acc205 assignments

ACC205

Assignment 2

Group-based Assignment
This assignment is worth 30% of the final mark for ACC205 Financial Reporting and Analysis.
The cut-off date for this assignment is 19 February 2014, 2359 hrs.
This is a group-based assignment. You should form a group of 3 members from your seminar
group. Each group is required to upload a single report to MyUniSIM via your respective seminar
group. Please elect a group leader. The responsibility of the group leader is to upload the report on
behalf of the group.
It is important for each group member to contribute substantially to the final submitted work. All
group members are equally responsible for the entire submitted assignment. If you feel that the
work distribution is inequitable to either yourself or your group mates, please highlight this to your
instructor as soon as possible. Your instructor will then investigate and decide on any action that
needs to be taken. It is not necessary for all group members to be awarded the same mark.
___________________________________________________________________________

Question 1
The accounting profession, the public, as well as regulatory bodies recognise the importance
of high quality corporate reporting. However, the recommendations to improve it are
sometimes questioned on the basis that the marketplace for capital can determine the nature
and quality of corporate reporting. Additional accounting and disclosure standards would
only distort a market mechanism that already works well and would add costs to the reporting
mechanism, with no apparent benefit. Additional requirements of the accounting standards
create costly, inefficient, and unnecessary regulation. On the other hand, increased disclosure
reduces risks and offers a degree of protection to users. This increased disclosure comes at
the expense of additional costs to the preparer of financial statements.
Required:
(a)

Examine and comment on the usage of the accounting standards to help the market
mechanism work effectively for the benefit of preparers and users of corporate
reports.
(10 marks)

(b)

Discuss and explain the relative costs to the preparer and benefits to the users of
financial statements of increased disclosure of information in financial statements.
(20 marks)

Assignment 2

Question 2
Falcon Semiconductor Ltd. is a leading provider of advanced semiconductor packaging and
test services. Falcon’s full turnkey semiconductor solutions include package design, probe,
assembly, test and distribution services. The test services operation has been experiencing
substantial losses for two years. The company’s year-end is 31 December. At a meeting on 22
September 20X2 the directors decided to close down the test services operation on 31 March
20X3 and then dispose of its non-current assets on a piecemeal basis. Affected employees
and customers were informed of the decision and a press announcement was made
immediately after the meeting. The directors have obtained the following information in
relation to the closure of the operation:
(a)

On 1 Nov 20X2, the factory had a carrying amount of $2.5 million and is expected to
be sold for net proceeds of $4 million. On the same date the plant had a carrying
amount of $1.3million, but it is anticipated that it will only realise net proceeds of
$300,000.
(10 marks)

(b)

Of the employees affected by the closure, the majority will be made redundant at cost
of $640,000, the remainder will be retrained at a cost of $150,000 and given work in
one of the company’s other operations.
(10 marks)

(c)

Trading losses from 22 September to 31 December 20X2 are expected to be $400,000
and from this date to the closure on 31 March 20X3 a further $200,000 of trading
losses are expected.
(10 marks)

Required:
Assess the points above and illustrate how the decision to close the furniture making
operation should be treated in Manco’s financial statements for the years ending 30
September 2010 and 2011. Your answer should quantify the amounts involved.

Question 3
The Conceptual Framework established the concepts that underlie the estimates, judgements
and models on which IFRS financial statements are based.
Required:
Based on the company you are currently working in or any suitable one you are able to gain
insight to.
(a)

Briefly outline the characteristics of the business you have chosen and the accounting
system of the company.
(5 marks)

ACC205

(b)

Assignment 2

Discuss what is good judgment and why is it increasing in focus?
(10 marks)

(c)

Show with examples how the management of the company you have selected apply
judgment in the preparation of the financial information provided to users.
(10 marks)

(d)

What are the challenges in removing bias from judgment? Will the adoption of a
judgment framework helps?
(15 marks)

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