Introduction for Accounting Assignment Sample
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Accounting terms is always the method implemented by several business and companies to calculate finances. With the help of accounting, business evaluation and estimation are determined. Accounting is a trendy course, and as the world improves in civilization, the need for accounting knowledge to complete tasks are getting much. However, learning accounting terms is not easy because students receive a series of assignment all the time. The accounting assignments are always complex and require the service of an accounting Assignment Help World experts in solving the problems. Accounting is all about theories with calculation, which is essential for future activities. It is these theories that confuse most students when finalizing their report assignments.
Sample 1 : Company name -Maple Leaf Foods
Year end -December 31, 2010
Main business activity of your Company
Solution:
Maple Leaf Foods operates three core businesses:
- Meat Products Group comprises the two leading Canadian brands in fresh and prepared meats,Maple Leaf and Schneiders, as well as Maple Leaf Prime Naturally fresh, seasoned and prepared chicken and a number of leading sub-brands.
- Bakery Products Group caters to f resh bakery business.
- Agribusiness Group provides raw material and essential services to Maple Leaf's fresh and prepared meats facilities
What is the stock exchange trading symbol for your company? - MFI
What was the date that the company posted their audited year-end financial statements on the Sedar.com website. ______
Within a company’s Annual Report, management and its Board will usually provide information regarding the company’sfuture plans and strategies. Please list three of your company's plans, goals or objectives for the future (after the year end) . Other resources you may wish to consult are business publications, news reports etc. (please note your sources of this information)
Solution:
1. Jobs are safe at Maple Leaf Foods
2. Maple Leaf Foods Plans Investments, Plant Closures To Boost Profits
3. Maple Leaf Foods returns to Q3 profit.
Using the results for your company’s most recent year end (unless otherwise indicated), please answer the following questions:
1. What was the Total Revenue of your company? (Pg 58) $ 4,968,119,000
2. Did the total Revenue increase or decrease from the previous year and by how much (show calculation)? Revenue decreased by 4.9%
2010 = $4,968,119,000
2009 = $ 5,221,602,000
Decrease in Revenue = (4,968,119,000/5,221,602,000)-1=4.9%
3. What was your company’s Net Income (loss) and if applicable, Comprehensive Net Income (loss)? $25,822,000
4. What was the value of the company’s Total Assets? $ 2,996,795,000
5. What was the largest Asset reported? (Pg 57) Property, plant and equipment,
6. In which Financial Statement (not notes to the financial statements) would you find information about Dividends? Did your company pay its shareholders any Dividends during the year? If so, how much?
Solution:
Cash flows contains information on Dividends,
Yes, the company paid $0.16 per share to common share holders and $0.18 per share to convertible shareholders.
7. Does the company have any intangible assets? If yes, what type?
Solution:
The company has following types of intangible assets; Goodwill, Customer relationships, poultry quota, software and others.
8. Does your company report Inventory? If so, how much ($)? 319,263,000
9. What type of inventory is it? Finished goods, raw materials, supplies?
Solution:
Included in the cost of inventory are direct product costs, direct labour and an allocation of variable and fixed manufacturing overhead including depreciation.
10. What type of Costing method has the company used to value its Inventory?
Solution:
Inventories are valued at the lower of cost and net realizable value, with cost being determined substantially on a first-in,
first-out basis.
11. What is your company's Largest Expense account in the current year? Cost of sales
12. Are the financial statements consolidated? If yes, with whom are they consolidated?
Solution:
The consolidated financial statements include the accounts of Meat Products Group, Agribusiness Group and Bakery Products Group.
13. Record the Accounting Equation using the amounts ($) from your company’s Financial Statements for both year ends presented in the financial statements.
