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ACCT222 Intermediate Accounting II

One of the learning outcome related to Intermediate Accounting 2 is to enable the students to utilize information technology in financial decision making. Within this perspective, you are required to fulfil the following requirements:

  1. Collect and input the information related to the available investment opportunities. 2. Analyze the information by using Excel spreadsheets (e-tables) 3. Take the appropriate investment decision.
  2. Produce a report based on the accounting information produced by the data analysis performed in requirement 3.

Available investments opportunities

Assume that you have been hired as an accountant in Al Barakah Financial Intermediation Company. Part of your duties in your new position is managing and reporting about one the of investment portfolios of the company. Consequently, you have to deal with two of the investment opportunities.

Investment opportunity One:

In 1.1.2016 Qatar Modern Electronics Company issued a 42 million dollars 10% bond as a long term investment. Assume that Al Barakah management has the intent and the positive ability to keep these bonds until maturity (December 31, 2025). For bonds of similar risk and maturity, the market yield was 8%. Interest is received semiannually on June 30 and December 31 for all the years, till maturity.

Investment opportunity Two:

In 1.1.2016 Qatar International Trade Company issued a 55 million dollars 10% bond as a

long term investment. Assume that Al Barakah management has the intent and the positive ability to keep these bonds till maturity (December 31, 2030). Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 12%. Interest is received semiannually on June 30 and December 31 for all the years, till maturity.

REQUIREMENTS

Step One: Collect and input the data related to the available investment opportunities

  • By using an Excel spreadsheet, you are required to design an electronic table with 6 independent columns as follow:

Period

Interest

Payment

Interest

Revenue

Discount

Amortization

Or

Premium

Unamortized

Discount Or

Premium

Carrying Value

Step Two: Data analysis by using electronic tables (e-tables)

  • Prepare an electronic table (e-table) for each investment opportunity.
  • Calculate all the values in all the columns using Excel PV Function. For more information on how to use the PV function for single amount and annuity, please refer to the link below: https://www.excelfunctions.net/excel-present-value.html

Step Three: Take the necessary investment decision

  • You have to compare the obtained data analysis for the e-tables related to each investment opportunities. Then, you need to take the appropriate investment decision by selecting one the investment opportunities (You have to learn and understand how choose an investment over other investments by using accounting).

Step Four: Prepare a report based on the obtained accounting data produced by the data analysis

  • Prepare a report (two pages maximum) that clearly indicates the results you obtained from your evaluation of the two investment opportunities and taking particularly into account the future cash inflows or outflows of each investment separately, under the following assumptions:
    • The sale of the bond issued by Qatar Modern Electronics Company by the end of 2022 for a sum of $ 42,250,000.
    • The sale of bond issued by Qatar International Trade Company by the end of 2027 for a sum of $53,750,000.

You have to submit two documents:

  • The Excel document of your analysis
  • The PDF file including your report

Grading

Date input: 2 marks

Excel electronics table: 4 marks

The report: 4 marks


ACCT222 – Case Study

One of the learning outcomes assigned to Intermediate Accounting II (ACCT222), is demonstrate the ability to critically analyze accounting issue and to apply accounting knowledge to solve business problems. To assess this outcome, you will be expected to participate in the following activities:

  1. Data gathering
  2. Data processing
  3. Reporting information

Data gathering:

This is individual performed case study. You will be assigned a company listed on the Qatar Stock Exchange. You will need to go on to the following website in order to download in information about your company's quarterly financial statements and financial ratios for the period 2011 until 2019 (total of 20 reports):

http://www.qe.com.qa/pps/qe/qe%20english%20portal/Pages/Home/

  • To find quarterly financial statements, go to the “listed Securities” tab in the Qatar Exchange website, and then click financial statements. From the reports, you will need to collect information about the company’s net profit and total shareholders’ equity.
  • To obtain financial ratios, go to “Market Statistics” and then “Financial Indicators”. Select the date, starting with 2011, until 2019. The three ratios that you will need are return on shareholders’ equity (defined as net income divided by the average shareholders’ equity), and Earnings per share (defined as earnings per share divided by the number of outstanding share), and earnings / price ratio (defined as earnings per share divided by the market price per share).

Data processing:

  • Input and organize the data into three separate tables.
  • Table No. 1: consists of the following columns: date, net income, average of shareholders’ equity, and returns on shareholders’ equity.
  • Table No.2: consists of the following columns: date, net income, number of shares, and earnings per share.
  • Table No. 3: consists of the following columns: date, earnings per share, average of share price, and earnings / price ratio.

Reporting information:

Write a brief report (two pages maximum) about the results of the comparison between the book value of shareholders equity and market value of shareholders equity, and how such change in these two ratios affect decision-making and performance of the company, especially in view of:

Change in net income

Change in shareholders’ equity

Performance rules and policies

Other factors

Submission information:

Please submit the combined report including the above-mentioned three tables with the analysis of book value and market value of shareholders equity for the assigned company by (27th April 2019) through the Safe assign link on Blackboard. Please make sure that you hand in the case study in PDF form.

Allocation of marks:

Activity

Marks

Data gathering

3

Data processing

3

Reporting information

4