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ACC4028 Applied Accounting Coursework Answer

BIRMINGHAM CITY BUSINESS SCHOOL

COURSEWORK

MODULE TITLE:  Applied Accounting      

MODULE CODE:  ACC4028

COURSEWORK INSTRUCTIONS

This assignment requires you to complete a written report on the regulatory framework and the application of an International Accounting Standard to a given scenario.

This coursework comprises 50% of the overall module mark.

The learning outcomes assessed in this coursework include:

2.    Apply and discuss the principles of appropriate accounting standards including the regulatory framework

Guidance on completing this assignment.

The work submitted must be your own work.

You should submit your work via the electronic portal on Moodle.

Your submission should consist of the following:

1.    A written report on the regulatory framework

2.    Completion of the financial statements taking into consideration the additional information

3.    A written account of the discussion points in part c and d

4.    Assessment cover sheet

You should use Microsoft Office Word or PDF (for any written element) and Excel (for numerical elements).

Please note – no other office software is compatible with the university’s system.

Marks will be awarded for the accuracy of your work along with the quality of your written presentation. You should view your notes and textbooks to arrive at a suitable format for your solution.

Presentation, grammar and spelling

a.    Please make sure the document is submitted as a PDF or MS Word

b.    Presentation requirements

•    Written work should be justified

•    Font: Arial

•    Size: 12

•    Spacing: 1.5

•    Include page numbers at the bottom of the text

•    In text referencing and a list of references at the end

•    Marks will be awarded for an appropriate format

c.    All submitted work will be submitted subject to Turnitin

d.    Remember to include the cover sheet (see attached)

Part A

The regulatory framework

Explain the process that was followed in order to be able to issue International Accounting Standard (IAS) 8 Accounting Policies, Changes in estimates and correction of errors.

You should make reference to:

•    the process undertaken and the various organisations and individuals involved in the process

•    the historical background of the accounting standard in your explanation including the reason for any historical changes, and

•    any current developments surrounding IAS 8

Word count: 450 words

(Total Part A: 40 marks)

Part B

International Accounting Standard 8:

Accounting Policies, Changes in Accounting Estimates and Errors

Malinslee Ltd has been trading for many years. You are provided with an extract of the financial statements for the year to 31st December 2018 and 2019.


The above financial statements, and the prior year comparatives, are provided before any adjustments required to reflect the new information provided below.

The following additional information has also been provided:

1.    The directors of the company have decided that more reliable and relevant information would be presented by changing the disclosure of the property, plant and equipment depreciation.

Currently, depreciation is charged in full to cost of sales. The new disclosure requires the depreciation charge to be allocated between cost of sales (50%), administration expenses (30%) and distribution costs (20%).

The depreciation expense included in the 2018 and 2019 financial statement is as follows (both years have been charged to cost of sales):

        2018     £45,000

        2019    £40,000

Retained earnings at 1st January 2018 were £370.

2.    Whilst preparing its financial statements for the year to 31st December 2019, it has been discovered that, due to double counting one of its off-site warehouses, the closing inventory for 2018 was overstated by £20,000.

3.    The provision for trade receivables has previously been calculated at 2% of year trade receivables, based on the last twelve months of trading, the directors wish to change the percentage of the provision to 5%.

The entry for the current year allowance has not been entered into the financial statements. The adjustment is considered to be an administration expense.

Required:

a)    For the additional information provided above:

i.    State the accounting treatment for each of the notes, as required by IAS 8.

ii.    State whether the adjustment is

•    a change in policy,

•    a change in estimation or

•    a correction of a prior period error

Include in your explanation, whether any necessary adjustment is to be applied retrospectively (re-statement of previous year financial statements) or prospectively (only making changes for the current year and in the future) (20 marks)

b)    Prepare the financial statements for the year to 31st December 2019, showing restated comparative figures for the year to 31st December 2018.

You should use a format suitable for publication, including comparatives. (20 marks)

c)    The objective of IAS 8.

The objective of this standard is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors.

The Standard is intended to enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements over time and with the financial statements of other entities. (para 1, IAS 8, IASB 2003)

Discuss whether, in your opinion, the objective of IAS 8 been met by requiring the adjustments in part b).

Word count: 150 words (10 marks)

d)    In order to be able to draft a set of financial statements an accountant needs to follow the requirements of various accounting standards, a number of which you are studying (have studied) as part of your Introduction to Financial Accounting and Applied Accounting modules. Discuss whether you believe that the use of accounting standards makes financial accounting / reporting more precise or more chaotic. Full understanding of the process indicated


COURSEWORK REQUIREMENTS

1.    You are required to produce a written report of not more than 750 words, an application working and notes.

Given below are relevant extracts from the Faculty policy on word limits:

The word limit is for your coursework assignment, and it does not cover material which is submitted as an appendix.  Material submitted as an appendix provides a background to your coursework, but it will not be marked as part of your answer unless specified in the assessment brief.  Also, it is important that you cross-refer between the main text of your assignment and any appendices, in order to demonstrate the linkage and that the appendices do not constitute additional material unrelated to that included in the body of your assignment.

Your bibliography will not be included in the word count, but where you quote within the text of your assignment (e.g. Smith & Jones identified that…) this will be included in the word count.

Answer

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