ACT204
S1 2020
Assignment
Task: Financial reporting implications of Coronavirus COVID-19.
Value: 20% of total assessments.
Due date: Week 11 (Sunday the 24th of May 2020 at 23.59pm Darwin time)
Length: Maximum of 2000 words.
Presentation: Online submission through Learnline.
Assessment Criteria:
This task will generally be assessed in terms of the following criteria:
1. Effectiveness of communication: readability, grammar, spelling, neatness, completeness
and presentation.
2. Demonstrated competency and understanding: This will be evidenced by the student's
ability to be dialectical in the discussion of contentious issues. The marker will pay attention
to the accuracy of the content, coverage of relevant issues, structure of argument, English
expressions, absence of plagiarism, concise writing style, and referencing style.
3. Evidence of research - This will be evidenced by the references used and the inclusion of a
ibliography. (At least 5 different references to be used).
4. The assignment is marked out of 20 marks. A mark is assigned to each question as
indicated below. Also, 2 marks are assigned for the overall submission requirements,
presentation, references and language expressions.
Assignment Requirements:
The coronavirus (COVID-19) pandemic has significantly affected businesses around the
globe. This include inte
uption of production, businesses closures, reduced demands, and
disruption to supply chains and to financial markets. These effects will have some impacts
on financial reporting especially in the application of some IFRS/IAS/AASP standards.
In this assignment you are required to answer the following questions:
1. List Eight accounting considerations that are impacted by the Coronavirus 2019
disease. (2 marks)
2. Choose Five of the Eight you listed above and provide a
ief explanation for each of
these Five considerations (One paragraph for each). (Limit those Five to those that
are discussed in our unit ACT 204. This means that you are not allowed to discuss
those that were not covered in our unit). (5 marks)
3. Choose Two of these Five and discuss them in detail as they relate to a public
company of your choice. This means, you are to choose a public company and go
through its financial report to understand its operations. Then, discuss the
coronavirus impact on these two accounting considerations as they apply in the
chosen company. (11 marks)
For example:
Accounting for inventories: (Not to be used in your answers)
Accounting standards (IAS 2/ AASB 102) sets the guidelines for accounting for
inventory. So by explaining initially how the standards apply to inventory, you then
need to discuss the impact of COVID-19 on accounting for inventories for example on
writing-down inventories due to lower prices, or inventory obsolescence due to
lower sales of the company of choice… etc…
You need to remember, that each company will be in a different situation than
others depending on the different risks assessment as this vary based on locations,
industry, and future evaluation of the economic lockdown and performance. Hence,
your explanation needs to consider the risk assessment for your chosen company
and its specific operating market. In this, you may consider, the location of your
company, its suppliers, its customers, prices, shipment, etc….
Submission of Assignments
• Assignments must be submitted by the due date.
• Failure to submit an assignment on or before the due date will result in an academic
penalty of 4% of the marks allocated for the assignment each day the assignment is
overdue.
• All assignments must be submitted online. (Assignments submitted via email will not
e accepted).
• The cover page of the assignment should include ONLY the student name and
student number. No other cover page format can be used.
• Assignment should be typed, and submission file should be either word or pdf. All of
your assignment should be on ONE file only.
• Your assignment file name should be your campus name followed by your student
number only (example: WFD990040.doc). Use WFD for waterfront; SYDN for Sydney,
and EXT for external.
Assignment Extensions
All requests for extensions must be in writing and received seven days before the due
assignment submission date. All requests for extensions must be submitted as per
instructions posted on Learnline (Refer to Learnline for more details).
Chapter 14 Tutorial Solution.pdf
PART 4: ACCOUNTING FOR LIABILITIES AND OWNERS’ EQUITY
Chapter 14
Accounting for financial instruments
Review questions
14.1 AASB 132 Financial Instruments: Presentation defines a financial instrument as any
contract that gives rise to both a financial asset of one entity and a financial liability or
equity instrument of another entity. Such a definition, in turn, generates a need to define
a financial asset, a financial liability and an equity instrument.
According to paragraph 11 of AASB 132, financial asset means any asset that is:
(a) cash;
(b) an equity instrument of another entity;
(c) a contractual right:
(i) to receive cash or another financial asset from another entity; or
(ii) to exchange financial assets or financial liabilities with another entity
under conditions that are potentially favourable to the entity; or
(d) a contract that will or may be settled in the entity’s own equity instruments and
is:
(i) a non-derivative for which the entity is or may be obliged to receive a
variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments. For this purpose the entity’s own equity
instruments do not include puttable financial instruments that are a
derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments. For this purpose the entity’s own equity
instruments do not include puttable financial instruments that are classified
as equity instruments in accordance with paragraphs 16A and 16B,
instruments that impose on the entity an obligation to deliver to another
party a pro rata share of the net assets of the entity only on liquidation and
are classified as equity instruments in accordance with paragraphs 16C
and 16D, or instruments that are contracts for the future receipt or delivery
of the entity’s own equity instruments.
A financial liability, on the other hand, means any liability that is
(a) a contractual obligation:
(i) to deliver cash or another financial asset to another entity; or
(ii) to exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavourable to the entity; or
(b) a contract that will or may be settled in the entity’s own equity instruments and
is:
(i) a non-derivative for which the entity is or may be obliged to deliver a
variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments. For this purpose, rights, options or wa
ants to
acquire a fixed number of the entity’s own equity instruments for a fixed
amount of any cu
ency are equity instruments if the entity offers the rights,
options or wa
ants pro rata to all of its existing owners of the same class
of its own non-derivative equity instruments. Also, for these purposes the
entity’s own equity instruments do not include puttable financial
instruments that are classified as equity instruments in accordance with
paragraphs 16A and 16B, instruments that impose on the entity an
obligation to deliver to another party a pro rata share of the net assets of
the entity only on liquidation and are classified as equity instruments in
accordance with paragraphs 16C and 16D, or instruments that are
contracts for the future receipt or delivery of the entity’s own equity
instruments.
If a financial instrument does not give rise to a contractual obligation on the part of the
issuer to deliver cash or another financial asset, or to exchange another financial
instrument under conditions that are potentially unfavourable, then it is considered to
e an equity interest where equity is defined as the residual interest in the assets of the
entity after deduction of its liabilities.
14.2 According to paragraph 11 of AASB 132, financial asset means any asset that is:
(a) cash;
(b) an equity instrument of another entity;
(c) a contractual right:
(i) to receive cash or another financial asset from another entity; or
(ii) to exchange financial assets or financial liabilities with another entity
under conditions that are potentially favourable to the entity; or
(d) a contract that will or may be settled in the entity’s own equity instruments and
is:
(i) a non-derivative for which the entity is or may be obliged to receive a
variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments. For this purpose the entity’s own equity
instruments do not include puttable financial instruments that are a
derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments. For this purpose the entity’s own equity
instruments do not include puttable financial instruments that are classified
as equity instruments in accordance with paragraphs 16A and 16B,
instruments that impose on the entity an obligation to deliver to another
party a pro rata share of the net assets of the entity only on liquidation and
are classified as equity instruments in accordance with paragraphs 16C
and 16D, or instruments that are contracts for the future receipt or delivery
of the entity’s own equity instruments.
A financial liability, on the other hand, means any liability that is
(a) a contractual obligation:
(i) to deliver cash or another financial asset to another entity; or
(ii) to exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavourable to the entity; or
(b) a contract that will or may be settled in the entity’s own equity instruments and
is:
(i) a non-derivative for which the