Iam not able find the answer for Question no. 4 and question no. 3

ACC210 Major Assignment (Task 2) Semester (Trimester) 2 - 2017 Word count: approximately 1,500 words Weighting: 30% This assignment (task) requires you to prepare answers to the following four (4) questions. The assignment must be your own individual work, that means it is not a group assignment. If it is believed that a student has copied material from another student or any other source without appropriate referencing, the necessary action will be taken in accordance with the University's Student Academic Integrity - Governing Policy: (http://www.usc.edu.au/explore/policies-and-procedures/student-academic-integritygoverning policy). Consequently, it is critical that you provide complete referencing for any and all sources of information that you use in preparing your answers to the assignment. This includes both in-text references and a list of references at the end of your assignment. Please, contact your local campus lecturer/tutor if you have any questions about referencing (APA 6th Edn. is to be used - it is available on MSWord). Alternatively, you can post your enquiry on the Discussion Board of the Blackboard site for this course. Other general points about this assignment: The assignment should only be submitted electronically via Safe Assignment on the ACC210 Blackboard site. If you wish to apply for an extension to your submission date, please email Dr Greg Laing (glaing@usc.edu.au) to explain the circumstances and attach any necessary supporting documentation. Late penalties will be applied for assignments submitted after 12 midnight (24:00 hours) on Monday 9th October, 2017 without an approved extension. More details on late penalties are provided in the course outline. It is not necessary to include an overall introduction and conclusion for the assignment. The suggested word count for each of the four (4) questions provides you with a guide to the approximate number of words that you should use in answering each question. The total word count is approximately 1,500 words. But if your word count is above 1,800 words, we will not continue marking your assignment after reading that number of words. Assessment Criteria: The assignment will be marked according to the rubric and allocation list which encompass aspects such as: Logical application of concepts to situations, with adequate justification/support for choice made; Professional presentation (word template provided), correct spelling, grammar and the use of the American Psychological Association (APA 6 th Edn.) referencing method. 1 Question 1: (Approximately 400 words) Exercise 3.1- Valuation premise for measurement of fair value Maple Ltd conducts a business that makes women's shoes. It operates a factory in an inner suburb of Perth. The factory contains a large amount of equipment that is used in the manufacture of shoes. Maple Ltd owns both the factory and the land on which the factory stands. The land was acquired in 2007 for $200 000 and the factory was built in that year at a cost of $520 000. Both assets are recorded at cost, with the factory having a carrying amount at 30 June 2017 of $260 000. In recent years a property boom in Perth has seen residential house prices double. The average price of a house is now approximately $500 000. A property valuation group used data about recent sales of land in the area to value the land on which the factory stands at $1 000 000. The land is now considered prime residential property given its closeness to the city and, with its superb river views, its suitability for building executive apartments. It would cost $100 000 to demolish the factory to make way for these apartments to be built. It is estimated that to build a new factory on the current site would cost around $780 000. The directors of Maple Ltd want to measure both the factory and the land at fair value as at 30 June 2017. Required: Discuss how you would measure these fair values. 2 Question 2: (Approximately 300 words) Exercise 5.18 - Revaluation model On 1 July 2016, Peewee Ltd acquired two assets within the same class of plant and equipment. Information on these assets is as follows. Cost Expected useful life Machine A $100 000 5 years Machine B 60 000 3 years The machines are expected to generate benefits evenly over their useful lives. The class of plant and equipment is measured using fair value. At 30 June 2017, information about the assets is as follows. Fair value Expected useful life Machine A $84 000 4 years Machine B 38 000 2 years On 1 January 2018, Machine B was sold for $29 000 cash. On the same day, Peewee Ltd acquired Machine C for $80 000 cash. Machine C has an expected useful life of 4 years. Peewee Ltd also made a bonus issue of 10 000 shares at $1 per share, using $8000 from the general reserve and $2000 from the asset revaluation surplus created as a result of measuring Machine A at fair value. At 30 June 2018, information on the machines is as follows. Fair value Expected useful life Machine A $61 000 3 years Machine C 68 500 3.5 years Required: 1. Prepare the journal entries in the records of Peewee Ltd to record the events for the year ended 30 June 2017. 2. Prepare journal entries to record the events for the year ended 30 June 2018. 3 1. 