2. a) NT News OnTheGo Ltd has developed a masthead for its newspaper to the point where it is a very valuable asset. Although the masthead is not currently recognised, management believes it could be sold for at least $3 million.
b) John Wiley & Sons Australasia Ltd purchased a publishing title two years ago for $1.2 million when another publisher went into liquidation. The book lhas been very successful and management believes that it could probably sell $1.5 million if ever they put it on the market.
c) Booze Your Juice Ltd acquired a franchise for an ice-cream stand at a beach at a cost of $100 000. There is great demand for this type of franchise as evidenced by recent sales of equivalent franchises at other beaches. The current market price of such a franchise is $200 000.
DJB Ltd has deferred development costs of $520 000 and the estimated recoverable amount of development project is $860 000
3. You own a financial accounting services called MyNextProblem Consultancy Ltd. You have been invited to lecture at Darwin Charles Uni and provide advice to students of the requirements of AASB 10 in respect of the control criterion.
Required: For each of the below independent situation, determine whether or not control exists and, if so, by which party. Discuss the reasons for your answers. Where possible, support your answer with excerpts from AASB 10.
The scenario depict that the various phases are there when the payment made to the employees by a company could be context as an asset. Except for the given statement where the employer has paid to the employee for converting the raw material into the work in progress, various other options are there where the payment made to the employees by a company could be context as an asset. Such as if an employee buys or rental a personal car from an employee and then use that car on the name of the company than the paid amount to the employees could be considered by the company as an asset.
Cash a/c Dr. 1,00,000
To Car a/c 1,00,000
(Being car purchased.)
Further, if an employee is paid for his work through equity securities or right share then in that case, this payment could also be context as an asset (Schroeder, Clark & Cathey, 2001). Various other phases are also there where the payment made to the employees by a co
mpany could be context as an asset.
Shares a/c Dr 50,000
To employees a/c 50,000
Thus the above journal entries depict that for paying the amount to the employees, the assets account of the company get affected.
Machineries a/c Dr 30,000
To revaluation account 30,000
Revaluation a/c Dr. 50,000
To share capital a/c 50,000
Machineries a/c Dr 5,20,000
To revaluation account 5,20,000
(The excess amount of revaluation has been credited.)
Revaluation a/c Dr. 5,20,000
To share capital a/c 5,20,000
(Excess amount has been transferred into the share capital.)
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Lee, T.A., (2006). The FASB &accounting for economic reality. Accounting &the Public Interest, 6(1), pp.1-21.
Schroeder, R.G., Clark, M.W. &Cathey, J.M., (2001). Accounting theory &analysis. Chapel Hill: University of North Carolina.
Whittington, G., (2008) (B). Fair value &the IASB/FASB conceptual framework project: an alternative view. Abacus, 44(2), pp.139-168.
Whittington, G., (2008). Fair value &the IASB/FASB conceptual framework project: an alternative view. Abacus, 44(2), pp.139-168.
This problem has been solved.
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