ACFI3001 Accounting Theory And Accounting Management


A year ago you bought shares in an investment company. The investment company in turn buys, holds and sells shares of business enterprises. You want to use the financial statements of the investment company to assess its performance over the past year.

  1. What financial information about the investment company’s holdings would be most relevant to you?
  2. The investment company earns profits from appreciation of its investment securities and from dividends How would the concepts of recognition in the Conceptual Framework apply here?
The manager of Gladstone Ltd is not convinced of the scientific evidence behind climate change, and does not consider it necessary to adopt changes in the company’s operations which would decrease its greenhouse gas emissions. Gladstone Ltd.’s accountant, however, has argued that if the company does not try to decrease its greenhouse gas emissions, the company’s carbon footprint will begin to appear on its statement of financial position with the introduction of a carbon emissions trading scheme.
  1. Explain why will carbon footprint be appearing on the statement of financial position?
  2. Would that footprint’ be visible to investors? Explain its consequence.
You are an accountant having long professional experience in dealing with lease arrangements. The company board has requested you to explain the following two questions for them so that they can have a clear understanding about the impact of lease on the financial position of the business:
  1. How will the accounting treatment be different if Finance Lease involving a Financier Lessor change to Finance Lease involving a Manufacturer/ Dealer lessor?
  2. Identify three possible adverse effects on an entity’s financial statements arising from recognition of a lease arrangement on the statement of financial position.

Determine whether the following transactions are related party transactions under AASB 24/IAS 24 and explain.

  1. A performance-related amount paid to the directors of the entity.
  2. A loan for $100 000 that was made to a retired director of an entity, and which was written off as an uncollectible debt during the current financial year.
  3. A loan of $30 000 advanced to the chief financial officer of an entity and which is outstanding at the end of the reporting period.
  4. An annual cash bonus amount paid to factory workers employed by the entity
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