2_04-09-09Tutorial_answer (1)

2_04-09-09Tutorial_answer (1) - Problem 18 a) b) c) d) e) ?...

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Problem 18 a) ? b) ? c) The sale of a division of the company is one of the extraordinary items. d) Increase wage expenses by $90,000 in ordinary activities. e) South African currency loss of $20,000 decreases foreign currency reserve. Problem 19 Statement of Financial Performance $’000 Revenue from ordinary activities 1,800 Expenses from ordinary activities (900) Borrowing costs (25) Profit from ordinary activities 875 Less income tax related to ordinary activities (150) Profit from ordinary activities after tax 725 Loss from extraordinary activities (net of related taxes) (885) Net Loss (160) Increase in asset revaluation reserve 80 Dividend paid (100) Decrease in retained profits (50) Total changes in equity (230) Expenses $’000 Cost of goods sold 550 Administration salaries 170 Depreciation of office equipment 70 Major loss due to insolvency of customer 110 900 Page 1 of 27
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Problem 15.2 A single clearly identifiable operating cycle that extends over a period greater than twelve months is recognized as a current asset (liability) if it is expected to be realized in the normal course of the entity’s operating cycle. Discuss why the Financial Reporting Council of Australia decided on replacing the Australian Accounting Standards with the International Accounting Standards by 1st January 2005? FRC foresees a better quality of accounting standards as shown in previous incidents like the issue of CLERP1 and other international standards as imposed to Australia (p.14). In the hope FRC, the adoption of IAS will bring acceptable high quality accounting standards which will improve transparent financial reporting (p.18). It saves accounting cost and information cost as only there will be a standardize requirement to provide information (p.20). Government can achieve a cost reduction as the adoption of IAS will reduce the Following the downfall of Enron and WorldCom, the government must do something to show to the market that they are intend to fix the problem, and replacing the IAS What are the implications (particularly the difficulties) of this decision to Australian companies? As the introduction of the new standards is complex, many entities will have to make system changes (p.18). Small companies will face massive changeover costs (p.21). The opinions and suggestions from small companies will be more difficult to reach the accounting body after the adoption of IAS as only large companies have resources to influence the IASB significantly (p.27). There is insufficient time to overcome difficulties given the tight deadline (p.33-34). Companies have to spend money to re-educate their accounting staffs (p.34).
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This note was uploaded on 01/10/2012 for the course FINS 3616 taught by Professor Curry during the Three '10 term at University of New South Wales.

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2_04-09-09Tutorial_answer (1) - Problem 18 a) b) c) d) e) ?...

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