease for the years

ended 30 June 2022 and 30 June 2023. No post ref. required. Marks: 6 General Journal – James Ltd Date Account Post Ref Debit 30.06.202 Mining Drill Dr 43300 2 Cash Cr (Purchase of mining drill) 30.06.202 Lease Receivable Dr 45443 2 Mining Drill Cr Cash Cr (Recognition of lease receivable) 30.06.202 Cash Dr 13000 2 Executory Cost reimbursement in advance Cr Lease Receivable Cr (First lease receipt) 1.07.2022 Executory Cost reimbursement in 3000 advance Dr Reimbursement Revenue Cr (Executory costs reimbursement for the 2023 financial year) 30.06.202 Cash Dr 13000 3 Executory Cost reimbursement in advance Cr Lease Receivable Cr Interest revenue Cr (Second lease receipt) 1.07.2023 Executory Cost reimbursement in 3000 advance Dr Reimbursement Revenue Cr (Executory costs for the 2023 financial year)

Credit

43300

43300 2134

3000 10000

3000

3000 7968 2032

3000

Page 4 of 7

Question 2: Answer this question in this Word document. Marks: 12 Greenhub Ltd is headquartered in Perth and the functional currency of Greenhub Ltd is A$. The company has reporting periods ending on 31 December and 30 June. During the year ended 30 June 2023, when the global economy recovered from the COVID-19 pandemic, Greenhub Ltd entered into various foreign currency transactions with some US companies in US$ as follows. (a) On 11 November 2022 Greenhub Ltd ordered plant costing US$700,000 from a company in Arizona under a FOB destination contract. On 30 November 2022, the plant was delivered. On 8 February 2023, the invoice for the plant purchase was paid. (b) On 30 November 2022 Greenhub Ltd sold inventories to a customer in Nevada for the agreed price of US$20,000. The inventories had a cost of A$15,000. On 14 February 2023, the sales invoice was paid by the customer. (c) On 22 August 2022, Greenhub Ltd made an loan without interest to a company in Georgia for US$50,000 for 3 years. Applicable exchange rates are as follows. 22 Aug. 2022

US$1=A$1.37

11 Nov. 2022 30 Nov. 2022

US$1=A$1.30 US$1=A$1.40

31 Dec. 2022 8 Feb. 2023

US$1=A$1.35 US$1=A$1.33

14 Feb. 2023

US$1=A$1.31

30 Jun. 2023

US$1=A$1.45

Required: Prepare the journal entries to reflect the effects of the above transactions. You should apply the applicable accounting standards. (a) Marks: 4 Date Account 30.11.2022 Plant Dr Accounts Payable Cr (Plant purchase) 31.12.202 Accounts Payable Dr 2 Gain on Foreign Exchange Cr (Re-measurement of Payable) 08.02.202 Accounts Payable Dr 3 Gain on Foreign Exchange Cr (Re-measurement of Payable) 08.02.202 Accounts Payable Dr

Debit 980000

Credit 980000

35000 35000 14000 14000 931000 Page 5 of 7

3 Cash (Cash payment)

Cr

931000

(b) Marks: 5 Date Account 30.11.2022 Accounts Receivable Dr Sales Revenue Cr (Sale) 30.11.2022 Cost of Sales Dr Inventory Cr (Cost) 31.12.202 Foreign Exchange Loss Dr 2 Accounts Receivable Cr (Re-measurement of Receivable) 14.02.202 Foreign Exchange Loss Dr 3 Accounts Receivable Cr (Re-measurement of Receivable) 14.02.202 Cash Dr 3 Accounts Receivable Cr (Cash receipt)

Debit 28000

Credit 28000

15000 15000 1000 1000 800 800 26200 26200

(c) Marks: 3 Date Account 22.08.202 Loan Receivable Dr 2 Cash at Bank Cr (Receivable) 31.12.202 Foreign Exchange Loss Dr 2 Loan Receivable Cr (Re-measurement of loan receivable) 30.06.202 Loan Receivable Dr 3 Gain on Foreign Exchange Cr (Re-measurement of loan receivable)

Debit 68500

Credit

68500 1000 1000 5000 5000

SIV Question: Answer this question in this Word document. Marks: 0 The ASX code of the company that you worked on in your assignment is (DBF.ASX). Page 6 of 7

The End of this Document In my opinion, companies like Nike and Gap, which work on such a large scale can or does not only focus on the money aspect but also on the environment, sustainability and the social well-being. they have to focus on the well-being of the workers as they are the ones who lead the company's productions to such a huge scale and ultimately making money for the organisation. The social well-being of the factory workers and giving them a better working place leads to mental satisfaction of the workers giving them sense of belongingness for the company, stabilising the staff turnover, resulting in efficiency of the operations. Moreover, taking these kind of decisions and making such policies advertises the brand image better in the market creating a positive image of the company, hence attracting more customers.

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