MA601 Theory and Current Issues in Accounting :
|Assessment Details and Submission Guidelines MA601 Theory and Current Issues in Accounting|
|Course Name||Master of Professional Accounting (MPA)|
|Unit Title||Theory and Current Issues in Accounting|
|Trimester||Trimester 1, 2023|
|Assessment Author||Dr Jayasinghe Hewa Dulige|
|Assessment Title||Assessment Task 4 – Group Assignment|
|Unit Learning Outcomes Addressed:||The purpose of this assignment is to assess the following Learning Outcomes: c. Evaluate different accounting theories and their implications in policy choice by managers. d. Synthesize the complex elements of the Conceptual Framework and apply them to accounting activities. e. Apply their knowledge to identify strategies to meet accounting issues and problems in new situations.|
|Release Date||Week six|
|Due Date||Week 10|
|Submission Guidelines||This assignment should be completed in groups of four.All work must be submitted on Moodle by the due date along with a completed Assignment Cover Page. The assignment must be in MS Word format, 1.5 spacing, 11-pt Calibri (Body) font and 2 cm margins on all four sides of your page with appropriate section headings. Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using APA 6th edition for the School of Business.|
|Extension||If an extension of time to submit work is required, an Application for Special Consideration and supporting documentation must be submitted directly to the School’s Administration Officer via your MIT AMS login [https://online.mit.edu.au/ams/default.aspx?ReturnUrl=%2fams%2f]. You must submit this application no later than three working days after the due date of the specific piece of assessment or the examination for which you are seeking Special Consideration. Further information is available at: http://www.mit.edu.au/about–mit/institute–publications/policies–procedures–and–guidelines/specialconsiderationdeferment|
|Academic Misconduct||Academic Misconduct is a serious offence. Depending on the seriousness of the case, penalties can vary from a written warning or zero marks to exclusion from the course or rescinding the degree. Students should make themselves familiar with the full policy and procedure available at:http://www.mit.edu.au/about-mit/institute-publications/policies-procedures-and-guidelines/Plagiarism-Academic-Misconduct-Policy-Procedure. For further information, please refer to the Academic Integrity Section in your Unit Description.|
Assessment Cover Sheet
|Student ID Number/s:||Student Last name/s:||Student First name/s:|
|Unit code:||Unit title:|
|Due date:||Date submitted:||Campus:|
|Student Declaration I/We declare and certify that: the work contained in this assessment is my/our own work/group work, except where acknowledgement of sources is made;this assessment has not been submitted previously for academic credit in this or any other course;I/we have read MIT’s Plagiarism and Academic Misconduct Policy and Procedure, and I/we understand the consequences of engaging in plagiarism, collusion and contract cheating; a copy of the original assignment is retained by me/us and that I/we may be required to submit the original assignment to the Lecturer and/or Unit Co-ordinator upon request; I/we have not plagiarised the work of others or participated in unauthorised collaboration or contract cheating when preparing this assessment.|
MA601 Concept and Current Issues in Accounting Assignment Description
Accountants must decide which accounting policies are most effective for any given entity and situation to prepare General-Purpose Financial Reports (GPFR) (Accounting Conceptual Framework 2014). Furthermore, it is recognized that in making a decision, accountants must use their professional judgment because deciding on the best accounting policy is frequently not an easy task.
Leases are used to obtain the use of an asset, or to finance the acquisition of the asset. Leases are one of the most important sources of finance for businesses of all sizes and in all industries the world over. It has been customary for leases to be classified by lessees and lessors as either operating leases (off-balance sheet) or finance leases (on-balance sheet). Until the 1980s, Australian accountants treated all leases as operating leases. It was widely, argued that the right of possession and use of leased assets were not recognized as an asset, and the obligation to make lease payments was not recognized as a liability on operating leases. Rent was recognized as an expense in the reporting period during which the rent was payable (Henderson, 2017).
Due to the exclusion of these rights and obligations, the financial statements did not provide a “true and fair view” of the entity’s financial performance and financial position, as stated in the accounting conceptual framework.
However, lease classification remains a contentious issue, and there has been controversy about the appropriate accounting treatment of finance leases. This led to accounting standard setters and capital market regulators to make revisions to the accounting standards in an effort to reflect the substance nature of the lease transaction rather than its legal form.
