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Assignment 2 - 110.309 Advanced Financial Accounting
110.309 Advanced Financial Accounting
Assignment 2: New Zealand Limited (NZL)
This email provides you with the information and instructions for Assignment 2. This assignment comprises two parts, Part A on consolidation and Part B on fair value.
Part A
You are on an internship with the Accounting Team at New Zealand Limited (NZL). As you have studied consolidations in your advanced financial accounting paper at Massey University, the Accounting Team has requested your assistance in preparing the consolidated financial statements of NZL and its subsidiaries for the year ended 31 March 2016.New Zealand Limited (NZL) is a major trading company. It embarked on an ambitious expansion programme in 2015 including the acquisition of two other companies, North Island Limited (NIL) and South Island Limited (SIL). All three companies have financial years 1 April to 31 March
NZL partly acquiring NIL
New Zealand Limited (NZL) acquired a 60 per cent interest in North Island Limited (NIL) on 1 April 2015 for $2 million. All assets and liabilities are fairly valued in the books of NIL limited. The equity section on the balance sheet of NIL at the date of acquisition appears below:
$
Share Capital
2,000,000
Retained Earnings
600,0002,600,000
NZL partly acquiring SILNZL Limited acquires a 55 per cent interest in South Island Limited (SIL) on 1 April 2015 for $1.6 million. All assets and liabilities are fairly valued in the books of SIL limited. The equity section on the balance sheet of SIL on 31 March 2015:
$
Share Capital
1,600,000
Retained Earnings
800,0002,400,000
End of year financials
The trial balances of the three entities as at 31 March 2016 can be downloaded in a spreadsheet by clicking here.
Additional information:
Plant and equipment
1. On 1 April 2015, NZL Ltd sold plant to NIL for $15,000. The plant cost NZL $10,000 on 1 April $2014. Both companies apply a 10% p.a. straight-line method of depreciation in relation to these assets.
Inventory
2. During the current year, NZL sold inventory to NIL Ltd for $18,000 recording a profit of $2000. NIL has not resold any of these items.
3. During the current financial year, SIL Ltd sold inventory to NZL Ltd for $23,000 recording a profit of $3000. NZL has since resold half of these items.
4. During the current year NIL sold inventory to SIL Ltd for $15,000 recording a profit of $1000. SIL has resold all of these items.
Services
5. During the current financial year, NIL paid $1000 to NZL Ltd for services rendered.
Goodwill
6. Goodwill from investment in SIL has not been impaired while the goodwill from the investment in NIL had an impairment loss of 30 per cent during the current financial year.
Non-controlling interests
7. The group has adopted the policy of measuring non-controlling interest at a proportionate share of the acquiree’s identifiable net assets.
Tax Implications
8. You may ignore tax implications for the purposes of this assignment.
Instructions:
Prepare the consolidated financial statements for NZL and its controlled entities as at 31 March 2016. You have been provided with an Excel template for entering the $ amounts for the items in the consolidated financial statements. To download this Excel template click here.
Submission
Complete the Excel template and submit after renaming it as follows:
C12207077_110309Ass2_Jieyu_Liu.xlsxPart B
You have recently been seconded to the technical department of LMNOP, a large accounting firm and asked to contribute to a newsletter for clients. The aim of ‘News Brief’, the newsletter, is to provide updates and advice on accounting standards and their application.
The partner in charge of the technical department has asked you to focus on NZ IFRS 13, which defines fair value, sets a single framework for measuring fair value, and requires disclosures about fair value measurements.
Required:
Prepare a short article for inclusion in News Brief which:
1. Discusses the differences between the various levels in the fair value hierarchy and whether values produced under all levels should be described as ‘fair values’; and
(30 marks)
2. Reviews The Warehouse Group 2015 Annual Report to illustrate the application of fair value accounting. You should identify at least five different items for which fair value has been applied and discuss the valuation approach and the input levels used for each item.
(20 marks)
Further Guidancea) Your answer to (1) above should include at least two references other than the prescribed text and IFRS 13. Five marks are allocated for relevance, quality and correctness of your citations and reference list (News Brief uses APA-6 conventions);
b) Three marks are allocated for professional appearance, style, grammar and spelling;
c) As per the “Required†above, this is to be a short article. Part B of this assignment has a word limit of 600 words. Answers which exceed this limit may be penalised up to 20% of the marks available;
d) The marking rubric provides further guidance as to how your newsletter article will be assessed. To download the marking rubric click here.
e) Download and use the template (Word file) provided. Click here to download the template.
