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acc205 assignments

ACC205Assignment 2Group-based AssignmentThis assignment is worth 30% of the final mark for ACC205 Financial Reporting and Analysis.The cut-off date for this assignment is 19 February 2014, 2359 hrs.This is a group-based assignment. You should form a group of 3 members from your seminargroup. Each group is required to upload a single report to MyUniSIM via your respective seminargroup. Please elect a group leader. The responsibility of the group leader is to upload the report onbehalf of the group.It is important for each group member to contribute substantially to the final submitted work. Allgroup members are equally responsible for the entire submitted assignment. If you feel that thework distribution is inequitable to either yourself or your group mates, please highlight this to yourinstructor as soon as possible. Your instructor will then investigate and decide on any action thatneeds to be taken. It is not necessary for all group members to be awarded the same mark.___________________________________________________________________________Question 1The accounting profession, the public, as well as regulatory bodies recognise the importanceof high quality corporate reporting. However, the recommendations to improve it aresometimes questioned on the basis that the marketplace for capital can determine the natureand quality of corporate reporting. Additional accounting and disclosure standards wouldonly distort a market mechanism that already works well and would add costs to the reportingmechanism, with no apparent benefit. Additional requirements of the accounting standardscreate costly, inefficient, and unnecessary regulation. On the other hand, increased disclosurereduces risks and offers a degree of protection to users. This increased disclosure comes atthe expense of additional costs to the preparer of financial statements.Required:(a)Examine and comment on the usage of the accounting standards to help the marketmechanism work effectively for the benefit of preparers and users of corporatereports.(10 marks)(b)Discuss and explain the relative costs to the preparer and benefits to the users offinancial statements of increased disclosure of information in financial statements.(20 marks)Assignment 2Question 2Falcon Semiconductor Ltd. is a leading provider of advanced semiconductor packaging andtest services. Falcon’s full turnkey semiconductor solutions include package design, probe,assembly, test and distribution services. The test services operation has been experiencingsubstantial losses for two years. The company’s year-end is 31 December. At a meeting on 22September 20X2 the directors decided to close down the test services operation on 31 March20X3 and then dispose of its non-current assets on a piecemeal basis. Affected employeesand customers were informed of the decision and a press announcement was madeimmediately after the meeting. The directors have obtained the following information inrelation to the closure of the operation:(a)On 1 Nov 20X2, the factory had a carrying amount of $2.5 million and is expected tobe sold for net proceeds of $4 million. On the same date the plant had a carryingamount of $1.3million, but it is anticipated that it will only realise net proceeds of$300,000.(10 marks)(b)Of the employees affected by the closure, the majority will be made redundant at costof $640,000, the remainder will be retrained at a cost of $150,000 and given work inone of the company’s other operations.(10 marks)(c)Trading losses from 22 September to 31 December 20X2 are expected to be $400,000and from this date to the closure on 31 March 20X3 a further $200,000 of tradinglosses are expected.(10 marks)Required:Assess the points above and illustrate how the decision to close the furniture makingoperation should be treated in Manco’s financial statements for the years ending 30September 2010 and 2011. Your answer should quantify the amounts involved.Question 3The Conceptual Framework established the concepts that underlie the estimates, judgementsand models on which IFRS financial statements are based.Required:Based on the company you are currently working in or any suitable one you are able to gaininsight to.(a)Briefly outline the characteristics of the business you have chosen and the accountingsystem of the company.(5 marks)ACC205(b)Assignment 2Discuss what is good judgment and why is it increasing in focus?(10 marks)(c)Show with examples how the management of the company you have selected applyjudgment in the preparation of the financial information provided to users.(10 marks)(d)What are the challenges in removing bias from judgment? Will the adoption of ajudgment framework helps?(15 marks)—- END OF ASSIGNMENT —-

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