diff_months: 11

Subject Name: Financial Reporting

Download Solution Now
Added on: 2024-11-21 22:00:35
Order Code: SA Student Ken Accounting and Finance Assignment(10_23_37169_62)
Question Task Id: 496225

Subject Name: Financial Reporting

Assessment Type: Statement of Advice]

Your Task

Your task is to analyse client information using the information and questions raised by the CEO, and present the findings in a Statement of Advice. You must address all the questions raised from your client.

For each issue, you are expected to:

1) Identify the facts and accounting topic

2) Apply the relevant legislation, accounting standard and/or process

3) Make a recommendation and/or summary of the correct accounting treatment

Assessment Description.

Assume that you are a team of graduate accountants working for independent consulting & accounting firm, situated at 100 Flinders Street, Melbourne, VIC 3000. The Manager of your firm, Ms. Olivia Dawson, has asked you to prepare the Statement of advice in response to an email received from a client, Mr. Greg Coles, the Managing Director of Moon Ltd, raising several accounting issues.

The maximum length for the body of the letter is 1,500 words. You should address all the technical issues/discussion in the statement of advice, followed by a Reference List.

Email Information

One of your clients has emailed your firm with several queries. Make sure you reference any relevant sources relating to your advice, for example, AASBs, Corporations Act, and relevant websites. See the email below

Re: Accounting Issues: Year Ending 30 June 2022 From: Greg Coles (G.coles@Moon.com.au) Sent: 10 July 2023 To: Olivia Dawson ( HYPERLINK "mailto:O.Dawson@consultinggroup.com.au" O.Dawson@consultinggroup.com.au)

Dear Olivia,

As discussed, our chief accountant is currently on leave. I need to understand the following transactions and events to present to the Board regarding the financial impacts of our recent takeover. The chief accountant left me a note, but I am unsure of the effect of the below transactions. Can you please provide me with a more detailed explanation just in case the board request further information? Please remember the Board of directors have varying degrees of accounting knowledge, so please limit the use of technical accounting terms.

Issue 1

Recently Moon Ltd recently purchased 100% of issued shares in Mini Ltd. The directors of Moon Ltd discovered the following intangible assets and contingent liabilities were not recognised in Mini Ltds books at the time of acquisition.

Intangible assets

a) a household brand name which the market has valued at $10 million;

b) a customer list consisting of information about customers, such as their name, personal preferences, order or product backlog and contact information, which is estimated to have a fair value of $5 million; and

c) a good customer relationship (customer contracts and related customer relationship) which is highly valued by Subsidiary Ltd, but which is estimated to have a fair value of only $1 million once the ownership and management of Subsidiary Ltd is changed through the acquisition.

Contingent liabilities

a) a contingent liability involving a claim for infringement of copyright, which the lawyers are of the opinion that there is a 60% chance that Mini Ltd will have to pay nothing, a 20% chance that it has to pay $100,000 and another 20% chance that it has to pay $500,000; and

b) a contingent liability involving a possible payment of $1 million compensation to the CEO of Mini Ltd in the event that the CEO is dismissed within 3 years for not meeting the profit targets.

Having prepared the acquisition analysis as part of preparing the consolidated financial statements for Moon Ltd, can you explain how the above unrecorded items should be treated/recorded? Please explain each of the steps involved in preparing the acquisition analysis for Moon Ltd.

Issue 2

Mini Ltd had a recorded goodwill of $90,000 in its balance sheet at the time of acquisition. How does the recording of goodwill by the subsidiary affect the accounting for the groups goodwill? When goodwill is impaired in later years, should the impairment loss be recognised in the records of Moon Ltd or as a consolidation adjustment? How will it be recorded? What happens when it is fully impaired?

Issue 3

I am confused as to why we would ever use Retained earnings in intragroup transactions. It doesnt make sense to use equity accounts, to eliminate the effect of unrealised profits. Please explain the reason and provide at least two examples (including journal entries) of when this account would be used in consolidation elimination entries.

Please provide us a statement of advice as I would like to present this to the Board. I look forward to hearing from you shortly.

Regards

Greg Coles

Managing Director, Moon Ltd Level 6,

12 Bright Street,

Perth WA 6000

Additional Requirements

1) You must include the following in your Statement of Advice (SoA):

a) Cover Page should include:

i) name/logo of your accounting and consulting firm

ii) The words "Statement of Advice"

iii) Who the document is prepared by

iv) Who the document is prepared for

v) Date

vi) Brief information on what the document is about

b) Table of Contents

c) Recommendations and explanations include in-textreferencing

d) Conclusion

e) Reference list

2) Any sources that you use need to be acknowledged in order to avoid plagiarism. Information on referencing can be found under "Study Resources Academic Skills" on MyKBS at this link.

3) You must identify and refer to specific paragraphs of the relevant accounting standards in your advice.

  • Uploaded By : Pooja Dhaka
  • Posted on : November 21st, 2024
  • Downloads : 0
  • Views : 138

Download Solution Now

Can't find what you're looking for?

Whatsapp Tap to ChatGet instant assistance

Choose a Plan

Premium

80 USD
  • All in Gold, plus:
  • 30-minute live one-to-one session with an expert
    • Understanding Marking Rubric
    • Understanding task requirements
    • Structuring & Formatting
    • Referencing & Citing
Most
Popular

Gold

30 50 USD
  • Get the Full Used Solution
    (Solution is already submitted and 100% plagiarised.
    Can only be used for reference purposes)
Save 33%

Silver

20 USD
  • Journals
  • Peer-Reviewed Articles
  • Books
  • Various other Data Sources – ProQuest, Informit, Scopus, Academic Search Complete, EBSCO, Exerpta Medica Database, and more