Assessment 3 Information
Subject Code: ACC203
Subject Name: Financial Accounting 2
Assessment Title: Case study
Assessment Type: Individual Written Report – Case Study
Weighting: 30%
Total Marks: 30 marks
Submission: Individual Written Report submitted via Turnitin on MyKBS
Word limit: 1500 words (max.)
Due Date: Monday of Week 13 at 3:55 pm AEST
Your Task
You are required to prepare a business letter to answer key accounting issues regarding income taxes, property, plant & equipment revaluation and revenue.
Assessment Description
Assume that you are a graduate accountant working for Highend Accountants, a public accounting firm located at 203 York Street Sydney, NSW 2000. The manager of your firm, Mr. John Little asked you to draft a letter in response to an email received from Ms. Michelle Smith, the managing director of Lowsales Ltd in response to various key accounting issues. See the copy of the email on the next page.
You should address all the technical issues/discussion in the letter, followed by a Reference List.
The breakdown of your assessment marking is as follows:
Technical component 25 marks – These marks cover the technical content of your advice and the explanation on each of the issues, the calculations and the sources used.
Communication Skills/Writing 5 marks – These marks cover the generic skills of report writing, layout, clear meaning, structure and appropriate tone and grammar and spelling and punctuation.
Learning Objectives:
After completing this Individual Assignment, you will be able to:
• apply accounting principles and standards when accounting for non-current assets
• apply accounting principles and standards when accounting for liabilities, revenue and income tax
• develop information gathering and communication strategies to enable the provision of professional advice to a client
Case Study
Assume that you are a graduate accountant working for Highend Accountants, a public accounting firm located at 203 York Street Sydney, NSW 2000. The manager of your firm, Mr. John Little asked you to draft a letter in response to an email received from Ms. Michelle Smith, the managing director of Lowsales Ltd in response to various key accounting issues. Make sure you include any references from AASBs, Corporations Act and relevant websites.
The following email was sent from Ms. Michelle Smith to John Little.
Re: Accounting Issues: Year Ending 30 June 2021
From: Michelle Smith (msmith@lowsales.com.au)
Sent: 5 May 2021
To: John Little (john123@highendaccounting.com.au)
Dear John,
Thank you for your phone call this morning. As discussed, we have recently hired a new chief accountant for our group who is concerned about three matters.
Firstly, the chief accountant expressed his concerns to the Board that there were no deferred tax accounts. The chairperson said that we should not be wasting our time on future tax consequences because there are far more important issues for us to focus on. The company pay taxes every quarter, is this not sufficient? Could you please explain this issue? As I said, we are all nonaccountants, and therefore an example would be great.
The chief accountant raised a second matter about the recording of revenue. For example, Lowsales Ltd executes a contract to sell and install machinery for our customer, Gregory Ltd to support their dam construction project. The sales price charged for the machine, installation and ongoing support is $6,000,000. The terms state that Gregory Ltd will pay for the machine immediately (fair value of the machinery is $5,000,000). The installation will take approximately 3 months to complete (fair value of installation is $1,000,000). In addition, Lowsales Ltd have agreed to provide Gregory Ltd with 24 months of ongoing technical support (fair value of technical support is $100,000).
In the accounts of Lowsales Ltd revenue of $6,000,000 (on the date the contract was exchanged) was recorded. However, the chief accountant requests that Lowsales Ltd should apply the five-step model per the accounting standard to record the revenue. Can you explain the five-step using the above example?
The accountant raised a third point. He recommended that Lowsales Ltd adopt the “revaluation method” for property, plant and equipment instead of our current “cost method”. Can you explain what is the difference between the cost method and the revaluation method? I am also not sure how this affects our financial statements. Could you please explain how this may impact our financial statements? Our board thinks that the revaluation method is better as we can increase company asset values anytime and therefore it will attract more new investors. Is this correct?
Please respond by letter (not email) as I would like to present your views to our board.
I look forward to hearing from you shortly.
Regards
Michelle Smith
Managing director,
Lowsales Ltd
Level 11, 203 York Street,
Sydney NSW 2000
Important Study Information
Academic Integrity Policy
KBS values academic integrity. All students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Academic Integrity and Conduct Policy.
