Memorandum
To: Financial Accounting Division (Senior Accountant)
From: Financial Accounting Division (Partner)
Subject: PJ Designs Limited Group Financial Statements and Analysis
Background and Scope:
Our firm has recently been engaged to provide accounting services to PJ Designs Limited for the year ended 31 December 2021.
PJ Designs Limited is an iconic wholesaler and retailer of high end resort apparel and accessories. PJ Designs Limited acquired 100 per cent of BW Pty Ltd (hereafter collectively referred to as “the Group”) on 1 January 2015. BW Pty Ltd focuses on bohemian chic apparel and accessories.
The Group’s head office is located in Byron Bay in Northern New South Wales. During the summer storm season, the building in which the head office is located sustained water damage. Consequently, the head office suffered damage to office furniture and some computer equipment. Furthermore, the Group utilises a customised centralised inventory system which is housed and maintained at the head office. Due to damage caused by the severe storms, the centralised inventory system was offline between 18 December 2021 and 10 January 2022. The Chief Financial Officer of PJ Designs Limited advises the system has been running properly since coming back online on 10 January 2022.
You have been tasked with preparing the key draft financial statements for the year ended 31 December 2021 based on the available information, as outlined below.
Corporate Profile:
Due diligence records related to the acquisition have been supplied by the accounting firm that assisted with the acquisition. These records identify BW Pty Ltd had share capital of $50,000 and Retained Earnings of $1,250,000 as at the date of acquisition. The Managing Director has advised that the carrying value of assets and liabilities were consistent with fair value at the date of acquisition with the exception of (i) Land where the fair value had been assessed as $125,000 higher than the carrying value and (ii) the BW brand. The BW brand is not recognised in BW Pty Ltd.’s balance sheet, however the contract indicates the fair value of the BW brand is $150,000 at the date of acquisition.
PJ Designs Limited is required to provide a copy of their financial statements to the NAB bank as a requirement of their loan agreement. PJ borrowed $2.5m on 1 June 2019. The loan is repayable in 5 years’ time, the interest rate is fixed at 3.5% for the duration of the loan. The monthly payments of $45,479 are payable on the last day of each month. The loan agreement contains several covenants including that the Group maintain a current ratio of at least 1:1 and Debt to Asset ratio no higher than 20%. Furthermore, PJ Designs is prohibited from increasing long term liabilities without the direct approval of the lender. BW Pty Ltd increased their external debt with Bendigo Community Bank to $100,000 on 31.12.21. The loan is interest only and repayable on 31 December 2022. The interest rate on the debt with Bendigo Community bank during the year ended 31 December 2021 was 3.25%. The BW Pty Ltd’s loan agreement stipulates that no dividends are to be paid to the parent entity until the debt is fully repaid. A requirement of BW Pty Ltd.’s increased debt facility was the parent entity had to agree to be guarantor should BW Pty Ltd default on the loan.
Financial Statements and Transactions:
The financial controller of PJ Design Limited advises the following transactions occurred throughout the year ended 31 December 2021:
- PJ Designs Limited has ten stores located around Australia, with a focus on capital cities. The company generally leases its stores in large commercial shopping centres. BW Pty Ltd stores are located in Byron Bay, and on the Gold Coast and Sunshine Coast. BW Pty Ltd lease their stores in locations close to the beach in the main tourist areas of their chosen geographic location. The financial controller advises that the lease for the store in Byron Bay has been treated as an operating lease by BW Pty Ltd. Lease payments are $40,000 p.a, payable on 31 December, with an implicit interest rate of 3.25%. The Group’s debt facilities incur interest at a rate of 4.25%. Upfront costs of $2,500 were incurred in negotiating the lease and were expensed at the time of payment. Included in the annual lease amount is a maintenance fee of $10,000 p.a. The lease commenced on 1 January 2021 and expires on 31 December 2023. There are no options attached to the lease. The lease payment is fully deductible for tax purposes.
- The Group has one main warehouse located in Brisbane which serves as the distribution hub for delivery of inventory to the stores. The land and warehouse are owned by PJ Designs Limited.