AASB 16 ‘Leases’ was issued by AASB replacing AASB 117 leases, and AASB 16 applies to annual reporting periods beginning on or after 1 January 2019. AASB 16 adopts a new approach to lease accounting recognizing all leases as finance leases (on-balance sheet). The balance sheet, particularly the leverage and solvency ratios of European-listed firms are significantly affected by the adoption of IFRS 16 (Morales-Díaz & Zamora-Ramírez (2018).
You need to critically assess the aforementioned claims and events, and then recommend whether the AASB’s actions to classify all leases as finance leases are appropriate. This is necessary because its outcome is yet to assess, and it is also widely accepted that any particular lease agreement may contain features typical of both operating and finance leases, making lease classification a matter of professional judgment.
The MA601 Concept and Current Issues in Accounting report should incorporate the followings:
- Describe the nature of leases.
- Explain the implications of lease accounting for the assessment of operating performance and financial risk.
- Critically examine management’s incentives to favour one form of lease accounting over the other.
- Evaluate the motivation for accounting standard setters (IASB and AASB) releasing a new leasing standard AASB 16 replacing with AASB 117, to recognize all leases as finance leases, by comparing both.
- Examine potential implications of the newly introduced leasing standard AASB 16 for the financial statement preparers and users and explain whether AASB 16 ‘leases’ is likely to overcome the problems associated with lease classification under AASB 117 leases.
- Your recommendations.
Henderson, S., Peirson, G., Herbohn, K., Artiach, T. and Howieson, B. (2017). Issues in Financial Accounting (16th ed.). AU: Pearson Higher Education.
Morales-Díaz, J., & Zamora-Ramírez, C. (2018). The impact of IFRS 16 on key financial ratios: A new methodological approach. Accounting in Europe, 15(1), 105-133.
This assignment must be written/structured in the form of a ‘business report’. That is, it must have a/an;
(a) Executive summary (between 100 to 150 words),
(b) Introduction that;
Succinctly summarizes this assignment’s topic and its key issues, controversies, etc. (no more than 200 words), and
(c) Body that addresses all the requirements – see above 1-6 (no more 1500 words),
(d) Conclusion that sums up the mains issues of this assignment (no more than 200 words), and
(e) Reference list containing all cited works.
(f) Proper English Grammar, appearance, format, etc.
At least 2 recognized journal articles should be cited.
MA601 / Theory and Current Issues in Accounting /Semester T1, 2023, Group Assignment
|Assessment Criteria||Total Marks||Marks awarded|
|Criterion 1 – Structure and Clarity of the Report/Assignment introductory paragraphlogical flow of clarity and structure of ideas and argumentsappropriate use of paragraph and headings to explain and discuss ideasappropriate concluding paragraph||3 2 2 3|
|Total marks for criterion 1||10|
|Criterion 2 – Body/contents Describe the nature of leases.Explain the implications of lease accounting for assessment of operating performance and financial risk.Critically examine management’s incentives to favour one form of lease accounting over the other.Evaluate the motivation for accounting standard setters (IASB and AASB) releasing a new leasing standard AASB 16 replacing with AASB 117, to recognise all leases as finance leases, by comparing both.Examine potential implications of the newly introduced leasing standard AASB 16 for the financial statement preparers and users and explain whether AASB 16 ‘leases’ is likely to overcome the problems associated with lease classification under AASB 117 leases.Your recommendations.||5 10 10 10 10 10|
|Total marks for criterion 2||55|
|Criterion 3 – Research and Analysis quality of research undertakenaccuracy and depth of analysisappropriate use of in-text and end text referencingquality of information sourcesappendices||7 8 5 5 5|
|Total marks for criterion 3||30|
|Criterion 4 – Presentation layoutformattingspelling/grammarproof readprofessional format||1 1 1 1 1|
|Total marks for criterion 4||5|
Using Technology for Assessment
|Rationale||Activities||Technological tools selected|
|Industry knowledge & skillsreflection on learningfeedback on performancepractice of critical thinking||check for plagiarismproblem-based learning||online forum on MoodleTurnitin|