Company boards, executives, and management are investing more and more time and resources on issues of sustainability – such as carbon (greenhouse gas emissions),
energy efficient technology, water use, cleantech, and biodiversity, to name just a few. An important part of the global push towards sustainability practices involves
a need to account for, and report on, sustainability – sometimes referred to as environmental, social, and governance (ESG) reporting
The International Accounting Standards Board (IASB) has achieved “almost” worldwide acceptance and adoption of its precious and hard-delivered (that is, more than 30
years in the making) “baby”—International Financial Reporting Standards (IFRS), a comprehensive set of financial reporting standards. However, that “almost” is a very
significant one: the US, the largest capital market in the world, is still reluctant to fully incorporate IFRS into its financial reporting system, despite the
recognition of IFRS on all continents during the last ten years (Bogopolsky, 2015).
Bogopolsky, A. (2015). Does IFRS have a future in the US? IFAC. (Available at: https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/does-ifrs-
Critically discuss the above statement. Why is the United States still reluctant to fully adopt IFRS for its financial reporting practices? Provide your arguments.
Note 1: Word limit for Question 1 is 1,000.
Note 2: Professional marks will be awarded for format, clarity and expression.
Note 3: The presentation of Question 1 should include Introduction, Discussion, Conclusion and List of references.
Question 2 (Word limit = 500 words) (50 Marks)
At the end of its financial year, Colour Ltd. took the following information from its accounting books of record.
Trial Balance as at 30 June, 2017
AUD $ AUD $
Prepaid insurance 80,000
Plant & Machinery 360,000
Accounts Payable 240,000
Accumulated Depreciation – Plant & Machinery 180,000
Accumulated Depreciation – Computers 120,000
Accumulated Depreciation – Buildings 116,000
Bank Loan secured over buildings, due 1st May, 2019 600,000
Share Capital 1,000,000
General Reserve 160,000
Retained Earnings 124,000
Short term Investment – due 30th September, 2017 664,000
Salaries and wages 320,000
Heating and lighting expenses 100,000
Audit fees and charges 40,000
Interest Expense 30,000
Damage due to flooding 134,000
Interim dividend 32,000
Cash at bank 304,000
Accounts Receivable 342,000
Sales Proceeds 2,866,000
Provision for Doubtful Debts 40,000
I. Salaries and wages not paid at 30th June amounted to $32,000.
II. Unpaid heating account for June totalled $16,000.
III. Prepaid insurance attributable to current year is 20,000.
IV. Colour Ltd. uses the periodic inventory system. The stock-take of 30th June shows closing inventory of $440,000 (valued at lower of cost and net realisable value).
V. Interest on bank loan is 10% per annum and is payable twice yearly on 31st December and 30th June. The amount due at 30 June has not been recognised.
VI. Depreciation rates on the straight line basis are as follows:
a. Plant & Machinery 10%
b. Furniture & Fittings 5%
c. Buildings 5%.
VII. The current market value of investments is $168,000.
VIII. Colour Ltd pays income tax at the rate of 30%.
IX. On 21st May 2017, Colour Ltd was notified of an impending legal suit for $100,000 against the company for breach of contract. The case was settled on 15th July
X. Tax expense was calculated to be $160,000.
XI. A final dividend of 5% of paid-up-capital was declared and approved on 30th June 2017.
XII. Paid-up Capital consists of 500,000 ordinary shares of $2 each.
1) Prepare necessary adjusting journal entries for the above events (15 Marks).
2) Prepare a single Statement of Comprehensive Income (6.5 Marks), a Statement of Financial Position (8 Marks) and a Statement of Changes in Equity (5.5 Marks) in
accordance with applicable accounting standards for financial year end 30th June 2017.
3) Prepare at least fifteen (15) notes to the financial statements according to the relevant accounting standards (15 Marks).