My Assignment Help

HI6025 Accounting Theory And Current Issues Tutorial Questions Answers

Assessment Task – Tutorial Questions

Unit Code: HI6025

Unit Name: Accounting Theory and Current Issues

Assignment: Tutorial Questions

Weighting: 50%

Total Assignment Marks: 50 marks

Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit

Unit Learning Outcomes Assessed:

1. Examine conceptual issues and the sources of authority for the accounting requirements which apply to reporting by Australian companies, including Company Law, International and Australian Accounting Standards, and Stock Exchange requirements;
2. Understand and evaluate different theories of accounting such as positive accounting theory, normative accounting theory, stakeholders’ theory, legitimacy theory, institutional theory, and
different initiatives of relevant global organisations such as GRI, IR;
3. Apply Australian Accounting Standards and Corporate Legislation to the financial reporting processes;
4. Evaluate advanced level financial accounting problems and select appropriate accounting strategies for the accounting entity;
5. Understand different provisions of accounting standards and the compliance requirements of the professional and legal bodies in Australia;
6. Make judgments about appropriate use of accounting standards and accurately apply appropriate
treatments for different advanced level accounting issues;

Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions and submit these answers in a single document.

The questions to be answered are:

Question 3 - Week 3 (11 marks)

TAKULAH Traders Ltd purchased a machine for $650 000 and there was an accumulated depreciation balance of $110 000 at 30 June 2022. Its fair value is assessed at this time, with its first revaluation as

$450 000. The machine’s useful life is expected to be 5 more years and the residual value to be $50

000. On 1 July 2023 the asset’s fair value is $460 000 and the residual value and useful life are expected

to be unchanged (that is, there is 4 years of remaining life).


Provide the journal entries necessary to account for all the above transactions and events up to 1 July 2023, in accordance with AASB 116 if the revaluation is undertaken. (11 marks)

Question 2 - Week 5 (7 marks)

Fitbit Ltd has leased a machine on the following terms:
Date of entering lease
1 July 2019
Duration of lease
5 years
Life of asset
6 years
Unguaranteed residual value
Lease payments inception (at the start)
Annual payments (5)
Implied rate 11.0 %


Determine the Fair Value (rounded off) of the leased asset. (7 marks)

Dainty Ltd has an average weekly payroll of $200 000. The employees are entitled to 2 weeks', non- vesting sick leave per annum. Past experience suggests that 56% of employees will take the full 2 weeks' sick leave and 22% will take 1 week's leave each year. The rest of the employees take no sick leave.


  1. Calculate the expected annual sick-leave expense for Dainty Ltd (on the basis of average salaries). (2 marks)
  2. Provide the journal entry necessary to recognise the sick-leave entitlement expense as it accrues each week. (2 marks)
  3. In the current week an employee with a weekly salary of $600 has been off sick for the first time this year. The employee took 2 days off out of her normal 5-day working week. Assuming that PAYG tax is deducted at 30%, what would the entry be to record the employee's weekly salary (round amounts to the nearest dollar)? (3 marks)

Question 3 - Week 9 (11 marks)

Compaq Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2018. At the beginning of the period Compaq Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 January 2018 Compaq Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2018 Compaq Ltd made a one-for-five bonus issue of ordinary shares out of retained earnings. The last sale price of an ordinary share before the bonus issue was $2.50. At the beginning of the current period Compaq Ltd also had 500 000, $1.00, 5% cumulative preference shares on issue. The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2017 was $1.50 per share.


  1. Calculate the basic EPS amount for 2018. (8 marks)
  2. Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS. (3 marks)

On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.

The exchange rates at the relevant dates are:

1 March 2020A$1.00 = NZ$1.20

1 June 2020A$1.00 = NZ$1.30

30 June 2020A$1.00 = NZ$1.25


  1. Determine the amount in AUD, as at:
    • 1 March 2020; and
    • 30 June 2020.(2 marks)
  2. Prepare the journal entries for the above dates, up to 1 June 2021, showing the amount of exchange gain or loss (5 marks).

Question 3 - Week 11 (7 marks)

The following quote appeared in an article entitled ‘Business and society in the coming decades’,

which was available on the website of McKinsey & Company (accessed in October 2015).

There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”.