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| Subject | Business | Pages | 10 | Style | APA |
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Answer
Condition
Gastrodilation Pruritus
Definition of Word Parts
Gastro= stomach
Dilated= stretching
Pruritus= itching
Gastrodilation pruritus is also known as “expanded stomach” or Axe’s disease. Dr. Axe is the doctor who discovered that the expansion of the stomach, and the resulting skin itching was as a result of eating carbohydrates and fatty meals too fast (Weichselbaum, 2012). Bloating occurs when there is no room for effective digestion; hence gas is trapped back in the stomach and intestines.
This medical condition is non-communicable. It features an expanded gastrointestinal system, thereby expanding the surrounding skin as well which is why itching is experienced. Food products such as carbohydrates need sufficient time in the stomato (stomach) and entero (intestines) so that digestion can take place effectively. Unfortunately, when an individual eats too much at once, the food is forced to move at a much faster pace, hence preventing the necessary acids from processing the food to forms that can be digested (Weichselbaum, 2012).
The patient will present with stomato edema, bowel emphraxis, frequent emesis, and excessive eructation with a distinct smell. Patients complain of stomato erethism.
This medical condition may affect anyone, especially those who are attending feasts as it is during such an occasion that people overeat without giving themselves ample time for digestion (Sullivan1, 2012). However, this condition is also very common in older individuals who have weakened systems, hence cannot produce sufficient stomach acids for digestion. In this case, they may experience it more often even without eating too much. All it takes is for them to eat carbohydrates. Children are also more predisposed to this condition as their digestive system is yet to fully develop (Sullivan1, 2012). Therefore, when they eat foodstuff that they are not used to, the condition may be experienced.
This medical condition is diagnosed through various ways. First, the physician may look at the general appearance of the abdomen. If it looks protruded, and the skin appears tight, then Gastrodilation pruritus is suspected (O’Shea, 2010). This is usually as a result of the bloating as gas is restricted in the digestive system. The restriction is also due to the obstruction of wastes from being excreted. Second, since this condition is accompanied by frequent eructation, the physician may watch out for this (O’Shea, 2010). The gas is often accompanied by a distinct smell, and this may be a good determinant of the condition. Third, the physician may palpate the abdomen so as to get a sense of how it feels. With this condition, the abdomen feels hard as the organs within are dilated (O’Shea, 2010). Fourth, considering the restrictions from the swelling organs, another diagnosis may be made by considering the breathing of the patient. Usually, the breathing pattern is faster and labored as the lungs are restricted from expanding to their usual extent. Generally, according to O’Shea (2010, p. 19) “Other symptoms include bloody or dark stools, chest pain, fatigue, vomiting (possibly blood), anaemia, difficulty swallowing, gastrointestinal bleeding and unexplained weight loss.”
The treatment procedures for this illness are quite simple. First, the patient should be advised to exercise more often as this will increase the body temperature in the intestines as well as encourage effective digestion (Laliberte, 2015). Therefore, gas will be expelled hence offering relief. Second, the patient should be given more water as this will encourage the function of fibers. Fibers are effective in encouraging food digestion (Laliberte, 2015). Also Laliberte (2015, p. 33) states “Separate small meals and snacks by 90 minutes to 2 hours, giving food time to move through your system.”Lastly, the physician may provide relief medication which will aid in the release of gas, hence offering quick relief.
Luckily, there are no disabilities linked to this condition. The discomfort experienced may be bad, but after a few days of proper eating, the patient is expected to experience relief from the gas and non-digested food material.
References
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Laliberte, R. (2015). Bloating. Prevention, 67(12), 33-37. O'Shea, L. (2010). Diagnosing indigestion. Practice Nurse, 40(10), 17-25. Sullivan1, S. N. (2012). Functional Abdominal Bloating with Distention. ISRN Gastroenterology, 1-5. doi:10.5402/2012/721820 Weichselbaum, E. (2012). Does bread cause bloating?. Nutrition Bulletin, 37(1), 30-36. doi:10.1111/j.1467-3010.2011.01943.x
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