1 July 2016 Machine A Dr Machine B Dr Cash 100 000 60 000 Cr 160 000 30 June 2017 Depreciation expense - Machine A Dr 20 000 Accumulated depreciation - Machine A Cr (1/5 x $100 000) Depreciation expense - Machine B Dr 20 000 Accumulated depreciation - Machine B Cr (1/3 x $60 000) Accumulated depreciation- Machine A Dr Machine A Cr (Writing down to carrying amount) 20 000 20 000 20 000 20 000 Machine A Dr 4 000 Gain on revaluation of Machine A (OCI) Cr (Revaluation increment: $80 000 to $84 000) 4 000 Gain on revaluation of Machine A (OCI) Dr 4 000 Asset revaluation surplus - Machine A Cr (Accumulation of net revaluation gain in equity)) 4 000 Accumulated depreciation - Machine B Dr Machine B Cr (Writing down to carrying amount) 20 000 20 000 Loss on revaluation - Machine B (P&L) Dr Machine B Cr (Revaluation to fair value at 30/6/17) 2 000 2. 1 January 2018 Machine C Dr Cash Cr (Acquisition of machine C) 2 000 80 000 80 000 Depreciation expense - Machine B Dr 9 500 Accumulated depreciation - Machine B Cr (1/2 x /1/2 x $38 000) 9 500 Cash Dr Proceeds on sale of Machine B Cr (Sale of Machine B) 29 000 29 000 4 Carrying amount of Machine B Sold Dr Accumulated depreciation - Machine B Dr Machine B Cr (Carrying amount of machine sold) 28 500 9 500 General reserve Dr Asset revaluation surplus - Machine A Dr Share Capital Cr 8 000 2 000 38 000 30 June 2018 Depreciation expense - Machine A Dr Accumulated depreciation - Machine A Cr (1/4 x $84 000) 10 000 21 000 21 000 Depreciation expense - Machine C Dr Accumulated depreciation - Machine C Cr (1/4 x x $80 000) 10 000 Accumulated depreciation - Machine A Dr Machine A Cr (Writing down to carrying amount) 21 000 Loss on revaluation of Machine A (OCI) Dr Machine A Cr (Write down of plant from $63000 to $61000) 2 000 Asset revaluation surplus - Machine A Dr Loss on revaluation of Machine A (OCI) Cr (Accumulation of revaluation loss to equity) 2 000 Accumulated depreciation - Machine C Dr Machine C Cr (Writing down to carrying amount) 10 000 Loss on revaluation (P&L) Dr Machine C Cr 1 500 10 000 21 000 2 000 2 000 10 000 1 500 Question 3: (Approximately 500 words) Exercise 6.11 - Internally generated intangible assets In their article entitled 'U.S. firms challenged to get \"intangibles\" on the books', Byrnes and Aubin (2011) noted that in the United States some companies were accounting for intangibles such as brands, patents and information technology differently when they were developed internally rather than being acquired. This could mean major differences in accounting numbers where internally generated intangibles developed at low costs by one company 5 were sold for large amounts to another company. They noted: The accounting difference could result in distorted behaviour, warns Abraham Briloff, a professor emeritus of accountancy at Baruch College, tempting companies to buy intellectual property rather than doing research themselves . . . Required: 1. Explain the accounting for internally generated intangible assets in AASB 138/IAS 38. 2. Discuss any differences between accounting for internally generated intangible assets and acquired intangible assets in AASB 138/IAS 38. Answer: It is easier to recognise intangibles when they are acquired in comparison to when they are internally generated. For acquired intangibles there is a market transaction and the acquired assets are measured at costmeasured at fair value for business combinations. For assets acquired in a business combination fair values may be used compared with having to determine a cost. With acquired assets, the assets prohibited in para 63 for recognition as internally generated intangibles, may be recognised. Once recognised, all intangible assets are subsequently treated the same. 3. Discuss why companies may be reluctant to press for changes in AASB 138/IAS 38 to require more recognition of internally generated intangible assets. (Loftus, p.175) 6 Question 4: (Approximately 300 words) Exercise 9.19 - Accounting for defined benefit superannuation plans Some years ago, Wattle Ltd established a defined benefit superannuation plan for its employees. The company has since introduced a defined contribution plan, which all new staff join when commencing employment with Wattle Ltd. Although the defined benefit plan is now closed to new recruits, the fund continues to provide for employees who have been with the company for a long time. The following actuarial report has been received for the defined benefit plan: 2016 $ Present value of the defined benefit obligation 1 Jan. 20 000 000 Past service cost 2 000 000 Net interest ? Current service cost 800 000 Benefits paid 2 100 000 Actuarial loss on DBO 100 000 Present value of the defined benefit obligation 31 Dec. 23 000 000 Fair value of plan assets at 1 Jan. 19 000 000 Return on plan assets ? Contributions paid to the fund during the year 1 000 000 Benefits paid by the fund during the year 2 100 000 Fair value of plan assets at 31 December 2016 20 130 000 Additional information (a) All contributions received by the funds were paid by Wattle Ltd. Employees make no contributions. (b) The interest rate used to measure the present value of the defined benefit obligation was 10% at 31 December 2015 and 31 December 2016. (c) The asset ceiling was nil at 31 December 2015 and 31 December 2016. Required: 1. Determine the surplus or deficit of Wattle Ltd's defined benefit plan at 31 December 2016. 2. Determine the net defined benefit asset or liability that should be recognised by Wattle Ltd at 31 December 2016. 3. Calculate the net interest and the return on plan assets for the year ended 31 December 2016. 4. Present a reconciliation of the opening balance to the closing balance of the net defined benefit liability (asset), showing separate reconciliations for plan assets and the present value of the defined benefit obligation. 5. Prepare a summary journal entry to account for the defined benefit superannuation plan in the books of Wattle Ltd for the year ended 31 December 2016. 7 8