Assignment of Accounting theory and Current issues 1

Assignment of Accounting

By [Name of Student]

[Name of Instructor]

[University]

[Name of Course]

[Date]
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“WEEK 6”

PART A

Calculation of the leave-benefit total amount

Total Years Current Total Rate of Total years Expected

of S-L Salary Employees Inflation to Maturity Salary

Net Salary Entitlement

Three 1,200,000 Twelve 14,400,000 One percent Seven 15,438,749 1,157,906

dollars dollars dollars dollars

One 8 lac dollars Ten 8,000,000 One percent Nine 8,749,482 218,737

dollars dollars dollars

Calculation of accumulated (total) long-service leaves benefit as on June 30, 2020

Total Years Total years Corporate Present Possibility Long-

of S-L to Maturity Rate of Value or service leaf

Entitlement
Bond benefit
Probability

Three Seven 1,157,906 0.06 770,074 40% or 0.4 308,029

dollars dollars dollars

One Nine 218,737 0.08 109,423 20% or 0.2 21,885

dollars dollars dollars

The formula used to calculate the present value:

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The amount of total long-service leave benefit is 329,914 dollars.

PART B

329,914 dollars is the amount that should be recorded as the provision for L-S (long-service)

leave.

PART C

Debit: Cost of Employee Benefits A/c $133,969

Credit: Long-service leave provision $133,969

(To record the provision for long-service)

PART D

The long-term benefits, which are also called benefits related to annual leaves, are needed to

be discounted as per AASB 119 (revised edition). The discount on such benefits allows

achieving the levels of salary that are expected in the coming years when it is projected that

the leaves will be taken.

“WEEK 7”

PART A

The method used to calculate the gross profit is “percentage of completion method”
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Big Construction Company

Statement of Income

For the year ended December 2021

2019 2020 2021

Total Revenue Recognized $3.125 million $5 million $1.875 million

Total cost incurred $2.5 million $4 million $1.5 million

Net Gross Profit $0.625 million $1 million $0.375 million

For the recognition of revenue, the following formula is used:

Sales Recognized = Cost of goods completed and delivered / total COG to be delivered x

Total revenue that is expected

Calculation of Recognized Revenue

The year 2019 = 2.5 million dollars / 8 million dollars x 10 million dollars

= 0.3125 million dollars x 10 million dollars

= 3.125 million dollars

The year 2020 = 4 million dollars / 8 million dollars x 10 million dollars

= 0.5 million dollars x 10 million dollars

= 5 million dollars

The year 2021 = 1.5 million dollars / 8 million dollars x 10 million dollars
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= 0.1875 million dollars x 10 million dollars

= 1.875 million dollars

PART B

Big Construction Company

General Journal

Year 2019

Cost incurred:

Debit: Construction-In-Progress $2.5 million

Credit: Cash $2.5 million

Payments Received:

Debit: Cash $2 million

Credit: Account Receivable $2 million

Revenue Adjustments:

Debit: Expense of the Construction $2.5 million

Construction-In-Progress $0.625 million

Credit: Sales Revenue $3.125 million

Year 2020

Cost incurred:
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Debit: Construction-In-Progress $4 million

Credit: Cash $4 million

Payments Received:

Debit: Cash $5 million

Credit: Account Receivable $5 million

Revenue Adjustments:

Debit: Expense of the Construction $4 million

Construction-In-Progress $1 million

Credit: Sales Revenue $5 million

Year 2021

Cost incurred:

Debit: Construction-In-Progress $1.5 million

Credit: Cash $1.5 million

Payments Received:

Debit: Cash $3 million

Credit: Account Receivable $3 million

Revenue Adjustments:

Debit: Expense of the Construction $1.5 million

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Construction-In-Progress $0.375 million

Credit: Sales Revenue $1.875 million

Project Completion:

Debit: Billing $10 million

Credit: Construction-In-Progress $10 million

PART C

Calculation of net G.P:

= Total expected Revenue – Total incurring cost

= 10 million dollars – 8 million dollars

= 2 million dollars

Big Construction Company

General Journal

Year 2019

Cost incurred:

Debit: Construction-In-Progress $2.5 million

Credit: Cash $2.5 million

Payments Received:

Debit: Cash $2 million

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Credit: Account Receivable $2 million

Year 2020

Cost incurred:

Debit: Construction-In-Progress $4 million

Credit: Cash $4 million

Payments Received:

Debit: Cash $5 million

Credit: Account Receivable $5 million

Year 2021

Cost incurred:

Debit: Construction-In-Progress $1.5 million

Credit: Cash $1.5 million

Payments Received:

Debit: Cash $3 million

Credit: Account Receivable $3 million

Recognition of the revenue:

Debit: Billings $10 million

Credit: Sales Revenue (Construction) $10 million

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CIP expense out:

Debit: Construction cost $8 million

Credit: Construction-In-Progress $8 million

“WEEK 8”

Neutral Site

The expenditure of 28,000,000 dollars associated with evaluation and exploration is

required to be C/F (carry forward) to 2020, which is the next year based upon the given

proportion (seventy-percent of PPE and the remaining amount is related to the company’s

intangible assets. This is because the site that is neutral has still on the stage, which gives

permission to a reasonable evaluation in the initial period, and also the main and active

operations in the interest area are still ongoing. Therefore, the following entry is needed to be

mentioned:

