Week 1 Question (10 marks)
It is argued by some researchers that even in the absence of regulation, organisations will have an
incentive to provide credible information about their operations and performance to certain parties
outside the organisation; otherwise, the costs of the organisation’s operations will rise.
What is the basis of this belief?
Week 2 Question (10 marks)
What force of law does the conceptual framework have?
Week 3 Question (10 marks)
Under Positive Accounting Theory, what are agency costs of equity and agency costs of debt? Is it
possible to put in place mechanisms to reduce all opportunistic action? If not, why not?
Week 4 Question (10 marks)
TXA Ltd acquired a machine from Blue Ltd for the following consideration:
? Cash $70, 000
? Land in the books of TXA Ltd the land is recorded at its cost of $650,000.
It has a fair value of $450,000.
TXA Ltd also agrees to assume the liability of the Blue Ltd bank loan of $89,000 as part of the
machine acquisition.
Required:
(a) Calculate the acquisition cost of the machine. (2 marks)
(b) Provide the journal entries that would appear in TXA Ltd.’s books to account for the
acquisition of the Machine. (8 marks)
Week 5 Question (10 marks)
Max Ltd acquires an item of machinery on 1 July 2016 for a total acquisition cost of $61,000. The life
of the asset is assessed as being six (6) years, after which time Max Ltd expects to be able to dispose
of the asset for $6,000. It is expected that the benefits will be generated in a pattern that is best
reflected by the sum—of—digits depreciation approach. On 1 July 2019, owing to unforeseen
circumstances, the machinery is exchanged for a motor vehicle. Note the motor vehicle is two years
old, originally cost $17,000 and has a fair value of $11,000.
Required:
Provide the necessary journal entries for the disposal of the machinery and the acquisition of the
motor vehicle on 1 July 2019.