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Assessment Type: Case study report – theory and calculations – individual assessment Topic: Research Individual Assignment Task Details: West Ltd is a leading company in the sale of frozen and canned...

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Assessment Type: Case study report – theory and calculations – individual assessment

Topic: Research Individual Assignment
Task Details: West Ltd is a leading company in the sale of frozen and canned fish produce. These products are sold under two
and names. Fish caught in southern Australian waters are sold under the
and ‘Artic Fresh’, which is the
and the company developed when it commenced operations and which is still used today. Fish caught in the northern oceans are sold under the
and name ‘Tropical Taste’, the
and developed by Fishy Tales Ltd. West Ltd acquired all the assets and liabilities of Fishy Tales Ltd a number of years ago when it took over that company’s operations.
West Ltd has always marketed itself as operating in an environmentally responsible manner, and is an advocate of sustainable fishing. The public regards it as a dolphin-friendly company as a result of its previous campaigns to ensure dolphins are not affected by tuna fishing. The marketing manager of West Ltd has noted the efforts of the ship, the Steve Irwin, to disrupt and hopefully stop the efforts of whalers in the southern oceans and the publicity that this has received. He has recommended to the board of directors that West Ltd strengthen its environmentally responsible image by guaranteeing to repair any damage caused to the Steve Irwin as a result of attempts to disrupt the whalers. He believes that this action will increase West Ltd.’s environmental reputation, adding to the company’s goodwill. He has told the board that such a guarantee will have no effect on West Ltd.’s reported profitability. He has explained that, if any damage to the Steve Irwin occurs, West Ltd can capitalise the resulting repair costs to the ca
ying amounts of its
ands, as such costs will have been incu
ed basically for marketing purposes. Accordingly, as the company’s net asset position will increase, and there will be no effect on the statement of profit or loss and other comprehensive income, this will be a win–win situation for everyone.
Required
The chairman of the board knows that the marketing manager is very effective at selling ideas but knows very little about accounting. The chairman has, therefore, asked you to provide him with a report advising the board on how the proposal should be accounted for under accounting standards and how such a proposal would affect West Ltd.’s financial statements.
Research requirements: Students need to support their analysis with reference to relevant material from the text and a minimum of eight (8) suitable, reliable, cu
ent and academically acceptable sources – this should include at least 2 peer-reviewed academic journal articles.
Presentation: XXXXXXXXXX% word short report format. Title page, executive summary, table of contents, appropriate headings and sub-headings, recommendations/findings/conclusions, in-text referencing and reference list (Harvard – Anglia style), attachments if relevant. Single spaced, font Times New Roman 12pt, Cali
i 11 pt or Arial 10 pt.
Marking Guide:    Interpretation and representation    20%
Calculations    20%
Analysis    20%
Assumptions    20%
XXXXXXXXXXCommunication     XXXXXXXXXX20%
Marking Ru
ic for ACC701 Financial Accounting Assessment 2
    Criteria
    Fail
(0 – 49%)
    Pass (50 – 64%)
    Credit (65 – 74%)
    Distinction (75 – 84%)
    High Distinction (85 – 100%)
    Interpretation and Representation 20%
    Does not provide explanations of information presented in mathematical form.
Does not make appropriate inferences based on that information.
Does not convert relevant information into an insightful mathematical portrayal.
    Provides somewhat accurate explanations of information presented in mathematical forms, but occasionally makes minor e
ors related to computations or units.
Makes some inferences based on that information.
Completes conversion of information but resulting
mathematical portrayal is only partially appropriate or accurate.
    Provides mostly accurate explanations of information presented in mathematical form. Makes mostly appropriate inferences based on that information.
Converts relevant information into an insightful mathematical portrayal in a way that contains minimal inaccuracies
    Provides accurate explanations of information presented in mathematical form.
Makes appropriate inferences based on that information.
Competently converts relevant information into an insightful mathematical portrayal in a way that contributes to a further and deeper understanding.
    Provides accurate explanations of information presented in mathematical form.
Makes skilful inferences based on that information.
Skilfully converts relevant information into an insightful mathematical portrayal in a way that contributes to a further or deeper understanding.
    Calculations 20%
    Does not perform accurate calculations.
Formulae and workings either not provided or incomplete. Many e
ors.
    Performs calculations which solve the basic and/or most obvious problem(s).
Main formulae and workings only provided.
Some e
ors.
    Performs mostly accurate calculations which are sufficiently comprehensive to solve most (of the) problem(s).
Most formulae and workings provided - some gaps.
Minor e
ors
    Performs mostly accurate calculations which are sufficiently comprehensive to solve the problem(s).
Most/all formulae and workings provided - minimal gaps.
Minimal e
ors
    
