Concept of reporting entity, Operation Research

Briefly discuss the concept of Reporting Entity in SAC 1

How asset is defined and recognised under the AASB Framework?

Silver Developers Ltd is a property development company listed on the Australian Securities Exchange. They paid $650 000 for a prime piece of sub-divi¬sional land adjoining several growing educational institutions. The purchase was funded with a fixed term two-year loan of $315 000 at 7.8 per cent from the NAC bank. Interest was payable monthly with the full amount of the principal due at the end of two years.

The company expended $78,000 in each of the two years to secure all necessary permits and provide water, sewerage, drainage and roads. On the first day of the third year, a very successful auction on site sold all the lots for a total of $1 mil¬lion. Sufficient cash was received immediately to repay the loan. The remaining amounts due to the company were payable in instalments over two years, free of interest.

The company accountant was asked to recommend how these transactions should be reflected in the accounts. The accountant rang various personal contacts in the real estate business and was told of the following approaches adopted by other companies.

• Treat the interest as an expense in the year paid and all land sales as revenue at the time of the auction.
• Capitalize the interest until the land was sold and regard sales as revenue at the time of the auction.
• Treat interest as part of the cost of the land and recognize revenue from sales according to the time at which payment is due.
• Treat interest as part of the cost of the land, but do not recognise sales as revenue until the final payment is received from the purchaser.


Required: Advise Silver Developers Ltd on this accounting treatment by referring to the requirements of AASB 102 Inventory, AASB123 Borrowing Costs, AASB 118 Revenue.

Posted Date: 3/9/2013 12:58:40 AM | Location : United States







Related Discussions:- Concept of reporting entity, Assignment Help, Ask Question on Concept of reporting entity, Get Answer, Expert's Help, Concept of reporting entity Discussions

Write discussion on Concept of reporting entity
Your posts are moderated
Related Questions
Q2.Six Operators are to be assigned to five jobs with the cost of assignment in Rs. given in the matrix below. Determine the optimal assignment. Which operator will have no assignm

B A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper

mile-high microbrewery makes a light beer and a dark beer. mile-high has a limited supply of barley, limited bottling capacity, and a limited market for light beer. profits are $0.

A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i

A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i

Table of contents The tables  of contents  is an outline  of the order  of the chapters sections and  sub  section  with their  respective  pages. If  report  includes  a n

how do you calculate using this method where the least cost appears twice

Methods  of calculation of standard deviation a. Calculation of Standard  Deviation  - Individual Series: There  are two methods of calculating standard  deviation in an ind

How to solve linear programming problems using simplex method introducing slack variable,surplus variable and artificial variable

The 2 nd phase of operations Research is to construct a mathematical model representing the system under study. It requires the identification of both static and dynam