What is academic integrity and misconduct?
What are the penalties for academic misconduct?
What are the late penalties?
How can I appeal my grade?
Click here for answers to these questions: http://www.kbs.edu.au/current-students/student-policies/.
Word Limits for Written Assessments
Word limit is 650 words (max.)
Submissions that exceed the word limit by more than 10% will cease to be marked from the point at which that limit is exceeded.
Study Assistance
Students may seek study assistance from their local Academic Learning Advisor or refer to the resources on the MyKBS Academic Success Centre page. Click here for this information.
ACC203 Assignment Rubric: 30% Individual Assignment
Components High Distinction
85 – 100%
(Marks 25.5 to 30) Distinction
75 – 84%
(Marks 22.5 to 25.4) Credit
65 – 74%
(Marks 19.5 to 22.4) Pass
50 – 64%
(Marks 15 to 19.4) Fail
0 – 49%
(Marks 0 to 14.9) Mark
Awarded
(Out of 30)
Technical component
Journal entries,
Calculations,
Explanations
25 marks It clearly identifies and addresses all the technical issues raised & provides clear, correct & decisive answers displaying an outstanding understanding of each of the technical issues.
- It is very clear and concise making it easy for the client to understand.
- Where applicable the appropriate reference has been correctly made to the AASBs, GAAPs and other legislation It clearly identifies and addresses most of the technical issues raised by the client and provides clear, correct, and decisive advice displaying a good understanding of most of the technical issues.
- It is easy for the client to understand.
- Where applicable the appropriate, reference has been made to the AASBs, GAAPs and other legislation It clearly identifies & addresses some of the technical issues raised by the client and provides reasonably clear, correct, and decisive advice displaying a reasonably good understanding of some of the technical issues.
- It most cases it is easy for the client to understand.
- Reference has been made to most of the AASBs, GAAPs and other legislation where applicable It identifies and addresses some of the technical issues raised by the client and provides fairly clear, but not always correct and/or decisive
advice. It displays a reasonable understanding of some of the technical issues raised. - In some cases, it is easy for the client to understand.
*Reference has been made to some of the AASBs, GAAPs and other legislation where applicable. It does not identify or address the technical issues raised by the client It displays a lack of understanding of
some
or all of the technical issues raised.
*It is difficult for the client to understand. - Little or no reference is made to the AASBs, GAAPs and other legislation where applicable.
ACC203 Financial Accounting 2 page 5 Assignment 3 Case Study
Communication
Skills/Writing
Written
Business Letter with letterhead
Overall
Presentation,
Language and Grammar
5 marks
The Letter includes the letterhead with a logo and business name.
Recipient name and address clearly identified.
Date and subject line included.
Presentation, formatting and structure are of a high professional standard.
Exceptional and eloquent use of the English language presented clearly, sequentially and without errors in grammar and referencing.
The Letter includes the letterhead with a logo and business name.
Recipient name and address clearly identified.
Date and subject line included.
Only minor improvements are needed in presentation, formatting and structure for high professional standards to be met.
An excellent use of the English language though minor improvements
needed in clarity, sequence, grammar and referencing. The Letter includes the letterhead with a logo and business name.
Recipient name and address clearly identified.
Date and subject line included.
An inconsistent application of professional standards of presentation, formatting and structure.
A solid use of the English language though
inconsistencies exists
in terms of clarity,
sequence, grammar and referencing. The Letter includes the letterhead with a logo and business name.
Recipient name and address clearly identified.
Date and subject line included.
Major improvements are needed in terms of presentation, formatting and structure.
An acceptable level of English but major improvements are required in terms of
clarity, sequence, grammar and referencing. The Letter does not include a letterhead and there is no logo or business name.
Recipient name and address is not clearly identified.
Date and subject line included.
Unprofessional presentation and formatting with a structure that does not flow.
The application of the English language is difficult to follow, and the
standard of clarity, sequence, grammar and referencing is below what would be acceptable by a professional body.
TOTAL MARKS (out of 30 marks)
ACC203 Financial Accounting 2 page 6 Assignment 3 Case Study
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