Debit: PPE 19,600,000 dollars

Assets (intangible) 8,400,000 dollars

Credit: Bank 28,000,000 dollars

Undesirable Site

The expenditure of 20,000,000 dollars associated with evaluation and exploration are

required to be written off in the year 2019 according to the method named interest area. The

reason is that the site has no more restrictions. Therefore, the following entry must be passed:

Debit: Account of Expense 20,000,000 dollars

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Credit: Bank 20,000,000 dollars

Desirable Site

The cost connected to evaluation and exploration is 25,000,000 dollars, which is

needed to be C/F to the coming year (2020) on the same basis as mentioned in the neutral

site. This is required because the discovery of oil took place in the year 2020 at this site. The

following entry will be posted:

Debit: PPE 17,500,000 dollars

Assets (intangible) 7,500,000 dollars

Credit: Bank 25,000,000 dollars

Also, the cost of development amounting to 48,000,000 dollars incurred in 2020 at

this site, which is needed to be written off on the basis of production. Most of the amount

related to this expense is associated with PPE and the remaining relates to the assets that are

intangible. Another journal entry is required to be recorded in the general journal, which is

given below:

Debit: PPE 32,000,000 dollars

Assets (intangible) 16,000,000 dollars

Credit: Bank 48,000,000 dollars

“WEEK 9”

PART A

Calculation of Earnings per Share for the Year 2019:

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EPS (2019) = Net income available for the shareholders / Weighted Avg. Number of Stock

So,

Basic EPS for 2019 = $1,460,000 / 1275000

Basic EPS for 2019 = $1.15

Calculation of Adjusted Comparative Earnings per share for the Year 2018:

In the previous year (2018):

Total Earnings = 1.5 dollars x 9 lacs

Total Earnings = 1,350,000 dollars

So,

Restated shares of the equity (weighted) = add (9 lacs x 1/6) into 9 lacs

= 9 lacs + 1.5 lacs

Restated shares of the equity (weighted) = 1,050,000

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Calculation of BEPS (Adjusted)

BEPS = Net profit / Equity Shares

= 1,350,000 / 1,050,000

BEPS = 1.28 dollars or 1.3 dollars

PART B

Diluted (EPS)

Diluted Earnings per share is defined as the earnings that are made on each stock of a

company that is considered public and calculated on the assumption that all changeable

securities were appropriately exercised. Not only the common shares but also convertible

Pref. stock, warrants, convertible bonds, and stock options are taken into consideration by the

DEPS, which assumes that all these securities are altered truly. Such EPS is seeing essential

for the companies’ shareholders as the earnings that are earned by a stockholder in the worst

situations are laid down by DEPS. It is necessary for the calculation of diluted earnings per

share to add the effect of all the common stocks that are considered dilutive. It is important to

know that the company’s basic EPS is always greater than it’s another EPS (diluted) in the

case when the profit is earned by such an organization. The reason is that the profit that is

generated is divided among a larger number of stocks, Similarly, if the company faced a loss

in any of the years, a lower amount of loss will be shown by the diluted earnings per share as

compared to basic EPS as such loss would be spread out over a larger number of stocks.

Stock options are one of the securities that can dilute the company’s EPS (basic).

Such securities are not considered as the common shares of the corporation; however, they

can be changed into the common stock if that option is exercised by the holder. When the
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stock options are converted into common stock, the no. of shares outstanding (weighted) is

increased due to such dilutive securities that bring a decline in the company’s EPS.

“WEEK 10”

PART A

Fujitsu Ltd

General Journal

For the Year ended _______

Date Particulars Debit Credit

11-05-2019 (A/c) Purchases $731,707

(A/c) DFO Limited $731,707

(To record the purchase by the company)

Date Particulars Debit Credit

30-06-2019 (A/c) DFO Limited $34,033

Loss or gain on Foreign Exchange (A/c) $34,033

(To record the dissimilarity in loss or gain

associated with foreign exchange)

Date Particulars Debit Credit

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DFO Limited Account

14-08-2019 $769,231

Bank Account
$769,231

(To record the amount of payment given

to the creditor)

Date Particulars Debit Credit

14-08-2019 Loss or gain Foreign Exchange (A/c) $71,556

DFO Limited (A/c) $71,556

(To record the forex’s effect recorded)

PART B

The term qualifying asset is defined by both AASB 1036 and AASB 123 as an asset

by which a substantial time is taken to prepare for its proposed sale or utilization. Also,

constant requirements are possessed by such an asset in respect of the suspension, cessation,

and commencement of borrowing costs’ capitalization. According to various standards of

Accounting in Australia, financial assets are not considered as a part of qualifying assets,

even in the entities where such assets are treated as equity securities. The AASB categorized

qualifying assets into two different kinds: the assets that are measured at fair value and the

finished goods that are produced or manufactured in bulk quantity based on repetition, which

needs a considerable period for selling purpose. Examples of such assets could be the

property of investment during the period of construction or PPE and inventories that are made

to order.
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