ACC 1101 SEM 1 2017/2018

TURORIAL CONCEPTUAL FRAMEWORK

Question 1
Identify which enhancing qualitative characteristics is described by the following statements.
a. A company chooses to use the straight line method to depreciate or allocate the cost of
its motor vehicle over 5 years (economic useful life).

b. A company prepares its financial statements and makes it available on the companys
website.

c. Expenses in the statement of profit or loss are classified according to its functions.

d. Jedi Berhad appointed three different property valuers to assess the fair value of its
freehold land. All three valuers arrived at significantly different value. The managing
director decided to report the middle value in the Statement of Financial Position.

e. Force Berhad is the only company within the same industry that depreciates its
machinery on straight line basis. All other companies use declining balance.

f. Empire Sdn. Bhd. does not issue its first quarter report until after the second quarters
results are reported.

Question 2
What are the objectives of financial reporting?

Question 3
Identify and briefly explain TWO (2) fundamental qualitative characteristics and ONE (1)
enhancing qualitative characteristics of financial reporting.

Question 4
Explain how cost can put a constraint in providing useful financial information.

Question 5
Based on the definition given in Conceptual Framework, state three (3) necessary
characteristics for an item to be classified as an asset and a liability.
Question 6
a. On 1 February 2013, Safariland purchases 1,000 hectares of undeveloped natural land
called Freelands, an area of land in central Africania, for $10,000,000, with the aim of
establishing an ecotourism business. The property is not fenced and adjoins a national park
on all its boundaries except the western boundary, where Freelands adjoins privately
owned undeveloped land that is currently unused. A wide range of indigenous plants and
wild animals (including significant numbers of buffalo, crocodile, giraffe, hippopotamus,
leopard, lion, zebra and a wide variety of antelope) inhabit Freelands and the surrounding
lands. Law in Africania specifies that wild animals are the property of the owner of the
land that they occupy.

Are the wild animals on Freelands assets of Safariland?

b. b. In December 2016, the Safariland begin the intensive training of the staff recruited from
nearby communities. The staff are trained in all aspects of running an exclusive ecotourism
lodge. The company has incurred significant staff training costs and some staff possess
specialised skills that are essential for Safarilands operations. Because of the lack of an
established network of roads on Freelands, safaris are undertaken in three ways: game
tracking on foot; game viewing by helicopter; and game viewing by hot air balloon.
The company ensure that the most knowledgeable local game trackers are hired to lead the
walking safaris.

Are the trained staff assets of Safariland?

Question 7
Dusun Pak Ngah is an eco-resort in Jelebu, Negeri Sembilan. Dusun Pak Ngah offers guests a
choice of ten kampong houses scattered within two acres of fruit and vegetable orchards.
Facilities include accommodation with breakfast, basic facilities for self-catering, a barbeque
fit and access to the natural swimming pool. Guests can enjoy guided jungle trekking and river
rafting for additional charges. Fruits and vegetables from the orchard can be enjoyed free of
charge within the Dusun area but are charged current market price for takeaway. Dusun Pak
Ngah also provides lunch, dinner and food for barbeque with advanced orders and payments.
All enquiries and bookings are made online. Payments are made in advance for confirmation
of bookings. Cancellations made within 48 hours will be refunded with a 20 percent
cancellation fee.

Identify the different types of revenue for Dusun Pak Ngah and determine when each type of
revenue should be recognised.