Assignment of Accounting theory and Current issues 1
Assignment of Accounting
By [Name of Student]
[Name of Instructor]
[University]
[Name of Course]
[Date]
Exam of Behavioral Finance 2
“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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