1
\nASSESSMENT BRIEF
\nSubject Code and Title ACCT6003 FINANCIAL ACCOUNTING PROCESS
\nAssessment Major Assessment \u2013 Part 2
\nIndividual\/Group Individual
\nLength Not applicable
\nLearning outcomes
\n1. Explain the regulatory framework that governs financial
\nreportinginAustraliawithemphasisontheConceptual
\nFramework for financialreporting
\n3.Apply accounting principles and standards when accounting
\nfor non-current assets, revenue and liabilities and recognise
\nthe judgements required in a range of diverse business
\ncontexts
\n5. Differentiate between shares and debentures and apply
\nappropriate accountingprocedures
\nSubmission Week 8, Sunday 11 Nov 2018 by 11:55pm AEST\/AEDT
\nWeighting 25% (Part 2 only, Full assessment 30%)
\nTotal Marks 100 marks
\nContext:
\nThis assignment forms Part 2 of the major assignment. Students are provided with a business
\ncase in which an entrepreneur, Xiaojing Wu, from China immigrated to Australia and considered
\nsetting up a business in South Australia. Xiaojing decided to change the business structure from
\napartnershiptoaprivatecompany,ChiHerbalPtyLtd,andithasbeengreatyearsforthem.
\nAfter ten years of operation, the company has grown and again they have made a decision to
\nmove onto public company structure ChiHerbal Ltdfrom private company structure.
\nInPart2oftheassignment,studentsarerequiredtopreparejournalentriestoaccountfora
\nrange of transactions undertaken by ChiHerbal Ltd.
\nBusiness Case
\nRefer to the transactions for Modules 2, 3 and 4 (Impairment of Assets will not be assessed in
\nthis assignment).
\n2
\nInstructions
\nStudentsareexpectedtoreviewthecontentofModule2,3and4(excludingImpairmentof
\nAssets inModule4).Students arerequiredtoaccount fortheformationandoperationof
\nCHiHerbalLtd,i.e.transactions regardingthecompany\u2019s financingactivities,fixedassets,and
\nintangible assets.
\nAssignment Part 2 Questions
\nAssume you were the accountant of ChiHerbal Ltd, address the requirements of the following
\nindependent scenarios for the company.
\nScenario 1 Financing Company Operations (30 marks)
\nOn 1 July 2017, essay cola, write my essay, dissertation writing service, writer my paper, homework help ChiHerbal Ltd was registered and offered 500,000 ordinary shares to the public
\nat an issue price of $7, payable as follows. As per the company\u2019s constitution, all surplus money
\nfrom application would be transferred to allotment and\/or calls accounts.
\n$3 on application (due by 1 August 2017)
\n$2.5 on allotment (due by 30 August 2017)
\n$1.5 on Call 1 (due by 15 June 2018)
\n$1 on Call 2 (due by 30 July 2018)
\nApplication has been closed and by 1 August 2017, 600,000 shares have been applied for of
\nwhich applicants for 100,000 shares forwarded the full $8 per share, and the reminder paid
\napplication money only.
\nOn15August,directorsdecidedtoallotsharesinfulltoapplicantswhohadpaidthefullamount
\nand to all remaining applications on a pro rata basis.
\nThe cost of publishing prospectus and stamp duty ($29,000) was also paid on 15August. Other
\nlegal fees of $7,000 were paid on this date too.
\nAll outstanding allotment money was received by the due date above.
\nThe Call 1 was made on 1 May 2018 with money due by 15 June. Subsequently Call 2 was made
\non 1 July 2018 with money due by 30 July 2018. All money was received on the due dates except
\nforthe holder of 15,000 shares who failed tomeetboth call 1&2.On1September 2018, as
\nprovided for in the constitution, the directors decided to forfeit these shares. They were
\nreissued,on15September2018,aspaidto$8for$6cashwithabrokeragefeeof$4,000.The
\nbalanceoftheforfeitedsharesaccount(afterthereissuingsharecosts)wasreturnedtothe
\nformer shareholder on 30 September 2018.
\nRequired
\nPrepare the journal entries to record the transactions of ChiHerbal Ltd up to and including that
\nwhich took place on 30 September 2018. (Show all workings and narrations are compulsory)
\n3
\nScenario 2 Property, Plant and Equipment (25 marks)
\nThe end of the reporting period for ChiHerbal Ltd is 30 June. The company depreciates all
\ndepreciable assets using the straight-line method.
\nThe following events \/ transactions occurred during 2017 and 2018:
\n01April2017 Paid $90,000 cash for a TruckA. ChiHerbal Ltd estimated the truck\u2019s
\nuseful life and residual studybay value at 5 years and $10,000.
\n30June302017 Paid $140,000 cash for equipment. ChiHerbal Ltd estimated the
\nequipment\u2019s useful lifefor 10 years with no residual value.
\n31August2017 Paid$2,500cashforTruckA\u2019s transmissionrepairsandoil change.
\n01September 2017 ChiHerbal Ltd decided to change the basis of measuring equipment to
\nthe rAssessment model. ChiHerbal Ltd directors assessed the
\nequipment\u2019s fair value at 1 September 2017 at $115,000 with remaining
\nlife 8 years.
\n1March2018 Truck A has been sold for $59,000 cash
\n30 June 2018 ChiHerbal Ltdre-assessedfairvalueon30June2018byindependent
\nvaluer and the equipment\u2019s fair value at 30 June 2018 was $120,000.
