ACCOUNTING QUESTIONS

Q52
Consider the judgement delivered on 30 October 2019 by Justice Logan in the Federal
Court of Australia decision Addy v Commissioner of Taxation [2019] FCA 1768.
(Hint: you may either read the decision or read at least one of the several
commentaries available online)
Task
Answer the following questions
1. What are the possible consequences of this decision for ‘backpackers’ who have
already paid tax in accordance with WHMR Act? Give reasons.(20 marks)
2. How has the Australian Tax Office (ATO) responded to the decision in Addy v
Commissioner of Taxation? (10 marks)
Q53
Assessment 2 Assessment Type: Case study report – theory and calculations – individual assessment
Purpose: To allow students to apply the technical knowledge of relevant accounting standards to financial reporting settings. This assessment relates to learning outcomes c, d. Value: 30%
Due Date: Week 9 – 8:00 pm Wednesday of Week 9
Submission: Submission must be made to the Moodle Assignment Link on the KOI Moodle Subject Home Page by 8.00 pm Wednesday of Week 9. A printed copy must be submitted to the Lecturer at the Week 9 Lecture to assist with marking. All assignments must have a signed KOI Assignment Coversheet included with the submission.
Topic: Research Individual Assignment
Task Details: Mags Ltd is an Australian mail-order company. Although the sector in Australia is growing slowly, Mags Ltd has reported significant increases in sales and net income in recent years. While sales increased from $50 million in 2009 to $120 million in 2018, profit increased from $3 million to $12 million over the same period. The stock market and analysts believe that the company’s future is very promising. In early 2019, the company was valued at $350 million, which was three times 2018 sales and 26 times estimated 2019 profit.
Company management and many investors attribute the company’s success to its marketing flair and expertise. Instead of competing on price, Mags Ltd prefers to focus on service and innovation, including: •
free delivery • a free gift with orders over $200.
As a result of such innovations, customers accept prices that are 60% above those of competitors, and Mags maintains a gross profit margin of around 40%.
Nevertheless, some investors have doubts about the company as they are uneasy about certain accounting policies the company has adopted. For example, Mags Ltd capitalises the costs of its direct mailings to prospective customers ($4.2 million at 30 June 2018) and amortises them on a straight-line basis over 3 years. This practice is considered to be questionable as there is no guarantee that customers will be obtained and retained from direct mailings.
In addition to the mailing lists developed by in-house marketing staff, Mags Ltd purchased a customer list from a competitor for $800 000 on 4 July 2019. This list is also recognised as a non-current asset. Mags Ltd estimates that this list will generate sales for at least another 2 years, more likely another 3 years. The company also plans to add names, obtained from a phone survey conducted in August 2019, to the list. These extra names are expected to extend the list’s useful life by another year.
Mags Ltd.’s 2018 statement of financial position also reported $7.5 million of marketing costs as noncurrent assets. If the company had expensed marketing costs as incurred, 2018 net income would have been $10 million instead of the reported $12 million. The concerned investors are uneasy about this capitalisation of marketing costs, as they believe that Mags Ltd.’s marketing practices are relatively easy to replicate. However, Mags Ltd argues that its accounting is appropriate. Marketing costs are amortised at an accelerated rate (55% in year 1, 29% in year 2, and 16% in year 3), based on 25 years’ knowledge and experience of customer purchasing behaviour.
Required: Discuss the requirements under AASB138 / IAS 38 Intangible Assets how Mag Ltd should account for the costs. Provide reasons for your answer in reference to relevant paragraphs of AASB138 / IAS 38.
Research requirements: Students need to support their analysis with reference to relevant material from the text and a minimum of eight (8) suitable, reliable, current and academically acceptable sources – this should include at least 2 peer-reviewed academic journal articles.
Presentation: 2000 + 10% word short report format. Title page, executive summary, table of contents, appropriate headings and sub-headings, recommendations/findings/conclusions, in-text referencing and reference list (Harvard – Anglia style), attachments if relevant. Single spaced, font Times New Roman 12pt, Calibri 11 pt or Arial 10 pt.
