Financial Accounting - Written Decision Case
This assessment item assesses the following learning outcomes:
Knowledge & Technical Skills (KS) - Demonstrate and apply integrated and advanced discipline and professional practice knowledge, including knowledge of relevant research principles and methods.
Higher Order Thinking Skills (HO) - Exercise creativity and intellectual independence and make informed decisions and judgements in planning, designing, and executing strategic and research-based responses to address real world issues and problems.
Professional Communication (PC) - Use information literacy skills and communicate effectively and professionally in written forms and using media appropriate for diverse purposes, contexts and audiences.
Purpose: Effective written communication skills are highly valued in business. This is particularly true for accountants who are often tasked with suggesting solutions where there is no uncontested or objective answer to the problem they are faced with. This assessment item is intended to develop these skills.
Decision Case -
A client has come to you seeking your advice and opinion on financial instruments. Your client has a small but successful business and understands basic accounting concepts. They are interested in raising capital for their business and want to understand some of the associated accounting implications.
Specifically your client wants to know:
1. What factors would be relevant in deciding whether a financial instrument, for instance redeemable, cumulative preference shares, should be classified as liabilities or equity in accordance with AASB 132?
2. What implications, if any, are there on debt contracts and compensation plans which may arise as a results of classification decisions?
In your advice you need to explain to your client how entities determine classification of financial instruments as either as a liability (debt) or as equity with reference to AASB 132.
Attachment:- Assignment Files.rar