Combo Offer 30% Off + 5% Extra OFF

BAC6021 Financial Reporting Assignment Sample

Order on WhatsApp Get Upto 50% off
Securing Higher Grades Costing Your Pocket? Book Your Assignment At The Lowest Price Now!
  • Order on Whatsapp
X

BAC6021 Financial Reporting Assignment Sample

Introduction

Get free samples written by our Top-Notch subject experts for taking online assignment help & australian assignment help services.

As per this assignment our major learning objective is to understand the conceptual framework of financial reporting (ISAB) and learning how to analyze the financial statements of companies and thus to achieve those objective this assignment consist of 3 major question which will helps to achieve those objectives.

Question 1

  1. 1.     

The need of financial statements information in terms of each user is as follows:

a)    Creditors

= These are the person uses information to know about the ability of firm to repay the credit/loan amount, thus financial statement helps in knowing about financial soundness of any firm.

b)    Investors

= As if a person wants to invest his/her money in anything whether its business or it’s on some stocks or something, the first thing he/she will do is to check the financial soundness of the company by using financial statements. (Users of Accounting Information (Internal and External Users Explained), 2021).

c)    Management

= Financial accounts tells everything about business and as management role is to find whether business is profitable or not, it needs to go through financial statements.

d)    Owners

= These are the core person of the organization as they provide funds to the organization, they have the curiosity to know about all happening in their business and to know about it, thus financial statements helps them to do so.

e)    Government

= There is a need of financial information by gov. at the time of tax payment to determine whether firm has paid payable amount or not (Bragg and Bragg, 2021).

 

  1. 2.    Before stating the example let us brief about the events  the events are as follows :

 

 

a)    Adjusting Events ;

= This is the type of event which provides us the evidence of those conditions which existed at the end of reporting period.

This types of events needs adjustments and even companies are required to adjust their statements as per the events (ACCA FA (F3) Notes: F4a. Event after the reporting period | aCOWtancy Textbook, 2021).

b)   Non- Adjusting Events

= This is the type of event which provides us the indicative information about the conditions that arose after the end of reporting period.

This type of event do not result in adjustment to the financial statements but should be disclosed as they can impact the evaluation/decision making process (IAS 10 Events after the Reporting Period, 2021).

 

Example of Adjusting Events:

It is related to IAS37 Provisions, Contingents Liabilities & Contingent Assets as it the liability pertaining to the below example might be recorded in statements of financial books and if not recognized the liability might be adjusted as per the above provision.

= Settlement of litigation against the entity after the reporting date, as those events may provide evidence about the existed and the amount of liability pertaining at described date (IAS 10 Events After The Reporting Period (Balance Sheet Date) | Simplified, 2021).

 

Example of Non-adjusting Events:

Any company or firm plans to buy/purchase or sale major assets for its company for any reasons might be new techniques or anything else.

  1. 3.     

 

1)    The four main characteristics of Public Sector ( not for profit organization) relating to Local Refuse Collection Department can be as follows :

-        Health

= As this department know the causes and impact pertaining if not handles the things in a right manner as it is associated directly with health.

 

-        No Hidden Benefit

= This is one of the department of gov. which has no hidden benefit associated and has only sole purpose to serve the nation.

 

-        Employment

= Helps in generating employment opportunities for the local people & other people who finds difficulty in earning for their living & finding jobs ; thus this sector/department helps in giving them jobs which in turns also reduces unemployment.

 

-        Green Environment

= Primary characteristics of this type of department is to give nation a green and healthy environment for living.

 

Question 2:

 

  1. 1.    The possible ‘new” operational decisions that were taken during the year that have caused the changes in results are as follows :

 

-        Increased in inventory

= There is purchase of stocks in company due to which there is decrease in cash in company accounts.

-        Increase in Payable

= There is increase in payable in company, which indicates that the company is purchasing more products on credit from different dealers (What Is "Due From Shareholder" on a Balance Sheet?, 2021).

-        Increase in Receivable

= There is increase in receivables in company, which indicates that company is paying its payable amount to the people during the year and it also represents that cash outflow is happening in that year (Operational Decision - an overview | ScienceDirect Topics, 2021).

 

  1. 2.    After analyzing the statement of cash flow , as per following cases; the following interpretation could be made as follows :

 

  1. a.    A new supplier looking to offer credit to Teckies Plc

= After analyzing the financial statement i.e. Cash flow statement, it could be seen that company is clearing it debts on time and even after subtracting the expenses, it can be found that company has good amount of cash in hand; which also signifies that company capacity is good and thus the chances of loss and uncertainty automatically decreases (Importance of Cash Flow Statement with Example, 2021).

Thus as a new supplier; I would definitely team-up with Teckies Plc.

