ACCT3102 EXTERNAL REPORTING CASE STUDY

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ACCT3102 EXTERNAL REPORTING CASE STUDY
This assignment information should be read in conjunction with the material provided in relation to the lecture for Topic 6: Case Study Development and Communication.
Please note Section 5.5 of the ECP: Students must submit this assignment to achieve a passing grade in ACCT3102. Failure to submit, even with a mark of more than 50% in the two examinations, will result in a grade of 3.
CONSULTATION IN RELATION TO THE CASE STUDY
To ensure consistency of information, ALL questions relating to the case study must be submitted on the Blackboard Discussion Board Case Study Thread. Questions will be answered promptly when using this platform. We will not be answering content related questions in relation to this assessment item in consult or via email. The only exception to this will be during the Case Study Lecture.
Case Study
LIMIT 3 pages (excludes Appendix and the Reference List)
WEIGHTING 20% (40 marks)
REQUIREMENTS:
You are required to individually prepare business advice to the directors of Snow Protek Ltd. The following professional writing protocols have been adopted by your firm for correspondence with all clients:
• All client correspondence is to be single line spaced on A4 paper with 2.5cm for all margins.
• Font to be used is Times New Roman font size 11.
• All calculations should be rounded to the nearest whole dollar amount/percentage.
Important notes relating to referencing:
• Harvard referencing is to be adopted for in-text reference, other than for accounting standards (see note below), and for the reference list.
• Ensure you use the most recent version of AASB 138 Intangible Assets as issued in December 2015.
• For the in-text referencing from the accounting standards, you must cite the specific provisions including paragraph from the relevant AASB. One of the following two examples should be adopted: AASB 102:11 or AASB 102 para. 11. However, do not reproduce significant parts of the regulation as this would not be appropriate when presenting your advice to a client. The focus should be on interpretation and application of the standard, with a concise, well-structured analysis for your client with key referencing to critical elements of the appropriate accounting standards.
• A ‘Formal Report’ structure with an Executive Summary and Table of Contents is NOT required given the brevity of the required information.
• This assessment must be the sole work of the individual student and not done in collaboration with other students. Students may discuss with one another the general principles of the Accounting Standards; however, you may not collaborate/discuss on the specifics of the proposal or how the Standards are relevant to the proposal.
Case Study
The following business situation has been presented to your firm for advice.
Snow Protek Ltd is a small company. Because of a successful research project the company expects rapid growth over the next five to ten years. As a reporting entity, Snow Protek Ltd is required to comply with all accounting standards.
As shown in the following extract from its draft Statement of financial position as at 30 June 2016 prepared by the company, Snow Protek Ltd has two separate classes of intangible assets:
Intangible Assets as at 30 June 2016:
Brand name (at directors’ valuation June 2013) $800,000 Research and development asset at cost $1,710,000
Snow Protek Ltd has provided the following additional details relating to each item.
Brand Name
In January 2013, Snow Protek Ltd purchased a successful brand of sun hats for $500,000. The hats, called Snowsafe, are specially designed for use in snowy conditions. Based on years of experience in the industry, Snow Protek Ltd’s Managing Director (MD) valued the brand name conservatively at 80% of its estimated value in use ($1,000,000) on 30 June 2013. The brand name has not been amortised because, as the MD says, “there is no telling just how long these hats will sell”. Over the last two years, numerous competing products have emerged under similar brand names and several of those brands have sold to new owners.
In the 2015-2016 financial year, Snow Protek Ltd spent $300,000 on advertising and marketing of its Snowsafe brand and sales have increased slightly. The MD wishes to increase the value of the brand name by $300,000 to $1,100,000 because any decline in sales has been avoided.
Research and Development
The research and development asset relates to two projects:
Project 1: Face Cream – Research and Development asset – $1,260,000
Project 1 is concerned with a new form of face cream that, within 1 minute of application, provides an effective barrier to wind burn for a period of 12 hours. There is great excitement about the potential of this product. Snow Protek Ltd is currently building production facilities for the new face cream and expects these facilities to be completed by 1 July 2016 at which time commercial production will commence. Further details on these costs are as follows.
Costs incurred by Snow Protek Ltd in previous accounting periods – $800,000 The prior periods’ costs included:
• $100,000 related to research on the effect of UV rays on various skin types;
• $200,000 was spent on investigating methods to increase the effective protection time of the face cream.
