Case (a) A Cement manufacturing organization incurred the following expenses during the year 2017.The establishment cost for a new business facility was amounted to OMR 45,000, the cost of formulas and prototype was OMR 76,000, The design of pilot plan was OMR 172,000, The television advertisement cost was OMR 25,000, Goodwill acquired from purchase combination was OMR 65,000, Operating rights cost was 36,000 During the year, in house accounting software was developed by the organization at a cost of OMR 120,000.

Case (b) A new product was developed during the year. The expenditure totaled OMR 4.5 million of which OMR 3 million was incurred prior to 30 November 2018 and on that date it became clear that the product was technically viable. The new product will be launched in the next four months and its recoverable amount is estimated at OMR 2,100,000.

Case (c) A customer list was prepared by marketing division and through that innovative marketing strategies have been developed. The estimated cost of preparation of customer list was OMR 900,000 out of which the actual cost incurred for this purpose was OMR 650,000. Because of this cost the company has earned incremental revenue of OMR 450,000.

Case (d) The Company has acquired a formula from an organization for production of one variety of products. The cost incurred on acquiring the formula was OMR 200,000. The new product with the formula was popularized and the increased profit to the business over the next two years would be OMR 325,000

Required:

On the role of an accountant, assess ALL the above cases and justify your answer for ALL the cases about the capitalization of assets and charging of expenses as per the requirement so IAS 38

Case (a) A Cement manufacturing organization incurred the following expenses during the year 2017.The establishment cost for a new business facility was amounted to OMR 45,000, the cost of formulas and prototype was OMR 76,000, The design of pilot plan was OMR 172,000, The television advertisement cost was OMR 25,000, Goodwill acquired from purchase combination was OMR 65,000, Operating rights cost was 36,000 During the year, in house accounting software was developed by the organization at a cost of OMR 120,000.

Case (b) A new product was developed during the year. The expenditure totaled OMR 4.5 million of which OMR 3 million was incurred prior to 30 November 2018 and on that date it became clear that the product was technically viable. The new product will be launched in the next four months and its recoverable amount is estimated at OMR 2,100,000.

Case (c) A customer list was prepared by marketing division and through that innovative marketing strategies have been developed. The estimated cost of preparation of customer list was OMR 900,000 out of which the actual cost incurred for this purpose was OMR 650,000. Because of this cost the company has earned incremental revenue of OMR 450,000.

Case (d) The Company has acquired a formula from an organization for production of one variety of products. The cost incurred on acquiring the formula was OMR 200,000. The new product with the formula was popularized and the increased profit to the business over the next two years would be OMR 325,000

Required:

On the role of an accountant, assess ALL the above cases and justify your answer for ALL the cases about the capitalization of assets and charging of expenses as per the requirement so IAS 38

A wholesale business with December 31 year-end purchased new equipment on November 25, 2018, for 40,000. Before 2018, the business owned no other equipment.

Required:

1. Complete the table below to show the tax consequences. If the business sells the equipment in 2020 for (a)$15000 (b) $23000 (c) $46000.

2018 purchase:

2018 CCA:

2018 UCC:

2019 CCA:

2019 UCC:

SITUATION A:

Less: Disposal Proceeds:

Interim UCC:

Terminal Loss/ Recapture:

Ending UCC:

Situation B

Less: Disposal Proceeds:

Interim UCC:

Terminal Loss/ Recapture

Ending UCC:

Situation C

Less: Disposal proceeds:

Interim UCC balance

Terminal Loss/ Recapture

Ending UCC:

Capital Gain:

Taxable Capital Gain:

2) How would your answer change if on December 31, 2020. the business acquired new equipment costing $1000? ( Enter minus sign when the amount is reducing the CCA

SITUATION A:

Less: Disposal Proceeds:

Interim UCC:

Terminal Loss/ Recapture:

Ending UCC:

Situation B

Less: Disposal Proceeds:

Interim UCC:

Terminal Loss/ Recapture

Ending UCC:

Situation C

Less: Disposal proceeds:

Interim UCC balance

Terminal Loss/ Recapture

Ending UCC:

Capital Gain:

Taxable Capital Gain:

The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020 are:

Other information:

Share capital is increased by the bonus issue of 24 000 shares for $1.00 each out of retained earnings. Plant is acquired during the period at a cost of $36 000, while plant with a carrying amount of $nil (cost of $24 000, accumulated depreciation of $24 000) is scrapped.

