Outback Meats has produced an innovative product over the last three years which has been well received overseas. Instead of selling emu bellies to pet food manufacturers, it has developed a new product Emu jerky for export. Outback reported a minimum 12% growth in annual earnings for each of the past three years. During the current year, because of a downturn in the economy, the earnings growth is expected to be less than 9%. One month before the 31 December financial year-end of the current year, the manager of the Emu jerky product line is considering the following actions that could address the low earnings growth:
 

a. Defer December's routine monthly maintenance on packaging equipment to the next financial year.
 

b. Outback purchased equipment which was transported to the factory in Perth. The company paid the fine incurred by the driver who parked the truck illegally to get a coffee, as well as the extra cost to replace a part which fell off the truck because it was not secured properly by the driver. The bookkeeper will be instructed to include the fine and cost of part replacement to the asset account "Equipment".
 

c. Defer the recording of the current period's advertising costs by requesting Outback Meats' external advertising agency to delay the billing of December advertisements until January of the next financial year or instruct Outback's staff to alter invoices to a date in the next financial year.
 

d. Request the accountant to increase the dollar amount of the emu bellies inventory on the balance sheet to show a higher market price (net realisable value).

 

Based on the above case study, finalize a report: 

 

Body of the Report (Include the following)

• Introduction:
  ▪ Briefly state the business involved- remember that this is a fictitious company, 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 each item (a) to (d). Briefly list these and any relevant law referred to in your analysis.
• Analysis of suggestions:
  ▪ Have a subheading for each of the suggestion labelled (a) to (d). Please do not repeat the description of each suggestion given in the case.
  ▪ Under each suggestion, specify the impact of the suggestion on the financial statement elements. Journal entries are not required. If there is no financial impact, 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 is referred to in your analysis.
   
• Show logically how you apply the concept/principle to the suggestion.
• In the conclusion, assess whether there is any violation, followed by recommendation 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 general conclusion, by stating which suggestions are acceptable or otherwise, any additional information required.
  ▪ Broad consequence to the business and offer recommendations on general action to undertake to strengthen for example, corporate governance, legal framework, human resources, sustainability, management strategy and other business operations issues.
  
   
• Back matter
  ▪ Reference list
   
• Appendix

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

Company Name	Revenue recognition policy and amount reported (Use the predominant policy related to sales of goods or rendition of services)	Inventory policy (Total inventory Reported)	Policy for (a) and (b) Including depreciation/ amortisation policy on   a. Property, plant & equipment, and b. intangible assets (if any) State net carrying value for each class of non-current assets (a) & (b)

 

Answer rating: 100% (QA)

Report on Financial Decision Making for Outback Meats Introduction Outback Meats a fictitious company has seen significant success in the past three years with its innovative product Emu jerky which h... View the full answer