Question 2 (10 marks) Koala Ltd provide financial advice to Trump-Biden Inc. for an agreed fee of US$1 million on 10 July 2019. The monies are paid into the USA bank account of Koala Ltd on 10 July 2019. Koala Ltd decide to leave the monies in the USA bank account and will receive interest at a rate of 10% on 30 June each year. The appropriate exchange rates are noted below: 10 July 2019: A$1.00 = US$0.78 30 June 2020: A$1.00 = US$.75 Provide the journal entries (including narrations) that would need to be made in the books of Koala Ltd to account for the above transactions for the year ended 30 June 2020. Question 3 (6 marks) What is included in a director's declaration, and what are the implications if a director signs a declaration and the organisation suddenly fails owing substantial sums of money it cannot pay. Question 4 (5 marks) Should the general-purpose financial statements of a company be compiled in a manner that is understandable to all investors? Why? Question 5 (5 marks) What are restoration costs and how should an organisation in the extractive industries account for restoration costs? Question 6 (5 marks) Why is it useful for students of accounting to consider accounting theories? Question 7 (3 + 2 = 5 marks) Richmond Pty Ltd constructed a Giant Machine and incurred the following costs in doing so: . Amounts paid to employees to build the machine = $120,000 Raw materials consumed in building the machine = $45,000 . Manufacturing equipment depreciation attributed to construction of Giant Machine = $25,000 For the above transactions: A. Provide the journal entries that Richmond Pty Ltd would use for the construction of the asset. B. Assume that immediately after the journal entries in part A. have been made, new information becomes available that indicates the recoverable amount of the Giant Machine is only $160,000. Provide the adjusting journal entries. Question 8. (5 marks) Because heritage assets typically generate negative cash flows there is a perspective that they should be treated as liabilities and not assets. Do you agree with this viewpoint? Justify. Question 9 (3+3 = 6 marks) Melbourne Pty Ltd has an average weekly payroll of $600,000. The employees receive entitlements to two weeks sick leave per year. The sick leave entitlements are classified as non-vesting. Past experience suggests that 50% of employees will use their full two weeks entitlements each year, 25% of employees will take one week's sick leave each year and 15% of employees will take one day's sick leave each year. A. Calculate the expected sick leave expense for Melbourne Pty Ltd (on the basis of average salaries). B. Provide the monthly journal entries necessary to recognise the sick leave entitlement expense as it accrues. Question 11 (10 marks) The following operating segment is presented for Brisbane Pty Ltd. Segment Revenue Segment Profit Segment Assets W ($'000) ($'000) ($'000) Club Membership 700 100 1,000 Canteen sales 125 20 200 Sponsorships 50 (35) 100 Clothing 90 5 90 Total 965 90 1390 Determine which segments are reportable according to the guidelines provided in the Australian Accounting Standards. Justify. Question 13 (15 marks) In July 2019, Fitzroy Pty Ltd, an organisation involved in the surfing industry, provides two weeks of surfing lessons to a group of middle-aged executives employed by AFL Pty Ltd. The lessons conclude on 15 July 2019. The contract with AFL Pty Ltd requires it to make two deferred payments of $20,000 each to Fitzroy Pty Ltd on 15 July 2020 and 15 July 2021. Fitzroy Pty Ltd typically provides credit arrangements to such customers at a rate of 8 per cent. Provide the journal entries for Fitzroy Pty Ltd to account for the revenue to be received from the customer. Question 14 (5 marks) Brisbane Pty Ltd provides consulting services to AFL Pty Ltd. Rather than pay in cash it is agreed that AFL Pty Ltd will transfer some machinery to Brisbane Pty Ltd. The machinery is recorded in AFL Pty Ltd's accounts at a cost of $75,000 with accumulated depreciation of $20,000. The fair value is assessed as being $60,000. Provide the journal entry (or entries) for Brisbane Pty Ltd to recognise revenue to be received from AFL Pty Ltd. Question 15 (8 marks) Collingwood Pty Ltd has the following obligations: . It has agreed to