ACC-ACF3100 Advanced Financial Accounting

Research Assignment: Semester 1 2018

Weighting: 20% (marked out of 60)

Due Date: Week 8 (Friday 27 April 4pm)

Word Limit: The business reportshould be a maximum of 2,000 words (excluding executive summary, references and any appendices)

Learning objectives assessed:

This assessment task is designed to test your achievement of learning objectives 1, 2, 3 and 4.

This is a group-basedassessment task (groups of 2) and notan individual project.

It is designed to assist you in demonstrating your knowledge of, and ability to critically assess a contemporary issue in financial reporting and disclosure. It also provides you with an opportunity to further enhance your research, judgement and written communication skills.

Issue to be investigated: Accounting for Leases

"One of my great ambitions before I die is to fly in an aircraft that is on an airline's balance sheet."

Sir David Tweedie, former Chair of the International Accounting Standards Board (speech to the Empire Club in Toronto, April 2008)

Accounting for leases is a very sensitive topic. After an extensive consultation period with many interested parties, the International Accounting Standards Board (IASB) issued IFRS 16 Leaseswhich is effective for annual reporting periods on or after 1 January 2019 with early adoption allowed. The new standard has resulted in a single accounting model for all leases by lessees.

You have recently been appointed as a graduate accountant in a company listed on the Australian Securities Exchange Top 200 (ASX200) Woolworths, and are currently reporting to the Chief Financial Officer (CFO). The CFO of Woolworthshas been asked to respond to the Board of Directors regarding the effect that this new leasing standard will have on the company's financial reporting as Woolworths will applyIFRS 16Leases from 1 July 2019.

You are to research and comment on the new standard for leases and present your findings as follows:

*A business reportto update the CFO and the Board of Directors on the effect of IFRS 16 Leaseson financial reporting.

Your business reportneeds to be concise and informative. In preparing your report, you should investigate a range of issues:

(i)Provide a descriptionof the leases arrangements and how these are currently being recognised in Woolworthsfinancial statements based on the current requirements of AASB 117 Leases. You need to refer to the latest annual report for Woolworths.

(ii)Critically evaluatethe current accounting treatment of leases under AASB 117 Leasesand compare this to the new IFRS 16 Leasesstandard. Your evaluation should consider the impact of the changes to the new standard on financial reporting generally. Support your position and discussion with reference to theories covered in this unit and academic journal articles; and

(iii)Critically evaluate the possible impact of the new leases standard on Woolworths.

(iv)Provide a recommendationregarding treatment for existing leases and considerations about taking out new leases, which your CFO can take to the Board of Directors. Support your recommendation with reference to theories covered in this unit and academic journal articles.

Further information

*This assessment task must be done in pairs, i.e. two students working together from the same tutorial. In Week 1 and 2 tutorials, students will be required to form themselves into pairs and advise their tutor.

*In preparing your business report, you must refer to theories covered in this unit, academic journal articles and, where relevant, high quality newspaper and professional articles.

*A word count must be included. Students exceeding the word limit by more than 10% will incur a mark penalty.

*You must keep a copy of your submission until your marked assignment is returned.

Assessment Criteria:

A matrix outlining the assessment criteria and how your work will be assessed against these criteria will be provided on Moodle. This will assist you in completing the assessment task and to see the allocation of marks.

For more information on appropriate report writing, formatting and referencing, you should refer to the Q Manual at the following site:

http://www.buseco.monash.edu.au/qmanual/qmanual.pdf