Organize the accounting entries, Cost Accounting

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JK is a motor dealership which organizes its financial statements to 30 November. In the year to 30 November 2009, transactions integrated the following:

(a) JK had motor vehicles taking place its premises that were supplied by a car manufacturer, SB. Trading between JK and SB was subject to a contractual agreement. This agreement stated that JK could keep up to 100 vehicles on its premises even though the legal title of the vehicles remained with SB until they were sold by JK to a third party. JK was requisite to inform SB within 5 working days of any sale, at which time SB would increase an invoice at the price agreed at the original delivery due date. JK had the right to return any vehicle at any time without acquire a penalty. JK was liable for insuring all the vehicles on its property.

Required:

Discuss in brief the economic substance of JK's contractual agreement with SB and explain which entity should identify the vehicles in inventory for the duration of the period that they were held at JK's premises.

(b) On 1 December 2007 JK granted 1,000 share appreciation rights (SARs) to its 120 employees. To be entitled, employees must be remained employed for 3 years from the grant date. The rights must be implemented in December 2010.

12 staff left and a additional 15 were expected to leave over the following two years, In the year to 30 November 2008.

8 staff left and a additional 10 were expected to leave in the following year in the year to 30 November 2009.

The fair value of each SAR was $17 at 30 November 2009 and $15 at 30 November 2008.

Required:

Organize the accounting entries to record, for the year to 30 November 2009, the expenditure associated with the SARs.


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