need help with, Australian financial reporting, "AASB", 3 questions with sub sections.

Assessment Task 2 Assignment Part B Due date: Thursday of Week 10 (11.45 pm AEST) Weighting: 20% ASSESSMENT 2B Objectives This assessment item relates to the following course learning outcomes: Interpret the technical requirements and conceptual aspects of selected accounting standards that address key issues in financial reporting. Apply relevant accounting pronouncements and professional judgement to solve routine accounting problems. 1 Question 1 Total 8 marks On 1 July 2012, Weston Ltd paid $140,000 to acquire a machine that was to be used to manufacture steel cables. On this date, management of Weston Ltd estimated that the machine had a useful life of ten years and a residual value of $20,000. In accordance with AASB 116 Property, Plant and Equipment, Weston Ltd uses the revaluation model as its accounting policy to measure items of property, plant and equipment and the straight-line method of depreciation. The fair values of the machine for the first three years were as follows: 30 June 2013: $137,000 30 June 2014: $124,000 30 June 2015: $104,000 In October 2015, two competitors started selling high quality steel cables at prices that were well below those charged by Weston Ltd. By January 2016, Weston Ltd's sales of steel cables had significantly decreased and the output of the machine had dropped to nearly a quarter of its expected capacity. In February 2016, Weston Ltd engaged the services of a consultancy firm who were tasked with reviewing Weston Ltd's operations and advising how Weston Ltd could reduce its manufacturing costs. The review is expected to be completed in late May 2016 and the consultants expect to deliver their final report in late July or early August 2016. As at 30 June 2016, the fair value of the machine was $84,000 and the costs of disposal of the machine were estimated to be $200. As at this date, the value in use of the machine was determined to be $80,000. Required (a) Based on the requirements of AASB 116 Property, Plant and Equipment, provide (where necessary) appropriate journal entries in relation to the measurement of the machine as at: 30 June 2013, 30 June 2014, and 30 June 2015. (b) Based on the requirements of AASB 116 Property, Plant and Equipment and AASB 136 Impairment of Assets, explain how Weston Ltd would account for the machine as at 30 June 2016 and provide (where necessary) appropriate journal entries. (c) What other actions should Weston Ltd undertake on 30 June 2016? 2 Question 2 Total 8 marks Pizza Haven is a global pizza franchise that sells pizzas and pasta dishes through quick-service restaurants. On 1 July 2016, Wilson Pty Ltd (the franchisee) entered into a franchise agreement with Pizza Haven (the franchisor). The terms of the franchise agreement included the following: The initial franchise fee payable by Wilson Pty Ltd is $60,000 plus GST. Payment of the initial franchise fee gives Wilson Pty Ltd the right to use the Pizza Haven brand name and the exclusive right to operate a Pizza Haven restaurant in the Sydney CBD. Pizza Haven will assist Wilson Pty Ltd in locating suitable premises. Wilson Pty Ltd is responsible for the following costs: fitting out the premises; acquisition of equipment, fixtures and fittings; and initial marketing and promotion costs. Employees of Wilson Pty Ltd will be trained by Pizza Haven and the cost of training has been included in the initial franchise fee. Wilson Pty Ltd is required to pay a monthly royalty fee of 7% of gross sales and a yearly marketing fee of 4% of gross sales. The term of the franchise agreement is ten years. Wilson Pty Ltd can renew the franchise agreement every ten years. Although there is no fee for renewing the franchise agreement, Pizza Haven will only renew the franchise agreement if Wilson Pty Ltd has not committed any serious breaches of the franchise agreement and has satisfied Pizza Haven's performance requirements based on meeting revenue levels. Wilson Pty Ltd intends to continually renew the franchise agreement. Wilson Pty Ltd is not permitted to sell or transfer the franchise. Costs incurred by Wilson Pty Ltd were as follows: Paid $5,500 (including GST of $500) on 24 June 2016 for fees for legal and business advice relating to the franchise. Paid the initial franchise fee of $66,000 (including GST of $6,000) to Pizza Haven on 1 July 2016. Paid $22,000 (including GST of $2,000) on 14 July 2016 for marketing and promotion. Paid 88,000 (including GST of $8,000) on 21 July to fit out the restaurant. Paid a non-refundable deposit (representing 10% of the total cost) of $13,200 (including GST of $1,200) on 25 July 2016 for equipment and fixtures. Paid $11,000 (including GST of $1,000) on 28 July 2016 for inventory. Wilson Pty Ltd is entitled to a refund of the GST paid on all of the above payments. Although franchisees cannot sell or transfer their franchise, they are permitted, subject to the approval of Pizza Haven, to sell their entire business including the franchise agreement. A recent analysis of such sales indicated that the franchises were traded at prices that reflected more than the remaining term of the franchise agreement. For example, in May 2016, a franchisee who had operated a Pizza Haven restaurant for eight years (with two years of the franchise agreement remaining) sold their business for $900,000. This price included $50,000 specifically for the franchise agreement. 3 Required (a) Explain why the franchise agreement satisfies the definition of an intangible asset in AASB 138 Intangible Assets. (b) How, according to AASB 138 Intangible Assets, are separately acquired intangible assets measured on initial recognition? At what amount would Wilson Pty Ltd recognise the franchise agreement on initial recognition? (c) Apply the requirements of AASB 138 Intangible Assets and discuss whether the useful life of the franchise agreement should be assessed as finite or indefinite. You should ensure that you adequately justify your answer. 4 Question 3 Total 4 marks The latest versions of Australian accounting standards issued by the AASB are available on the AASB website: http://www.aasb.gov.au/Pronouncements/Current-standards.aspx. Review the current accounting standards on the AASB website and select two accounting standards that are not examined in this course and which you consider might be important for you to have some knowledge about in your future role as a professional accountant. Required (a) For each of the two accounting standards, explain why you selected that particular accounting standard. That is, explain why knowledge of the requirements of that particular accounting standard might be important or relevant to you as a professional accountant. (b) Identify and explain at least four activities that you could undertake once you have graduated to learn about the requirements of these accounting standards. 5 ACCT19062 Issues in Financial Reporting Assignment: Part B Question 1 2 3 Criteria The relevant requirements of AASB 136 Impairment of Assets and AASB 116 Property, Plant and Equipment have been appropriately applied. Written answers are correct (accurate), clearly expressed (the meaning is evident) and succinct (concise/brief). Where applicable, professional judgement has been exercised appropriately. All amounts are correct and workings are clearly shown. The relevant requirements of AASB 138 Intangible Assets have been appropriately applied. Written answers are correct (accurate), clearly expressed (the meaning is evident) and succinct (concise/brief). Where applicable, professional judgement has been exercised appropriately. All amounts are correct and workings are clearly shown. Marks Awarded /8 /8 The accounting standards selected are not examined in this course and their importance has been justified. Appropriate activities to learn about the requirements of these accounting standards have been identified and explained. Written answers are clearly expressed (the meaning is evident) and succinct (concise/brief). /4 Total /20 6