Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 5 (14 marks) Robert, the newly appointed independent non-executive director of Heron Limited, has no accounting knowledge. He has the following queries regarding the

image text in transcribed

Question 5 (14 marks) Robert, the newly appointed independent non-executive director of Heron Limited, has no accounting knowledge. He has the following queries regarding the depreciation on the property, plant and equipment of the company. 1. Depreciation on building should not be provided as the market value of the company's building had been doubled during the recent years. 2. The depreciation expenses of machinery in the past three years were $300,000, $500,000 and $200,000. Robert noticed that there were no addition or disposal during those years and wondered why the depreciation expenses were fluctuating. Required: (a) Explain the concept and treatment of depreciation in respect of Robert's queries. (10 marks) Another director of Heron Limited found that the company's profit had not been improved even though huge amount had been incurred to acquire property, plant and equipment for business expansion during the recent years. He pressed the chief financial officer to find a way to make the company's income statement looks healthier in order not to disappoint the stakeholders. Required: (b) Within the context of property, plant and equipment and depreciation, state the possible fraudulent tactics that the chief financial officer may carry out even though which might violate the accounting standard. (4 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Begin Investing In Real Estate With The Ultimate Guide

Authors: Tadahikol T. Nakamura

1st Edition

979-8867848330

More Books

Students also viewed these Finance questions