Evaluation and Regulation of Financial Statements - Account Management in Business System - Accounting and Finance Assignment Help

Assignment Task:

• Comprehend accounting as a language of business
•  At your first meeting, decide within your team which student will complete which question.
• It is a good idea that before your first meeting that each team member reads the task so that they are able to present their point of view about the task.
• It is recommended that each group member is allocated a question(s), you should then allocate a different group member to provide feedback on the answer given for each question.
• This is a suggestion only and you can allocate the work differently but keep in mind that every student in your team must participate and answer questions as well as provide feedback to others.
• Students should be allocated a question based on their strengths. Please record details of your first meeting using the document titled ‘Action Plan Template.’
• You should also document who is answering which question and who is providing feedback on that question.
• Set deadlines that group members agree to have their questions and feedback finished and record these details and provide a copy to each team member to ensure they all agree on what was said.

A new company that is preparing to start trading shortly has employed you and your team as graduate accountants. The company, Reliable Mowing Pty Ltd will begin operation on 1 July 2019. The owners of the company do not have much cash and cannot afford to hire an experienced accountant, as a result, you are the only accountants working for the business. As the owners do not have any accounting experience they have asked your team to help determine suitable accounting policies in relation to recording, expensing and reporting of non-current assets and to provide advice regarding the company’s non-current asset treatment and revenue recognition. 

The owners of the company Chris and Ingrid would like you to work with the other three graduates to get the financial records of the business ready in preparation for Reliable Mowing Pty Ltd to start trading. Chris and Ingrid have provided you with some background information regarding the 5 company’s non-current assets and revenue from customers. The group is required to prepare a brief report outlining to the owners which accounting policies have been selected and how certain elements will be treated. Your group is encouraged to refer to AASB 116 Property, Plant and Equipment, AASB 136 Impairment of Assets and AASB 15 Revenue from Contracts with Customers to justify your answer. When referring to the accounting standards to justify your answer, you may reference the paragraph number within the text. 

Required

The owners of Reliable Mowing have a number of questions they need answering. Your job is to produce a report for them. The report should address the following: 

1. Determine the amounts to be recorded in the balance sheet for the newly acquired land, building, and equipment. You shall consider any additional amounts that need to be included in the cost of the land, building, and equipment and justify why or why not they should be included. Include in your answer the journal entry required to record the lump-sum acquisition and any other journal entries if required. Show your calculations. 

2. Choose the most appropriate depreciation method for the buildings and equipment using the information in the case data and justify the reason for each item the depreciation method you select. Calculate the annual depreciation expense to be charged in the accounts of Reliable Mowing Pty Ltd, with respect to the building and equipment for the life of each asset. Please display your results in a table. Students should display results for all methods of depreciation not just for the method selected. 

3. Discuss whether and how the business should account for a revaluation increase and revaluation decrease in buildings and land. Discuss also if an increase or decrease is reversed what will happen. Using the revaluation model calculate the revised amount that the building and land should be recorded in the balance sheet as of 30 June 2021. Include in your answer the general journal entries to recognize the revised value of the building and land. Show your calculations. 

4. Prepare journal entries to account for additional costs incurred on 30 June 2022 and the disposal of old parts. Determine the updated annual depreciation expense after the overhaul of the equipment. Show your calculations. 

5. In three years’ time the owners of Reliable Mowing, Chris and Ingrid approach your team about how to record subsequent costs to the building as of 30 June 2021. They would like to add these costs to the cost of the original asset, which would then be depreciated. Briefly explain whether the costs can be recorded as an asset and discuss the reasons. Identify and discuss which qualitative characteristics of financial reporting would be violated if they are recorded as an asset. 

6. With reference to AASB 15 Revenue from Contracts with Customers, apply the five-step process for revenue recognition in regards to the contract with We Care Aged Care Pty Ltd. Discuss how Reliable Mowing shall recognize the revenue from the contract. Please list each of the five steps and show the calculations.

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