1 ACCT 2271 FINANCIAL REPORTING Semester 1 2018 Assignment 2 (Individual): Due date 23 March 2018, 20% of total assessment weighting. Assignment report to be submitted through Turnitin software....

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1 ACCT 2271 FINANCIAL REPORTING Semester 1 2018 Assignment 2 (Individual): Due date 23 March 2018, 20% of total assessment weighting. Assignment report to be submitted through Turnitin software. Assume you are the chief accounting officer of a private company, ABC Pty Ltd. Pursuant to legislative and financial reporting standard requirements, the company will be required, from the current financial year, to prepare general purpose financial reports. The chief executive officer (CEO) of the company is not an accounting expert, and wants you to provide her with an outline of two accounting policies with which the company will have to comply in preparing general purpose financial reports, being a) accounting for income tax (tax effect accounting), and b) consolidated accounts. REQUIRED: Prepare a report for the company’s CEO explaining the conceptual basis for these two accounting policies. To assist you in preparing the report, the CEO has provided you with the following guidance on the two report items to be addressed: Report Item 1 (10 marks) Outline the conceptual basis for the ‘balance sheet liability method of accounting for income taxes’ (tax effect accounting) prescribed by IAS 12: Income Taxes. Within the report, discuss the difference in treatments for accounting (accounting standard) and Australian tax purposes of the following items: (i) depreciation of assets (ii) upward revaluations of non-current assets (iii) long service leave (iv) bad and doubtful debts (maximum 1,500 words) Report Item 2 (10 marks) Outline the conceptual basis for consolidated financial statements pursuant to IFRS 10: Consolidated Financial Statements. Within the report, outline the essential steps and accounting consolidation journal entries required in preparing consolidated financial statements for a group comprising a parent entity and a single wholly-owned and controlled subsidiary. (maximum 1,500 words)