Il vodafone AU 4G 12:00 AM Done ACC201 FINANCIAL ACCOUNTIN... Question 1 Recently Sea Eagle Ltd experienced a strike that affected a number of its operating plants. The group accountant of Sea Eagle Ltd indicated that it was not appropriate to report depreciation expense during this period as the equipment was not used during the strike. She stated that during the strike the equipment did not depreciate and an inappropriate matching of costs and revenues would result if depreciation were charged. She based her position on the following points. 1. It is inappropriate to charge the period with costs for which there are no related revenues arising from production 2. The basic factor of depreciation in this instance is wear and tear, and because the equipment was idle. no wear and tear occurred. Required 1. Summarise the requirements of AASB 116 in relation to depreciation of property, plant and equipment assets. 2. You are a part of the auditing team that analyses the accounts of Sea Eagle Ltd. Write a report to your supervisor in relation to the views of the group accountant of Sea Eagle Lid. Question 2 Bolton Ltd holds a trademark that is well known within consumer circles and has enabled the company to be a market leader in its area. The trademark has been held by the company for 9 years. The legal life of the trademark is 5 years, but is renewable by the company at little cost to it. Required Discuss how the company should determine the useful life of the trademark with reference to AASB 138. noting in particular what form of evidence it should collect to justify its selection of useful life Question 3 Tee Ltd's directors decided on 3 May 2020 to restructure the company's operations as follows. Factory Z would be closed down and put on the market for sale. 100 employees working in Factory z would be retrenched on 31 May 2020, and would be paid their accumulated entitlements plus 3 months wages. The remaining 20 employees working in Factory Z would be transferred to Factory X, which would continue operating Five head-office staff would be retrenched on 30 June 2020, and would be paid their accumulated entitlements plus 3 months wages. As at the end of Tee Ltd's reporting period, 30 June 2020, the following transact had occurred. O O O o Factory Z was shut down on 31 May 2020. An offer of $4 million had been received for Factory Z but there was no binding sales agreement. The 100 retrenched employees had left and their accumulated entitlements had been paid. However, an amount of $76 000, representing a portion of the 3 months wages for the retrenched employees, had still not been paid Costs of $23 000 were expected to be incurred in transferring the 20 employees to their new work in Factory X. The transfer is planned for 14 July 2020. . Four of the five head office staff who have been retrenched have had their accumulated entitlements paid, including the 3 months wages. However, one employee, James Perry, remains in order to complete administrative tasks relating to the closure of Factory Z and the transfer of staff to Factory X. Jerry is expected to stay until 31 July 2020. His salary for July will be $4000 and his retrenchment package will be $13 000, all of which will be paid on the day he leaves. He estimates that he would spend 60% of his time administering the closure of Factory Z, 30% on administering the transfer of staff to Factory X, and the remaining 10% on general administration Required 1. Summarise the accounting for provisions and contingent liabilities with reference to AASB 137. 2. Calculate the amount of the restructuring provision recognised in Tee Ltd's financial statements as at 30 June 2020, in accordance with AASB 137. 3. Analyse the impact of restructuring provisions on gearing ratios of Tee Ltd and implications on their existing debt covenants. Report format: Group Report - All groups - One copy per group to be uploaded to Moodle and Turnitin via Kol's Moodle subject homepage. Presentation: 1600 words (+/-10%); short report format, Title page. executive summary, table of contents, appropriate headings and subheadings, recommendations/findings/conclusions, in-text referencing reference list (Harvard - Anglia style). attachments if relevant. Single spaced, font Times New Roman 12pt. Calibri 11 pt or Arial 10pt. In text referencing and reference list are excluded from the word count. Marking Guide: Research-extent and application 30% Analysis 30% Recommendations 20% Written communication 20% Total mark will be scaled to a mark out of 20 subject marks