1. You are the Chief Finance Officer (CFO) of John Ltd. and have prepared the financial reports for one of...

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Question:

1. You are the Chief Finance Officer (CFO) of John Ltd. and have prepared the financial reports for one of your clients, Rusty Ltd. Sarah is the Managing Director (MD) of Rusty Ltd, and she has limited accounting knowledge. Sarah does not understand why you have revalued land upwards and buildings downward. You are having a meeting with Sarah next week to clarify some of the questions she has about the revaluations of non-current assets undertaken within the current financial statements.

Required:

At the meeting, you need to explain to Sarah (in laymen's terms) why one class of asset can be revalued upward while another class of asset can be revalued downward within the same financial period.

2 You are the accountant at Sandy Ltd. and have provided the financial statements for the year ending 30 June 2023 for circulation at the next board meeting. You have been informed that one of the board directors, Annie, has questioned the impairment of goodwill recorded within the financial statements. Annie has limited accounting knowledge and does not understand why you would impair goodwill.

Required:

At the upcoming board meeting, you will explain (in laymen's terms):

How the amount of goodwill is identified, and

Why goodwill may be impaired.

3 You are the senior accountant at Jamie Ltd. and submitted the financial reports for the year ending 30 June 2023 to Yuki, the Chief Executive Officer (CEO). Yuki has limited accounting knowledge and does not understand how you reconciled the profit before tax and taxable income figures.

Required:

Explain to Yuki, in laymen's terms, how profit before tax and taxable income are reconciled.

4 You are the Chief Financial Officer (CFO) of Sandy Ltd and presented the financial reports for the year ending 30 June 2023 to the board of directors. Kylie, one of the directors, disagrees that prior period deferred tax asset (DTA) and deferred tax liability (DTL) amounts were used to adjust the current year's DTA and DTL figures.

Required:

You are having a meeting with the board of directors next week and must explain, in laymen's terms, why prior period amounts are considered when identifying the closing DTA and DTL for the current year.