Advanced Corporate reporting

Advanced Corporate Reporting (ACC5CRE)

Group Assignment 20%

Due date: Week 9, Friday (5.00pm), 28 September 2018

1. The assignment is a compulsory group assignment and is worth 20% of the marks of the subject.

2. The group must be comprised of three (3) students.

3. You must keep a copy of your assignment (in hard copy form) until you receive the marked original back. If you assignment is lost and you fail to provide us with a copy of the assignment when requested, we will assume the assignment has not been written and the penalties for late assignment will be applied.

4. The assignment must be presented in a professional manner (word processed).

5. Submissions must be properly referenced (Harvard Reference Style).

6. Plagiarism is a serious academic misconduct; all students involved will be referred to the University’s appropriate authority.

7. Late submission will incur a penalty of one mark per day including the weekend. Late submission must be lodged with Course Coordinator only.

8. Application for extensions must be lodged with the Course Coordinator before due date in writing for granting an extension (medical problems etc.).

9. Word limit : 1,500 words

Question 1 (50 Marks)

Company boards, executives, and management are investing more and more time and resources on issues of sustainability - such as carbon (greenhouse gas emissions), energy efficient technology, water use, cleantech, and biodiversity, to name just a few. An important part of the global push towards sustainability practices involves a need to account for, and report on, sustainability - sometimes referred to as environmental, social, and governance (ESG) reporting

“Corporate social responsibility (CSR) is an issue of growing interest, and the reporting of socially responsible activity is becoming more prevalent as investors, customers, and other stakeholders demand greater transparency about all aspects of business. As the importance placed by stakeholders on socially responsible behavior has increased, the attitude toward CSR has changed dramatically over the last few decades” (Kim, Park and Weir, 2012, p. 761).

Reference:

Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? The Accounting Review, Vol. 87, No. 3, pp. 761-796.

Required:

(a) Critically discuss the above statement.

(b) Identify a company which is listed on the ASX, collect recently published annual report from the company webpage and discuss what types of social responsibility information the company provides in the annual report? Do you think that your chosen company’s CSR disclosures are adequate for the stakeholders of the company? (Please note that each group needs to select different company after consultation with the tutor).

Note 1: Word limit for Question 1 is 1,000.

Note 2: Professional marks will be awarded for format, clarity and expression.

Note 3: The presentation of Question 1 should include Introduction, Discussion, Conclusion and List of references.

Note 4: You will be able to obtain electronic copies of articles by visiting La Trobe University Library website.

Question 2 (Word limit = 500 words) (50 Marks)

Merinda Ltd commences its operations on 1 July 2017. One year after the commencement of its operations (30 June 2018) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2018. The statements are prepared before considering taxation. The following information is available.

Merinda Ltd

Statement of Comprehensive Income

for the year ended 30 June 2018

	$	$
Sales Revenue Less Cost of Goods Sold Gross Profit		7,625,000 2,585,000 5,040,000
Expenses:
Administrative expenses	529,200
Salaries	725,000
Provision for doubtful debts	126,000
Long service leave	252,000
Warranty expenses	151,200
Depreciation expense – Machinery	201,000
Insurance	138,600
		2,154,000
Accounting profit for the year		2,917,000

Merinda Ltd

Assets and Liabilities as disclosed in the Statement of Financial Position

for the year ended 30 June 2018

	$	$
Assets
Cash		103,700
Inventory		577,800
Receivables (net)		378,000
Prepaid insurance		51,900
Machinery – cost	2,010,000
Less accumulated depreciation	201,000
		1,809,000
Land		2,268,000
Total assets		4,283,900
Liabilities
Payables		403,200
Provision for warranty expenses		100,800
Loan payable		975,000
Provision for long service leave		88,200
Total liabilities		1,567,200
Net assets		2,716,700

Other information:

· All administration and salaries expenses incurred have been paid as at year-end.

· The amount of $163,800 long service leave expense has been paid.

· The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes.

· Amounts received from sales, including those on credit terms, are taxed at the time of the sale is made.

· Warranty expenses were accrued and, at the year-end, actual payments of $50,400 had been made (leaving of accrued balance of $100,800). Deductions for tax purposes are only available when the amounts are paid and not as they accrued.

· Insurance was initially prepaid to the amount of $190,500. At the year-end, the unused component of the prepaid insurance amounted to $51,900. Actual amounts paid are allowed as a tax deduction.

· Merinda Ltd has some land which cost $1,470,000 and which has been revalued to its fair value of $2,268,000.

· The tax rate is 30 per cent.

Required:

· Compute the taxable income or loss.

· Complete the Taxation Worksheet on the next page in accordance with AASB 112 Income Taxes.

· Prepare the applicable journal entries at 30 June 2018 to account for tax using the Balance Sheet method.

Merinda Ltd

Taxation Worksheet as at 30 June 2018

Item	Carrying amount $	Tax Base $	Deductable Temporary Difference $	Taxable Temporary Difference $	Tax Expense $	Revaluation Surplus $	Tax Payable $