  1. Explain the above statement in the context of corporate social responsibility. [Word limit 150-200 words] (3 marks)
  2. Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies? Explain. [Word limit 200 – 250] (4 marks)


Question 1 Journal entry of revaluation 

30.06.2022             Dr. Loss on revaluation A/c                                $ 90000

                               Cr. Asset A/c                                                       $ 90000

(Being asset revalued)

30.06.2023             Dr.Depreciation A/c                                             $ 90000

                               Cr. Accumulated depreciation                                                              $ 90000

(Being depreciation charged)

01.07.2023             Dr. Asset A/c                                                       $ 100000

                              Cr. Loss on Revaluation A/c                                $ 90000

                              Cr. Revaluation Reserve A/c                                $ 10000

(being asset again revalued)

Question 2 Calculation of fair value of leased assets

YearAmountPresent value factorPresent value

The fair value of the leased assets266659

Question 3 Sick leave expense and its accounting

a) Expected annual sick leave expense 

ParticularsPercentage of employeeAverage weekly payrollSick leave expense to be recognized
Employees take 2-week leave56%200000224000
Employees take 1-week leave22%20000088000
Employees take No leave22%2000000
The expense to be recognized312000

b) Journal entry to recognize the expense

Dr. Sick leave Expense A/c$ 312000

Cr. Provision for sick leave expense A/c$ 312000

(Being sick leave expense recognized)

c) Journal entry of the employee

Dr. Provision for sick leave expense A/c$ 240

Dr. Salary expense A/c$ 360

Cr. PAYG tax A/c$ 180

Cr. Employee A/c$ 420

(Being expense recorded)

Dr. Emplyoee A/c$ 420

Cr. Bank A/c$ 420

(Being salary paid)

Question 4 Basic and diluted earnings per share

A) Calculation of basic earnings per share

Earnings available for equity share holders = $ 2000000 – ($ 500000*5%) = $ 1975000

Weighted average equity share holders –

Shares at the beginnings = 900000

Further issued shares for half year = 150000 ( 300000 * 6/12)

Bonus shares = 80000 (1200000*1/5*4/12)

Weighted average equity share = 1130000

Basic Earnings per share = $ 1975000 / 1130000 = $ 1.75 answer.

B) Diluted earnings per share

Diluted earnings per share are the earning per share that is diluted with the securities that are not the part of equities but are part of the other securities but in a letter when any condition is satisfied then such securities are converted in the equity thus we calculate the diluted earnings per share after taking effect of those securities, the concept of the diluted earnings per share is introduced to make fair reporting of the earnings per share (Yu, X., Zheng, H., Sun, L., & Shan, Y. (2020). On the other hand, Diluted earnings per share (Diluted EPS) is earnings made on every share of a public company that is calculated after assuming all the securities are converted into equity shares (Kaltenegger, et al. 2017).

The major security that causes to be the diluted earnings per share is convertible debentures and the share warrants (Yu, Zheng, Sun, L., & Shan, 2020).

Question 5 Adjustment of foreign currency in the value of assets

a) Value of debt and machinery in the Australian dollar

Value in NZ $750000750000
Exchange rate1.21.3
Value in AUD625000576923

b) Journal Rate

01.06.2020Machinery A/c Dr.A$ 576923 
 To New Zealand company /c A$ 576923
30.06.2020Foreign exchange difference A/cA$ 23077 
 To New Zealand company A/c A$ 23077

Question 6 Corporate social responsibility

a) Corporate social responsibility 

Corporate social responsibility is the responsibility of the company in its social environment. A company is surrounded by the social elements a company can no work without the support of the society thus it is required to be necessary for the companies to create a social image in the market and to create a social good image for the better performance in its business activities (Tahmida, & Yasmin,). The business organization is covered with various stakeholders like government, debtors, suppliers, employees, and customers cumulative they form the society in the surrounding of the company. The company has earned from the society and it is the responsibility of the company to provide the same return to the society and the company is responsible not only for the investors but for the whole society (Christodoulou, Clubb, & Mcleay, 2016).

b) Legitimacy of companies under CSR:

The legitimacy is important for the survival of business organizations and for acquiring the resources and benefits for the stakeholders and their support. The legitimacy refers to the process of organization in which the approval of doing the business is getting under different acts from groups of society. The organizations' actions are based on and planned on norms, values, beliefs, and definitions of society. The definition of legitimacy is vital as it includes pragmatic, moral, and cognitive behavior. The pragmatic behavior is related to CSR work and framed in such a manner as the organization gets benefits by considering the societal benefits. The approach of business is based on ethics and values of society which is fulfilled through CSR work. The companies facing the pressure of global interaction and networking between political persons and corporate leaders for discussing the CSR challenges, objectives, standards, and procedures for growing and fulfilling the higher expectations of corporate moral legitimacy act and play a role by CSR communication.

Customer Testimonials