• $500,000 was spent on developing a face cream that could be easily applied and had a pleasing smell and texture.
In the prior periods no market research was conducted but the MD of Snow Protek Ltd was confident of obtaining large sales in Australia and New Zealand.
Cost incurred by Snow Protek Ltd in the current accounting period (2015/2016) – $460,000
The $460,000 costs incurred during the current period relate to the successful development of techniques to produce the face cream in large, economically viable quantities. During the current period, an external consultant undertook the first market research of the face cream’s potential sales. The research results conclusively confirmed that there is a large, highly profitable market for the cream in both Australia and New Zealand.
Project 2: New Fabric – Research and Development asset – $450,000
Project 2 relates to the design of a new fabric for ski jackets that Snow Protek Ltd has been investigating for a number of years. Costs incurred in prior periods of $300,000 relate to research on different types of technologies potentially available to make a highly insulating but non-sweaty material. In the current period, an additional $150,000 has been incurred. However, due to economic constraints faced by the company, project 2 was abandoned on the 1 June 2016.
Required:
You represent the accounting firm advising Snow Protek Ltd as to its compliance with AASB 138 Intangible Assets. Comment on all matters relating to the past and current accounting treatment of the intangible assets described above, providing clear explanations to support your answers. This should include comment on the appropriate value of each intangible asset at 30 June 2016 based on the appropriate basis of measurement (cost model, revaluation model or recoverable amount) and discussion on amortization. Your discussion should include comments on any past accounting treatment described above that are not consistent with AASB 138, with the appropriate treatment that should have been adopted.
You recommendations should provide a clear explanation of:
a) how the accounts would need to be adjusted at 30 June 2016 to reflect your analysis and recommendations; and
b) the determination of the carrying amount of the intangible assets recognised in the Statement of financial position of Snow Protek Ltd as at 30 June 2016.
Case Study Marking Criteria and Rubric
LG 1: Be knowledgeable within field of accounting;
• Analysis Brand: Problem is analysed with integration of relevant research of accounting standards and data.
• Analysis R&D: Problem is analysed with integration of relevant research of accounting standards and data.
LG2: Have professional and effective writing skills
• Structure: Written work is logically sequenced with sound paragraph structure, clear and easy to read.
• Clarity of expression: Writing is free of spelling, punctuation and grammatical errors.
• Research and Referencing: Written work is referenced and demonstrates an ability to undertake independent research.
LG 3: Be creative analytical thinkers
• Identification Problem is identified and discussed within relevant context
• Analysis Brand: Problem is analysed with integration of relevant research of accounting standards and data.
• Analysis R&D: Problem is analysed with integration of relevant research of accounting standards and data.
• Conclusion: Consequences are considered, discussed, and conclusion reached.
• Recommendation: Solutions are proposed and justified.
Page | 5
Case Study Marking Criteria and Rubric
Task Mark
Outstanding 5 Very Good
4 Meets Expectations
3 Below Expectations
2 Well Below Expectations
1 Not attempted 0
Identification
Problem is identified and discussed within relevant context 5 All key concepts clearly identified and summarised appropriately. Most key concepts identified. Only the occasional minor error evident. Identifies some key concepts. Some minor, and the occasional major, error evident. Few key concepts identified. Major errors evident throughout. Fails to identify key concepts. Little or no evidence of understanding. Not attempted
Brand Analysis
Problem is analysed with integration of relevant research of accounting standards and data. 5 Evidence of rigorous research of the relevant accounting standards and application of the case details, demonstrated by correct application of all of the relevant sections of the accounting standards with supporting calculations correct. Evidence of rigorous research of the relevant accounting standards and application of the case details, demonstrated by the correct application of most of the relevant sections of the accounting standards with supporting calculations correct. Evidence of sound research of the relevant accounting standards and application
of the case details, demonstrated by the correct application of some of the relevant sections of the accounting standards with supporting calculations mostly correct. Limited evidence of research of the relevant accounting standards and application of the case details, demonstrated by the correct application of few of the relevant sections of the accounting standards. Errors evident in calculations. Inappropriate and/or insufficient research of the relevant accounting standards and application to the case details. Major errors evident in calculations. Not attempted
R&D Analysis