\nRequired
\nPrepare the journal entries to record the above transactions of ChiHerbal Ltd for the financial
\nyear ended 30 June 2017 and 2018.
\nStudents are required to show depreciation entries as well as closing entry(ies) to Asset
\nRAssessment Surplus Account only, if any (you do not need to show closing entries to P+L
\nsummary). Show all workings and narrations are compulsory. Tax effect on rAssessment is
\nignored.
\n4
\nScenario3Lease(35marks)
\nOn 31 December 2016, ChiHerbal Ltd has entered into an agreement to lease a Machine from a
\nmanufacturer, Cessnock Ltd.
\nThe lease agreement details are as follows.
\nLength of lease, non-cancellable 5 years
\nCommencement date 1 July 2017
\nAnnual lease payment, commencing 1 July 2017 $8,000
\nUsual selling price of (fair Value) the Machine at 1 July 2017 $35,322
\nLessor\u2019s carrying amount of the machine at 1 July 2017 $31,000
\nEstimated useful life of the Machine 7 years
\nEstimatedresidual value of the plant at the end of its economic life $3,000
\nResidualvalueattheendoftheleaseterm,100%isguaranteedby
\nChiHerbal Ltd. $2,160
\nInterest rate implicit in the lease 9%
\nRequired
\na) Prepare a schedule of lease payments forthe entire lease term and the journal entries
\nforChiHerbal Ltdin respect ofthelease forthe financial year ended 30 June 2018and
\n2019 only (20marks).
\nb) Prepare a schedule of lease receipts forthe entire lease term and the journal entries for
\nthemanufacturer,CessnockLtdforthefinancialyearended30June2018and2019
\nonly in respect of the essaypro lease for the lease term (15 marks).
\nNote: Include narrations for all journal entries. Present value tables (both single dollar and
\nannuity tables) have been included at the end of the assessment
\n5
\nScenario 4 Intangible Assets (10 marks)
\nChiHerbal Ltd has undertaken a project ( help with nursing paper writing from experts with MSN & DNP degrees) to develop an online sales team. The project ( help with nursing paper writing from experts with MSN & DNP degrees) involves all
\nsales representatives being equipped with a hologram-project ( help with nursing paper writing from experts with MSN & DNP degrees)ing equipment which can project ( help with nursing paper writing from experts with MSN & DNP degrees)
\nan accurate, image of every stock item ordered by customers.
\nThecostsincurredinthecurrentperiodonthisproject ( help with nursing paper writing from experts with MSN & DNP degrees)forthefinancialyear30June2017were:
\n\uf0b7 Computer equipment (life five years, zero residual value) $500,000
\n\uf0b7 Software development $380,000
\n\uf0b7 Consultants\u2019 fees (for testing) $620,000
\nChiHerbal Ltd expected the project ( help with nursing paper writing from experts with MSN & DNP degrees) to \u2018go-live\u2019 by the end of financial year 2017. However errors
\nweredetectedandtheproject ( help with nursing paper writing from experts with MSN & DNP degrees)wasstillunderon-goingexperimentaltesting.Applicationfora
\npatenthasbeendelayed.ChiHerbalLtdwashopingtosellthetechnologytoothercompanies
\nbutthemarketingdepartment have confirmedthat currently there\u2019s yetto be existence ofa
\nmarket for the new product.
\nRequired
\nForthe reporting period ended 30 June 2017, applying the provisions ofAASB138, identify the
\namount of development and whether the development costs should be capitalised or
\nrecognised as anexpense.
\nIn your answer must refer to the relevant sections and paragraphs in AASB 138 Intangible Assets
\nto fully justify your conclusion. Journal entries are not required.
\n6
\nPresent value tables for the Question 3 Lease
\nPresent Value Of $1
\n4% 5% 6% 7% 8% 9% 10% 11% 12%
\n0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
\n1 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929
\n2 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972
\n3 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118
\n4 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355
\n5 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674
\n6 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066
\n7 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523
\n8 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039
\n9 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606
\n10 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220
\nPresent Value Of Annuity (in arrear)
\n4% 5% 6% 7% 8% 9% 10% 11% 12%
\n1 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929
\n2 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901
\n3 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4437 2.4018
\n4 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.1024 3.0373
\n5 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6959 3.6048
\n6 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114
\n7 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638
\n8 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676
\n9 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282
\n10 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502<\/p>\n","protected":false},"excerpt":{"rendered":"
1 ASSESSMENT BRIEF Subject Code and Title ACCT6003 FINANCIAL ACCOUNTING PROCESS Assessment Major Assessment \u2013 Part 2 Individual\/Group Individual Length Not applicable Learning outcomes 1.\u2026<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7316,7318,7317,7315,7319,7321],"tags":[441,7323,628,7326,7325,7322,7324],"class_list":["post-48785","post","type-post","status-publish","format-standard","hentry","category-best-dissertation-writers-uk","category-british-dissertation-writers","category-dissertation-help-online","category-dissertation-writing-services-uk","category-help-with-dissertation-writing","category-uk-dissertation-help","tag-cheap-dissertation-writing-services","tag-dissertation-help-london","tag-dissertation-help-online","tag-dissertation-tutor","tag-expert-assignment-help","tag-masters-dissertation-help","tag-university-assignment-help"],"_links":{"self":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/48785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/comments?post=48785"}],"version-history":[{"count":0,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/48785\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/media?parent=48785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/categories?post=48785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/tags?post=48785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}