There is no specific word count. You need to prepare a number of journal entries and some other tasks. You will need to support your journal entries and other tasks with specific reference to the relevant rules. If you think something is ambiguous, state why and identify different treatments, then make a decision, and state why you selected that option. Your manager is a bad tempered ratbag who does not like reading lots of spam, so you need to ensure your justifications and comments are stated concisely.

The facts

At the start of July 2017, the client decided to upgrade the site so that it would allow customers to buy books online. The client also decided to completely update the graphics and the content of the site.

In the financial year ended 30^th June 2018 the company spent another $100,000 on the planning stage, and $150,000 on application and infrastructure development, making sure the front end and back end of the website operate properly. Eighty percent of the work relating to both of these stages of the upgrade was undertaken by external consultants. The remaining work was undertaken by the client’s staff. The content development cost another $220,000. All of this expenditure related to payments for professional photographers to take images of the products, e.g. pictures of the front covers of the books. The graphical design development stage cost $75,000 in that financial year. The client tells you that it was not happy with the original graphical design, as it was not attractive and was not consistently applied through the site. This work was undertaken by an external consultant.

Your colleaguethought the following schedule for classifying the various stages of creating a website may be useful.

1. Planning – includes undertaking feasibility studies, defining objectives and specifications, evaluating alternatives and selecting preferences;

Required

At Happy Hour last Friday evening, your manager asked you to prepare journal entries based on the information above, in order to prepare the GPFR for the years ended 30/6/2017 and 30/6/2018. You will need to provide specific references to the accounting rules (rule number and paragraph number) to justify your position.

Your manager is particularly interested in the end of year tax-effect entries and your workings. You can assume the tax rate is 30% in all relevant years.