Solution:
Accounting Equation:
Assets = Liabilities + Equities
For 2010, Accounting Equation is:
Assets = $ 2,996,795,000
Liabilities = $ 1,779,418,000
Equities = 1,217,377,000
For 2009, Accounting Equation is:
Assets = $ 3,057,464,000
Total liabilities = 1,868,414,000
Equity = 1,189,050,000
14. Calculate the following for your company for both years shown on their F/S:
|
|
Most Recent Year End |
Prior Year End |
Show Calculations |
|
Working capital |
= 590,995,000- 1,097,904,000
|
=617,238,000-737,413,000
|
|
|
Current Ratio |
=590,995,000/ 1,097,904,000
|
=617,238,000/737,413,000
|
|
Based on the information above, has the liquidity of your company improved over the prior year? Yes or No and Explain.
Solution:
The liquidity of the company has declined from 0.84 to 0.54. The working
capital has also declined.
15. What are accrued liabilities? Does the company report any accrued
liabilities? If yes, how much and what type(s) (pg.83)?
Solution:
Accrued liabilities $22,546,000
16. Is the company's Balance Sheet a Classified Balance Sheet, how do you know?
Solution:
Yes, the company's Balance Sheet is a Classified Balance Sheet.
17. What is the balance of Retained Earnings or Deficit at year end? (pg
77) $ 346,319,000
18. What was the largest Current Liability reported? Accounts payable and
accrued charges of $521,746,000
19. What was the Total Balance of Long Term Liabilities reported by your
company? (Page 57) $681,514,000
20. Does the company have any commitments or contingencies? If yes, briefly
describe them in your own words (page 87 Note#23]
Solution:
The Company has operating lease, rent and other commitments with total payments of $ 344,144,000.
21. If applicable, what was the balance of the Current Portion of LTD?
$ 496,835,000
22. What is the dollar value reported for Capital stock and how many shares are issued and outstanding?
Solution:
Dollar value reported for Capital stock= $ 1,217,377 ,000
Shares outstanding= 140,044,089
23. What is the amount of the company’s Allowance for Doubtful Accounts at year end? If there is none, where did you look?
Solution:
As at December 31, 2010, the Company has recorded an allowance for doubtful
accounts of
$6.8 million (2009: $10.2 million).
24. Who are the auditors of this company? Are the auditors part of this company’s management and do the auditors dictate which accounting policies this company choses (explain)?
Solution:
Auditor of this company is KPMG LLP. The auditors are not the part of this company’s management and the auditors do not dictate which accounting policies this company chooses.
25. How much Cash has been generated (or used) from (each) Operating, Investing and Financing Activities ?
Solution:
Cash has been generated (or used) from:
Operating Activities= $ 283,668,000
Investing Activities = $ (160,105,000)
Financing Activities= $ (164,490,000)
26. The Balance for Cash at the Bottom of the Statement of Cash Flows statement agrees to what other balance in which Financial Statement?
Solution:
Balance for Cash at the Bottom of the Statement of Cash Flows statement agrees to Cash and cash equivalents in the Financial Statement
27. Go to the F/S Note which supports your Long-Term Assets such as “Property, plant and equipment” and copy it into the following chart, if available:
|
Assets |
Cost (in thousands) |
Accumulated Depreciation per group of assets if available (in thousands) |
Net Book Value (in thousands) |
|
Other long term assets |
$333,833 |
- |
$333,833 |
|
Goodwill |
$ 850,382 |
- |
$ 850,382 |
|
Intangible assets |
$ 53,996 |
- |
$ 53,996 |
|
Property |
$ $ 2,440,066 |
$ (1,402,638) |
$ 1,037,428 |
28. What Depreciation method does your company use to Depreciate their Fixed Assets?
Solution:
Depreciation is calculated using the straight-line basis, which is based on
the expected useful life of the assets as follows:
Buildings 15 – 40 years
Machinery and equipment 3 – 10 years
29. Identify and describe one interesting thing you learned about your company from reviewing their financial statements and the accompanying notes.
