Case Study:

Global Net Ltd is an internet service provider in Australia which employs staff locatedoverseas to man its call centres. It has been operating in the business for three years.Competition in this industry is intense and Global is about to issue more shares in thefollowing two years. The following ideas have been suggested for action for the currentyear (ending 30 June):

a. Record executive year-end bonus compensation for the current year when it ispaid in the next year, after the June financial year-end. b. Move the call centres to cheaper and older rental premises outside of the citycentre. c. Sell off equipment before year-end. The proceeds from the sale will be recordedas service revenue and the carrying amount as expenses. The equipment couldbe replaced with leased equipment in the current year if required. d. Record the cash received from new customers in June as service revenue for thecurrent year. The plans will be effective from 1 July of the next financial year.

Based on the abovecase study, assume that you are a trainee accountant, recently employed by the company, preparea report to the Chief Executive Officer containing the following in one thousand three hundred words:

• Introduction: Briefly state the business involved- remember that this is a fictitiouscompany, and the information is contained in the case. Identify possible overall motivations for the suggestions. Identify relevant frameworks, standards you will use to analyse and solve eachitem (a) to (d). Briefly list these and any relevant law referred to in youranalysis.
• Analysis of suggestions: Have a subheading for each of the suggestion labelled (a) to (d). Please donot repeat the description of each suggestion given in the case. Under each suggestion, specify the impact of the suggestion on the financialstatement elements. Journal entries are not required. If there is no financialimpact, please state so.
• In the analysis: o Identify the specifics of framework/ standard/ code to be applied. o Briefly explain the accounting concept/ principle etc, the first time it isreferred to inyour analysis.
• Show logically how you apply the concept/principle to the suggestion.
• In the conclusion, assess whether there is any violation, followed byrecommendation to accept the suggestion or not.
• state appropriate accounting treatment, if applicable.
• if no violation of accounting concepts, please state so.
• comment on any business implications e.g., health and safety, staff welfare, social implications, ethical etc. and give the appropriate recommendation.
• General Conclusion and recommendations Following the discussion of all items, you may like to include a generalconclusion, by stating which suggestions are acceptable or otherwise, anyadditional informationrequired. Broad consequence to the business and offer recommendations on generalaction to undertake to strengthen for example, corporate governance, legalframework, human resources, sustainability, management strategy and otherbusiness operations issues.
• Back matter Reference list
• Appendix

Summarise the accounting policies and various amounts from financial statementsof the selected company using the table below:

CompanyName	Revenue recognitionpolicy and amountreported(Use thepredominant policyrelated to sales ofgoods or renditionof services)	Inventory policy (Total inventoryReported)	Policy for (a) and (b)Including depreciation/amortisation policy on a. Property, plant &equipment, and b. intangible assets (ifany)State net carrying valuefor each class of non-current assets (a) & (b)