Financial Reporting Written Assignment
Question 1 -
Read the three articles under the readings for week three:
1. Public losing confidence in capitalism - The Australian Financial Review, 16 Dec 2016, p. 20.
2. Fahour left hanging over pay - The Australian Financial Review, 10 Feb 2017, p. 3.
3. Big exec stakes key for tech stocks - The Australian Financial Review, 30 Jan 2017, p. 20.
After reading the three articles, select one of them, and in between 750 - 1,000 words:
1. Identify and briefly explain any theory/ies we have considered in our discussions that are relevant to the case.
2. Clearly show how the theory/ies inform or explain the action/s described in the article. Make sure you describe what the actions are.
3. Make sure you use Harvard referencing. All sources must be acknowledged, including the text book and any articles used.
You are free to select a different article that interests you, that is relevant to theories of accounting, and which helps you answer points 1 and 2.
Question 2 -
Handy Ltd holds an asset that is traded in three different accessible markets, Market A, Market B, and Market C. The valuation premise for the asset is on a stand-alone basis.
Handy Ltd normally trades 60% of such assets in Market C and 40% in Market B.
Some information gathered in relation to these three markets, based on identical assets, is as follows:
|
|
Market A
|
Market B
|
Market C
|
|
Annual market volume for the asset
|
60,000
|
24,000
|
12,000
|
|
Price
|
150,000
|
146,000
|
156,000
|
|
Transport costs
|
6,000
|
6,000
|
8,000
|
|
Transaction costs
|
2,000
|
4,000
|
4,000
|
Required
Using the above information, explain how Handy Ltd should measure the fair value of the asset it holds and determine the asset's fair value (show calculations).
In you answer, outline the key principles that Handy Ltd should consider by making reference to AASB 13. You should include as many points that you think are relevant (i.e. be comprehensive). You do not need to quote paragraphs from the standard verbatim or write blocks of text from the standard, but quote the appropriate paragraph number and summarise in your own words.