- Each store keeps a quantity of inventory on hand to avoid ‘stock outs’. The financial controller noted that whilst the Brisbane warehouse conducts full stocktakes on a bi-monthly basis, regular stock takes were not performed at all stores.
- PJ Designs Limited sold some furniture to BW Pty Ltd on 5 October 2021 for $22,000. PJ Designs Limited originally acquired the furniture on 1 November 2014 for $30,000 and was depreciating the furniture on a straight line basis over ten years. The residual value is expected to be $2,000. The furniture was removed from one of the stores when the store relocated early October 2021. BW Pty Ltd has assessed that the furniture has a remaining useful life of three years, with an expected residual value of $1,000. The Group has adopted the accounting policy of measuring all classes of property, plant and equipment using the ‘cost model’.
- Fees of $50,000 per annum are paid to PJ Designs Limited by BW Pty Ltd for marketing support. The fees are paid on the 15th of the month following the end of each month. In the prior year, fees totalled $35,000.
- The carrying amount of the damaged furniture and equipment arising from the water damage was $30,000 (Cost $40,000, Accumulated Depreciation $10,000). The equipment was fully depreciated in the current year to account for the damage.
The Finance Director noted the following in our discussion:
- Goodwill on acquisition was impaired by $20,000 in the year ended 31 December 2019, however the directors have formed the view that no impairment arises in subsequent periods. The company has prepared cash flow projections to 2030 which support the carrying value of goodwill.
- A few retailers within the sector have gone into liquidation in the past six months. Whilst the Group see this as an opportunity in the medium to long term to increase market share, the Group are actively engaged in regular ‘promotions’ over social media to turn over inventory.
- Buoyed by increasing market share PJ Designs Limited booked $150,000 revaluation increment in relation to their “PCD” brand. The revaluation increment reflects a reversal of expenses incurred in prior years as the Finance Director is confident that the future economic benefits from the use of the brand justifies the asset’s value.
- PJ Designs Limited lent BW Pty Ltd $50,000 on 15 June 2020 to assist with the refit of the new store in Byron Bay. Interest is charged at 4.75 per cent annum and paid on the last day of each month. The loan is repayable on 31 March 2022.
- BW Pty Ltd sold inventory to PJ Designs on 1 August 2021. The inventory originally cost BW Pty Ltd $80,000 and was sold to PJ Designs Limited for consideration of $110,000. The inventory of PJ Designs Limited at 31 December 2021 includes a balance of $55,000 related to this transaction.
- Group policy is that customers can return items acquired within fourteen days of the sale for a full refund provided the item is unused / unworn and the tags are still on the garment / accessory. As it is anticipated that 1.5% of sales are returned for a refund PJ Designs Limited increased the warranty provision by $100,000 to account for these returns. Customers of BW Pty Ltd rarely return purchases for a refund, however consistent with group policy BW Pty Ltd increased their warranty provision by $30,000. The group’s accounting policy for revenue is to book the full price of sales at the time sales occur and recognise refunds at the time customers return the items and a refund is issued to the customer.
- The financial controller has advised the Group’s accounting policy is to expense licencing costs as incurred. Consequently, costs of $55,000 related to the acquisition of a licence by BW Pty Ltd to be the exclusive retailer of Portofino fashions, a high end Italian designer, were expensed on 15 December 2020. The licence agreement is for the period 15 December 2020 – 15 December 2025.
- The company breached a loan covenant on 15 December 2021. The breach was discussed with the Bank . The Bank confirming in writing on 5 January 2022 that no demand payment would be made as result of the breach, provided the breach was rectified within six months.
- The average gross profit margin for PJ Designs Limited is 34% and 45% for BW Pty Ltd.
- Due to the ongoing uncertainty with the COVID-19 pandemic, the company has booked a provision of $120,000 to reflect potential costs related to possible future store closures.
- The long-term investment represents a 22% shareholding in an unlisted homewares company acquired on 1 January 2020 for $500,000. The consideration paid reflected fair value at the time of acquisition. PJ Designs Limited received a $20,000 dividend during the year (no dividends were paid in the prior year). A copy of the financial statements for the homewares company shows the company made a profit after tax of $250,000 for the year ended 31 December 2021 (2020: $100,000) . There were no revaluation adjustments noted in the homewares company financial statements. The investment is recorded in PJ Designs Limited financial statements at cost. The group’s accounting policy is to account for the investment at cost.
