Background to the case study: Assume that you are a graduate accountant working for Ebony and Associates a public accounting firm situated at 248 Adelaide Street, Brisbane, QLD 4000. Your direct manager, Ms. Ellen Lyrial has asked you to draft a letter in response to an email received from a client – Mr. Martin Muller, the Managing Director of Muppets Ltd, raising a number of issues regarding his company – see the copy of the email on the next page. The maximum length of the letter is 1,250 words (excluding any calculations). Part A: Technical component 15% - This mark covers the technical content of your advice and the explanation on each of the issues, the calculations and the sources used. [7.5% for each issue presented by the client] Part B: Communication Skills – Letter Writing 10% - This mark covers the generic skills of business letter writing; layout, clear meaning, structure and organisation, appropriate tone and grammar, spelling and punctuation etc. The assignment is designed to test the following skills: 1. Your knowledge and your ability to research the issues and then apply the information appropriately using judgement to correctly identify the relevant standards and legislation that relate to the issues raised by the client. 2. Your written communication skills – business letter writing ACC203/1T2018/ FA2/SK/MR Please note: Any work which has been copied or shared between students will result in a Fail grade for both students concerned. Therefore, please make sure that the answer to this individual assignment is your own work and not copied or bought from any source. In completing this assignment make sure you follow the guidelines for assignments especially those relating to the presentation of written work, late assignment policy and academic integrity. Please check the marking rubric for each part to ensure that you have followed all the guidelines for presenting your work. Re: Accounting Issues: Year Ending 30 June 2018 From: Martin Muller (
[email protected]) Sent: 13 March 2018 To: Ellen Lyrial (
[email protected]) Dear Ellen Thank you for your phone call this morning, as agreed I am emailing you regarding the accounting issues we briefly discussed. By the way to assist the accounting team in our decision-making process could you please make sure you reference any relevant sources relating to your advice, for example, AASBs, Corporations Act, and relevant websites. 1. At our recent board meeting, several directors raised concerns about the values of certain assets as they appeared in last year’s financial statements, e.g. Plant and Equipment at cost $450,000 Less Accumulated Depreciation 150,000 $300,000 Directors’ commented that this asset could not be sold for more than $200,000, and therefore the Accumulated Depreciation should be higher. The production manager disagreed by saying that the asset was working as efficiently as ever, and has not depreciated at all. Can you please provide advice regarding the correct accounting, valuation and disclosure of such assets for this financial year? 2. Our company has prepared financial statements according to Australian Accounting Standards, yet every year 30% of the profit calculated differs in amount from the actual income tax paid to the government. The directors are concerned that either the financial statements or tax calculation may be incorrect. Could you please explain the principles that are applied in accounting for income tax that may cause a difference between taxable income and profit? Should these differences be disclosed? How can we explain this situation to shareholders? ACC203/1T2018/ FA2/SK/MR Please respond by letter (not email) as I would like to present this to the Board. I look forward to hearing from you in the near future. Regards Martin Muller Managing Director, Muppets Ltd Level 13, 248 Adelaide Street, Brisbane QLD 4000 Hint: Remember that your firm plans to charge the client for your advice; as a check ask yourself if you would pay for the advice you have drafted!