Reference no: EM131703668

Question 1 -

(a) Ali (2005) argues that despite the strong motivation for harmonization of accounting there is a debate among academics, professionals and international bodies whether harmonization of is possible globally. Critically discuss the above statement and briefly explain the role of IASB to harmonize accounting standards and motivations for and barriers to achieve harmonization throughout the world.

Reference: Ali, M. J. (2005). A synthesis of empirical research on international accounting harmonization and compliance with international financial reporting standards, Journal of Accounting Literature, Vol. 24, pp. 1-52.

Question 2 -

At the end of its financial year, Star Ltd. took the following information from its accounting books of record.

Trial Balance as at 30 June, 2017

	Debit AUD $	Credit AUD $
Sales Revenue		700,000
Interest Revenue		16,500
Salaries	80,000
Light, power & fuel	25,000
Audit Fees	10,000
Interest Expense	8,000
Damage due to fire	33,000
Purchases	360,000
Interim dividend	8,000
Cash at bank	76,000
Inventories	115,000
Accounts Receivable	85,500
Provision for Doubtful Debts		10,000
Term deposit - due 30th September,2017	166,000
Marketable Securities (long term)	40,000
Insurance paid in advance	20,000
Plant & Machinery	90,000
Furniture & fittings	100,000
Buildings	145,000
Accounts Payable		60,000
Accumulated Depreciation - Plant & Machinery		45,000
Accumulated Depreciation - Furniture & fittings		30,000
Accumulated Depreciation - Buildings		29,000
Bank Mortgage secured over buildings, due 1st May, 2019		150,000
Share Capital		250,000
General Reserve		40,000
Retained Earnings		31,000
	1,361,500	1,361,500

Additional Information

1. Salaries not paid at 30th June amounted to $8,000.

2. Unpaid power account for June totalled $4,000.

3. Prepaid insurance attributable to current year is 10,000.

4. Star Ltd. uses the periodic inventory system. The stock-take of 30th June shows closing inventory of $110, 000 (valued at lower of cost and market value).

5. Interest on bank mortgage is 10% per annum and is payable twice yearly on 31st December and 30th June. The amount due at 30 June has not been recognised.

6. Depreciation rates on the straight line basis are as follows:

• Plant & Machinery 10%
• Furniture & Fittings 5%
• Buildings 5%.

7. The current market value of marketable securities is $42,000. Marketable securities are valued at lower of cost and market value.

8. On 21st June 2017, Star Ltd was notified of an impending legal suit for $25,000 against the company for breach of contract. The case was settled 15th July 2017.

9. Tax expense was calculated to be $40,000. A final dividend of 5% of paid-up-capital was declared and approved in 30th June 2017.

10. On 15 August 2017, Robert Ltd, a major customer of star Ltd, indicated that it had found an alternative supplier. At that date Robert Ltd owed no amount to Star Ltd.

Required:

1) Prepare the necessary adjusting journal entries required by items 1 to 10 (narrations are not required).

2) Prepare a Statement of Comprehensive Income, a Statement of Financial Position and a Statement of Changes in Equity for Star Ltd for the year ended 30th June 2017 in accordance with the requirements of ASB 101.

3) Prepare at least fifteen (15) notes to the financial statements according to comply with relevant accounting standards.