Required:Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(b) the costs incurred in extending the network; (7 marks)

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Required:

Discuss the principles and practices which should be used in the financial year to 30 November 2008 to account

for:(b) the costs incurred in extending the network; (7 marks)

更多“Required:Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(b) the costs incurred in extending the network; (7 marks)”相关问题

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(c) At 1 June 2006, Router held a 25% shareholding in a film distribution company, Wireless, a public limitedcompany. On 1 January 2007, Router sold a 15% holding in Wireless thus reducing its investment to a 10%holding. Router no longer exercises significant influence over Wireless. Before the sale of the shares the net assetvalue of Wireless on 1 January 2007 was $200 million and goodwill relating to the acquisition of Wireless was$5 million. Router received $40 million for its sale of the 15% holding in Wireless. At 1 January 2007, the fairvalue of the remaining investment in Wireless was $23 million and at 31 May 2007 the fair value was$26 million. (6 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.

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第2题

(d) Additionally Router purchased 60% of the ordinary shares of a radio station, Playtime, a public limited company,on 31 May 2007. The remaining 40% of the ordinary shares are owned by a competitor company who owns asubstantial number of warrants issued by Playtime which are currently exercisable. If these warrants areexercised, they will result in Router only owning 35% of the voting shares of Playtime. (4 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.

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第3题

5 Financial statements have seen an increasing move towards the use of fair values in accounting. Advocates of ‘fairvalue accounting’ believe that fair value is the most relevant measure for financial reporting whilst others believe thathistorical cost provides a more useful measure.Issues have been raised over the reliability and measurement of fair values, and over the nature of the current levelof disclosure in financial statements in this area.Required:(a) Discuss the problems associated with the reliability and measurement of fair values and the nature of anyadditional disclosures which may be required if fair value accounting is to be used exclusively in corporatereporting. (13 marks)

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第4题

(c) On 1 May 2007 Sirus acquired another company, Marne plc. The directors of Marne, who were the onlyshareholders, were offered an increased profit share in the enlarged business for a period of two years after thedate of acquisition as an incentive to accept the purchase offer. After this period, normal remuneration levels willbe resumed. Sirus estimated that this would cost them $5 million at 30 April 2008, and a further $6 million at30 April 2009. These amounts will be paid in cash shortly after the respective year ends. (5 marks)Required:Draft a report to the directors of Sirus which discusses the principles and nature of the accounting treatment ofthe above elements under International Financial Reporting Standards in the financial statements for the yearended 30 April 2008.

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第5题

4 The transition to International Financial Reporting Standards (IFRSs) involves major change for companies as IFRSsintroduce significant changes in accounting practices that were often not required by national generally acceptedaccounting practice. It is important that the interpretation and application of IFRSs is consistent from country tocountry. IFRSs are partly based on rules, and partly on principles and management’s judgement. Judgement is morelikely to be better used when it is based on experience of IFRSs within a sound financial reporting infrastructure. It ishoped that national differences in accounting will be eliminated and financial statements will be consistent andcomparable worldwide.Required:(a) Discuss how the changes in accounting practices on transition to IFRSs and choice in the application ofindividual IFRSs could lead to inconsistency between the financial statements of companies. (17 marks)

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第6题

3 Johan, a public limited company, operates in the telecommunications industry. The industry is capital intensive withheavy investment in licences and network infrastructure. Competition in the sector is fierce and technologicaladvances are a characteristic of the industry. Johan has responded to these factors by offering incentives to customersand, in an attempt to acquire and retain them, Johan purchased a telecom licence on 1 December 2006 for$120 million. The licence has a term of six years and cannot be used until the network assets and infrastructure areready for use. The related network assets and infrastructure became ready for use on 1 December 2007. Johan couldnot operate in the country without the licence and is not permitted to sell the licence. Johan expects its subscriberbase to grow over the period of the licence but is disappointed with its market share for the year to 30 November2008. The licence agreement does not deal with the renewal of the licence but there is an expectation that theregulator will grant a single renewal for the same period of time as long as certain criteria regarding network buildquality and service quality are met. Johan has no experience of the charge that will be made by the regulator for therenewal but other licences have been renewed at a nominal cost. The licence is currently stated at its original cost of$120 million in the statement of financial position under non-current assets.Johan is considering extending its network and has carried out a feasibility study during the year to 30 November2008. The design and planning department of Johan identified five possible geographical areas for the extension ofits network. The internal costs of this study were $150,000 and the external costs were $100,000 during the yearto 30 November 2008. Following the feasibility study, Johan chose a geographical area where it was going to installa base station for the telephone network. The location of the base station was dependent upon getting planningpermission. A further independent study has been carried out by third party consultants in an attempt to provide apreferred location in the area, as there is a need for the optimal operation of the network in terms of signal qualityand coverage. Johan proposes to build a base station on the recommended site on which planning permission hasbeen obtained. The third party consultants have charged $50,000 for the study. Additionally Johan has paid$300,000 as a single payment together with $60,000 a month to the government of the region for access to the landupon which the base station will be situated. The contract with the government is for a period of 12 years andcommenced on 1 November 2008. There is no right of renewal of the contract and legal title to the land remains withthe government.Johan purchases telephone handsets from a manufacturer for $200 each, and sells the handsets direct to customersfor $150 if they purchase call credit (call card) in advance on what is called a prepaid phone. The costs of selling thehandset are estimated at $1 per set. The customers using a prepaid phone pay $21 for each call card at the purchasedate. Call cards expire six months from the date of first sale. There is an average unused call credit of $3 per cardafter six months and the card is activated when sold.Johan also sells handsets to dealers for $150 and invoices the dealers for those handsets. The dealer can return thehandset up to a service contract being signed by a customer. When the customer signs a service contract, thecustomer receives the handset free of charge. Johan allows the dealer a commission of $280 on the connection of acustomer and the transaction with the dealer is settled net by a payment of $130 by Johan to the dealer being thecost of the handset to the dealer ($150) deducted from the commission ($280). The handset cannot be soldseparately by the dealer and the service contract lasts for a 12 month period. Dealers do not sell prepaid phones, andJohan receives monthly revenue from the service contract.The chief operating officer, a non-accountant, has asked for an explanation of the accounting principles and practiceswhich should be used to account for the above events.Required:Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(a) the licences; (8 marks)

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第7题

Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(c) the purchase of handsets and the recognition of revenue from customers and dealers. (8 marks)Appropriateness and quality of discussion. (2 marks)

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Required:Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(b) the costs incurred in extending the network; (7 marks)

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