Performs accurate calculations which are sufficiently comprehensive to solve the problem(s).
All formulae and workings provided. No e
ors
    Analysis 20%
    Does not use co
ect and complete quantitative analysis.
Does not make relevant and co
ect conclusions.
    Uses basic analysis but uses the quantitative analysis as the basis for tentative, basic judgments, is
hesitant or uncertain about drawing conclusions from this work.
    Uses mostly co
ect and complete quantitative analysis. Makes mostly relevant and co
ect conclusions.
    Uses co
ect and complete quantitative analysis.
Makes mostly relevant and co
ect conclusions.
    Uses co
ect and complete quantitative analysis.
Makes sophisticated, relevant and co
ect conclusions.
    Assumptions 20%
    Does not attempt to describe assumptions or makes inco
ect assumptions.
Limited, inco
ect or no rationale.
    Attempts to describe assumptions and provides limited rationale to explain why each assumption is appropriate. Some e
ors in assumptions or assumptions
overlooked
    Describes assumptions and provides rationale to explain each assumption.
Some elements incomplete or semi-accurate assumptions.
    Explicitly describes assumptions and provides strong rationale to explain assumptions.
Minimal e
ors in logic.
    Explicitly describes assumptions and provides comprehensive, compelling and justified rationale to explain assumptions.
No e
ors in logic.
    Communication 20%
    Communicates ineffectively. Words do not reflect the problem.
May include diagrams which completely misrepresent the problem situation.
May not include important supporting diagrams.
    Has some satisfactory elements but may fail to complete or may omit significant parts of the problem.
Explanation or description may be missing or difficult to follow in places Includes most but not all important diagram(s) or diagram(s) may be unclear and difficult to interpret.
    Makes significant progress towards completion of the problem, but the explanation or description may be somewhat ambiguous or unclear.
May include flawed or unclear diagram(s), or insufficient diagrams.
    Gives a fairly complete response with reasonably clear explanations or descriptions. Includes nearly all complete, appropriate diagram(s). Generally communicates effectively to the identified audience.
Presents supporting arguments which are logically sound but may
contain some minor gaps.
    Gives a complete response with a clear, unambiguous explanation and/or description.
Includes all appropriate and complete diagram(s). Communicates effectively to the identified audience. Presents strong supporting arguments which are logically sound and complete.
Answered Same Day Aug 31, 2021 ACC701 University of the Sunshine Coast

Solution

Preeta answered on Sep 03 2021
157 Votes
ACCOUNTING OF PROPOSAL
ACCOUNTING OF PROPOSAL
STUDENT NAME –
STUDENT ID –
LECTURER NAME –
UNIT –
WORDS –
REFERENCING - HARVARD
EXECUTIVE SUMMARY
This report has been prepared to give the details to the board of directors regarding the feasibility and the benefit from a proposed scheme from the marketing manager of the company, West Ltd. The marketing manager gave a proposal to announce the guarantee to repair a ship which is working for the protection of whales. He believes that this act will improve the environment friendly image of the company and can create goodwill for the company. This report has been prepared to see the accounting treatments as per the accounting standards and the ultimate benefit which the company will be getting if the proposal is accepted.
At first a
ief introduction has been given depicting the whole background and the scenario. Then the related accounting standards have been discussed as to what is mentioned for such expenses and if the expenses can be capitalized or expensed off. After that an accounting representation has been given for the convenience of understanding the scenario. Then analysis of the proposal is done based on the account treatments. In the end conclusions have been drawn and recommendations have been made based on the whole report.
Contents
EXECUTIVE SUMMARY    2
INTRODUCTION    4
ACCOUNTING STANDARD    5
ACCOUNTING REPRESENTATION    6
ANALYSIS    11
CONCLUSION    12
RECOMMENDATIONS    12
REFERENCES    13
INTRODUCTION
This report has been prepared to convey the board of directors regarding the accounting situations that will arise from certain decisions so that it will be helpful for them to decide if such decisions are to be taken or not. This company, West Ltd has always held the reputation of an environment friendly company and has always supported sustainable fishing. The company conducted a campaign to save dolphin from tuna fishing.
Steve Irwin is a ship which operates in the southern oceans and tries to save whales from whalers. The ship has gained immense publicity. This incident has come in the notice of the marketing manager and he makes the recommendation to the board to announce a guaranteed repair if Steve Irwin, the ship will be damaged in making its efforts to stop the whalers. He believes that this move will help to strengthen the image of the company as an environment sustainable entity and there will be addition to the goodwill of the company.
The marketing manager is of the opinion that there will be no effect on the profitability of the company and if any damage occurs that cost can be capitalized over a certain period of time as this cost can be considered as the cost will be incu
ed for the marketing purposes. Ultimately the asset will increase but there will be no effect on the statement of profit and loss. This whole situation has been explained in this report and its effect on financial statement.
    
ACCOUNTING STANDARD
This particular case deals with IAS 38. An intangible asset can be recognized only under the following circumstances (Agyei-Mensah, 2019):
· There is technical feasibility that the intangible asset will be completed and the asset will be eventually ready for sale.
· There is at least the intention of completing the intangible asset which will be either used or resold.
· The entity is able to use of sell the intangible asset.
· There will be probable future economic benefit from the asset but there should be surety regarding the output from that intangible asset.
· Ample financial, technical and any other resources necessary for the development of the intangible asset should be readily available.
· Further expenditure to be made on the intangible asset should be able to be measured using some reliable means.
Only one criteria of intangible asset is getting matched with the repairing cost to be incu
ed on the ship and that is there will be probable future benefit. So, this cost can be only recognized as internally generated good will. Paragraph 49 of the standard specifically states the rules and regulations regarding the internally generated goodwill. The rule states that internally generated goodwill cannot be recognized as an asset. Good will can be recognized only when it is acquired through business combination or to be specific if the goodwill can be measured according to IFRS 3 (Lin et al. 2015). So, as per this reasoning the expense to be incu
ed for the repair of the ship even if considered as internally generated goodwill cannot be capitalized. The reasons for non recognition of internally generated intangible assets are that those are not separate identifiable units and do not arise from contractual or other legal rights. Moreover, it also becomes difficult to calculate the fair value of the goodwill.
Another way is there as per which expenses can be capitalized. Paragraph 68-71 of IAS 38 mentions the details regarding the situations where expenses incu
ed on intangible assets can be capitalized. Paragraph 69 contains the whole list of examples which should always be...
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