Accounting standards
Assessment Type: – research report. Purpose: Assess students’ knowledge of relevant accounting standards. Students are required to prepare a research report which evaluates their interpretation of accounting standards. This assessment relates to learning outcomes a, b, c, d and e. due date 26 may : Research based assignment. Task Details: Students are required to attempt the following two questions. 1. A customer filed a lawsuit against Delta Ltd in December 2018. The lawsuit was for costs and damages allegedly incurred as a result of the failure of one of Delta Ltd’s electrical products. The amount claimed was $3 million. Delta Ltd’s lawyers have advised that the amount claimed by the customer is extortionate and that Delta has a good chance of winning the case. However, the lawyers have also advised that if Delta Ltd loses the case it is expected that costs and damages awarded would be $500,000. Required: A) Explain the accounting for contingent liabilities with reference to AASB 137. B) Under AASB 137, how should Delta Ltd disclose accounting implications of this lawsuit in its financial statements as at 31 December 2018? 2. In the article entitled ‘U.S. firms challenged to get “intangibles’’ on the books’, Byrnes and Aubin (2011) noted that some companies in the United States were accounting for intangibles such as brands, patents, and information technology differently depending on whether they were developed internally or acquired. Different accounting treatments can have a large impact on accounting numbers where internally generated intangibles developed at low cost by one company are sold at significant mark ups to another company. Required: A) Explain the accounting for internally generated intangible assets and impairment of intangible assets with reference to AASB138/IAS 38 and AASB136/IAS36 respectively. B) Discuss any differences between accounting for internally generated intangible assets and acquired intangible assets in AASB 138/IAS 38. C) Discuss why companies may be reluctant to press for changes in AASB 138/ IAS 38 to require more recognition of internally generated intangible assets. Presentation: 1000 words ; 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 11pt or Arial 10pt. In text referencing and reference list are excluded from the word count. Marking Guide: Research – extent and application 30% Analysis 30% Recommendations 20% Communication 20% Total mark will be scaled to a mark out of 20 subject marks