ACC3002 Financial Accounting & Reporting 2022
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ACC3002 Financial Accounting & Reporting
Diploma Programmes
January 2022
Continuous Assessment 1
INSTRUCTIONS TO STUDENTS:
1. This assignment consists of FOUR written questions. Answer ALL questions. You are required to provide ALL workings clearly. Narrations for journal entries MUST be provided.
2. Type your answers in a Word document using Times New Roman, font size 12 and submit via eGlobal. Assignments submitted through other ways (e.g. through personal email or hardcopy to the lecturer) will not be accepted.
3. Open your document in eGlobal after upload to ensure that the document submitted is complete and in order.
4. You should receive a confirmation email from eGlobal after submission.
5. Your submission should include a cover page that follows the following format:
Module Code & Module Name
Diploma Name
CA 1 (Individual Assignment)
Name
SIM Student Number
6. Do not type the questions into your submission.
7. Deadline: 20 January 2022 (Thursday), 11 59am.
8. Be reminded that a one-day late submission is subject to a 20% mark deduction. Submissions that are late by more than one day will NOT be graded.
9. CA1 is an individual assignment and should be worked upon independently. Any form of plagiarism and/or collusion will be penalised.
Important Note:
Students caught for Plagiarism and/or Collusion will be subjected to heavy penalties.
Plagiarism & Collusion
(extractedfrom Student Handbook)
3.7.2 Plagiarism/Collusion
Plagiarism is theft of intellectual property. It is a form of lying, stealing and mistreating others. Students are reminded that plagiarism is a serious offence subject to the Institute’s disciplinary procedures.
Plagiarism can mean any one ofthe followings:
• direct copying of phrases and/or passages without a reference and/or quotation marks;
• paraphrasing another writer’s work in your written work without citing the reference;
• making a direct reference to an author you have not read although you may have read about him. The correct way is to reference the secondary source you have actually read rather than referencing the original which you have not read;
• copying the work of another student, in part or in whole;
• handing in assignment that has already been submitted for assessment in the same or any other course.
Please note that it is also a disciplinary offence for students to allow their work to be plagiarised by another student.
A student found guilty of any of the above offences will render the student liable for disciplinary actions which may result in the voiding and adjustments to the continuous assessment grade, and may result in expulsion from the Institute.
Question 1 (26 marks)
Sun Telecom Ltd is a telecommunications provider. The company entered into a contract on 1 October 2021, under which the customer paid $730 for a handset bundled with a 200-minute talk time plan at $59 per month.
The customer will pay the monthly subscription of $59 at the end of each month. The contract lasts for 24 months.
Assume that the fair values of the handphone and two-year mobile service are $1,000 and $52 per month, respectively.
Required:
(a) Identify the respective performance obligations in this contract. (4 marks)
(b) How much revenue should be recognised in the 3 months ended December 2021. Show
all your workings clearly in a table and round off answers to the nearest cent, where
applicable. (10 marks)
(c) Prepare the necessary journal entries for:
(i) The inception ofthe contract on 1 October 2021; and (ii) The three months ended 31 December 2021.
Show all your workings clearly. (12 marks)
Question 2 (28 marks)
Stone Age Construction Pte Ltd entered into a construction contract to build a commercial building for Bintang Ltd for $9,200,000. Construction commenced on 1 January 2021.
The following details relate to the construction project as at 31 December 2021:
$'000
Progress billing to-date 5,520
Cash receipt to-date 5, 120
Costs incurred to-date 4,032
Estimated total costs 6,400
Stone Age Construction Pte Ltd accounted for the contract using the percentage-of-completion method.
Required:
(a) For the year ended 2021, calculate the percentage of completion to-date, revenue
recognised for the year and the profit recognised for the year. (10 marks)
(b) Prepare the necessary journal entries at the end of 2021 to record the above transactions
relating to the contract. (18 marks)
Question 3 (16 marks)
On 1 April 2017, Far West Organisation Ltd bought a piece of freehold land at the cost of $3,980,000 using a bank loan. The bank loan is to be repaid in a bullet sum at the earlier of
disposal or 10 years.
The land was subsequently revalued to $4,100,000 on 1 October 2020.
On 31 March 2021, the land was sold for $4,250,000 cash.
Far West Organisation has a financial year end of 31 December.
Required:
Prepare all the necessary journal entries to record the above for the years ended:
(a) 31 December 2017. (2 marks)
(b) 31 December 2020. (4 marks)
(c) 31 December 2021. (10 marks)
Question 4 (30 marks)
Graham Ltd purchased a building on 1 January 2015 at the cost of $9,000,000. The building was depreciated using the straight-line method over the 40-year lease period starting on 1 January 2015. There is no residual value estimated.
On 1 January 2021, the building was revalued to $7,800,000 by an independent valuer. The lease period was not affected by the revaluation.
Required:
(a) Prepare journal entries to record the revaluation on 1 January 2021.
(16 marks)
(b) Prepare all necessary journal entries to account for the depreciation of the revalued
building for the year ended 31 December 2021.
(14 marks)
Show all your workings clearly and round off answers to the nearest dollar, where applicable.
2022-01-19