Marking Guide:
Interpretation and representation 20%
Calculations 20%
Analysis20%
Assumptions20%
Communication 20%
Total mark will be scaled to a mark out of 30 subject marks.

Q54
You are the audit manager of Overseas Explorer Ltd (OEL), which acquired the small
proprietary company Local Pty Ltd (Local) on 30 June 2018. The price of the acquisition was
agreed at $5 million, on the condition that OEL is satisfied with the financial records of Local.
As Local is a small proprietary company, it has not prepared statutory financial reports or
undergone an audit since its incorporation in 2016. However, Local has agreed to allow your
firm, which is the auditor of OEL, to access its books and records. The CEO of OEL, Wendy
Champion, has requested that your firm provide assurance on the following three items:
? The management accounts for the year ended 30 June 2017
? All transactions occurring from the date negotiations commenced until the settlement
date, to ensure that all transactions were within the normal course of operations
? The financial report prepared at the acquisition date of 30 June 2018
In order to clarify your responsibilities, you requested that OEL indicate the level of
assurance that they require for each item. Wendy replied that the financial report as at
acquisition date is very important, as are the transactions since negotiations commenced,
but that she is willing to have less work done on the previous year’s management accounts.
Required:
Indicate the type of engagement that will most likely be undertaken for each of the three tasks
and the level of assurance to be provided. Explain your selections. (10 marks)

Q55
QUESTION ONE: Absorption and Variable Costing: Prepare and Reconcile Variable costing Statements
Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer’s ear. Cost data for the product follows
Q56
2. Identify each item in the accounting records as either an asset, a liability, or ownership interest
or Equity (identifying separately the expenses and revenues which contribute to the change in
the ownership interest).
b) Prepare a statement of financial position (balance sheet) at 30 June Year 2.
c) Prepare an income statement (profit and loss statement) for the year ended 30 June Year 2.
Q57
You are required to develop a report to the CEO and Board of the company, identifying the internal control procedures required within the organisation.
You will be required to submit the report following organisational formatting procedures and recommendations to address the internal control requirements for the company.
Your answers are required to be grammatically correct and where there is a report to present it should be completed as a business report.
Q58
Aves Treats, Inc. produces bird seeds. All direct materials used in the production process are added at the beginning of the manufacturing process. Labor and overhead are added evenly thereafter, as each unit is mixed and packaged. Aves Treats uses process costing and had the following unit production information available for the months of June and July: The units remaining in work in process at the end of June were 30% complete. During the month of July, all of the beginning work in process units was completed and the units remaining in work in process at the end of the month were 60% complete. a) Refer to the information above. For the month of June, the number of equivalent units of direct materials produced was: b) Refer to the information above. For the month of June, the number of equivalent units of labor and overhead produced was: c) Refer to the information above. For the month of July, the number of equivalent units of direct materials produced was: d) Refer to the information above. For the month of July, the number of equivalent units of labor and overhead produced was:
Q59
Examine the CAFR. Utilizing the CAFR obtained for Exercise/Problem 1-15, examine the financial statements included in the financial section and answer the following questions. If the CAFR you have obtained does not conform to GAAP, it is recommended that you obtain one that does. a. Government-wide Statements. What are the titles of the two government-wide statements? Are total assets larger for governmental activities or business-type activities? Which function or program has the highest net cost? What kinds of general revenues are available to cover the net cost of governmental activities? Were business-type activities “profitable”? That is, is the excess of revenues over expenses positive? b. Governmental Funds. Does the report state the basis of accounting used for the General Fund? What types of assets and liabilities are included on the governmental funds balance sheet? Is this reporting consistent with the basis of accounting being followed? c. Identify which of the major funds, if applicable, are special revenue funds, debt service funds, capital projects funds, and permanent funds. Are you able to determine which funds are considered nonmajor? (Hint: look for supplementary information.) What fund balance categories are being used? d. Proprietary Funds. List the names of the proprietary fund types included in the financial statements. Do the financial statements provide evidence that all proprietary funds use accrual accounting? e. Fiduciary Funds. List the names of the fiduciary funds included in the fund financial statements. Identify whether each of these is an agency fund, investment trust fund, pension (and other employee benefit) trust fund, or private-purpose trust fund. Do the financial statements provide evidence as to what basis of accounting these funds use? f. Notes to the Financial Statements. Read the notes to the financial statements, so that you can refer to them as needed in subsequent chapters. What significant accounting policies are discussed in the first note? With regard to revenue recognition, how do the notes define the term available for paying current period obligations?
