I&E Introduction Accounting

2023
ASSIGNMENTS WEEK 7
Wk7 (Assignment I)
Case description
Rondelli School wants to raise money for a new sound system for its auditorium. The primary
fund-raising event is a dance at which the famous disc jockey D.J. Sound will play classic and not so-
classic dance tunes. Matt Ballester, the music and theater instructor, has been given the responsibility
for coordinating the fund-raising efforts. This is Matt’s first experience with fund-raising. He decides to
put the student choir in charge of the event; he will be a relatively passive observer.

Matt had 500 unnumbered tickets printed for the dance. He left the tickets in a box on his desk and
told the choir students to take as many tickets as they thought they could sell for €5 each. In order to
ensure that no extra tickets would be floating around, he told them to dispose of any unsold tickets. When
the students received payment for the tickets, they were to bring the cash back to Matt and he would put
it in a locked box in his desk drawer.

Some of the students were responsible for decorating the gymnasium for the dance. Matt gave each
of them a key to the money box and told them that if they took money out to purchase materials, they
should put a note in the box saying how much they took and what it was used for. After 2 weeks the
money box appeared to be getting full, so Matt asked Jeff Kenney to count the money, prepare a deposit
slip, and deposit the money in a bank account Matt had opened.
The day of the dance, Matt wrote a check from the account to pay the DJ. D.J. Sound, however, said
that he accepted only cash and did not give receipts. So Matt took €200 out of the cash box and gave it
to D.J. At the dance, Matt had Sam Copper working at the entrance to the gymnasium, collecting tickets
from students, and selling tickets to those who had not prepurchased them. Matt estimated that 400 students
attended the dance. The following day, Matt closed out the bank account, which had €250 in it, and gave that
amount plus the €180 in the cash box to Principal Finke. Principal Finke seemed surprised that,
after generating roughly €2,000 in sales, the dance netted only €430 in cash. Matt did not know how
to respond.

Assignment
Identify as many internal control weaknesses as you can in this scenario, and suggest how each could
be addressed.. lOM oARcPSD| 5814602

Wk7 (Assignment II)

Case description At December 31, 2019, Jimenez Enterprises reported the following as plant assets.:
Land € 5,000,000
Buildings €26,100,000
Less: Accumulated depreciation—buildings 12,100,000 14,000,000
Equipment 38,000,000
Less: Accumulated depreciation—equipment 4,000,000 34,000,000
Total plant assets €53,000,000

During 2020, the following selected cash transactions occurred.

April 1 Purchased land for €3,100,000.
May 1 Sold equipment that cost €900,000 when purchased on January 1, 2016. The equipment
was sold for €478,000.
June 1 Sold land purchased on June 1, 2010 for €1,700,000. The land cost €400,000.
July 1 Purchased equipment for €2,700,000.
Dec. 31 Retired equipment that cost €600,000 when purchased on December 31, 2010. No residual
value was received.
Assignment
a. Journalize the above transactions. The company uses straight-line depreciation for buildings and
equipment. The buildings are estimated to have a 50-year life and no residual value. The equipment
is estimated to have a 10-year useful life and no residual value. Update depreciation on assets disposed
of at the time of sale or retirement.
b. Record adjusting entries for depreciation for 2020.
c. Prepare the plant assets section of Jimenez’s statement of financial position at December 31, 2020.

Wk7 (Assignment III)

Case description
The intangible assets section of Glover Restaurants at December 31, 2019, is presented below.

Patents (£75,000 cost less £9,000 amortization) £64,000

Franchises (£52,000 cost less £20,200 amortization) 31,800
Total £96,800

The patent was acquired in January 2019 and has a useful life of 10 years. The franchise was acquired in
January 2016 and also has a useful life of 10 years. The following cash transactions may have affected
intangible assets during 2020.

Jan. 2 Paid £54,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.–June Developed a new product, incurring £110,000 in research costs and £72,000 in
development costs prior to technological feasibility. A patent was granted for the product
on July 1. Its useful life is equal to its 20-year legal life.
Sept. 1 Paid £64,000 to an extremely large defensive lineman to appear in commercials advertising
the company’s products. The commercials will air in September and October.

Oct. 1 Acquired a franchise for £120,000. The franchise has a useful life of 40 years.

Assignment
a. Prepare journal entries to record the transactions above.
b. Prepare journal entries to record the 2020 amortization expense.
c. Prepare the intangible assets section of the statement of financial position at December 31, 2020.

Wk7 (Assignment IV)

Case description
The financial statements of TSMC are presented in Appendix A of the Book “Financial Accounting with IFRS”. The complete
annual report, including the notes to the financial statements, is available at the company’s website.

Assignment
Refer to TSMC’s financial statements and answer the following questions.
a. What was the total cost and book value of property, plant, and equipment at December 31, 2016?
b. What method or methods of depreciation are used by the company for financial reporting
purposes?
c. What was the amount of depreciation expense for each of the years 2016 and 2015?
d. Using the statement of cash fl ows, what is the amount of capital spending in 2016 and 2015?
e. Where does the company disclose its intangible assets, and what types of intangibles did it have at
December 31, 2016?
Wk7 (Assignment V)
Case description
Nestlé’s financial statements are presented in Appendix B in the Book “Financial Accounting with IFRS”.. Financial
statements of Delfi Limited are presented in Appendix C.

Assignment
a. Compute the asset turnover for each company for the most recent fiscal year presented.
b. What conclusions concerning the efficiency of assets can be drawn from these data?