repair faulty surfboards that it has sold. Evidence indicates that of the 2,000 surfboards that were produced in overseas factories, about 20% use defective fibreglass that will need to be replaced at an expected cost of about $250 per surfboard. It has a policy of providing long service leave to its employees. Under the arrangement, if employees stay for a period of ten years then they are entitled to an additional 15 weeks of holidays. Collingwood Pty Ltd believes it can reliably estimate how much the current years operations have contributed to this obligation. Collingwood Pty Ltd has an amount owing to its overseas supplier of $70,000, which it expects to pay in the next month. Collingwood Pty Ltd has a bank loan of $500,000. For the above transactions and events determine whether a provision should be recognised and provide a rationale for your response. 4 8. 6 10 11 12 13 14 16 17 18 19 ST 21 A t E $ & 1 21 1 6 K 25 19 0.9901 09803 90260 01960 09515 1060 09327 0.9215 09143 09053 19680 08875 08787 08700 08614 08528 11780 08.30 LLENG 08195 08114 KOVO 15640 0.7876 0.779 FOR 60 1960 09423 0.9219 09057 08880 0.8706 08535 0.88 HE80 08043 07885 0.7730 0.7579 07410 0.7285 07142 0.7002 1890 06730 G90 0.6468 D90 06217 $6090 ET 0.9709 0.9426 1516:0 0.8885 0.26 08375 ICINO 0.7894 1990 0.7441 0.7224 P1000 01990 06611 61190 ZIZVO 05090 PERSO COLO 0.5937 0.5376 61250 0.5067 0.4919 0.4776 Table 1-Present Value 4% 09615 0.9246 0800 81580 61270 0.7903 0.7999 0.7307 0.7026 0.6756 0.6496 91090 90090 0.5775 0.5553 0.5339 PERSO 0.4036 0.4746 1970 KAYO OTVO 04057 10000 0.3751 125 0.9524 0.9070 8900 0.8227 0.78.35 0.7462 0.7107 0.6768 9190 0.6139 0.5847 0.5568 0.5303 0.5051 048 10 04581 04363 04155 0.3957 0.3760 0.3589 95000 101CO 02953 09434 0060 9600 0.7921 0.7473 W 05000 15900 PLZVO 0.59 19 0.5584 0.268 0.4970 88970 04423 0.4173 0.39.37 0.3714 0.3503 03305 03118 CHITO 0.2775 NESCO OLATO 0.2330 P 66760 ELSKO B060D 07350 90890 2009/0 0.5815 0.5403 05003 0.4632 04299 0.3971 0.3677 0.3405 ZICO 61600 VOLTO 02533 LIETO WITO CROTO 0.180 VOLTO USTO OF TO 10% 09091 0.8365 07513 06810 60090 05645 0X150 04665 INCID 0.3855 SOVED 0.31M LINTO 02633 02.394 KLITO BLATO 0.1799 0.16.35 0.1486 ISOTO 0.1229 MITO STOTO 0.0923 121 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4924 0.4019 0.3606 0.3220 0.2875 0.2567 2600 91000 0.1827 0.1631 0.1456 00010 19110 0.1037 0.0926 92800 0.0738 0.0659 0.05 I z 7 6 7 1 F 9 10 11 12 H 15 " X a 17 18 19 3) K # R 12 K R ST 10000 HOLE! 29410 3.9020 PESUP 5.7955 6.7282 76517 09908 94713 10.3676 11.2551 12.8337 13.0037 1998 (T 14.7179 15:3623 163963 17.2240 18.0456 188570 196604 BSSYC MYCIE: tetatt 22.7952 23.3396 PHICK 25.8077 25 09804 19416 LLORE 47135 16014 64720 73255 ZOPEN 968 97869 105753 11.3484 12.1063 TOPSTI 133777 616TH 14.9920 156785 163514 170112 176581 182922 189139 193235 OFCIOC 203060 212813 YFYRIZ 22.3965 35 0.979 1.905 PREVZ 3701 45797 5.4172 6.2003 LABEL 7.7861 85302 92556 01566 10.6150 19611 11.990 12.5641 13.1661 137535 143214 14.8775 154150 15.99 16.406 590691 174132 17.3368 OZY BI 18.3641 SWE61 196004 Table 2-Present Value of an Annuity 43 226 0.9615 0.9524 13861 1.8994 2.7751 2.7233 6609 RISET 52421 6.0021 6.7327 74353 8.1109 8.7605 15856 9.9857 10.5631 111184 (299 12.1657 165921 13.1339 13.5903 262011 14511 14.3568 15.2470 15.6221 15.9828 16.3296 1(9991 16.9837 17:2920 Onse 56057 50757 5.7864 6.4632 SCOTL 7.7217 83064 $.8633 95656 98686 103797 108378 112741 9689 11 12.0853 12.4622 12.3212 11.1630 13.4536 137986 61601 14.375 14.6430 1961 THESE 15.3725 0914 18334 14030 IPWC VEREY 4.9473 53834 B 16009 LICK9 7.3601 6980L VER'S LOOKS 05626 9.7123 10.1059 10.4773 10.8276 11.1581 11.4699 11911 12.0416 12.3034 12.3504 12.7834 130032 FORD ET 13.062 CONNET SYSCYT 58 65760 TERCE 271 KIES CLOSE 60099 5.2064 5.3466 60129 6.7101 DICE'L 75361 79038 8.5595 8.8514 98182 10.0168 LOOT OF 1025 0.9091 1.7355 255601 116011 CORVI 11.1584 11.2578 3.1699 1.7908 EFFET PROEF OPEES 5.7590 6.1446 91216 61656 HOCK 9176 15619 6.3137 7.1034 73667 74061 0216 8.7715 10.3711 83832 10.5288 8.9647 10.6748 10.3100 8.3649 83136 23198 6019 LEEN L 07169 0L206 01916 92372 99056 EXT Zaro 900/1 STOFT 94269 3.0374 300048 41114 43638 4.9676 TRES 5.0802 53877 11619 6.4236 6/282 7.1196 73097 WPWC L 76447 7.7184 SHIEL 73431 73957 7.9426 79844 91278 81852