Financial Services

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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
Student Written Assessment

Business Unit/Work Group	Financial Services
Qualification Code	FNS50217	Qualification Title	Diploma of Accounting
Unit Code/s	FNSACC514	Unit Title/s	Prepare Financial Reports for Corporate Entities
Assessment Task Title	Unsupervised Assessment
Student Name	Student SIS ID
Assessor Name	Date

AssignmentTutorOnline

 

Student Guide for Written Assessment
Overview of Assessment	This assessment involves preparing a company book of reports from interim financial reports.
Task/s to be assessed	Students must complete the following tasks:  Part A: Perform end of year adjustments on the interim reports  Part B: Prepare the book of reports including notes  Part C: Make a presentation to shareholders  Part D: Prepare a report for shareholders
Time allowed	This assessment is to be completed over a period of 6 weeks
Location	Students will complete this assessment in their own time.
Decision making rules	To receive a satisfactory outcome for this assessment, all reports must be correct and presented in a professional manner.
Assessment conditions	This is an open book assessment. Students can use the textbook as well as financial reports for listed companies for guidance. Students can present their adjusted reports to their lecturer to check they are correct before proceeding. Lecturers can provide guidance as needed.
Resources required	Textbook Additional reading provided Financial reports of any listed company the student wishes to access
Results/Re assessment	Students will be resulted as Satisfactory or Not Satisfactory for this assessment. In order to achieve a satisfactory result, all presented reports must be correct and professionally displayed. Students will be notified of their result via the Learn site. If a student receives a Not Satisfactory result, they will have one chance to resubmit their assessment to achieve a Satisfactory result.

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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
Prepare Financial Reports for
Corporate Entities
Unsupervised Assessment
Elevated Enterprises Ltd provide elevator and escalator components to a variety of clients. They have approached
you to prepare their book of reports and have provided you with their initial Income Statement and Balance Sheet as
at the 30th June, 2018.

Elevated Enterprises Ltd
Income Statement for Year Ending 30 June 2018
Revenue
Sales	4,350
Rent Received	180
Interest Received	75
Dividends Received	70
Profit on Sale of Investments	70	4,745
Expenses
Cost of Goods Sold	1,550
Stock Loss	100
Bad Debts	53
Administration Expenses	1,415
Directors Fees	200
Audit Fees	135
Interest on Mortgage	170
Interest on Debentures	100
Interest on Loan	40
Interest on Leased Equipment	27
Depreciation on Plant & Equipment	150
Depreciation on Buildings	80
Amort Lease	100	4,120
Net Profit	625
Tax	191
Net Profit After Tax	434

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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT

Balance Sheet for Elevated Enterprises as at 30 June 2017 and 2018
Assets	2018	2017
Inventories	2,050	1,650
Accounts Receivable	3,450	3,190
Patents and Trademarks	150	150
Goodwill at Cost	400	400
Accumulated Impairment Goodwill	-65	335	-65	335
Investments	2,300	3,060
Plant and Equipment at Cost	5,200	4,700
Accumulated Depreciation Plant and Equipment	-1,070	4,130	-920	3,780
Leased Pland and Equipment	1,000	1,000
Accumulated Amortisation on Leased Plant and Equipment	-300	700	-200	800
Land at Fair Value	4,000	3,500
Buildings at Cost	2,000	2,000
Accumulated Depreciation Buildings	-340	1,660	-260	1,740
Deferred Tax Asset	33	24
18,808	18,229
Liabilities
Bank Overdraft	200	21
Accounts Payable	3,291	3,161
Current Tax Payable	200	210
Deferred Tax Liability	120	120
Accrued Annual and Long Service Leave	100	80
Accrued Expenses	100	90
Secured Bank Loan Due 23 February 2017	375	600
Leased Liability	390	534
Interest Only Mortgage on Land and Buildings Due 30 June 2023	3,000	3,000
7% $100 Debentures Due and Payable 25 June 2022	1,000	1,000
8,776	8,816
Net Assets	10,032	9,413
Shareholders Funds
Issued Capital – Fully Paid Ordinary Shares	7,000	7,000
Dividend Equalisation Reserve	400	400
Asset Revaluation Reserve	980	480
Retained Earnings at 30 June 2017	1,533	1,533
Plus Profit	434
Less Interim Dividend Paid	-175
Less Final Dividend Paid (From 2017)	-140	1,652
10,032	9,413