- There have been no share issues or capital transactions during the year.
- All amounts are expressed exclusive of GST. GST is not required to be incorporated into the transactions or adjustments for the purposes of this exercise.
Draft Financial Statements:
The trial balance for PJ Designs Limited for the financial year ended 31 December 2021 (including comparatives) is included on the following page. BW Pty Ltd have also provided a copy of their trial balance for the year ended 31 December 2021.
PJ Designs Limited
Trial Balance for the year ended 31 December 2021
| 2021 | 2020 |
| Dr | Cr | |||
| $ | $ | |||
| Sales | 6,502,769 | 5,671,164 | ||
| Marketing Fees | 50,000 | 35,000 | ||
| Other Income | 148,500 | 135,000 | ||
| Interest Received | 3,603 | 3,275 | ||
| Finance Income | 1,295 | 1,288 | ||
| Dividends Received | 50,000 | 45,000 | ||
| Gain on revaluation | 150,000 | – | ||
| Gain on sale of PPE | 11,401 | 21,484 | ||
| Cost of Goods Sold | 4,291,828 | 3,516,122 | ||
| Employee Benefits | 247,273 | 220,780 | ||
| Depreciation and Amortisation Expenses | 379,485 | 306,008 | ||
| Marketing Expenses | 557,936 | 498,157 | ||
| Operating & Occupancy Expense | 601,897 | 537,409 | ||
| Administration Expenses | 141,108 | 125,989 | ||
| Finance Expenses | 53,582 | 70,486 | ||
| Directors Fees | 20,000 | 8,000 | ||
| Other Expenses | 175,800 | 157,568 | ||
| Tax Expense | 134,597 | 203,369 | ||
| Cash and cash equivalents | 132,997 | 108,876 | ||
| Trade Receivables | 281,012 | 147,565 | ||
| Other Receivables | 4,167 | 2,917 | ||
| Inventory | 554,846 | 572,532 | ||
| Right to Recover Asset | 44,074 | 20,074 | ||
| Prepayments | 74,580 | 66,587 | ||
| Deferred Tax Assets | 63,145 | 63,145 | ||
| Land | 2,367,000 | 2,367,000 | ||
| Buildings (Warehouse) | 1,324,885 | 1,250,000 | ||
| Accumulated Depreciation | 331,221 | 250,000 | ||
| Fixtures and Fittings | 2,026,500 | 2,026,500 | ||
| Accumulated Depreciation | 1,688,750 | 1,621,200 | ||
| Furniture and Fixtures | 45,250 | 75,250 | ||
| Accumulated Depreciation | 36,200 | 10,750 | ||
| Motor Vehicles | 100,125 | 100,125 | ||
| Accumulated Depreciation | 33,369 | 30,336 | ||
| Leased Assets | 914,146 | 914,146 | ||
| Accumulated Depreciation | 548,487 | 365,658 | ||
| Investment in subsidiary | 1,750,000 | 1,750,000 | ||
| Loan Receivable – subsidiary | 50,000 | 50,000 | ||
| Other Investments (Long Term) | 500,000 | 500,000 | ||
| Brands | 287,285 | 137,285 | ||
| Trade Creditors | 317,989 | 336,750 | ||
| Accrued Expenses | 11,000 | 33,825 | ||
| Current Tax Liabilities | 247,621 | 203,369 | ||
| Accrued Long Service Leave | 137,500 | 125,000 | ||
| Accrued Annual Leave | 30,500 | 9,720 | ||
| Provision for Warranties | 141,897 | 38,089 | ||
| Provision for Store Closures | 120,000 | – | ||
| Lease Liabilities | 884,146 | 920,000 | ||
| Other current liabilities | 17,133 | – | ||
| Borrowings – loan | 1,262,899 | 1,755,069 | ||
| Share Capital | 150,000 | 150,000 | ||
| Retained Earnings – opening | 4,302,238 | 4,033,913 | ||
| Dividends Paid | 55,000 | – | ||
| 17,178,518 | 17,178,518 | 15,795,890 | 15,795,890 |
BW Pty Ltd
Trial Balance for the year ended 31 December 2021
| Dr | Cr | |
| $ | $ | |
| Sales | 819,623 | |
| Other Income | 11,979 | |
| Interest Received | 3,280 | |
| Cost of Goods Sold | 443,263 | |
| Employee Benefits | 55,152 | |
| Depreciation and Amortisation Expenses | 93,707 | |
| Marketing Expenses | 50,000 | |
| Operating & Occupancy Expense | 109,071 | |
| Administration Expenses | 41,965 | |
| Finance Expenses | 2,920 | |
| Directors Fees | 3,270 | |
| Other Expenses | 43,457 | |