Sample 2 :
Accounting Standards - Financial Reporting Assignment Sample
Question
Instructions for the report
AASB 9 (and IFRS 9) Financial Instruments was initially released in
December 2014, but it will become effective from financial reporting
periods beginning on or after January 1, 2018. This will bring
fundamental change to financial instrument accounting when it replaces
the existing accounting standard: AASB 139 (IAS 139) Financial
Instruments: Recognition and Measurement. Entities reporting financial
instruments will need to make several decisions and choices in relation
to the transition to the new standard. Many businesses, especially
banks and other financial institutions, will be affected by the
implementation of the new standard. You can find more information
regarding some changes made by the new accounting standard in 2018 and
industry impact for various entities from the following links:
https://www.pwc.com.au/ifrs/new-standard-financial-instruments.html
https://nexia.com.au/news/accounting/aasb-9-financial-instruments-understanding-the
basics.
This task requires you to prepare a report to evaluate and comment on information regarding financial instruments provided in the annual report of a company listed on the Australian Stock Exchange (ASX). Your comments or evaluation should comply with the requirements of relevant Accounting Standards (AASBs)
Part A
- Discuss the recognition for financial instruments including financial asset, financial liabilities and equity instruments according to relevant AASBs.
- Discuss the measurement of finical instruments according to related to relevant AASBs.
- Identify different types of financial instruments available in the chosen company. Provide at least one example of each type of financial instrument available in the chosen company and specify recognition and measurement of that financial instrument.
Part B
From the perspective of the investors, discuss the potential impact of
the adoption of new AASB 9 on assets, liabilities, financial
performance and one of selected financial ratios (such as debt/equity
ratio) of the chosen company.
Answer
Executive Summary
The increased globalization and cross-border business relations have
made it mandatory for the financial reports of different countries to
communicate a similar language. This is achieved through the
convergence to IFRS which makes interpretation of financial statements
easier and more apt to suit the business requirements. With the
effective implementation of the IFRS, entities could have significant
changes in their financial reporting. Its implementation is not just
restricted to equity instruments or such other long terms loans and
receivables but can extend to a few items on the profit and loss
account also. This report discusses the financial instruments concepts
that are in tune with the IFRS with practical examples from the annual
report of a listed company.
Part A
Financial instrument recognition
IFRS 9 specifies an entity’s classification and its measurement.
Further it relates to financial asset or financial liability and other
contracts to buy or sell non-financial items. IFRS 9 allows an entity
to account for an asset or liability of financial type only when it has
become a party to the contract in accordance with the contractual
provisions affected by the relevant instruments. At the prior stage,
the financial asset recognition and financial liability is made at the
fair value with an addition of the costs of transaction that are
incurred to acquire the asset or issue the liability. Hence, it is
imperative that the recognition should happen at the time when the
entity links to obligations of contractual nature, unlike the other
IFRS where the emphasis is laid on the future economic benefits (Horton
& Serafeim, 2010).
Derecognition of financial asset or removal happens from the financial statements when the expiry happens from that of contractual rights or cash flows or when there is a transfer of the entity and such a transfer leads to the qualification for derecognition (Deegan, 2005).
Derecognition of a financial liability happens when it gets extinguished or in other words, its obligations are discharged or canceled or expires.
1. Measurement of financial instruments according to the relevant AASBs.
Financial Assets : Every entity is expected to follow a business model to manage its financial assets and the cash flows of contractual nature arising and flowing from the assets. Based on this business model, the financial asset recognition is made according to the following criteria:
- Amortized Cost: The financial asset recognition is done at the cost of amortization only if both the conditions listed below are met:
- The asset is held by the entity for the purpose of collection of cash flows of contractual nature and the entity aim is to hold the assets for business purposes.
- Due to the possession of the financial asset, cash flow arises that are solely payments of principal and interest amounts outstanding on the assets (Landsman et. al, 2011)
IFRS 9 also provides guidance on whether the business model is meant for managing the assets or for the contractual cash flows or collection of both.
IFRS 9 states that when the business model changes, then a reclassification of all the financial assets has to be done.
Financial Liabilities: Financial liabilities are ascertained in the following ways:
- At FV through PL: The financial liabilities that are not ascertained at amortized cost fall in this category like derivative instruments, other financial liabilities for trading and such liabilities that the entity has specifically classified to be evaluated at the concept (Lai et. al, 2013).
