Accounting Business Reporting for Decision Making

208 Accounting: Business Reporting for Decision Making

5.29   LO8, 9

A friend who owns a small entity trading as Jobs Galore knows that you are studying accounting,

and has asked if you would prepare the entity’s classified balance sheet in narrative format as at

30 June. The friend has provided you with the following list of assets and liabilities (the equity

figure has not been provided) to perform this task.

Cash

Motor vehicles

Equipment

Monies owed by customers

Monies owed to suppliers

Loan due to be paid in two years

Wages owed to employees

Rent paid in advance

$4 260

23 800

13 090

3 220

5 600

17 960

1 100

510

5.30   LO4

Using the Conceptual Framework definition and recognition criteria, discuss if each of the

following items can be recorded as assets:

a. Trade receivables

b. Investments in shares

c. Inventory

d. Research expenditure

5.31   LO1

The accountant of the private secondary college, St Lucia, is preparing the school’s financial

statements. Discuss the justification for the school preparing special purpose financial statements

rather than general purpose financial statements.

5.32   LO3

On 8 November 2011, the Australian Senate passed the ‘carbon tax legislation’ in relation to the

government’s clean energy proposal, including a mechanism for pricing carbon. The legislation was

effective from 1 July 2012. Under the legislation approximately 500 of the largest emitters in Australia

would be liable to purchase and surrender carbon units for every tonne of carbon dioxide equivalent they

produce. The carbon pricing scheme had an initial price of $23 per tonne of emissions. On 17 July 2014

legislation to abolish the carbon tax was passed by the Senate and received the Royal Assent.

At the time the legislation was passed, and subsequently repealed, there was no accounting

standard governing the accounting treatment for emission schemes.

Access the websites of the International Accounting Standards Board and Australian Accounting

Standards Board and report on the development of accounting standards governing the accounting

treatment for emission schemes. Access the most recent financial report of one of the largest Australian

companies and report on its accounting policy and disclosures in relation to carbon emissions.

5.33   LO10

Find the University of NSW’s (UNSW) asset revaluation policy on the internet. Summarise the

measurement of UNSW’s various asset classes. Discuss the advantages and disadvantages of the

revaluation and cost measurement systems.

5.34   LO10, 11

You have a friend who is considering purchasing some shares in LookFool Ltd. The shares are

currently trading on the securities exchange at $3.58 each. The entity’s financial statements suggest

that the entity’s net assets are $250 000 and there are 150 000 shares on issue, giving a book value

per share of $1.67. Your friend is confused as to why the financial statements do not reflect the

measure of the entity’s value. Explain this to your friend.

5.35   LO5

In calculating the provision for employee benefits, JB Hi-Fi Ltd includes the value attributable

to employee long-service-leave entitlements. Explain how these entitlements differ from annual