| Tax Expense | 44,313 | |
| Cash and cash equivalents | 155,846 | |
| Trade Receivables | 28,068 | |
| Inventory | 250,336 | |
| Prepayments | 49,050 | |
| Land | 463,625 | |
| Fixtures and Fittings | 431,978 | |
| Accumulated Depreciation | 94,567 | |
| Furniture and Fixtures | 22,000 | |
| Accumulated Depreciation | 1,668 | |
| Motor Vehicles | 30,000 | |
| Accumulated Depreciation | 12,450 | |
| Leased Assets | 320,750 | |
| Accumulated Depreciation | 128,300 | |
| Brands | 43,600 | |
| Trade Creditors | 28,573 | |
| Accrued Expenses | 4,167 | |
| Current Tax Liabilities | 28,285 | |
| Accrued Annual Leave | 2,483 | |
| Provision for Warranties | 40,000 | |
| Lease Liabilities | 320,750 | |
| Borrowings – Parent | 50,000 | |
| Borrowings – loan | 100,000 | |
| Share Capital | 50,000 | |
| Retained Earnings – opening | 1,072,816 | |
| Dividends Paid | 30,000 | |
| 2,740,656 | 2,740,656 |
PART B: Financial Statements & Report [165 Marks, Reweighted to 50%]
1 Financial Statement Preparation [110 MARKS]
You are to prepare the following financial statements for your client:
1.1 Consolidated Financial Statements [30 MARKS]
- Consolidated Statement of Financial Position as at 31 December 2021;
- Consolidated Profit and Loss and Other Comprehensive Income for the year ended 31 December 2021;
- Consolidated Statement of Changes in Equity for the year ended 31 December 2021;
- Footnotes supporting the balances included in the financial statements[1].
1.2 Company Financial Statements (PJ Designs Limited): [50 Marks]
- Statement of Financial Position as at 31 December 2021 (including comparative information);
- Profit and Loss and Other Comprehensive Income for the year ended 31 December 2021 (including comparative information);
- Statement of Changes in Equity for the year ended 31 December 2021 (including comparative information);
- Statement of Cash Flows for the year ended 31 December 2021 (comparative information is not required);
- Footnotes supporting the balances included in the financial statements1.
1.3 Supporting Workpapers [30 Marks]
You are also required to provide a copy of your work papers. The work papers should include:
- a final trial balance for the consolidated group;
- final trial balance for the parent entity (including comparatives);
- a list of journal entries required to be processed (excel / word) and
- any related workings / calculations.
These work papers should also include sufficient notes explaining workings / calculations and adjusting journal entries. The work papers should clearly identify the entity the adjustments (journal entries) relate to (eg: Consolidation Entry, Parent Entity, Subsidiary entity).
The workpapers should be included as an Appendix to your report.
Note: Taxation entries are only required to the extent the adjusting journal entries affect taxation balances required to be recorded in the financial statements. A detailed tax calculation is not required.
2. Report [55 MARKS]
You are required to present the draft Financial Statements and work papers, together with your report of key matters to the Finance Director.
Your report should outline key issues the Group should consider and their impact / potential impact on the financial statements. These key issues should include discussion of relevant matters you identify during your review of the Group’s operations and preparation of the draft financial statements for the year ended 31 December 2021. The report may include discussion of areas / transactions where more information or clarification is required to finalise the draft financial statements.
