ACCT3563

ACCT3563 - THE UNIVERSITYOF NEW SOUTH WALES Australian...

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THE UNIVERSITYOF NEW SOUTH WALES Australian School of Business School of Accounting ACCT3563 Issues in Financial Reporting and Analysis Session One, 2010 Group Report DUE DATE: FRIDAY 7 th May at 5.00pm (This project is worth 20% of the marks for ACCT3563) OBJECTIVE AND LEARNING OUTCOMES The objective of this assessment is to develop students’ research skills and teamwork skills. In completing this essay, students should demonstrate their ability to conduct applied business research – acquiring, critically analysing and presenting accounting information in a real world situation. This project requires students to understand the drastically different views over the recognition and measurement of goodwill from two prominent senior practitioners. The essay offers students an opportunity to have in-depth learning about the accounting conceptual framework and positive accounting theory, to critically evaluate the limitations of the existing accounting regime, and to acquaint students with the influence of accounting on values of business investments and the evolving nature of accounting standards. REQUIREMENTS Readings Bloom, M. (2009) “Accounting for Goodwill”, Abacus, Vol. 45, No.3, pp. 379-389 (available on Blackboard under the “Research Essay” link) Lonergan, W. (2009) “Discussion of Bloom”, Abacus , Vol.45, No.3, pp. 390-396 (available on Blackboard under the “Research Essay” link) Background Imagine that you work for one of the large accounting firms in Sydney. The Partner to whom you report has just read the articles by Bloom (2009) and Lonergan (2009) and requests that you prepare a report for him covering the matters detailed below:
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ACCT3563, Session 1, 2010 (a) A short summary of the arguments in Bloom (2009) for a new financial statement known as the Market Capital Statement (MCS) and Lonergan’s (2009) comments on the MCS (4 Marks) . (b) Compare and contrast the MCS method and accounting for goodwill permitted in AASB 3 and AASB 138, and list all the differences between existing GAAP and the MCS. ( 3 marks) . (c) Critically evaluate the MCS against the IASB’s conceptual framework (3 marks) . (d) What economic incentives or political considerations might motivate companies and/or users of financial statements to lobby against an MCS being imposed on them by the IASB? Refer to Positive Accounting Theory in your answer. (4 marks) (e) Select three companies from the list provided below and prepare a draft MCS statement for each of them for the years ended 30 June 2005, 2006, 2007, 2008, and 2009. (I) Comment on the value of goodwill in the MCS compared to the book value of goodwill in the balance sheets of each company (2 marks) . (II)
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ACCT3563 - THE UNIVERSITYOF NEW SOUTH WALES Australian...

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