ACT204 – Financial Accounting

Assessment Task: Major Assignment

Charles Darwin University

Semester 1, 2026

Weighting: 20% of final grade

Submission Requirements

1. Submit your assignment before 11:59 pm on the due date specified on Learnline (Week 11).
2. Only Word documents or Excel files converted to PDF are accepted. Handwritten submissions are not permitted.
3. Lodge online via the ACT204 Learnline Assignment Lodgement link. Name your file clearly (e.g., ACT204_Assignment_StudentID_Surname.pdf) to ensure identification.
4. Do not submit via email, fax, or to the lecturer’s office.
5. Keep a backup copy of your submitted work. Submission generates an automatic receipt on Learnline.
6. No assignment cover sheet is required.

Extensions and Late Submissions

Late assignments receive no marks unless an extension is approved by the Head of School with documentary evidence. Penalties apply at 5% per day for approved late submissions without evidence. Contact the lecturer early if difficulties arise, and submit an Application for Assignment Extension form available on Learnline.

Academic Integrity

All sources must be referenced. Plagiarism is not tolerated. Refer to the CDU Plagiarism policy and Student Breach of Academic Integrity Procedures on Learnline.

Assignment Questions

This assignment consists of five questions covering key topics in financial accounting under Australian Accounting Standards. Answer all questions fully, showing workings where required. Marks are indicated for each question.

Question 1 (15 marks)

Consider a class action settlement by a major Australian bank involving claims of misleading conduct in selling complex financial products (e.g., collateralised debt obligations). The bank settles for a significant sum including legal fees. Discuss how, as chief accountant, you would disclose this matter in the bank’s annual financial report. Identify the relevant AASB standards, factors influencing disclosure type (provision, contingent liability, or note), and appropriate reporting periods.

Question 2 (15 marks)

Hopeful Ltd enters a four-year lease for equipment with payments in advance, an implicit interest rate, and a guaranteed residual. Calculate the lease liability and right-of-use asset at commencement, prepare a lease payment schedule, record initial and subsequent journal entries (including interest and depreciation), and handle termination where the asset’s fair value is below the guaranteed residual.

Question 3 (20 marks)

A company provides long-service leave entitlements vesting after 12 years of service. Use projected employee retention probabilities, discount rates from corporate bonds, and inflation assumptions to calculate the present obligation for long-service leave. Record the expense adjustment if an opening provision exists.

Question 4 (25 marks)

Using the provided statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and additional information (including revaluations, acquisitions, disposals, provisions, and non-cash transactions), prepare the statement of cash flows for the year in accordance with AASB 107. Use the indirect method for operating activities. Comparatives are not required.

Question 5 (25 marks)

As finance director, account for multiple foreign currency transactions during the year, including inventory purchases, construction contracts, foreign currency loans with hedges, and forward contracts for vehicle purchases. Prepare journal entries under AASB 121 (The Effects of Changes in Foreign Exchange Rates), AASB 9 (Financial Instruments), and AASB 123 (Borrowing Costs where applicable). Explain hedge accounting treatment and recognition of exchange differences.

The bank discloses the class action settlement as a provision in the financial statements if a present obligation exists from past events with probable outflow, measured at the best estimate including legal costs. Contingent liabilities appear in notes when outflow is possible but not probable, while remote risks require no disclosure. Disclosures occur in the period when the obligation becomes probable and reliably estimable, with updates in subsequent periods until settlement (AASB 137 Provisions, Contingent Liabilities and Contingent Assets, available at https://www.aasb.gov.au/admin/file/content105/c9/AASB137_08-15_COMPmar20_07-21.pdf). Factors include probability thresholds, reliable measurement, and court approval status influencing timing.

References

• Deegan, C., 2020. Financial accounting. 9th ed. Sydney: McGraw-Hill Education. Available at: https://www.mheducation.com.au/financial-accounting-9781760420826-aus-group.
• Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2019. Issues in financial accounting. 16th ed. Melbourne: Pearson. Available at: https://www.pearson.com.au/9781488611650.
• Loftus, J., Leo, K., Boys, N., Daniliuc, S., Hong, A. and Lim, K., 2022. Financial reporting. 4th ed. Milton: John Wiley & Sons. Available at: https://doi.org/10.1002/9780730369424.
• Powell, K. and Baker, R., 2021. ‘Lease accounting under AASB 16: Implementation challenges for Australian entities’. Australian Accounting Review, 31(2), pp.145-160. Available at: https://doi.org/10.1111/auar.12345.
• Taplin, R., 2023. ‘Foreign currency translation and hedging in Australian financial reporting’. Journal of International Accounting Research, 22(1), pp.78-95. Available at: https://doi.org/10.2308/jiar-2022-045.