Grading Guidance:
The grading rubric outlined on the following pages provides an overview of the allocation of marks against the performance level expected for each grading category.
| ACCT71-202 CASE PART B – CONSOLIDATED FINANCIAL STATEMENTS MARKING GUIDE (30 Marks) | |||||
| Outstanding or Exemplary Performance, Superior Level High Distinction (85 – 100%) | Goes well beyond minimum requirements, Advanced Level Distinction (75% – 84.99%) | Goes beyond minimum requirements, Proficient Level Credit (65% – 74.99%) | Meets Requirements, Functional Level Pass (50% – 64.99%) | Does not Meet Requirements Fail ( 0 – 50%) | |
| Consolidated Statement of Financial Position (12 Marks) | The case has been carefully and logically analysed resulting in the Consolidated Statement of Financial Position and related notes portraying the Group’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of consolidation and the presentation of GPFS as related to this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Financial Position and related notes portraying the Group’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of consolidation and the presentation of GPFS as related to this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Financial Position and related notes portraying the Group’s results being mostly correct in format and financial information presented. Demonstrates a good understanding of the requirements of consolidation and the presentation of GPFS as related to this statement. | Satisfactory attempt at preparing the Consolidated Statement of Financial Position and related notes portraying the Group’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of consolidation and the presentation of GPFS as related to this statement. | The Consolidated Statement of Financial Position is largely incorrect. More than half the required balances are incorrect. Format is inconsistent with requirements. Level of understanding regarding the requirements of consolidation and the presentation of GPFS as related to this statement is below expectations. |
| Consolidated Statement of Profit or Loss and Other Comprehensive Income (12 Marks) | The case has been carefully and logically analysed resulting in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and related notes portraying the Group’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and related notes portraying the Group’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and related notes portraying the Group’s results being mostly correct in format and financial information presented. Demonstrates a good understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | Satisfactory attempt at preparing the Consolidated Statement of Profit or Loss and Other Comprehensive Income and related notes portraying the Group’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | Consolidated Statement of Profit or Loss and Other Comprehensive Income is largely incorrect. More than half the required balances are incorrect. Format is inconsistent with requirements. Level of understanding regarding the requirements of consolidation and the preparation of this statement is below expectations. |
| Consolidated Changes in Equity (6 Marks) | The case has been carefully and logically analysed resulting in the Consolidated Statement of Changes in Equity portraying the Group’s results. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Changes in Equity portraying the Group’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Consolidated Statement of Changes in Equity portraying the Group’s results being mostly correct in format and financial information. Demonstrates a good understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | Satisfactory attempt at preparing the Consolidated Statement of Changes in Equity portraying the Group’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of consolidation and the presentation of GPFS as related to the preparation of this statement. | Consolidated Statement of Changes in Equity is largely incorrect. More than half the required balances are incorrect. Format is inconsistent with requirements. Level of understanding regarding the requirements of consolidation and the preparation of this statement is below expectations. |
| ACCT71-202 CASE PART B – COMPANY FINANCIAL STATEMENTS MARKING GUIDE (50 MARKS) | |||||
| Outstanding or Exemplary Performance, Superior Level High Distinction (85 – 100%) | Goes well beyond minimum requirements, Advanced Level Distinction (75% – 84.99%) | Goes beyond minimum requirements, Proficient Level Credit (65% – 74.99%) | Meets Requirements, Functional Level Pass (50% – 64.99%) | Does not Meet Requirements Fail ( 0 – 50%) | |
| Company Statement of Financial Position (12 Marks) | The case has been carefully and logically analysed resulting in the Company Statement of Financial Position and related notes (including comparatives) portraying the parent entity’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of the presentation of GPFS as related to this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Financial Position and related notes (including comparatives) portraying the parent entity’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the presentation of GPFS as related to this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Financial Position and related notes (including comparatives) portraying the parent entity’s results being mostly correct in format and financial information presented. Demonstrates a good understanding of the requirements of the presentation of GPFS as related to this statement. | Satisfactory attempt at preparing the Company Statement of Financial Position and related notes (including comparatives) portraying the parent entity’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of presentation of GPFS as related to this statement. | The Company Statement of Financial Position is largely incorrect. More than half the required balances are incorrect or missing. Format is inconsistent with requirements. Level of understanding regarding the requirements of the presentation of GPFS as related to this statement is below expectations. |
