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BUACC5932 CORPORATE ACCOUNTING

Major AssignmentSemester 1 2011

Due date 27 th May 2011 at 4.00 PMPART AThe trial balance for Megapixel Ltd as at 30 June 2010 (beforecalculation of income tax) is as follows:Note: this is the first year of operation of Megapixel Ltd.

DR CR$000 $000

Sales Revenue 1166Interest revenue 8Gain on Sale of Equipment 10Purchases 529Admin and Selling Expenses 153Goodwill Impairment Loss 25Auditor Fees 18Bad Debts Expense 5Depreciation Plant and Equipment 83Amortisation of Franchise 20Doubtful Debts Expense 6Interest Expense 21Miscellaneous Expense 28Rent Expense 17

Salaries 187Proceeds from Insurance Claim 20Accounts Receivable 118Allowance for Doubtful Debts 6Cash on Hand 4Deposits 130Franchise 220Accumulated Amortisation Franchise 20Goodwill 100

Accumulated Impairment Losses Goodwill 25Plant and Equipment 472

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Accumulated Depreciation Plant and Equip. 83Land 100Accounts Payable 235Bank Overdraft 13

Bank Loan 175Deferred Tax Liability 15Share Capital 400Foreign Currency Translation Reserve 25Revaluation Surplus 35

2236 2236

Additional information:

a) Inventory on hand at 30 June 2010 is $92,000b) Included in auditor remuneration is $6,000 in fees for various

management consulting services.c) The gain on sale of plant and equipment amounted to $10,000. The

written down value of the item sold was $77,000d) Directors have recommended a final dividend of $32,000 (4 cents

per share) at 30 June 2010e) On 30 June 2010 the company revised the useful life of one of its

plant and equipment assets from 5 years to 3 years. The asset hadbeen purchased on 1 July 2009 at a cost of $100,000

f) All assets other than accounts receivable, cash on hand andinventories are non-current. All liabilities other than accounts

payable, bank overdraft, current tax liability and provision fordividend are non-current.g) Share capital comprises 800,000 fully paid ordinary shares issued

on 1 July 2009.h) During the year ended 30 June 2010 the Foreign Currency

Translation Reserve credited with a foreign currency translationgain amounting to $25,000.

i) Income tax rate is 30% The only temporary differences relate todoubtful debts expense , goodwill impairment losses and

depreciation of Plant and Equipment (the depreciation allowablefor tax purposes for the year ended 30 June 2010 was $148,000

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j) Land was purchased on 1 July 2009 for $50,000. At 30 June 2010the directors have revalued the land to $100,000.

k) On 1 August 2010 a vehicle owned by the company was involvedin an accident and is now of no value. This vehicle was not insured.

At 30 June 2010 it had a carrying amount of $28,000.l) At 30 June 2010 the company has signed a contract for the

construction of a warehouse to the value of $380,000. All amountsunder the contract are due before 30 June 2011.

Required

Prepare a statement of comprehensive income ( using classificationof expenses by function method), a statement of financial positionand a statement of changes in equity, including any required notesfor the year ended 30 June 2010. These statements are to complywith Australian accounting standards AASB101, AASB108 andAASB110.

16 marks

PART BWith reference to Accounting Standard AASB108 AccountingPolicies, Changes in Accounting Estimates and Errors:a) Explain the distinction between accounting policies and

accounting estimatesb) Discuss the requirements under the standard where companies

wish to change accounting policies or accounting estimates

Maximum 300 words

4 marks

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Key assignment details and assessment criteria:

1. Group assignment with no more than two students in each group2. Submission due date: Week 103. Assignment worth in assessment = 20%

Assessment Criteria

The criteria used to assess the submitted assignment will be: Ability to work collegially in a group environment for shared

success. Evidence of relevant research and demonstrated understanding of

research materials. As a minimum students should consult thereferences listed under additional resources in the Unit Description

The structure, coherence and logic of arguments and analysispresented.

Demonstrated understanding of the subject matter that is the focus

of the assignment topic.