Financial Accounting

1203 Words Aug 20th, 2012 5 Pages
FACULTY OF BUSINESS AND LAW

ACFI2002 – FINANCIAL ACCOUNTING
SEMESTER 2, 2012
ASSIGNMENT 01

Student Name: Tran Thi Ngoc Hanh
Student Number: C3173300

Part I: Accounting Standard AASB138 Intangible Assets provides guidelines for accounting treatment of research and development costs for financial reporting purposes. Answer the following questions based on AASB138 and ‘Framework for the Preparation and Presentation of Financial Statements’. (85 marks)
Part I: Accounting Standard AASB138 Intangible Assets provides guidelines for accounting treatment of research and development costs for financial reporting purposes. Answer the following questions based on AASB138 and ‘Framework for the Preparation and Presentation of Financial
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Therefore, company usually have to agree on a contract to make sure that the ratio of debt to total assets be below a certain level (to protect the debt holders). Therefore, in a case that, company fails to maintain that level, they may have incentive to either inflate assets or deflate liabilities. So, in this case, manager prefers to recognise research expenditure as an asset.

iii. A company expected to realise a huge profit increase in this financial year. (15 marks) – expense
As we know that: profit = revenue – expense

Part II. The following two questions relate to heritage assets and biological assets (65 marks)
Part II. The following two questions relate to heritage assets and biological assets (65 marks)

1. Olive Twist Ltd has olive farms in Newcastle where the trees had a fair value less selling costs of $4 600 000 on 30 June 2011. During the year ended 30 June 2012, olives with an estimated market value of $300 000 were picked. The costs of picking, sorting and packing amounted to $100 000 and were paid in cash. The olives eventually sold on 2 July 2012 for $430 000.
In addition to the harvest of olives, the value of the olive trees changed over the period. The fair value less selling costs of the olive farm increased to $4 800 000 on 30 June 2012. During the reporting period ending 30 June 2012, employee expenses, fertilizers, lease expenses and other expenses amounted to $

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