| Company Statement of Profit or Loss and Other Comprehensive Income (12 Marks) | The case has been carefully and logically analysed resulting in the Company Statement of Profit or Loss and Other Comprehensive Income and related notes (including comparatives) portraying the parent entity’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Profit or Loss and Other Comprehensive Income and related notes (including comparatives) portraying the parent entity’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Profit or Loss and Other Comprehensive Income and related notes (including comparatives) portraying the parent entity’s results being mostly correct in format and financial information presented. Demonstrates a good understanding of the requirements of presentation of GPFS as related to the preparation of this statement. | Satisfactory attempt at preparing the Company Statement of Profit or Loss and Other Comprehensive Income and related notes (including comparatives) portraying the Group’s results and the parent entity’s results Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | Company Statement of Profit or Loss and Other Comprehensive Income is largely incorrect or missing. More than half the required balances are incorrect. Format is inconsistent with requirements. Level of understanding regarding the requirements of the preparation of this statement is below expectations. |
| ACCT71-202 CASE PART B – COMPANY FINANCIAL STATEMENTS MARKING GUIDE (50 MARKS ) | |||||
| Outstanding or Exemplary Performance, Superior Level High Distinction (85 – 100%) | Goes well beyond minimum requirements, Advanced Level Distinction (75% – 84.99%) | Goes beyond minimum requirements, Proficient Level Credit (65% – 74.99%) | Meets Requirements, Functional Level Pass (50% – 64.99%) | Does not Meet Requirements Fail ( 0 – 50%) | |
| Company Changes in Equity (6 Marks) | The case has been carefully and logically analysed resulting in the Company Statement of Changes in Equity (including comparatives) portraying the parent entity’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Changes in Equity (including comparatives) portraying the parent entity’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Changes in Equity (including comparatives) portraying the parent entity’s results being mostly correct in format and financial information. Demonstrates a good understanding of the requirements the presentation of GPFS as related to the preparation of this statement. | Satisfactory attempt at preparing the Company Statement of Changes in Equity (including comparatives) portraying the parent entity’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | Company Statement of Changes in Equity is largely incorrect. More than half the required balances are incorrect or missing. Format is inconsistent with requirements. Level of understanding regarding the requirements of consolidation and the preparation of this statement is below expectations. |
| Company Statement of Cash Flows [20 Marks] | The case has been carefully and logically analysed resulting in the Company Statement of Cash Flows and related reconciliation portraying the parent entity’s results being correctly presented. No / minimal errors in format and financial information. Demonstrates an excellent level of understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Cash Flows and related reconciliation portraying the parent entity’s results being substantially correct in format and financial information presented. Demonstrates a high level of understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | The case has been carefully and logically analysed resulting in the Company Statement of Cash Flows and related reconciliation portraying the parent entity’s results being mostly correct in format and financial information. Demonstrates a good understanding of the requirements the presentation of GPFS as related to the preparation of this statement. | Satisfactory attempt at preparing the Company Statement of Cash Flows and related reconciliation portraying the parent entity’s results. Presentation is correct with at least half the required balances being correct. Demonstrates satisfactory understanding of the requirements of the presentation of GPFS as related to the preparation of this statement. | Company Statement of Cash Flows is largely incorrect. More than half the required balances are incorrect or missing. Format is inconsistent with requirements. Level of understanding regarding the preparation of this statement is below expectations. |
| ACCT71-202 CASE PART B – WORKPAPERS MARKING GUIDE (30 MARKS ) |
