ACCOUNTING THEORY INDIVIDUAL ASSIGNMENT SEMESTER 2 2022
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ACCOUNTING THEORY INDIVIDUAL ASSIGNMENT SEMESTER 2 2022
SUGGESTED LENGTH 300 – 500 words; The word lengths are a suggestion only, i.e., they are NOT strict word limits for each part.
FORMAT The assignment is set up as a MyUni quiz for you to enter responses to each part of the question.
OTHER REQUIREMENTS AND INFORMATION
A forum has been placed on MyUni for questions regarding the assignment. Tutors will not discuss the assignment with you in consultations or tutorial time. Please post any questions you have to that forum so that the responses
provided by staff are accessible to all students in the course.
This assignment is weighted 8% of your final grade.
CASE: UPDATING PHONE-E LTD’S ACCOUNTING POLICY MANUAL
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Phone-E Ltd1 operates in the telecommunications industry. Many years ago, Phone-E Ltd withdrew from the retail market due to intense competition from international suppliers. Recently, Phone-E Ltd decided to re-enter the retail market and has four new products: |
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Item |
Cost $ |
Retail price $ |
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ePhone 22 |
50 |
75 |
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Prepaid SIM 100 GB data, expires after 12 months |
Standard cost 0.50/GB |
180 |
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Prepaid SIM 250 GB data, expires after 12 months |
Standard cost 0.50/GB |
300 |
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Combined ePhone 22 plus prepaid SIM 250 GB data, expires after 12 months |
50 + standard cost 0.50/GB |
350 |
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The prepaid SIM is for the provision of data service over a period of time. Phone-E Ltd had sold similar items a long time ago and the accounting treatment for them is described in the company’s Accounting Policy Manual. The accountant has already updated the Accounting Policy Manual for the sale of the phone and the prepaid SIM cards as separate items. She said, |
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“I am going on holidays now, so try and finish this task before I get back on 20 September. It was very easy; I just changed the name of the Accounting Standard because the accounting treatment is the same under the new Standard.” |
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Extract from Phone-E Ltd’s Accounting Policy Manual Sale of Combined Phone plus prepaid SIM card Recognise all of the consideration received as unearned revenue when received and amortise to revenue as data is used until the expiry date. Recognise any unamortised unearned revenue as revenue when the contract expires. Recognise the cost of providing data as an expense, based on standard cost and the amount of data provided each month. Disclose the policy for accounting for revenue for data service and the carrying amount of unearned revenue at the end of the reporting period. (Reference AASB 118: Revenue). Recognise the cost of the phone as a “customer acquisition asset” at the beginning of the contract. Classify it as an intangible asset and amortise it over three years. Disclose the policy for accounting for cost of phones and the assumption that customers will renew their contracts for several years.
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2022-09-19