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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
You have also been provided with the following additional information.
a) Amounts shown in the financial statements are to the nearest thousand.
b) The write-off of stock due to water damage is a material item and is an allowable tax deduction. The
amount shown was not covered by insurance.
c) Directors met after balance day and have recommended a final dividend of 5.5 cents per share, payable
on the 19th of December, 2018 subject to approval at the AGM.
d) A final dividend of $140,000 was paid on 31/1/2018 from the previous year’s profits.
e) The tax rate is 30%. The tax effect journal entries have already been posted to the ledger accounts for
the year ended 30 June, 2018. You will need to show the note for tax expense.
f) Directors have agreed to transfer $350,000 from the dividend equalisation reserve account. The entry
for this has not yet been posted.
g) Land has been revalued upwards by a total of $500,000 on 30/6/2018. Ensure you reflect this correctly
in your PPE disclosure note and in your Statement of Comprehensive Income. Ignore any tax effects.
The revaluation was conducted by independent valuers, based on current market conditions.
h) After conducting and impairment test as specified in the standard, goodwill is to be impaired by
$40,000 on 30/6/2018. No entry has been made for this yet.
i) All dividends are unfranked.
j) One director received $50,000 and the other directors $30,000 each for their services.
k) The building is subject to an impairment test. The expected cash flows for the next 5 years are $392,000
per annum. The average cost of capital for the company has been calculated at 12%. Round all
calculation figures to the nearest dollar. Round the final impairment value to the nearest thousand. The
entry for this impairment has not yet been entered in to the books and the impairment is not an
allowable tax deduction.
l) Cash receipts from customers total $4,037,000 for the year.
m) Actual cash payments to suppliers, employees and directors total $3,640,000 for the year, this includes
the payment to auditors
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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
n) Patents and trademarks were acquired on 30/6/2017 and will expire in 10 years. The entry for the
amortisation (straight line) has not yet been entered in the books. The amortisation on patents and
trademarks is not an allowable tax deduction.
o) The leased plant and equipment was acquired on 30 June, 2015 at the present value of $1,000,000. An
initial ‘upfront’ payment of $200,000 was made and payments have been made at $170,000 per annum
with an implicit rate of 5% per annum with a residual value of $81,668 due with the final payment in
2020. The journal entry apportioning the interest and liability repayment has already been made for
the year ended 30 June, 2018.
p) No plant and equipment was sold during the period.
q) Investments at a cost of $760,000 were sold during the year, the profit earned in non-taxable. The
market value of the remaining investments at 30 June, 2018 was $2,300,000. It is the directors policy
to carry all investments at market value, they are generally not held for resale.
r) Administration expenses include the adjustments for accrued expenses and accrued annual and longservice leave.
s) The increase in provision for annual and long-service and the increase in accrued expenses have
increased the amount of the future tax account balance from 2017 to 2018.
t) There are 3,500,000 fully paid ordinary shares on issue at 30/6/2018.
u) The inventories include $100,000 of samples and showroom display items.
v) Show Earning per Share in your report.
w) All loans and debentures are secured by a floating charge over the company’s assets. Interest rates are
variable except where stated.
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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
Part A
Use the additional information provided to adjust the Income Statement and Balance Sheet given for the year ended
2018.
When you have made the necessary adjustments, check your net profit and net assets figures with your lecturer to
confirm you have done the adjustments correctly. You need to have all of the figures in your reports correct in order
to pass this assessment.
Part B
Prepare the General Purpose Financial Statements for the year ended 30 June, 2018 suitable for presentation to the
shareholders of Elevated Enterprises Ltd. Your statements must comply with the Australian Accounting Standards,
Corporations Law and International Financial Reporting Standards.
Your reports must be professionally presented and include the following:
 Company Cover Sheet
 Contents Page
 Statement of Comprehensive Income
 Statement of Financial Position
 Statement of Cash Flows
 Statement of Changes in Equity
 Appropriately numbered notes including, but not limited to:
o Significant Accounting Policies
o Reconciliation of Tax
o Reconciliation of Cash Used in Operating Activities to Operating Profit after Tax
o Lease Commitment
 All calculations must be included as an attachment
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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
Part C
Organise a Skype session with your lecturer via the link in the course site. During this Skype session, your lecturer will
play the part of the shareholders of Elevated Enterprises Ltd and you will be required to give a PowerPoint
presentation on the performance of Elevated Enterprises for the year ended 30 June, 2018.
Your PowerPoint presentation must include the four reports as well as any significant notes. You are also required to
use some charts and graphs to highlight any parts of your report which are significant to shareholders. Your
presentation should last 3-5 minutes and you must also be prepared to answer any questions the shareholders may
have at the end.
Part D
It has become apparent that many shareholders have concerns about what they saw in the financial statements,
many of which are due to the fact that the shareholders don’t have a background in accounting. Write a report to
the shareholders which addresses the following concerns which were raised.
 Some shareholders know that the company tax rate is 30%, however for this year it appears tax was
paid at nearly 60%. Explain taxation legislation and how the income tax figure was calculated as well
as when tax is reported and paid.
 There are concerns about the directors choices of audit firm, explain the directors duties in relation to
conflict of interest and confidentiality when choosing an auditing firm.
 Explain the material items which were disclosed in the reports.
 Some shareholders are concerned about the accounting software used by Elevated Enterprises Ltd,
explain the features of an integrated computer accounting system.
 Previous reports were presented in a different format, outline the different format options available for
the reports.
 Outline how Elevated Enterprises Ltd handles leave provisions.
 Describe the options available for calculating depreciation and amortisation.
 Many shareholders are concerned about the cash flow for Elevated Enterprises Ltd, however they are
happy that despite poor cash flow, cash is still in credit. Explain double entry bookkeeping and how a
credit cash account is different to a credit bank balance.
Submit your General Purpose Financial Statements (including attachments), PowerPoint presentation and
Shareholders Report via the Learn site.
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Prepare Financial Reports for Corporate Entities
VET ASSESSMENT
Assessment Outcome
Satisfactory: Not satisfactory:
Reassessment details (if applicable):
_______________________________________________________________________________________________
_______________________________________________________________________________________________
Date of reassessment: _____________________________________
(Attach supplementary documentation used in re-assessment)
Reassessment outcome, if applicable:
Satisfactory: Not satisfactory:
Feedback to student:
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________

Student Name	Student Signature	I have been advised of the outcome of this assessment.
Assessor Name	Assessor Signature
Date