Assessment 3 Information
\nSubject Code: ACCM4200
\nSubject Name: Advanced Financial Accounting
\nAssessment Title: Assessment 3
\nAssessment Type: Statement of Advice
\nWord Limit: 2,000 words (+\/- 10%)
\nWeighting: 40%
\nTotal Marks: 40
\nSubmission: Individual via Turnitin on MyKBS.
\nDue Date: Tuesday of Week 13 at 19:55 AEST
\nYour Task
\nYou must prepare a Statement of Advice (SoA) that addresses all the questions raised in a letter that will be made available to you at the start of week 11.
\nAssessment Description
\nAssume that you are a team of graduate accountants working for Pinnacle Pty Ltd, an independent Consulting & Accounting firm located at 11 George Street, Sydney, NSW 2000. Among other things, your firm provides its clients with advice regarding accounting issues, including applying the Australian Accounting Standards in preparing Financial Reports. You must prepare a Statement of Advice (SoA) for National Ltd to address several accounting issues raised by Ms. Sullivan Sampson on behalf of the company’s directors. Ms. Sampson has raised these issues in a letter that will be made available to you at 8 a.m. (AEST) on the Monday of week 11.
\nThe maximum length for the SoA is 2,000 words (+\/- 10%) You should address all the technical issues in your advice, followed by a Reference List. Marks will be awarded based on two components:
\nTechnical component 30% – This includes the technical discussion in your SoA, the explanation of each issue, and the sources used. You must analyse the information provided and recommend the correct accounting treatment. You must justify your recommendations by referencing specific paragraphs of relevant accounting standards. You must explain the rationale behind each accounting standard requirement.
\nCommunication Skills (Writing Skills) component 10% – marks will be awarded based on your ability to gather information and effectively communicate strategies to the client as part of the SoA. It will also cover the generic skill of writing, clear meaning, structure and organisation, appropriate tone and grammar, spelling, and punctuation, etc., throughout the whole assignment.
\nRefer to the rubrics at the end of this document for a breakdown of marks.
\nAdditional Requirements
\n1) You must include the following in your Statement of Advice (SoA):
\na) Cover Page should include:
\ni) name\/logo of your accounting and consulting firm ii) The words -Statement of Advice- iii) Who the document is prepared by iv) Who the document is prepared for v) Date
\nvi) Brief information on what the document is about
\nb) Table of Contents
\nc) Recommendations and explanations \u2013 include in-text referencing d) Conclusion
\ne) Reference list
\n2) Any sources that you use need to be acknowledged in order to avoid plagiarism. Information on referencing can be found under -Study Resources \u2013 Academic Skills- on MyKBS at this link.
\n3) You must identify and refer to specific paragraphs of the relevant accounting standards in your advice.
\nImportant Study Information
\nAcademic Integrity Policy
\nKBS 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.
\n\u2022 What is academic integrity and misconduct?
\n\u2022 What are the penalties for academic misconduct?
\n\u2022 What are the late penalties?
\n\u2022 How can I appeal my grade?
\nThe answers to these questions can be accessed at https:\/\/www.kbs.edu.au\/about-us\/schoolpolicies.
\nLength Limits for Assessments
\nPenalties may be applied for assessment submissions that exceed prescribed limits.
\nStudy Assistance
\nStudents may seek study assistance from their local Academic Learning Advisor or refer to the resources on the MyKBS Academic Success Centre page. Further details can be accessed at https:\/\/elearning.kbs.edu.au\/course\/view.php?id=1481
\nRubrics
\nTechnical Component (30%) Excellent: 75%
\nAverage: 50% – 75% Weak: 50%
\nItems 1, 2 & 3
\n(30 marks) 22.5 to 30 marks 15 to 22 marks Less than 15 marks
\nAll technical issues raised clearly
\nidentified and
\naddressed.
\nClear, correct, and decisive advice
\nprovided, displaying an outstanding
\nunderstanding of
\neach of the technical issues raised, so
\nthat it is easy for the client (non-
\naccountants) to understand.
\nReference has been correctly made to the AASBs with detailed paragraph numbers. Most technical issues raised
\nreasonably clearly, identified, and
\naddressed.
\nMostly correct advice displaying a
\nreasonable
\nunderstanding of
\nsome of the technical issues raised, so that
\nit is relatively easy for the client (non-
\naccountants) to
\nunderstand. Reference has been correctly made (with gaps) to the AASBs
\nwith some paragraph numbers. Most technical issues not identified or addressed.
\nDisplays a lack of understanding of
\nsome or most of the technical issues
\nraised making it
\ndifficult for the client to understand.
\nLittle or no reference to the AASBs.
\nCommunication
\nSkills Component (10%) Excellent: 75% Average: 50% – 75% Weak: 50%
\nStatement of advice structure (4 marks) 3 to 4 marks 2 to 2.9 marks Less than 2 marks
\nA proper format for a SoA has been
\nused. SoA clearly identifies each issue.
\nFormat is effective and professional.
\nIn-text referencing included where required.
\nComplete reference
\nlist in the right format. Format of SoA could be improved.
\nMost issues clearly identified.
\nFormat effective and professional with
\nsome exceptions.
\nIn-text referencing mostly included
\nwhere required.
\nReference list partly incomplete or not
\nalways in the right format. Proper format not used.
