This assignment will assess the following learning outcomes:
- Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounting items.
- Critically evaluate the usefulness of accounting standards and the process by which they are agreed.
- Analyse and critically evaluate key notions of corporate governance focusing on accounting theories and policy aspects of financial reporting.
You are required to answer ALL the questions:
Q.1 Ibrahim, is a young entrepreneur, who started his business 5 years ago, as a homemade ice cream shop. Ibrahim's shop is offering high quality and a wide variety of ice-creams. He developed an excellent reputation in Muscat and is about to open his 3rd shop in Qurum. Ibrahim is asking for consultancy, he is seeking your advice and he wants to have an expert's opinion on the following facts.
1- Ibrahim considers his reputation as an asset, he is asking about the way to value it.
2- Ibrahim is negotiating with the international ice cream brand "Haagen Dazs" to open the first shop in Muscat. "Haagen Dazs" Franchise will entail the following costs:
- Franchising and legal cost of acquiring the right to use the brand "Haagen Dazs": 140,000 OMR.
- Operational cost during start-up period: 54,000 OMR (installing "Haagen Dazs" specific neon signs and displays).
- Massive advertising campaign to launch the brand: 25,000 OMR.
Ibrahim is asking how to compute these costs in financial statements and why.
3- Ibrahim is developing new flavours from the Omani heritage by mixing spices and fruits and he found the perfect combination. He just got the patent, but he is explaining that he wasted lot of money and supplies to develop and test the new flavour "Dates". Ibrahim has the records and invoices of the 3,500 OMR he spent on this new flavour until he got the patent. He is happy now with the new flavour that was tested and appreciated by customers during the trial in Muscat Festival 2016, because last year, he spent about 1,250 OMR on testing another flavour "Cardamom" and it was not successful. In this regard, he is looking for your advice regarding the way these costs will appear in financial statements.
Write a report based on the knowledge you accumulated in the module where you:
- Explain briefly to Ibrahim the concept of Assets and the different type of Assets.
- Explain to Ibrahim the meaning of Intangible assets, their recognition and valuation.
- Explain to Ibrahim the appropriate accounting classification regarding points 1, 2 and 3 mentioned above as a consultation and justify your answers.
Q.2
"It is fair to say that accounting standards still differ quite extensively from country to country. It is also interesting to see how proud people are about their own accounting rules. In fact, they may not like them, but they still believe that they are so much better than those which exist in other countries. This is the challenge of harmonization".
Source: K. Van Hulle (1993), "Harmonization of accounting standards in the EC: Is it the beginning or is it the end?" European Accounting Review 1993, 2, 387-396.
Critically assess this statement, showing:
The significance of the concept of Harmonisation of accounting standards, Who is promoting the harmonisation of accounting standards and why? The challenges or barriers to the harmonisation of accounting standards.
Q.3
Examine the annual report of a large publicly listed company to ascertain the information disclosed on matters relating to corporate governance (with reference to the Code of corporate governance for public listed Omani companies).
Write a report based on your findings where you:
Analyse and critically evaluate the key notions of corporate governance in eneral.
- Critically evaluate the use of the Code of Corporate Governance for public listed Omani companies, with reference to the "UK Combined Code".
- Critically evaluate the significance and usefulness of the information disclosed.
NB: A company name will be assigned by the module leader for each student, once the company has been assigned to you, you need to download the company's corporate governance report from Muscat Securities Market's website,
Explain to Ibrahim the appropriate accounting classification regarding points 1, 2 and 3 mentioned above as a consultation and justify your answers.
Maximum Word Length: 2500 words