Essay about acct 1b w2 prep ques ans

Submitted By rosewind
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Pages: 2

ACCT1511 REVISITING FINANCIAL STATEMENT ANALYSIS (2) &
ACCOUNTING POLICY CHOICE
PREPARATION QUESTION

Problem 16.15
Television program rights
1 The main differences are in the amortisation policies. Ten writes off series programs in full upon initial airing while features are amortised over their estimated useful lives. Seven uses the less of the rights period or a certain time (e.g. 12 months).
2 Not enough information to be sure but, Seven’s policy appears a little more conservative.

16B
1 Pre-opening expenses are made up of:
• set-up and establishment costs, i.e. clerical, legal, accounting and stationery costs incurred early in the life of a company. They include the incorporation fee, promoters’ fees and the cost of preparing corporate records;
• costs associated with the acquisition of the Casino licence, including preparation of tender, lobbying and entertainment costs;
• share issue and finance costs, including underwriting fees and the cost of printing share certificates.
2 Sydney Casino has written off ‘large chunks’ of its pre-opening costs as abnormal expenses as they occurred whereas Melbourne’s Crown Ltd has capitalised them. We are not told over what period this item will be amortised. The effect of the difference in policies is a reduction in profits and assets of Sydney Casino whereas Crown’s profit is only affected by the annual amortisation expense. Crown’s assets will include pre-opening costs as an intangible asset.
The result is that Crown is reporting…