Required:

a)      Reconstruct the allowance for doubtful debts and accounts receivable.

(6.5 marks)

b)      Reconstruct inventory and accounts payable

c)      Reconstruct accrued salaries

d)      Reconstruct property, plant and equipment and a

Elements of the Income Statement for Hofstadter Experiments Ltd. follow:

Highlights of the Balance Sheet:

Required: (Round all answers to 2 decimal places).

1. Calculate the gross profit rate for both 2019 and 2020.
2. Did the gross profit rate improve or worsen from 2019 to 2020?
3. What was the Accounts Receivable Turnover ratio for 2020?
4. Explain what Accounts Receivable Turnover is in your own words.
5. What was the Return on Common Shareholders’ Equity for 2020?
6. What was the Current Ratio for 2020?
7. Is the current ratio calculated in f) adequate?

Elements of the Income Statement for Hofstadter Experiments Ltd. follow:

Highlights of the Balance Sheet:

Required:   (Round all answers to 2 decimal places).

1. Calculate the gross profit rate for both 2019 and 2020.
2. Did the gross profit rate improve or worsen from 2019 to 2020?
3. What was the Accounts Receivable Turnover ratio for 2020?
4. Explain what Accounts Receivable Turnover is in your own words.
5. What was the Return on Common Shareholders’ Equity for 2020?
6. What was the Current Ratio for 2020?
7. Is the current ratio calculated in f) adequate?

When Roberto Goizueta became Coke’s CEO in 1981, he took over a poorly performing company that had diversified into unrelated businesses ranging from water purification to shrimp farming. One of his first initiatives was to analyze Coke’s various businesses using economic profit. The analysis concluded that only Coke’s core carbonated beverage business was creating shareholder value. The other businesses, while generating revenue, were actually consuming value. Consequently, they were divested or shut down. Goizueta then focused on Coke’s core beverage business using its substantial competitive advantages: global brand, worldwide distribution system, and sales and marketing expertise. The result was 18 years of success.

Similarly, when Bob Lane took over a poorly performing John Deere in August 2000, he quickly identified Deere’s biggest problem: spending too much money to make money. Factories tended to overproduce, leading to a large number of very expensive, large farming machines simply sitting on dealer floors. Lane began looking at economic profit. He decided managers were treating capital as a free resource. He charged each division manager 1 percent each month of the cost of the assets they used and required that at the end of the year their financial results exceed the charges. Deere has done well in the succeeding years.

What is the appropriate measure of a firm’s performance?

What does a focus on economic profit as opposed to a focus on accounting profit mean for a firm and its investors?”

Every year, Jessica Gomez, CEO of Logan Construction Company, takes a two week vacation to Barbados and signs multiple blank checks to pay for any major bills that come due while she is away. Jessica's vacation occurs towards the end of Logan's fiscal year. Carl Johnson, controller for the company, uses this practice for his gain. He identifies a very large invoice from a vendor, makes out a check to himself for that amount, and records it as a payment to the vendor for acquisition of supplies. He holds the check for several weeks to ensure the auditors will not review the canceled check. Not long after the first of the year, Johnson resubmits the invoice to Gomez for approval and records the check in the cash disbursements journal. Johnson then marks the invoice as paid and files away with other paid invoices. Johnson has been performing this activity many years and believes he has no risk of getting caught.

Required:

There are so many opportunities for improvement in the internal controls in this scenario. With an unlimited amount of funds, many people, and an unlimited time frame, a company could virtually eliminate all control risk. Practically speaking, though, that is not feasible for 95%+ of all companies. Small companies like Logan Construction especially struggle with control risk in the areas of acquisition and financing because they operate with minimal staffing, restrictive budgets, and a remote workforce.

If you were consulting with Logan Construction on internal control improvement opportunities, provide two short term suggestions for controls improvement, and one long term suggestion that the company might need to plan for financially or technologically.