Module Code: MAN00002M-A
Module Title: Advanced Financial Accounting
Module Leader: Roba Ashraf Abdelbadie
Open/Closed Assessment: Open
Maximum Word Count: 1500
Release Date: Autumn Term Week 9
Submission Deadline: TBC
A penalty of five marks will be deducted for late submissions that are made within the first hour after the deadline. Submissions that are more than one hour late but within the first 24 hours of the deadline will incur a penalty of ten marks. After the first 24 hours have passed, ten marks will be deducted for every 24 hours (or part thereof) that the submission is late for a total of 5 days. After 5 days it is treated as a non-submission and given a mark of zero. The consequences of non-submission are serious and can include de-registration from the University.
If you are unable to complete your open assessment by the submission date indicated above because of Exceptional Circumstances you can apply for an extension. If unforeseeable and exceptional circumstances do occur, you must seek support and provide evidence as soon as possible at the time of the occurrence. Applications must be made before the deadline to be considered.
Full details of the Exceptional Circumstances Policy and claim form can be found here: https://www.york.ac.uk/students/studying/progress/exceptional-circumstances
If you submit your open assessment on time but feel that your performance has been affected by Exceptional Circumstances you may submit an Exceptional Circumstances Affecting Assessment claim form by 7 days from the published assessment submission deadline. If you do not submit by the deadline indicated without good reason your claim will not be considered.
Please take proper precautions to safeguard your work and remember to make backup copies of your data. The University provides all its students with storage space on the University server and you should save and back up any work in progress on this server on a regular basis. Computer failure and theft of your equipment or storage media are not considered exceptional circumstances and extensions cannot be granted for work lost for these reasons.
Word count requirements
The word count for this assignment is 1500 words.
You must state on the front of your assignment the number of words used and this will be checked.
The main text for this assignment must be word-processed in Arial, font 12, double spacing, minimum 2cm margins all around.
You must observe the word count specified in this assignment brief. The School has a policy of accepting variations to the recommended word count of plus or minus 10%.
What does this mean for you?
Markers will mark your work up to the word count maximum plus 10% and then will stop marking; therefore all words which are in excess of the word count plus 10% will not be marked.
Where your word count is more than 10% below that specified, it is likely that this will result in a lack of analytical depth or relevant content, which will be reflected in the mark assigned.
What is in the word count?
The word count includes:
– the main text, including in-text reference citations and quotations.
The word count does not include:
– Appendices. These may be used to include supporting data, which may be too detailed or complex to include as a Table. They are not a device to incorporate material, which would otherwise cause you to exceed the word limit.
– Title page
– Contents page
– Abstract/executive summary
– Tables, figures, legends
– Reference lists
This assignment consists of two questions.
Candidates should answer all parts of all questions.
On 1 April 2018, Epsilon accepted delivery of a large and complex machine from a supplier. The agreed purchase price for the machine was £2 million. Epsilon received 10% trade discount.
On 1 April 2018, Epsilon incurred direct costs of £50,000 in handling the machine and £25,000 in installing the machine at its premises. Although the machine was ready for use from 1 April 2018, Epsilon did not bring the machine into use until 30 April 2018.
During April 2018 Epsilon incurred costs of £200,000 in training relevant staff to use the machine.
The directors of Epsilon estimate that the machine is capable of being usefully employed in the business until 31 March 2023, and that it will have no residual value at that date. Epsilon uses the straight-line method for calculating the depreciation. On 31 March 2023, Epsilon will be legally required to decommission the machine using the original supplier. The directors of Epsilon estimate that the cost of safely decommissioning the machine on 31 March 2023 will be £3 million. At an appropriate discount rate, the present value of the cost of decommissioning is expected to be £2.043 million.
Show with appropriate calculations how the above events would be reported in the financial statements of Epsilon for the year ended 30 September 2018.
The associated costs and activities for the year ended 31 May 2020 are as shown below:
Discuss, with the reference to IAS 38: Intangible Assets, the correct accounting treatment for all the costs incurred in relation to the Soak can for the year ended 31 May 2020. (Hint use the definitions of “research” and “development”).
(20 Marks) (300 words)
The company purchased an oil company during the year. As part of the purchase agreement, oil has to be supplied to the company’s former holding company at an uneconomic rate for a period of five years. As a result, a provision for future operating losses has been set up of £155m, which relates solely to the uneconomic supply of oil. Star Trek is also facing a legal claim for £300 million from a competitor who claims they have breached a patent in one of their processes. Star Trek has obtained legal advice that the claim has little chance of success and the insurance advisers have indicated that to insure against losing the case would cost £15 million as a premium.
Discuss whether the provision has been accounted for correctly under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Consider yourself the financial controller of Alpha. The managing director, who is not an accountant, has recently attended a seminar and has raised the following questions for you concerning issues discussed at the seminar:
Provide answers to the queries raised. You should justify your answers with reference to relevant IFRS Standards and academic literature.
(60 marks) (Word 1050).
END OF ASSESSMENT
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