Part I

You work for a consulting firm. Smith Marc holds a large proportion of shares in Newera Ltd, an Australia pharmaceutical company. Smith Marc asks you to provide opinions on the following two issues:

(a) Newera Ltd adopts Australian Accounting Standards. Does the accounting treatments of internal and external intangible assets provide useful information to the users of financial statements? re accounted for in the financial statements provide useful information? Explain your opinion.

(b) The CEO of Newera Ltd approaches retirement age, and her current compensation is composed of a fixed salary and bonus linked to accounting performance. Discuss how the application of AASB 138 Intangible assets may affect her decision-making of R&D activities. Discuss whether Newera Ltd needs to and how to redesign her compensation package to align her interest with shareholders' interest.

Part II

Assume the following figure represents the structure of some entities in an Australian group. The percentage of ownership is shown, and these percentages are deemed representative of voting rights.

A Ltd

B Ltd (20%) C ltd (80%)

D Ltd ( 40%)

The directors of the entities are as follows:

A LtdJack Smith

B LtdAnna White

C LtdMichael Tylor

D LtdZoe Tower

Required

Identify and explain the related parties of C Ltd

Part III

Redwoods Mining Limited has exploration licences for two areas. The first is in north-western Australia and is at the prospecting stage. The second is several hundred kilometres east and is in the exploration stage. The company's management wants to treat the projects as one area of interest and does not believe that AASB 6 Exploration for and Evaluation of Mineral Resources will apply.

Do you agree with management's position on this? Provide reasons to justify your response.