SECTION A: Short Questions (Total 25 marks) Al. Consider the following cases: (a) Rivers Limited purchased...

 

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SECTION A: Short Questions (Total 25 marks) Al. Consider the following cases: (a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of 25% per annum using the straight-line method. In order to raise the reported profit, the company's accountant decided to change the depreciation rate to 10% per annum. (b) Talent Limited is a recruitment agency. On 10 December 2018, Talent Limited helped Ocean Limited hire its Senior Manager and charged the company an agency fee of $30,000. The agency fee was received on 15 January 2019. Talent Limited did not include the $30,000 agency fee in its statement of profit or loss and other comprehensive income for the year ended 31 December 2018. Required: For each of the above cases, identify the accounting principle or concept that has been violated and give a brief explanation. (Total 10 marks) SECTION A: Short Questions (Total 25 marks) Al. Consider the following cases: (a) Rivers Limited purchased a machine for $200,000. The machine was depreciated at the rate of 25% per annum using the straight-line method. In order to raise the reported profit, the company's accountant decided to change the depreciation rate to 10% per annum. (b) Talent Limited is a recruitment agency. On 10 December 2018, Talent Limited helped Ocean Limited hire its Senior Manager and charged the company an agency fee of $30,000. The agency fee was received on 15 January 2019. Talent Limited did not include the $30,000 agency fee in its statement of profit or loss and other comprehensive income for the year ended 31 December 2018. Required: For each of the above cases, identify the accounting principle or concept that has been violated and give a brief explanation. (Total 10 marks)

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a Change of depreciation rate will be termed as change of accounting estimate As per Principle of Co... View the full answer