ACC2100 Financial Reporting Assessment Assignment
Individual/Group Individual
Length Not applicable
Learning Outcomes LO 2 Explain the technical and conceptual aspects of selective accounting standards that address issues in financial reporting
LO 3 Employ the requirements of relevant accounting standards and conceptual accounting knowledge to solve financial reporting problems
Submission Friday, 22 October 2021,11.55 pm
Weighting 30%
Total Marks 30 marks
Instructions:
Prepare your work using Word (not excel). All submissions must be submitted with a signed Ozford Institute of Higher Education Cover Sheet via Moodle.
Part A ( 20 Marks) Question 1 (5 Marks) In 20X0, BP who operated an oil exploration platform in the Gulf of Mexico suffered a leak and caused a toxic oil spill which went on for months. Legal proceedings are started seeking damages from the entity, but it disputes liability. Up to the date of authorisation of the financial statements for the year to 31 December 20X0 for issue, the entitys lawyers advise that it is probable that the entity will not be found liable. However, when the entity prepares the financial statements for the year to 31 December 20X1, its lawyers advise that, owing to developments in the case, it is probable that the entity will be found liable. Required: Does the entity need to recognise a provision or disclose a contingent liability for the damage at the following dates? Cite proper AASB pronouncements and specific guidelines to back-up your answer. (a) At 31 December 20X0 (2.5 Marks) (b) At 31 December 20X1 (2.5 Marks) Question 2 (10 Marks) On 31 March 2021, JJ Ltd has entered into an agreement to lease a machine from a manufacturer, AA Ltd.
Length of lease, non-cancellable 5 years
Commencement date 1 July 2021
Annual lease payment, commencing 1 July 2021 $20,000
Usual selling price of (fair Value) the Machine at 1 July 2021 $80,000
Lessors carrying amount of the machine at 1 July 2021 $70,000
Estimated useful life of the Machine 7 years
Estimated residual value of the plant at the end of its economic life $7,500
Residual value at the end of the lease term, 100% is guaranteed by Jubilee Ltd.
$3,000
Interest rate implicit in the lease 12%
Required: (a) Prepare a schedule of lease payments for the entire lease term and the journal entries for JJ Ltd
in respect of the lease for the financial year ended 30 June 2022 and 2023 only. (5 marks) (b) Prepare a schedule of lease receipts for the entire lease term and the journal entries for the
manufacturer, AA Ltd for the financial year ended 30 June 2022 and 2023 only in respect of the lease for the lease term (5 marks)
The following page contains some templates that you can use to answer the question.
