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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 55 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


Retained Earnings




NZL partly acquiring SIL


NZL Limited acquires a 60 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


Retained Earnings







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 $2013. Both companies apply a 10% p.a. straight-line method of depreciation in relation to these assets.





  1. During the current year, NZL sold inventory to NIL Ltd for $18,000 recording a profit of $3000. NIL has not resold any of these items.


  1. During the current financial year, SIL Ltd sold inventory to NZL Ltd for $23,000 recording a profit of $4000. NZL has since resold half of these items.


  1. During the current year NIL sold inventory to SIL Ltd for $15,000 recording a profit of $2000. SIL has resold all of these items.



  1. During the current financial year, NIL paid $2000 to NZL Ltd for services rendered.



  1. Goodwill from investment in SIL has not been impaired while the goodwill from the investment in NIL had an impairment loss of 10 per cent during the current financial year.


Non-controlling interests

  1. The group has adopted the policy of measuring non-controlling interest at he fair value of total acquisition and recognising full goodwill.



Tax Implications

  1. You may ignore tax implications for the purposes of this assignment.




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.



Complete the Excel template and submit after renaming it as follows:






Part 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.



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)

  1. 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 Guidance

  1. a) 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); 
  2. b) Three marks are allocated for professional appearance, style, grammar and spelling;
  3. 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;
  4. d) The marking rubric provides further guidance as to how your newsletter article will be assessed. To download the marking rubric click here.


  1. e) Download and use the template (Word file) provided. Click here to download the template.




Please submit the completed template (Word file) after renaming it as follows:





The digital files for Assignment 2

You can access all the digital files for this assignment by clicking here.






Subject Business Pages 2 Style APA



Team work is one of the primary reasons for the success of several organizations. Many organizations prefer team work to individual work because it makes the task more easy and achievable for a person when working in a team. A competent team should possess six fundamental traits namely: committed, communicate well, selfless, enthusiastic, adaptable, and have a vision (Hollander, 2013). The team must support the values and vision of the company and work jointly in alignment with the organization goals and purpose. The team must also cooperate and support each other. It is important to note that a good team holds high trust amid the team members and stay out of the brambles of gossips. On the other hand, leadership plays a greater role at the various stages of team development including forming, storming, norming, and performing. During team development, a leader acts as a director, coach, collaborator, and visionary. The team leader must understand these four leadership skills, practice, and then refine the skills needed at each point of team development. After comprehending the skills, the team leader establishes effective actions strategies for individual leadership development. Also, the team leader must understand and comprehend members’ backgrounds, beliefs, and values to give precise and amicable direction to all members.

A number of problems may arise at each stage of team development, for example, at the forming stage, some members may find it hard to understand the project to detail, therefore, fail to know their role as well the goals of the project. The team leader may also fail to provide a clear direction in regards to the project. At the storming stage, the members bear diverse opinions on what ought to be done as well as how it ought to be done – which leads to conflict within the team (Egolf & Chester, 2013). The team leader also faces a challenge by ensuring that the team members learn to listen to one another as well as respect their ideas and differences. Conversely, at norming, the members could experience a challenge with the data flow amid them. Finally, the performing stage has got a number of problems including low productivity, problems in decision-making as well as conflicts among members. All these problems can be solved through effective communication and setting rules which must be adhered to by all the team members. The team members need to coordinate well to avoid such kinds of menaces. At the performing stage, members must be considerably task oriented and vastly individual oriented to ensure group identity, morale, unity as well as loyalty.

Firstly, the transition team can improve its work together through implementing recognition programs. The team can encourage quality work via rewarding the subgroups for good performance. It can also establish incentives to work, through offering praise as well as issuing little tokens of appreciation which bear the projects name. The team ought also to encourage social activities by building a sense of camaraderie through the formulation of group activities such as gathering for a coffee in a nearby café. Additionally, the transition team can also boost team work abilities through highlighting clear roles for each member and identifying the existing problems as fast as possible before they cause uncertainties (Fiore & Georganta, 2017). Some of the recommendations that could be made for new and existing teams within the organization may include a clear outline of the project’s purpose so that every member can understand what is expected of him or her. Secondly, the team must exercise a sense of unity and accept others opinions for the betterment of the project’s vision. However, it is worth to note that team work can substantially lead to the achievement of an organization’s goals.



Egolf, D., & Chester, S. (2013). Forming storming norming performing: Successful communication in groups and teams. IUniverse.

Fiore, S. M., & Georganta, E. (2017). Collaborative Problem-Solving and Team Development: Extending the Macrocognition in Teams Model through Considerations of the Team Life Cycle. In Team Dynamics Over Time (pp. 189-208). Emerald Publishing Limited.

Hollander, E. P. (2013). Organizational leadership and followership. Social Psychology at Work (Psychology Revivals): Essays in Honour of Michael Argyle, 69.



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