Problem is analysed with integration of relevant research of accounting standards and data. 5 Evidence of rigorous research of the relevant accounting standards and application of the case details, demonstrated by correct application of all of the relevant sections of the accounting standards with supporting calculations correct. Evidence of rigorous research of the relevant accounting standards and application of the case details, demonstrated by the correct application of most of the relevant sections of the accounting standards with supporting calculations correct. Evidence of sound research of the relevant accounting standards and application
of the case details, demonstrated by the correct application of some of the relevant sections of the accounting standards with supporting calculations mostly correct. Limited evidence of research of the relevant accounting standards and application of the case details, demonstrated by the correct application of few of the relevant sections of the accounting standards. Errors evident in calculations. Inappropriate and/or insufficient research of the relevant accounting standards and application to the case details. Major errors evident in calculations. Not attempted
Conclusion Consequences are considered, discussed, and conclusion reached. 5 Conclusion/s clearly demonstrated with all correct decisions and relevant calculations carried forward from decisions made in previous sections. Conclusion/s clearly demonstrated with mostly correct calculations carried forward from decisions made in previous sections. Conclusion/s demonstrated with some correct calculations carried forward from decisions made in previous sections. Analysis demonstrated but with major calculation errors and/or inconsistent with decisions made in previous section. Analysis not demonstrated with calculations incorrect. Not attempted
Page | 6
Task Mark
Outstanding 5 Very Good
4 Meets Expectations
3 Below Expectations
2 Well Below Expectations
1 Not attempted 0
Recommendation
Solutions are proposed and justified 5 Proposed solutions are comprehensively justified. Highly relevant and correct recommendations drawn, with all relevant assumptions, data and evidence considered. Proposed solutions are well justified. Correct
recommendations drawn, with useful assumptions, data and evidence considered. May have some minor exclusions. Some useful solutions proposed. Correct recommendations, with minor errors in consideration and use of assumptions, data and/or evidence. Though not always relevant or justified, some proposed solution/s have been made. Recommendations tend to be incorrect due to major errors in consideration of assumptions, data and/or evidence. Proposed solutions and justification for these are
inappropriate. Incorrect or absent recommendations with little if any reference to relevant assumptions, data and evidence. Not attempted
Structure
Written work is logically sequenced with sound paragraph structure, clear and easy to read 5 Written advice is very well structured, logically sequenced and presented in
a highly professional manner that clearly communicates the intended advice to the client. Full compliance with page limit and formatting instructions. Written advice is well structured and logically sequenced with only the occasional minor formatting error. Presented in a professional manner that communicates the intended advice to the client. Compliance with page limit and formatting instructions. Written advice is adequately structured and sequenced, though it occasionally lacks a degree of professionalism (such as minor formatting errors and/or inappropriate use of headings). Provision of advice mostly takes into account the needs of the client. May have some non-compliance with page limit and/or formatting instructions. Written advice is adequately structured in part, though it lacks a degree of professionalism and/or lacks consideration regarding provision of advice suitable for the needs of a client. There is some non-compliance with page limit and formatting instructions. Presentation and lack of structure detracts from the professionalism of the report. Very little concern regarding provision of advice suitable for the needs of a client.
Compliance with page limits and formatting instructions has largely been ignored. Not attempted
Clarity of expression
Writing is free of spelling, punctuation and grammatical errors. 5 Fluent writing style with expression highly suited to set task. Grammar, spelling and punctuation are accurate. Mostly fluent writing style with expression appropriate to set task. Grammar, spelling and punctuation are mostly accurate with only minor errors evident. Writing style sometimes lacks the clarity of expression but meaning is still apparent. Grammar, spelling and/or punctuation contain more persistent errors. Writing style often lacks clarity of expression, which impacts on the readability of your work. There are some serious grammar, spelling and/or punctuation errors which impact on the readability of some parts of the written advice. Writing style is not suited to
the set task. There are numerous grammar, spelling and/or punctuation errors which significantly impact on the readability of the written advice. Not attempted
Research and Referencing
Written work is referenced and demonstrates an ability to undertake independent research. 5 In-text referencing and the reference list are complete and accurate. In-text referencing and the reference list are mostly complete and accurate with one or two minor errors evident in either in-text referencing or reference list. In-text referencing and the reference list are usually complete with several minor errors evident in either in-text referencing or reference list. Some attempt at referencing but details are either missing or contain more frequent errors. Referencing is absent and/or unsystematic and contains more frequent errors. Not attempted

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