  1. b.    A bank who has received a request for a loan (from Teckies Plc)

 

= After analyzing the financial statement i.e. Cash flow statement, it could be seen that company is receiving the payments from the debtors which indicates that there is a good amount of inflow of cash in a year and even if we analyze the statement we can also see that the remaining amount of cash at hand is also available and finally as a bank perspective it can be said that the repayment of a loan taken out of years ago will result in a significant cash outlay and thus the cash flow statement act as a medium to have a full overview of the company as banks need to carefully consider how company uses its cash resources to know how company gonna repay loan amount(Controller, 2021).

 

Thus, as a bank I would definitely team-up with Teckies Plc.

 

  1. c.     A potential new shareholder looking to invest in shares in Teckies Plc

 

= After analyzing the financial statement i.e. Cash flow statement, it could be seen that company has paid dividends to its shareholders which shows that Teckies Plc is returning profits to its shareholders, even the ratio of payable and receivables is good as in terms of payable; the company is paying is debts on timely basis and in terms of receivable; the firm is getting its amount from the debtors, overall it can be said that firm cash flow status is in sound condition (Why is the Cash Flow Statement Important to Shareholders and Investors?, 2021).

 

If we talk about shareholders perspective then we all know investors and shareholders wants to know how much return they would get from their investment, even wants to have the historic cash flow status of the firm as it would also help them to make decision even on same hand it also helps to know about the financial position of the firm and thus in short cash flow forecasting helps in easily determining the things on timely and on accurate basis.

 

Thus, as a bank I would definitely team-up with Teckies Plc.

 

Question 3:     

 

 

 

A)  As per the given financial statements , following pre-assumption values can be as follows :

                                                                                        

i) Share Price                                      $ 10

 

Interpretation:

 

= In this the listed amount is chosen based on the given data and analyzing the financial information provided in the question.

 

                                                                                        

ii) Fair value above Carrying value    $ 1,687

 

= In this question the value of PPE (Property, Plant & Equipment can be as follows:

 

Calculation of PPE

Amount $

F.V as on 1st July 2020

 

22500

Book Value as on 1st July 2020

 

 

Closing Balance Value

18500

 

Opening B.V

23125

 

Less: Depreciation

-2313

20813

Total

 

1687.5

 

Interpretation:

 

= As per the given data we have used $22500 as a fair value for Property Plant & Equipment as on date 1st July 2020, and then we have used the book value as on date 1st July 2020 and then calculated the opening B.V in working notes and then deducted the Opening B.V with depreciation charges i.e. $2313 (which is also calculated in working notes) thus resulting $20813 and then deducted the F.V as on 1st July 2020 with resulting amount and thus final PPE amount is $1687.5 (Dichev, 2008).

                                                                                        

iii) Impairment Value                          $ 500

 

= In this the listed amount is chosen based on the given data and analyzing the financial information provided in the question.

 

                                                                                        

iv) Fair Value of NCI                           $ 5,000

 

Thus, $5000, is the fair value of NCI at the time of acquisition of Son Ltd.

 

 

B.

 

The Consolidated Statement of Financial Position for the group can be formulated as follows:

 

Consolidated Balance Sheet

(as on 31/12/2020)

Particulars

 

Amount ($)

Assets

 

 

Non-Current Assets

 

 

Property, Plant & Equipment (PPE)

 

85500

Goodwill

 

4813

Current Assets (CA)

 

15440

Total Assets

 

105753

 

 

 

Equity & Liabilities

 

 

Equity

 

 

Share capital $1 each

 

21400

Other equity

 

57127

Liabilities

 

 

Non-Current Liability (NCI)

 

6726

10% Loan

 

13000

Current liability (CL)

 

7500

Total Equity & Liabilities

 

105753

 

 

 

 

 

Interpretation:

 

Consolidation balance sheet is created by using the prescribed data provided in the question and some of the required data is calculated to have a clear view or to complete the statement as on 31st December 2020(Stern, 1997).

 

Working Notes( for balance sheet)

1

PPE =

(65500+2000)

85500

2

CA=

(10500+5500-500-60)

15440

3

Share capital ($1) =

(20000+1400)

21400

4

10% Loan =

(10000+3000)

13000

5

CL=

(5500+2500-500)

7500

 

 

Major Calculations

 

  1. 1.     

Calculation of INA

Amount (000s)

Amount (000s)

Amount (000s)

 

D.O.C($)

P.A.C($)

D.O.C($)

Share capital

8000

 

8000

Reserve & Surplus

4000

6500

10500

 

12000

6500

 

Revolution of

 

 

 

PPE

1687

 

 

Depreciation

 

-187

 

 

 

 

 

Unrealized Profit on Stock

 

-60

 

 

 

 

 

 

13687

6253

 

 

 

Amount $

Peter Plc @70%

4377

NCI

1876

 

 

 

 

Interpretation:

In this the data at the time of merger is taken and data as after changes are taken to formulate the INA for the company (Dichev, 2008).

 

  1. 2.     

Calculation of Goodwill

Amount $

Investment

14000

Add: NCI @F.V

5000

Less:I.N.A

-13687

Goodwill

5313

Less: Impairment @500

-500

Total Goodwill

4813

 

Interpretation:

 

In this the data at the time of merger is taken and data as after changes are taken to formulate the goodwill for the company as on 31st December 2020 even in this the amount of Impairment is deducted to have an exact goodwill amount pertaining on 31st December 2020(Stern, 1997).

