Intermediate Financial Accounting Exam Paper

2011 Semester 2 Intermediate Financial Reporting Final Exam Solution.
Accounting standards (5 MARKS)
1. Explain what gives Australian accounting standards authority and how is it enforced?
The Corporations Act gives the standards the force of law. ASIC administer the Corps Act. and hence enforce the standards. Failure to comply with the standards can include legal proceedings, goal, financial penalties and prevention from acting as a manager or director of a company in the future.
In addition, members of the accounting bodies (CPA, ICAA and IPA) are bound by the Code of Ethics for Accountants and the Code says that members will abide by the standards. Failure to do so will result in disciplinary action from the member body.
Various other
Calculation
Expense
Cumulative expense
30 June 2011
200 options x 440 employees (est) x $1.80 x 1/4
39,600
39,600
30 June 2012
200 options x 435 employees (est) x $1.80 x 2/4 – 39,600
38,700
78,300
30 June 2013
200 options x 435 employees (est) x $1.80 x ¾ - 78,300
39,150
117,450
30 June 2014
200 options x 440 employees (actual) x $1.80 – 117,450
40,950
158,400
During 2014/2015
200 options x 420 employees x $5.50 = $462,000 received from exercised options; 200 options x 420 employees x $1.80 = $151,200 FV of options exercised
30 June 2015
200 options x 20 employees x $1.80 = $7,200 balance of options account transferred to general reserve
30 June 2011
Remuneration expense Dr $39,600
Share options Cr $39,600
______________________________________________________________
30 June 2012
Remuneration expense Dr $38,700
Share options Cr $38,700
______________________________________________________________
30 June 2013
Remuneration expense Dr $39,150
Share options Cr $39,150
______________________________________________________________
30 June 2014
Remuneration expense Dr $40,950
Share options Cr $40,950
______________________________________________________________
During 2014 - 2015
Cash at Bank Dr