You are now in the process of finalising the financial statements for Rush Ltd for the financial year ended 30 September2020. It is now 11 December 2020 and you are the financial controller of Rush Ltd, a public listed company.Rush Ltd has hired three accountants and four accounts assistants to cope with the year-end close process and accounting work load of Rush Ltd and its 15 subsidiaries.The tax rate is 30%.

Required:

With reference to applicable and relevant accounting standards (AASBs/IFRSs/IASs)and accounting principles,

(a)Articulate with an example to the four accounts assistants, the following terminologies:

(i)Cash-generating unit (1.5marks);

(ii)Retrospective restatement(1.5marks); and

(iii)Retrospective application(1.5marks).

(b)The items listed below relate to specific events which may have an impact on the company reporting in terms of adjustments or additional disclosures requirements in the financial statements. All amounts in the information below are material.

Required:

classify the above events into adjusting or non-adjusting events after the end of the reporting year;

explain and justify on the appropriate accounting treatment based on the relevant AASBs; and

prepare the necessary notes to the financial statements or adjusting entries needed in relation to the below events [b(i) to (ii) below].(i)At 30 September2020, Rush Ltd analysed the internal and external sources of information that would indicate deterioration in the worth of its assets. It determined that there were indications of impairment for a cash-generating unit.

Rush Ltd reported the following information of the cash generating unit in its statement of financial position at 30 September 2020 and determined that the recoverable amount of this CGU to be $830,000after the management undertook impairment testing.

Question 1 (b)

(i)

Machinery and equipment (M&E)$710 000

Accumulated depreciation M&E(200 000)

Accumulated impairment losses M&E (100 000)

Trademark 320 000

Accumulated amortisation trademark(15 000)

Copyrights 20 000

Goodwill 50 000

Freehold land145 000

Total non-current assets930 000

Cash at bank80 000

Inventories, net of reversal115000

Total current assets195000

Total assets$1 125000

Trade payables, accruals and provision395000

Net assets$730 000

Additional information at 30 September 2020:

Rush Ltds land had a fair value less costs of disposal of $105,000.

Rush Ltds machinery and equipment had a value in use of $350,000.

Copyrights are assumed to have an indefinite life. (8.5marks)

(ii) On 23October 2020, credit notes were issued for faulty goods returned to Rush Ltd from Matt Ltd last month. The goods returned amounted to $41,333plus GST. Rush Ltd earned a sales margin of 20% on this trade. Matt Ltd was later declared bankrupt at the end of October 2020and included in trade receivables of Rush Ltd was an amount of $11,338 plus GST which was due as at year end. GST rate is 10% and Rush Ltd adopts the perpetual inventory recording system.(7marks)

Show all workings. Narrations are not required. Round your answers to the nearest dollar.(Question 1= 4.5+ 8.5+ 7= 20marks)