Q60
You have recently joined as a Trainee Accountant at Accountants in Action in the
Huon Valley, with two other Trainee Accountants who are currently studying
accounting at the University of Tasmania. As a part of the training, your manager has
given your team a task of recording the transactions that occurred in a local
producer’s business Green Hills Produce for January 2020.
Your manager informed your team that this business was opened by Mr Johnno Linn,
on the 1st of January 2020 and he is the sole owner of this proprietorship. Green
Hills Produce sells local fresh produce and condiments to local customers. The
manager has supplied you with the following information and the tasks allotted to
your team are provided below.

Q61
You have recently joined as a Trainee Accountant at Accountants in Action in the
Huon Valley, with two other Trainee Accountants who are currently studying
accounting at the University of Tasmania. As a part of the training, your manager has
given your team a task of recording the transactions that occurred in a local
producer’s business Green Hills Produce for January 2020.
Your manager informed your team that this business was opened by Mr Johnno Linn,
on the 1st of January 2020 and he is the sole owner of this proprietorship. Green
Hills Produce sells local fresh produce and condiments to local customers. The
manager has supplied you with the following information and the tasks allotted to
your team are provided below.
Q62
1. Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,
assuming that the variable costs vary in proportion to the hours of operation. Express the total
cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of
operation? (5 marks)
b) During July, the complex will open for 570 hours. Predict the complex’s total electricity costs for
July using the cost estimation method employed in above requirement a). (3marks)
c) What is the main drawback of the high-low method of cost estimation? (2 marks, maximum 150
words)
Q63
Required
Prepare a report to the managing director of Paradise Industries to evaluate the processes, risks
and internal controls for Paradise Industries’ expenditure and conversion cycle. In your report, you
need to include the following items:
? System flow chart of expenditure cycle
? System flow chart of conversion cycle
? Analysis of physical internal control weaknesses in the expenditure cycle
? Analysis of the risks exist in the conversion cycle and the changes needed to reduce the risks
Assignment Structure
The report should include the following components:
? Assignment cover page clearly stating your name and student number
? A brief introduction of what the report is about
? Body of the report with appropriate section headings
? Conclusion
? List of references
Q64
Unit Learning Outcomes Assessed:
1. Demonstrate a thorough understanding of the reporting requirements of auditing
standards relating to auditors’reports.
2. Explain how the audit planning process directs the auditor to obtain adequate evidence to
support auditfindings and addressthe importanceofmateriality in an audit.
3. Explaintheprocessofauditplanningtodetermineriskassessmentsandanoverallauditstrategy.
4. Explain the auditors’ obligations with regards to understanding the client’s business and
internal controls and assessing businessrisks.
Description: Each week students were provided with three tutorial questions of varying degrees of
difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard.
The Interactive Tutorials are designed to assist students with the process, skills and knowledge to
answer the provided tutorial questions. Your task is to answer a selection of tutorial questions from
weeks 1 to 5 inclusive and submit these answers in a single document
Q65
Unit Learning Outcomes Assessed:
1. Explain what a computer program written in Python does and translate a given algorithm into
Python code.
2. Identify and fix the various types of coding errors i.e. syntax, logical, and run-time.
3. Apply standard algorithms and libraries and import built-in modules to solve a given problem.
4. Understand and explain the basic programming constructs.
5. Understand the ICT profession and professional expectations of computer programming.
Description: Each week students were provided with three tutorial questions of varying degrees of
difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard.
The Interactive Tutorials are designed to assist students with the process, skills and knowledge to
answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for
weeks 1 to 5 inclusive and submit these answers in a single document.