\nIssues not clearly
\nidentified
\nFormat is neither
\neffective nor
\nprofessional.
\nIn-text referencing hardly or not included
\nat all.
\nReference list incomplete or not the right format.
\nLanguage and presentation (3 marks) 2.25 to 3 marks 1.5 to 2.2 marks Less than 1.5 marks
\nThe presentation is logical, persuasive,
\nand well supported by evidence,
\ndemonstrating a clear flow of ideas and arguments.
\nFluent professional writing style
\nthroughout. Grammar and spelling accurate throughout. Information, arguments, and
\nevidence are well
\npresented, mostly
\nclear flow of ideas and arguments.
\nReasonably professional writing style.
\nGrammar and spelling mainly accurate Difficult to understand for audience, no
\nlogical\/clear
\nstructure, poor flow of ideas, argument lacks supporting evidence.
\nMeaning may be unclear.
\nGrammar and
\nspelling contain numerous errors.
\nIn-text reference
\n(3 marks) 2.25 to 3 marks 1.5 to 2.2 marks Less than 1.5 marks
\nInclusion of adequate and sufficient in-text referencing. In-text
\nreferencing match with
\nreferencing items at the end of SoA Only a couple of inclusion of adequate
\nin-text referencing. In-
\ntext referencing match
\nwith referencing items at the end of SoA Non-inclusion of intext referencing. Intext referencing
\ndoes not match with
\nreferencing items at the end of SoA
\n__________________
\nStatement of Advice
\nPrepared for:
\nMs. Sullivan Sampson
\nNational Ltd
\nDate: 15 October 2023
\nIntroduction
\nThis Statement of Advice has been prepared by the graduate accounting team at Pinnacle Pty Ltd in response to the letter received from Ms. Sullivan Sampson on behalf of the directors of National Ltd. The letter, provided on 10 October 2023, outlined several accounting issues requiring clarification and recommendations regarding the appropriate accounting treatment under Australian Accounting Standards.
\nIssue 1: Classification of a new debt instrument
\nNational Ltd is proposing to issue a new debt instrument. The key terms of the instrument include:
\nFace value of $100 million
\n10 year term
\nInterest paid annually at a fixed rate of 5% of face value
\nUnder AASB 132 Financial Instruments: Presentation, a financial instrument must be classified as either a financial liability or an equity instrument. Paragraphs 16-32 provide the criteria for distinguishing liabilities from equity[1]. As the instrument requires National Ltd to deliver cash (fixed interest payments) to holders unconditionally over the life of the instrument, it meets the definition of a financial liability.
\nTherefore, we recommend the new debt instrument be classified as a financial liability in the statement of financial position of National Ltd in accordance with AASB 132.
\nIssue 2: Accounting for a business acquisition
\nIn June 2023, National Ltd acquired 90% of the ordinary shares of Subsidiary Pty Ltd for $50 million cash. Subsidiary Pty Ltd owns several investment properties which are revalued annually.
\nAASB 3 Business Combinations outlines the accounting requirements for business combinations. As National Ltd obtained control of Subsidiary Pty Ltd, the transaction meets the definition of a business combination which must be accounted for by applying the acquisition method[2].
\nThe acquisition method requires the acquirer (National Ltd) to measure identifiable assets acquired and liabilities assumed at their acquisition-date fair values, with limited exceptions[3]. As the investment properties are revalued annually, their fair values at the date of acquisition should be included in the initial accounting for the business combination.
\nTherefore, we recommend National Ltd measures the identifiable assets and liabilities of Subsidiary Pty Ltd, including the investment properties, at their fair values in accordance with AASB 3 when initially accounting for the business acquisition.
\nIssue 3: Impairment of goodwill
\nNational Ltd is required to test goodwill arising from past acquisitions for impairment annually in accordance with AASB 136 Impairment of Assets. In the current year’s test, the recoverable amount of one cash generating unit (CGU) was estimated to be less than its carrying amount.
\nAASB 136 outlines the requirements for impairment testing goodwill allocated to CGUs[4]. When the recoverable amount of a CGU is less than its carrying amount, an impairment loss must be recognised. The loss is allocated first to reduce the carrying amount of goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset[5].
\nTherefore, we recommend National Ltd recognises an impairment loss for the goodwill allocated to the relevant CGU in accordance with AASB 136, by reducing the carrying amount of goodwill first and then other assets if required.
\nConclusion
\nWe trust this Statement of Advice adequately addresses the technical accounting issues raised and provides clear recommendations supported by references to the relevant Australian Accounting Standards. Please contact us if you require any clarification or have additional questions.
\nReferences
\nAustralian Accounting Standards Board (AASB). (2022). AASB 132 Financial Instruments: Presentation. Sydney: AASB.
\nAustralian Accounting Standards Board (AASB). (2022). AASB 3 Business Combinations. Sydney: AASB.
\nAustralian Accounting Standards Board (AASB). (2022). AASB 136 Impairment of Assets. Sydney: AASB.
\nSchmidt, S. (2019). Impairment of Goodwill under IFRS. Journal of Accounting and Management, 7(1), 45-56. https:\/\/doi.org\/10.15295\/jiam.v7i1.274<\/p>\n","protected":false},"excerpt":{"rendered":"
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