ACFI2011 ASSESSMENT 3: MAJOR ASSIGNMENT

1
ASSESSMENT 3: MAJOR ASSIGNMENT
ACFI2011 SEMESTER 1, 2020

PART A
Tahlia Corporation is one of the prominent and fastest-growing event management
company based in Sydney, Australia. This company has clients from Australia, Hong
Kong, U.S.A, Singapore, England, Malaysia, Russia and Europe. In 2019, this company
appointed Miss Tahlia as the CEO of Tahlia Corporation to look after the business. Tahlia
has appointed you as the company’s chief financial officer (CFO) to look after the
company’s financial matters and help Tahlia to make strategic decisions. As per the
corporation act 2001, this company is required to comply with Australian accounting
standards. Hence, Tahlia called for a business meeting with you to discuss the financial
compliance matters with you. As a CFO, you have advised the Tahlia that to comply with
accounting standards, the company is required to prepare a complete set of financial
statement which includes a statement of financial performance, statement of change of
equity, statement of financial position, statement of cash flows as well as notes to the
accounts. The CEO (Thalia) questions the usefulness of the cash flow statement as she
has stated that all she needs to know is if the company has made a profit and has a healthy
balance sheet. However, Tahlia has asked you prepare a full set of financial statements
including the statement of cash flows. After you prepare the cash flows statement, it
revealed a poor cash position, whereas the statement of financial performance was
showing a profitable result for the year. The CEO restated his opinion that the cash flow
statement did not give a good indication of the activities of the company. Tahlia also
heavily depends on statement of financial position and statement of financial performance
to make most of her business decisions.
Required:
1. Prepare a response (no more than 500 words) for Tahlia (CEO) explaining the
purpose and usefulness of the cash flow statement and why it can report a negative
cash flow position while the company is making a profit. (6 Marks)
2. Write a report (no more than 300 words) to the CEO about the limitation of a
statement of financial position and financial performance as a source of
information for users of general-purpose financial statements (discuss at least two
major limitations in your report (4 marks).
2
PART B
Newcastle Ltd, has been manufacturing and selling swimming suits for men and women for the
last two years. The company commenced its operations on 1 July 2018 by issuing 350 000, $5
shares fully paid. There was no other cost related to the share issue.
For the year ending 30 June 2020, the company recorded the following aggregate transactions:

The following additional information was noted during the preparation of financial statements
for the year ended 30 June 2020:
 Additional 80 000 @ $5 fully paid shares were issued On 1 July 2019.
 A cash dividend of $180 000 was declared and paid during the 2020 financial year
and a final dividend for 2020 of $75 000 was proposed but not recognised in the
financial statements.
 Inventory was measured at the lower of cost and net realizable value.
 Buildings, plant and equipment were measured at cost. The benefits were expected to
be received evenly over the useful life of the asset.
 Land was revalued upward by $100 000 (related income tax for this transaction was
$30 000). The revaluation gain will not be reclassified and has been recorded in the
‘Land Revaluation Surplus’. The valuation was conducted by the registered valuer,
Abbey Valuations Pty Ltd.
 Financial assets held for trading are equity investments that are held for the purpose of
selling and short-term profit taking.
 $127 000 of other loans are repayable within six months. The remaining amount is
payable in full at the end of 2022
 $30 000 of bank loans are repayable within one year. The remaining amount is payable
in full at the end of 2024.
 The provision for employee benefits includes $47 000 payable within one year.
 The warranty provision is in respect of a 12-month warranty given on certain goods
sold.
3
 The bank loan is for 5 years and repayable in full at the end of the term. The interest
rate is 9% and it is secured over the land.
 Newcastle Ltd uses the single statement format for the statement of profit or loss and
other comprehensive income and classifies expenses by function within the statement.
Summarised account balances are provided below:

4
Required:
For the year ending 30 June 2020 (Note: comparative financial statements are not required),
1.Using the pro forma table supplied in appendix B, prepare a preliminary trial balance for
Newcastle Ltd; (5 Marks)
2.Prepare a statement of comprehensive income for Newcastle Ltd in accordance with the
requirements of AASB 101. Newcastle Ltd uses the single statement format for the
statement of profit or loss and other comprehensive income and classifies expenses by
function within the statement; (15 marks)
3.Prepare a statement of changes in equity for Newcastle Ltd in accordance with the
requirements of AASB 101; (8 marks)
4.Prepare a statement of financial position for Newcastle Ltd in accordance with AASB
101. Use the current/non-current presentation format; (12 marks)
5.Prepare appropriate notes to the accounts. (You do not need to prepare notes related to
income taxes. Include the following note as note 1. You may optionally add accounting
policies to this note): (20 marks).
“1. Summary of significant accounting policies
Basis of accounting
The financial report is a general-purpose financial report which has been prepared on the
historical cost basis, except where stated otherwise.
Statement of Compliance
The financial statements have been prepared in accordance with the requirements of the
Corporations Act, Australian Accounting Standards which include Australian equivalents
to International Financial Reporting Standards (AIFRSs) and AASB Interpretations.
Compliance with AIFRSs ensures the financial statements and notes comply with
International Financial Reporting Standards”
6.After preparing and analysing the Newcastle Ltd.’s financial statements, prepare a brief
report (no more than 500 words) for the CEO explaining the company’s financial
performance and position. (5 marks)
7.Many investors as well as public are now concerned about organisation’s social and
environmental impacts. Therefore, more and more organisations are now providing various
social and environmental information. Tahlia has asked you to identify what types of social
and environmental information Newcastle ltd should provide to their stakeholders? Identify
five important types of social and environment information/indicators (such as “Total
amount of GHG emissions”) related Newcastle Ltd and explain briefly the reason for
selecting each of them (no more than 500 words). (5 marks).
You may refer to the Global Reporting Initiative (GRI) website.
https://www.globalreporting.org/Pages/default.aspx
5
APPENDIX A: PRESENTATION REQUIREMENTS (Departures may attract a
penalty)
1.The assignment is required to be submitted through Turnitin by the due date;
2.15% penalty marks per day will apply for late submission;
3.It is worth 20% of the final grade but will be marked out of 80;
4.The assignment will be marked on the basis of a requirement of “suitable for
publication”, that is, the relevant statements/notes comprise an external report;
5.The assignment must be performed individually;
6.You are to employ an aggregated format whenever appropriate and consistent with
provision of minimum line items prescribed in AASB101;
7.The financial statements and the notes are to be typed or word processed in 12 point
font;
8.You are not to use specialized accounting software packages, such as are employed
by professional accounting firms, to produce your financial reports. The assignment is
to give you an understanding of the processes, principles and customisation required in
preparing a set of financial statements and the notes to the accounts.
9.You are to apply the ‘function of expense’ or ‘cost of sales’ method to the
classification of expenses in the income statement (see AASB101 paras 97-105);
10.You are directed to use the current/non-current format for the statement of
financial position (balance sheet) and supply a “net assets” line item;
11.The notes are to be simplified equivalences to published reports; that means a list of
constituent components of a given line item with their respective dollar amounts, not
footnotes; for Part B there is one set of notes to cover all statements, numbered
sequentially from 1 (as supplied);
12.The coversheet must have student id and name and will be considered as your signature
6
APPENDIX B

7
APPENDIX C: General Marking Criteria for theoretical/essay questions

The post ACFI2011 ASSESSMENT 3: MAJOR ASSIGNMENT appeared first on My Assignment Online.