The following details are taken from the accounting prepare


Assignment

Question 1

"Although the 2005 adoption of IFRS was a major regulatory transition affecting several tens of thousands of companies worldwide, its costs and benefits were initially unclear." (George, Li & Shivakumar, 2016).

Reference:

George, Li & Shivakumar (2016), A review of the IFRS adoption literature, Review of Accounting Studies (forthcoming).

Required:

Critically discuss the above statement by outlining costs and benefits of adopting IFRS by reporting entities throughout the world. Do you think that culture has any influence on harmonising accounting standards globally?

Note 1: Word limit for Question 1 is 1,000.
Note 2: Professional marks will be awarded for format, clarity and expression.
Note 3: The presentation of Question 1 should include Introduction, Discussion, Conclusion and List of references.
Note 4: You will be able to collect electronic copies of articles by visiting La Trobe University Library website.

Question 2 (Word limit = 500 words)

The following details are taken from the accounting records of Cootamundra Ltd. at 30 June 2015.

Trial Balance as at 30 June, 2015

 

Debit AUD $

Credit AUD $

Sales Revenue

 

2,000,000

Rent Revenue

 

149,500

Salaries

240,000

 

Light, power & fuel

75,000

 

Audit Fees

30,000

 

Interest Expense

24,000

 

Damage due to fire

99,000

 

Purchases

1,080,000

 

Interim dividend

24,000

 

Cash at bank

228,000

 

Inventories

345,000

 

Accounts Receivable

256,500

 

Provision for Doubtful Debts

 

30,000

Term deposit - due 30th September, 2015

498,000

 

Marketable Securities (long term)

120,000

 

Insurance paid in advance

60,000

 

Plant & Machinery

270,000

 

Furniture & fittings

300,000

 

Buildings

435,000

 

Accounts Payable

 

180,000

Accumulated Depreciation - Plant & Machinery

 

135,000

Accumulated Depreciation - Furniture & fittings

 

90,000

Accumulated Depreciation - Buildings

 

87,000

Bank Mortgage secured over buildings, due 1st May, 2017

 

450,000

Share Capital

 

750,000

General Reserve

 

120,000

Retained Earnings

 

93,000

 

4,084,500

4,084,500

Additional Information

(a) Salaries not paid at 30th June amounted to $30,000.

(b) Unpaid power account for June totalled $16,000.

(c) Prepaid insurance attributable to current year is 24,000.

(d) Cootamundra Ltd. uses the periodic inventory system. The stock-take of 30th June shows closing inventory of $330, 000 (valued at lower of cost and market value).

(e) Interest on bank mortgage is 10% per annum and is payable twice yearly on 31st December and 30th June. The amount due at 30 June has not been recognised.

(f) Depreciation rates on the straight line basis are as follows:

a. Plant & Machinery 10%
b. Furniture & Fittings 5%
c. Buildings 5%.

(g) The current market value of marketable securities is $126,000.

(h) Tax expense was calculated to be $80,000.

(i) A final dividend of 5% of paid-up-capital was declared and approved in 30th June 2015.

(j) On 21st June 2015, Cootamundra Ltd. was notified of an impending legal suit for $25,000 against the company for breach of contract. The case was settled 15th July 2015.

(k) The tax rate is 30%.

Required:

1) Prepare the necessary adjusting journal entries required by items (a) to (l) (narrations are not required).

2) Prepare a Statement of Comprehensive Income, a Statement of Financial Position and a Statement of Changes in Equity for Cootamundra Ltd for the year ended 30th June 2015 in accordance with the requirements of AASB 101.

3) Prepare at least fifteen notes to the financial statements according to comply with relevant accounting standards.

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