Attached requirements for assignment below:
MAA363 – Corporate Accounting - Trimester 1 2021 Assessment 2 – Individual Assignment DUE DATE AND TIME: Monday 24 May 2021 before 11.59 pm AEDT (Late penalty will apply to assignment submitted after 11.59 pm AEDT) PERCENTAGE OF FINAL GRADE: 5% for Part A and 10 % for Part B SUBMISSION: ONLINE only to Dropbox – no hard copy to be submitted DROPBOX OPEN: Monday 17 May 2021, 9:00 am AEDT DROPBOX CLOSE: Saturday 29 May 2021, 11:59 pm AEDT Learning Outcome Details Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO) ULO 1: Explain accounting theory, principles, and accounting standards in theglobal financial reporting environment. GLO1, GLO 5 ULO 2: Identify, discuss, evaluate, and apply the relevant accounting standards relating to definition, recognition, measurement and disclosure requirements of a reporting entity’s assets, liabilities, equity, income and expenses. GLO1, GLO 5 ULO 3: Identify and analyse complex business problems GLO1, GLO5 Assessment Feedback The results for this assignment will be published via CloudDeakin within 15 business days from the due date of assignment submission. Assignment Requirements 1 For Part A, write the answer in a new word document and save the file using the following file name: student id_MAA363_assignment 2 Part A, for example 123456789_MAA363_assignment 2 Part A. Please submit your answer document to the relevant drop box in the unit site. 2 For Part B, you must use the excel proforma and save the file using the following file name: student id_MAA363_assignment 2 Part B, for example 123456789_MAA363_assignment 2 Part B. Please submit your answer document to the relevant drop box in the unit site. 3 Please monitor CloudDeakin for any instructions/announcements. 4 Students must correctly use the Harvard style of referencing (if any references are used). 5 This is an Individual assignment (there is no group option). 6 If you choose not to submit this assignment you will score zero – the marks cannot be added to the final examination result. 7 The Dropbox will remain open for late submissions. 8 A penalty of 5% of marks per day will be applied. Late submissions after 5 days will not be marked as per Faculty’s Policy and will receive 0% for the task. Extensions Extensions will only be granted for exceptional and/or unavoidable circumstances outside the student’s control. Students seeking an extension for an assignment prior to the due date should apply directly to the Unit Chair with supporting documents by completing the Assignment and Online Test Extension Application Form. Requests for extensions will not be considered after 12 noon, [21 May 2021]. Applications for special consideration after the due date must be submitted via StudentConnect. Submission Instructions • To submit the assignment to the dropbox under the Assessments tab, click the name of the Assignment folder that you want to submit an assignment to. • Carefully read the instructions relating to the assignment criteria and submission. • Click Add a File. • Note: You can upload a maximum of 250 MB file. • Submit items from your computer/local disk. • Add a comment if required. • Click Submit. You will receive confirmation that your file submission was successful. You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy. Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism. When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment dropbox folder after upload, and check for, and keep, the email receipt for the submission. For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in the first folder next to the Unit Guide of the Resources area in the CloudDeakin unit site. A note on plagiarism and collusion Plagiarism and collusion are forms of cheating and is considered a serious academic misconduct, and severe penalties are associated with them. Please refer to the MAA363 unit guide for your responsibilities with regard to plagiarism and other academic offences. https://www.deakin.edu.au/students/faculties/buslaw/student-support/assignment-extensions https://www.deakin.edu.au/students/faculties/buslaw/student-support/assignment-extensions https://www.deakin.edu.au/students/faculties/buslaw/student-support/assignment-extensions https://www.deakin.edu.au/students/studying/assessment-and-results/special-consideration https://www.deakin.edu.au/students/studying/assessment-and-results/special-consideration Support The Division of Student Life (see link below) provides all students with editing assistance. Students who wish to take advantage of this service must be organized and plan ahead and contact the Division of Student Life in order to schedule a booking, well in advance of the due date of this assignment. http://www.deakin.edu.au/about-deakin/administrative-divisions/student-life Referencing Any material used in this assignment that is not your original work must be acknowledged as such and appropriately referenced. You can find information about plagiarism and other study support resources at the following website: http://www.deakin.edu.au/students/study-support http://www.deakin.edu.au/about-deakin/administrative-divisions/student-life http://www.deakin.edu.au/students/study-support Part A – Financial Instruments (20 marks, contributes to 5% of the final grade) (a) The directors of Avco, a public limited company, are reviewing the financial statements of two entities which are acquisition targets, Cavor and Lidan. They have asked for clarification on the treatment of the following financial instruments within the financial statements of the entities. Cavor has two classes of shares: A and B shares. A shares are Cavor's ordinary shares and are correctly classed as equity. B shares are not mandatorily redeemable shares but contain a call option allowing Cavor to repurchase them. Dividends are payable on the B shares if, and only if, dividends have been paid on the A ordinary shares. The terms of the B shares are such that dividends are payable at a rate equal to that of the A ordinary shares. Lidan has in issue two classes of shares: A shares and B shares. A shares are correctly classified as equity. Two million B shares of nominal value of $1 each are in issue. The B shares are redeemable in two years' time. Lidan has a choice as to the method of redemption of the B shares. It may either redeem the B shares for cash at their nominal value or it may issue one million A shares in settlement. A shares are currently valued at $10 per share. The lowest price for Lidan's A shares since its formation has been $5 per share. Required Discuss whether the above arrangements regarding the B shares of each of Cavor and Lidan should be treated as liabilities or equity in the financial statements of the respective issuing companies. Your answer should refer to relevant IFRSs and the Conceptual Framework. (8 marks) (b) At its recent general meeting, a shareholder asked the board to explain how it decides whether certain financial instruments are classified as equity whereas other seemingly similar financial instruments are classified as debt. The shareholder suggested that the directors do not understand the impact of the classification on investors and their analysis of the financial statements. Required (i) Explain the key classification differences between debt and equity under IFRSs. (ii) Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statements. (8 marks + 4 marks = 12 marks) Part B – Group Accounting (100 Marks, contributes to 10% of the final grade) On 1 July 2018, QAN Ltd purchased 75% of PREM Ltd’s shares for $900,000 cash. On that day, the equity of PREM Ltd was: Share capital $650,000 Retained earnings 320,000 $970,000 At the time of acquisition, PREM Ltd recorded all its assets at their fair values except for an item of plant and some land. QAN Ltd considered that an item of plant shown in the accounts of PREM Ltd was less than the fair value. The fair value should be 75,000 not 70,000 as shown in PREM Ltd's accounts. The plant was assessed to have a remaining useful life of 5 years and was to be depreciated on a straight-line basis. The land was recorded in the accounts of PREM Ltd of $35,000 and QAN Ltd considered its fair value to be $50,000. On 21 June 2021, the land was sold to an unrelated party of QAN Ltd and PREM Ltd. On 30 June 2021, the financial statements of QAN Ltd and PREM Ltd are as follows: Statements of Financial Position of QAN Ltd and PREM Ltd as at 30 June 2021 QAN Ltd PREM Ltd Assets Cash 729,812 186,380 Accounts Receivable 76,642 37,010 Less: Allowance for doubtful accounts 10,000 66,642 4,800 32,210 Dividend Receivable 120,000 - Inventory 187,158 38,950 Total Current Assets 1,103,612 257,540 Non-current assets Deferred Tax assets