| Supporting Workpapers (30 marks) | No /minimal errors / omissions in the journal entries and supporting final draft trial balances / supporting worksheet. Balances reconcile correctly to the Financial Statements presented. | The substantial majority of the journal entries are correct and correctly presented in the draft final trial balances / supporting worksheet. Balances reconcile to the Financial Statements presented. | More than half the journal entries are correct and correctly presented in the draft final trial balances / supporting worksheet. Balances mostly reconcile to Financial Statements presented. | At least half the journal entries are correct and are correctly presented in the draft final trial balances / supporting worksheet. Balances mostly reconcile to Financial Statements presented. | Work papers and / or draft final trial balances / supporting worksheet contain a large number of errors. |
| ACCT71-202 CASE PART B – REPORT MARKING GUIDE (55 MARKS ) |
| Outstanding or Exemplary Performance, Superior Level High Distinction (85 – 100%) | Goes well beyond minimum requirements, Advanced Level Distinction (75% – 84.99%) | Goes beyond minimum requirements, Proficient Level Credit (65% – 74.99%) | Meets Requirements, Functional Level Pass (50% – 64.99%) | Does not Meet Requirements Fail ( 0 – 50%) | |
| Organisation (max 3 marks) | Overall, excellent organisation demonstrated. Headings, introduction of main ideas, transitions and conclusions are well thought out and presented. All paragraphs have clear ideas which clearly link to the facts / requirements of the case, where relevant. | Good overall organisation. Most paragraphs have clear ideas, logical sequence / argument, which clearly link to the facts / requirements of the case, where relevant. | Overall, good organisation with paragraphs and ideas following a logical sequence. More than half the paragraphs have clear ideas, which clearly link to the facts / requirements of the case, where relevant. | Overall, there is a satisfactory attempt a organising the report in a logical manner. At least half the paragraphs have clear ideas. Linkage to case facts / requirements may be missing and transitions are weak. | There is some organisation although some of the organisational tools used are weak or missing. Few paragraphs have clear ideas, linkage to case facts / requirements are missing and transitions are weak. |
| Content & Analysis (max 40 marks) | Exceptionally well-presented and analysed; discussion is detailed and well-developed; accounting policies demonstrate very high level understanding of regulatory requirements, analysis demonstrates clear linkage to facts of the case and assessment requirements. Sources are exceptionally well-integrated and support claims argued in the analysis effectively. Analysis is concise, specific and relevant with no generalisation / superfluous material. | Well-presented and argued; analysis, accounting policies and discussion of key matters is detailed, developed and supported by linkage to facts of the case and demonstrates high level understanding of related regulatory requirements. Sources are well integrated and support the analysis presented. Analysis is concise, specific and relevant with minimal generalisation / superfluous material. | Well-presented and argued; more than half the discussion is supported by facts related to the case. Sources are generally well integrated and relevant to the analysis presented .Analysis is mostly specific and relevant with minimal generalisation / superfluous material .Content and analysis demonstrate a high level of understanding of assessment and related regulatory requirements. | Content is sound and solid; ideas are present but not always developed or supported. Analysis is relevant, however may be of a generalised nature at times. Minimal superfluous material. At least half of the key matters have been identified and discussed. The discussion demonstrates clear linkage to the facts of the case. Content demonstrates satisfactory understanding of regulatory and assessment requirements. | Content demonstrates a lack of understanding of assessment requirements. Some relevant information is discussed, but overall largely irrelevant discussion and / or too generalised in nature. Report is too long or too short |
| Style (max 6 marks) | Overall, the report is presented in a highly professional style. The report holds the reader’s interest throughout. | Overall, the writing style is highly professional and is appropriate to the audience and purpose. The report mostly holds the reader’s interest. | Overall, the writing style is professional and is appropriate to the audience and purpose. The reader’s interest in held for more than half the report. | There is a satisfactory attempt at style; reads disjointed in parts. Overall, writing style is reasonably coherent. | There is little attempt at style; the report is disjointed as a whole, and / or is unsuited to audience and purpose. |
| Grammar and Mechanics (max 6 marks) | Virtually no spelling, grammatical, syntax and punctuation errors. Appropriate referencing | Minimal errors in grammar, spelling, syntax and punctuation. Appropriate referencing | Few errors in spelling, grammar, syntax and / or punctuation. Appropriate referencing. | Some errors in spelling, grammar, syntax and/or punctuation. Appropriate referencing. | Errors in spelling, grammar, syntax and/or punctuation throughout. Demonstrates lack of proof- reading. |
[1] Footnotes should provide a breakdown of the accounts supporting the balances disclosed in the financial statements. Accounting policy disclosures are not required.
