Depicting and explaining the meaning contributed towards Conceptual framework:
The point mainly states that individuals objectively assumes, where fundamental forms of social power is mainly needed, who could trade on the objective of assumption. Moreover, the use of legitimacy in preparing accounts could eventually help in generating accounts, which could be perceived as normal. Moreover, agreeing to the arguments of Hines mainly states that profession attempts to uncover the overall ideas and truths that might help in developing political action to ensure survival of profession. Moreover, the conceptual framework mainly allows CF to improve their decision usefulness for reducing the restrictions on stewardship. In addition, the conceptual framework mainly allows effective comparisons of two companies, within the same industry and past performances (Christensen, Cottrell and Baker 2013).
(a) The straight-line method:
Annual depreciation = (Cost – salvage value)/Estimated useful life
= ($65,000 – $5,000)/6
= $10,000
(b) The sum-of-digits method:
Estimated useful life = 6 years
Sum-of-the-years’-digits method= 21 (1 + 2 + 3 + 4 + 5 + 6)
Depreciation for 2011 = $65,000 x 4/21 = $12,380.95
Note: $65,000 is the depreciable cost (cost – salvage value).
(c) The declining-balance method:
Straight-line rate = 0.17 (1/6)
Declining rate = 0.17
|
Year ending
A |
Book value at year beginning B |
Depreciation expense C = B x 0.17 |
Accumulated depreciation D |
Book value at end of year E = B – C |
|
06/30/2011 |
65,000 |
11,050 |
11,050 |
53,950 |
(d) The units-of-production method:
Estimated total truck to be driven = 246 000 kilometers
Thus, depreciation per service hour = $65,000/246,000 = 0.26 kilometers
|
Year |
Kilometers |
Depreciation |
|
2012 |
28,000 |
$ 7,398.37 |
|
2013 |
34,000 |
$ 8,983.74 |
|
2014 |
42,000 |
$ 11,097.56 |
|
2015 |
55,000 |
$ 14,532.52 |
|
2016 |
68,000 |
$ 17,967.48 |
|
2017 |
19,000 |
$ 5,020.33 |
|
246,000 |
$ 65,000.00 |
(a) Evaluating gross profit to be recognized for each of the three years:
|
Particulars |
2015 |
2016 |
2017 |
|
contract price |
50 |
50 |
50 |
|
Less estimated cost |
|||
|
cost to date |
10 |
28 |
40 |
|
estimated cost to complete |
28 |
12 |
|
|
estimate total cost |
38 |
40 |
40 |
|
Estimated total gross profit |
12 |
10 |
10 |
|
percentage complete |
26.32% |
70.00% |
100.00% |
|
Year |
Profit |
Gross profit |
|
|
2015 |
12,000,000 |
3,157,894.74 |
|
|
2016 |
10,000,000 |
3,842,105.26 |
|
|
2017 |
10,000,000 |
3,000,000.00 |
|
|
Total Profits |
10,000,000.00 |
(b)Preparing journal entries for the 2016 financial year using percentage method:
Journal entries conducted for percentage-of–completion-method
|
Dr Construction in progress Payables, materials, accumulated depreciation and cash (recognizing costs with the contract) |
10,000,000 |
10,000,000 |
|
Dr Construction in progress Dr Construction expenses Income from long term contracts (derived by using the completion time of revenue) |
3,158,400 10,000,000 |
13,158,400 |
|
Dr Account receivables Construction in progress (Part payment provided by the customers) |
12,000,000 |
12,000,000 |
|
Dr Cash Account receivables (Payment received by customers) |
11,000,000 |
11,000,000 |
|
Dr Progress (Construction) Payables, materials, accumulated depreciation and cash (Identifying costs associated with contract) |
10,000,000 |
10,000,000 |
|
Dr Expenses (Construction) Income from long term contracts (revenue recognition is restricted to cost) |
10,000,000 |
10,000,000 |
|
Dr Account receivables Construction in progress (amount received as part payment) |
12,000,000 |
12,000,000 |
|
Dr Cash Account receivables (amount received as part payment from customers) |
11,000,000 |
11,000,000 |
|
Dr Construction in progress Contract liability (adjustments conducted on balance of contract assets and liabilities) |
2,000,000 |
2,000,000 |
Assuming that if the overall stage of completion is not reliably estimated then the overall amount invoiced to customers could eventually increase, where it is essential for net liability to be disclosed.
(a) Identifying the research expenditure and development expenditure recognized as an expense in 2013:
In addition, $50,000 is mainly expected to the overall expenditure, which is conducted on both development and research. Moreover, $40,000 is mainly conducted on research expenditure, while $10,000 is mainly conducted in development of expenditure.
(b) Depicting the research and development expenditure recognized as an expense in 2014:
The overall $12,000 must be recognized, as the expenditure for conducting in research and development.
(c) Stating the expenditure carried forward and reported in financial position at the end of 2013 and 2014:
During 2013, there is no carried forward expenditure was reported in balance sheet, while in 2014 $60,000 was mainly identified as the carried forward expenditure. According to the AASB138 restatements of costs previously expensed is not taken into consideration, which is why $10,000 is development expenditure conducted in 2013 cannot be added.
(d) Preparing journal entries for the amortization of deferred costs in 2015 and 2016:
|
2015 |
Dr Amortization of differed development cost Accumulated Amortization differed cost (Amortization of development costs) |
$6,000 |
$6,000 |
|
2016 |
Dr Amortization of differed development cost Accumulated Amortization differed cost (Amortization of development costs) |
$12,000 |
$12,000 |
|
Particulars |
2016 |
2015 |
|
Deferred Development cost |
6,000 |
6,000 |
|
Accumulated Amortization |
18,000 = (6,000+12,000) |
6,000 |
|
Carrying Amount |
54,000 |
54,000 |
The overall carrying amortization in 2014 is mainly at $24,000 ($60,000- $36,000)
|
2015 |
Dr Impairment loss Accumulated impairment deference development costs (Impairment of deferred development costs) |
$9,000 |
$9,000 |
Reference and Bibliography:
Christensen, T., Cottrell, D. and Baker, R., 2013. Advanced Financial Accounting (No. 2013). McGraw-Hill.
Cortesi, A., Tettamanzi, P., Scaccabarozzi, U., Spertini, I. and Castoldi, S., 2015. Advanced Financial Accounting: Financial Statement Analysis–Accounting Issues–Group Accounts. EGEA spa.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
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