  1. 3.     

 

Calculation of NCI

On Acq Date

5000

Post Acquiring Changes

1876

Less: Goodwill Impairment

-150

Total

6726

 

 

Interpretation:

 

In this the amount at the date of acquisition is used and the amount after acquisition is calculated and then used to formulate the amount of NCI for the firm, even in this the amount of Impairment is deducted to have an exact NCI amount pertaining on 31st December 2020.

 

  1. 4.     

 

Calculation of Other Equities

Amount $

Securities Premium

 

Opening

3000

New issue

12600

Retained Earning

37500

Add: Post Acq Changes

4377

Less: Goodwill Impaired

-350

Total

57127

 

Interpretation:

 

To formulate the amount of other securities factors like opening share premium is used and retained earning amount as on 31st December is used and then post acquiring changes is added and then at last good impairment amount is subtracted to have a final amount.

 

 

  1. 5.     

 

Calculation of Additional Depreciation

Amount $

F.V of PPE on 1st July 2020

22500

Depreciation

2500

Depreciation Charged

2313

Total Additional Depreciation

187

 

Interpretation:

 

In this simply the amount of depreciation for 5 months and the charged depreciation is used and subtracted from each other to know the additional depreciation pertaining as on 31st December (Dichev, 2008).

 

 

 

 

 

 

Working Notes

Amount $

1

Unrealized Profit on Stock

(300*25/125)

60

2

Goodwill Impairment

(500*30%)

150

3

Depreciation

(23125*0.5/5)

2313

4

Opening B.V

(18500/4*5)

23125

5

Depreciation

(22500/4.5*0.5)

2500

 

 

 


 

Conclusion:

 

 

 As we can see in this assignment we have 3 questions in which one of those question revolves around the conceptual framework for financial reporting (ISAB) and the other revolves around the analysis of cash flow statements and discussing the role and need of cash flow statement as for different kinds of users associated with the business and the last question revolves around the creation and formulation of consolidated statements and thus after formulation and answering to those questions , the basic framework of understanding is achieved and thus the learning objective is fulfilled.

 

Bibliography

 

  • Accounting Simplified. 2021. IAS 10 Events After The Reporting Period (Balance Sheet Date) | Simplified.  Available at: <https://accounting-simplified.com/ifrs/ias-10-events-after-the-reporting-period/>.
  • Acowtancy.com. 2021. ACCA FA (F3) Notes: F4a. Event after the reporting period | aCOWtancy Textbook.  Available at: <https://www.acowtancy.com/textbook/acca-fa/f4-events-after-the-reporting-period/event-after-the-reporting-period/notes>.
  • Bragg, S. and Bragg, S., 2021. Users of financial information — AccountingTools.  AccountingTools. Available at: <https://www.accountingtools.com/articles/2018/1/26/users-of-financial-information>.
  • Controller, C., 2021. What do Banks look at when Extending Credit to a Business? | Complete Controller.  Complete Controller | America's Bookkeeping Experts. Available at: <https://completecontroller.com/what-do-banks-look-at-when-extending-credit-to-a-business/>.
  • Dichev, I., 2008. On the Balance Sheet-Based Model of Financial Reporting. Accounting Horizons, 22(4), pp.453-470.
  • Guru99.com. 2021. Importance of Cash Flow Statement with Example.  Available at: <https://www.guru99.com/cash-flow-report.html>.
  • Icaew.com. 2021. IAS 10 Events after the Reporting Period.  Available at: <https://www.icaew.com/technical/financial-reporting/ifrs/ifrs-standards/ias-10-events-after-the-reporting-period-previously-events-after-the-balance-sheet-date>.
  • iEduNote.com. 2021. Users of Accounting Information (Internal and External Users Explained).  Available at: <https://www.iedunote.com/users-of-accounting-information>.
  • Kotak Securities®. 2021. Why is the Cash Flow Statement Important to Shareholders and Investors?.  Available at: <https://www.kotaksecurities.com/ksweb/articles/why-is-the-cash-flow-statement-important-to-shareholders-and-investors>.
  • Sciencedirect.com. 2021. Operational Decision - an overview | ScienceDirect Topics.  Available at: <https://www.sciencedirect.com/topics/engineering/operational-decision>.
  • Small Business - Chron.com. 2021. What Is "Due From Shareholder" on a Balance Sheet?.  Available at: <https://smallbusiness.chron.com/due-shareholder-balance-sheet-69165.html>.
  • Stern, E., 1997. Crisis and Learning: A Conceptual Balance Sheet. Journal of Contingencies and Crisis Management, 5(2), pp.69-86.
Free Download Full Sample Free Download Full Sample
Get best price for your work

offer valid for limited time only*

Get a callback
In a Hurry-Get a Callback

© Copyright 2021 | New Assignment Help | All rights reserved