NEWCASTLE BUSINESS SCHOOL
ACFI2012 Accounting for Corporate Entities Semester 1, 2021
Weighting: Worth 20% of final mark.
Both the parts of the assignment must have a completed coversheet attached .
The assignment must be attempted and completed individually.
Turnitin reports can be used as evidence by the lecturer in the event that plagiarism is suspected in an assignment. Suspected acts of plagiarism will be forwarded to the Student Academic Conduct Officer (SACO).
Any assignment submitted late will be penalised at a rate of 10% per day of the possible maximum mark for the assignment for each day or part day that the assessment is late. Any assignment submitted more than five days after the due date will be awarded zero marks.
Question 1 (30 marks)
Morning Star Ltd was registered on 1 July 2020, as a company with a constitution limiting the shares that could be offered to 5 000 000 Ordinary shares (including all classes) and 2 000 000 preference shares. The company issued a prospectus dated 1 July 2020 inviting the public to apply for 3 600 000 Ordinary A class shares at $7.00 per share. The terms of the shares on issue are $3.00 on application, $2.00 on allotment and a future call of $2.00.
If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any refunds will be given.
On 30 July, applications for the Ordinary A class shares closed. Applications for 4 000 000 shares in total had been received with applicants for 1 000 000 shares paying the full price and 3 000 000 shares paying only the application fee.
On 1 August, the Ordinary A class shares were allotted on a pro-rate basis with all allotment money owed paid by the 30 August.
The company paid share issue costs of $10,000 for the issuing of Ordinary A shares on 1 September. The share issue costs related to legal expenses associated with the share issue and fees associated with the drafting and advertising of the prospectus and share issue.
The call on the Ordinary A shares was made on 15 Septmber and due by 30 September. All call money was received except for the call on 100 000 shares. The directors met and forfeited the shares on 15 October. On 30 October, the forfeited shares were reissued at $6.50 fully paid to
$7.00. Costs associated with reissuing the forfeited shares totalled $3,000. The remaining money was refunded to the defaulting shareholders on 15 November.
On 1 January 2021, Morning Star Ltd issued via a private placement semi-annual coupon debentures (which pay interest every 6 months) with a nominal value of $500,000. The debenture term is four years and the coupon rate is 6% per year. The market requires a rate of return of 4% per year. The money came in and the debentures were allotted on the same date. The first interest payment will occur on 30 June 2021.
On the same day (1 January), Monring Star issued 300,000 options for class A shares with an exercise price of $6.00 each. It costs $1.00 per option. These options expires on 30 June 2021.
The directors decided on 31 March 2021 to make a bonus issue of the Ordinay A shares at initial issue price to the existing Ordinary A shareholders for every 20 shares of holding.
The company issued via a private placement 400,000 redeemable preference shares of $5.00 each on 30 June 2021. The shares offer a fixed dividend of 6 per cent per annum. The shares are later redeemed to non-voting Ordinary Class B shares at the choice of the shareholders on 30 June 2022.
By 30 June 2021, 220,000 options were exercised. The remaining options are lapsed.
The profit before tax, as reported in the statement of profit and loss for Aileen Ltd for the year ended 30 June 2020, amounted to $185,000, including the following revenue and expense items:
Cost of goods sold
Bad debts expense
Depreciation expense – equipment
Amortisation expense – development costs
Impairment of goodwill
The draft statement of financial position of Aileen Ltd at 30 June 2020 and the statement from last year showed the following assets and liabilities:
Allowance for doubtful debts
Equipment – cost
Accumulated depreciation – equipment
Accumulated amortisation – development costs
Deferred tax asset
Rent received in advance
Deferred tax liability
Question 3 (40 marks)
Select an Australian company listed on ASX and analyse the company’s disclosure quality with regards to the disclosure requirments discussed in Topic 2-6 (Note: please focus on one topic at your choice and clearly indicate which topic you choose in the report).
Please analyse the disclosure quality from the following two aspects based on the annual report of the company selected:
of the users of accounting information.
Format: ReportExpected length: 800 words
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