- At cost of Amortization: All financial liabilities are evaluated at amortized cost leaving those measured at fair value through profit and loss (Maria, 2016).
Equity Instruments: IFRS 9 states that the measurement of equity instruments has to be done at FV. The changes in the equity instruments have to be recognized in the P/L account. The exception being for the equity instruments that the entity has opted to present the variances in the comprehensive income.
IFRS 9 provides the option to designate the instrument of equity at FV through other comprehensive income and this option can opt at the initial time. It is an irrevocable option. This classification will result in all the gains and losses being presented under the other comprehensive income except the dividend income which is seen in the income statement.
IFRS 9 even projects way on when the cost might is feasible for FV and when should not be used for fair value.
Thus these are the measurement criteria laid down in IFRS 9.
2. Different types of financial instruments available in ARB
Corporation Limited
The company selected for discussion and analysis is ARB Corporation
Limited. It deals with the manufacture, design, and other engineering
matter related to motor vehicles.
The performance of the company has been pretty good and in a growing phase. The revenue, profits, and dividends have all seen a steady increase. It needs to be noted that the companies demand for the products are healthy. It is thus well poised for a long-term business growth (ARB Corporation, 2017).
The financial statements notes contain the details and explanations about the financial assets, financial liabilities, and equity. The below has been extracted from the same. The derivatives that are designated as effective hedging instruments are forward exchange contracts and these are carried at fair values (ARB Corporation, 2017).
-
Derivative Financial Instruments are classified under Current
Assets.
Example – Loans & Receivables
Recognition – These financial assets are recognized when the company enters into a contract and the other party is under an obligation and also bound by the performance of the contact.
Measurement – These assets are ascertained at the fair value at inception. The subsequent measurement is at the cost of amortization utilizing the method of interest rate. It is tested for impairment at the date of reporting and any impairment gain or loss is recognized in the profit and loss account (ARB Corporation, 2017). -
Derivative financial instruments are classified under current
liabilities.
Recognition – On similar lines as a financial asset, financial liabilities are recognized upon entering into contractual obligations where both the parties agree to undertake their obligations (Hanlon et. al, 2014). - Measurement – The financial liabilities mentioned above from third parties are measured at the amortized cost since these are fixed sums of liabilities and do not alter with time (ARB Corporation, 2017). Hence fair value measurement is not adopted for these liabilities. The amortized cost is checked for on the reporting date and the amount of liability outstanding is disclosed in the statement.
- Consolidated statement of changes in equity presents the movements and profit or loss made by the company. Retained Earnings recognize and take into account the movements in FV of cash flow hedges, net of tax (Goodwin, 2008).
Example – Cash Flow Hedges
Recognition –
There are derivatives of specific nature that are allotted to be
instruments of hedging and such derivatives are recognized as Cash flow
hedges. For classification under this category of cash flow hedge, the
items that generate the cash flows should be realistic (Hanlon et. al,
2014).
Measurement – The changes in the FV of the derivatives on the reporting date are recognized under the equity account in a reserve of hedging of cash flow. The profit or loss arising is passed on to the Income Statement during the same period when such transactions occur, thus mitigating the chances of fluctuations of exchange rate that would have occurred when hedging is not present (Goodwin, 2008).
Part B
As the adoption of IFRS is at a phased stage, there are a few standards
that are currently in force and being adopted by the company whereas
the other IFRS are not currently to be mandatorily followed but
available for early adoption by the company (Byard, 2011).
As IFRS 9 simplifies the approach towards the financial assets and liabilities classification and measurement in comparison to AASB 139, there could be a change in the recognition, classification, and measurement of financial assets when the standard is adopted (ARB Corporation, 2017). The change is due to the fact that the standard allows the provision of the fair value of gains or losses in income of comprehensive nature that are not held for trading. This would be the impact of the change in the financial assets recognition and measurement (Byard et. al, 2011).
