Task:

Question 1 

It is argued that culture (Wong, 2004) and non-compliance with IFRSs (Ali, 2005) are two major barriers to harmonize accounting standards globally.

Required:

(a) Briefly discuss the above statement in the Introduction section. 

(b) Do you agree that culture can be a barrier to harmonize accounting standards throughout the world? Discuss with examples and provide your own comments. 

(c) Do you think that the compliance with IFRS is essential to harmonize accounting standards globally? What are the reasons for noncompliance with IFRS? Discuss with example.

(d) Do you think harmonization of accounting standards is possible? Justify your answer.

(e) Summarise the above questions (a-d) in the Conclusion section.

(f) Provide references (at least 10 articles/sources) in the end of the assignment and use those articles in your writing with references.

Question 2

Penguin Ltd began operations on 1 July 2019. One year after operations, the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2020. However, the statements were prepared for internal purposes but income tax calculations were ignored. Accounting profit before income tax for the year 30 June 2020 of Penguin Ltd amounted to $2,720,000, including the following revenue and expenses.

$Sales 11,760,000

Depreciation expense – Plant and Machinery 201,000

Depreciation expense – Equipment 232,000

Depreciation expense – Furnitures and Fixtures 50,000

Insurance 138,600

Rent of premises 74,000

Other expenses 198,000

Administrative expenses 529,200

Entertainment costs 44,000

Wages 720,000

Long service leave 252,000

Warranty expenses 151,200

Cost of sales 6,450,000

Required:

(i) Compute the Taxable Income or Loss. (using excel spreadsheet).

(ii) Prepare the Taxation Worksheet on the next page in accordance with AASB 112 Income Taxes. (using excel spreadsheet).

(iii) Prepare the applicable Journal Entries at 30 June 2020 to account for tax using the Balance Sheet Method. 

Question 3 

IFRS 3 Business Combinations states that when an acquirer obtains control of a business (e.g. an acquisition or merger) such business combinations are accounted for using the ‘acquisition method’, which generally requires assets acquired and liabilities required to be measured at their fair values at the acquisition date (IAS Plus, 2020).

Required:

Critically justify why does an acquirer need to use fair value measurement methods with regard to IFRS 3?

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