1. This is an Individual Coursework and please remember to include your student number in the heading of your work.
2. This coursework is based on three different scenarios covering various financial accounting topics, including IFRS standards and the conceptual framework (there are three separate elements overall). The coursework is marked out of 100. PLEASE NOTE THAT YOU MUST ANSWER ALL THREE OF THESE ELEMENTS.
3. You must use Word to complete this assignment and you are only permitted to upload one document to Canvas. If you submit more than one document, then only the final one submitted prior to the submission date and time will be marked. Please use a clear font (Arial 11 point is recommended) and tables where appropriate. If you source material from any other publication or website, you must cite your source and include it in a list of references at the end of your work. Use the Harvard referencing system to reference your work.
4. This is an academic coursework. In terms of format, your work should be well structured, clearly presented and adequately referenced, making use of suitable headings and sub-headings within the text. It is recommended that you also use page numbers and a table of contents page. A comprehensive bibliography is expected. You may also make use of appendices where appropriate.
5. Work limit 2,000 words maximum and the maximum word count for each question is also shown
6. For Questions a and c, students are required to write their answers in the form of essay, including introduction, main body and conclusion.
7. Computations should be presented in the clear format. Marks will be given for presentation and use of the clear layout for each computation.
ANSWER ALL THREE PARTS OF THE QUESTION:
a. The financial manager of Hull plc has recruited you to provide trainings on various accounting standards.
You Are Required To:
Describe how an asset impairment loss is determined and explain how IAS 36 deals with the recognition and measurement of the impairment of assets with reference to academic literature.
[Maximum 650 words]
Total 30 Marks
b. Mr. Luis Rodriguez is the financial manager of Hull plc, a UK company which is located in the east of London.
Hull Plc has the following inventory transactions:
Day 1 Opening inventory nil
Day 2 Purchased 50 units at £15 per unit
Day 3 Sold 20 units at £35 per unit
Day 4 Purchased 60 units at £17 per unit
Day 5 Purchased 80 units at £30 per unit
Day 5 Sold 30 units at £40 per unit
You Are Required To:
i) Apply the Average costing method to each transaction and calculate the closing value of inventory.
ii) Prepare the report to critically evaluate the LIFO and FIFO inventory valuation methods and advise which method is better. In addition, explain which method Hull plc should use to remain IAS 2 compliant.
iii) The Financial Manager of Hull Plc needs your advice on IAS 38. You are required to explain why it is necessary to distinguish between research and development expenditure and how this distinction affects the accounting treatment.
iv) Following the financial manager’s request, you need to explain the criteria that need to be satisfied before expenditure can be recognised in the balance sheet as intangible assets. Also, explain how the criteria is applied to the recognition of separately purchased intangible assets, intangible assets acquired in a business combination and internally generated intangible assets. In your discussion, you are required to discuss IAS 38.
v) The Hull plc decides to adopt straight-line depreciation on production equipment. The straight-line depreciation is charged in periods of operation, but if the production equipment is not in active use then no depreciation is charged. The financial managers of Hull plc justify this on the grounds that the economic benefits of the inactive production equipment are not being consumed. Some equipment can remain inactive for many years, although money is spent maintaining them during these periods. The financial manager requires advice as to whether this depreciation policy is in accordance with IAS 16 Property, Plant and Equipment.
[Maximum 700 words]
Total 40 Marks
c. Financial manager at Hull plc asks you to consider the following statement:
‘The Conceptual Framework sets out the fundamental concepts for financial reporting that guide the Board in developing IFRS Standards.
Discuss critically how the conceptual framework guides the development of IFRS’s with reference to academic literature.