As per the needs of IFRS 9, the financial liabilities accounting that are provided at FV through PL will only be influenced. Hence no influence will be there on the accounting for entity’s for financial liabilities (ARB Corporation, 2017).
With reference to the cash flow hedge, the requirements of IFRS 9 state that a new model has to be developed which is deeply aligned with the risk management and application will be easy. The implementation cost will be reduced but the model requires extended disclosures. Thus the impact of this new hedge accounting model is yet to be assessed by the company as it is applicable from 1 January 2018.
Out of the items discussed above, financial assets like loans and receivables will not be influenced by IFRS 9. Financial liabilities like trade payables, other creditors and liabilities will also not undergo a significant change in the adoption of IFRS 9 (ARB Corporation, 2017).
The debt-equity ratio of the company is currently Nil as the company is not having borrowings as per the statement of financial position.
Hence another ratio is discussed which is a return on equity which is currently 18.83. Upon adoption of IFRS 9, it is possible that due to the recognition of the financial assets and liabilities which are to be concerned at FV through P/L account, the net profits of the company might increase or decrease (ARB Corporation, 2017). This increase or decrease is largely dependent upon the measurement of fair value which is a result of the overall market conditions on the reporting date. Hence the ratio will accordingly increase or decrease.
Conclusion
The significance of IFRS 9 is thus seen in terms of recognition and
measurement of financial assets, financial liabilities, and equity. The
accounting and disclosure for cash flow hedge is the only item that
will require more efforts in terms of the development of a model and
extended disclosures. From the investor perspective, it would be
evident that the adoption of IFRS 9 will bring the financial statements
closer to the current market scenario. Most of the items that were
being shown at the current or historical cost figures will now be
disclosed at fair values and hence the profitability of the company can
either increase or decrease. It will also not facilitate one on one
comparison with the prior year figures due to the changed recognition
and measurement criteria.
References
ARB Corporation. (2017). ARB Corporation Annual report and accounts
2017. Retrieved from:
http://www.annualreports.com/Company/ARB-Corporation-Limited [Accessed
25 May 2018]
Byard, D, Li, Y, & Yu, Y. (2011). The effect of mandatory IFRS adoption on financial analysts’ information environment. Journal of Accounting Research, 49(1), 69-96.
Deegan, C. (2005). Australian Financial Accounting. McGraw Hill, Sydney.
Goodwin, J, Ahmed, K & Heaney, R. (2008). The Effects of International Financial Reporting Standards on the Accounts and Accounting Quality of Australian Firms: A Retrospective Assignment. Journal of Contemporary Accounting & Economics, 4(2), 89-119.
Goodwin, J. & Ahmed, K. (2006). The Impact of International Financial Reporting Standards: Does Size Matter?. Managerial Auditing Journal, 21(5), .460- 475.
Hanlon, D., F. Navissi & G. Soepriyanto (2014). The value relevance of deferred tax attributed to asset revaluations. Journal of Contemporary Accounting & Economics, 10(2): 87-99.
Horton, J. & Serafeim, G. (2010). Market reaction to and valuation of IFRS reconciliation adjustments: first evidence from the UK. Review of Accounting Studies, 15(4): 725-751.
IFRS. (2016). IFRS Application around the world jurisdictional profile. Retrieved from: http://www.ifrs.org/Use-around-the-world/Documents/Jurisdiction-profiles/Australia-IFRS-Profile.pdf [Accessed 25 May 2018]
Lai, C., Lu, M & Shan, Y. (2013).Has Australian financial reporting become more conservative over time?. Accounting & Finance, 53, 731-761.
Landsman, W. R, Maydew, E. L & Thornock, J. R. (2011). The information content of annual earnings announcements and mandatory adoption of IFRS. Journal of Accounting and Economics, 53(2), 34-54.
Maria, W. (2016). The Big Consequences of IFRS: How and When Does the Adoption of IFRS Benefit Global Accounting Firms?. The Accounting Review , 91(4), 1257-1283
