Assessment Task 2 \u2014 Written Assessment – Write My Essay Today: No1 Oz Essay Writing Service Australia Part A
\nDue date: Wednesday of Week 7 (23:45 AEST) ASSESSMENT
\nWeighting: 20% 2A
\nObjectives
\nThis assessment item relates to the following unit learning outcomes:
\n\uf0b7 Interpret the technical requirements and conceptual aspects of selected accounting standards that
\naddress advanced issues in financial reporting.
\n\uf0b7 Exercise professional judgement to apply the requirements of relevant accounting standards and
\nconceptual accounting knowledge to solve advanced accounting problems.
\n\uf0b7 Justify and communicate accounting advice and ideas in straightforward contexts to influence
\nspecialists and non-specialists.
\n\uf0b7 Reflect on performance feedback to identify and action learning opportunities and self-improvements.
\nPage | 2
\nHimalaya is a hiking equipment medium sized retailer which runs over 500 retail stores
\nthroughout Australia with significant online exposure. Katherine Kay is a newly appointed
\nchief financial officer in Himalaya. She decided to recommend share options and exchange
\ntraded share options to leverage the risk of volatile shares or earn the return from the share
\nmarket. Katherine have asked you as a financial accountant to prepare a memorandum to
\nthe board of directors for Katherine’s signature. Considering the members of the board have
\nlimited understanding of financial instruments such as exchange traded share options,
\nKatherine request you to draft the memorandum with the explanations of the exchange
\ntraded share options. The below questions need to be addressed in the memorandum.
\n\uf0b7 What is an option? Distinguish call options from put options.
\n\uf0b7 What is an exchange traded share option? How does an exchange traded share option
\nwork?
\n\uf0b7 Are exchange traded share options financial instrument in accordance with AASB 9
\nFinancial Instrument? What type of financial instruments are they according to AASB
\n9 (for example, primary, compound, hybrid, derivative)? Explain your answers.
\n\uf0b7 For example, Himalaya has entered the contract of options on FashionCo Ltd on 1 July
\n2023. Explain the rights and obligations of Himalaya.
\n\uf0b7 Then assuming on 1 September 2023, the company writes 100,000 exchange traded call
\noptions in FashionCo at a premium of $2.50 per option. The options have a fair value to the
\nholder of $1.50 each on 31 January 2024. Explain whether it is beneficial for the company
\nto write the exchange traded call options. Use this example as the assumption in the
\nmemorandum to present the accounting entries and its relevant explanations on
\nrecognition and measurement.
\nQuestion 1 continued over the
\npage
\nQuestion 1 20 marks
\nPage | 3
\nQuestion 1 (continued)
\nWord Limit
\nWord limit is 700 words. You can exceed this limit by 10% (an extra 70 words) with no penalty. – – Note that the following are not included in the
\nword count:
\n\uf0b7 The Memorandum title and heading block, and
\n\uf0b7 The reference list.
\nResources
\nThe following are sources of information about share options for this assignment:
\n\uf0b7 Assessment Brief Original Custom Research Essay Pro Papers Help – Chapter 11 or 12 of the new edition on prescribed textbook. This chapter contains information about the requirements of AASB 9
\nFinancial instruments in relation to classification, recognition, and measurement.
\n\uf0b7 An introductory finance textbook. This will provide you with some useful information. However, it will be at a more advanced level
\nthan what is required here. It will not include discussion of the requirements of AASB 9 Financial Instruments.
\n\uf0b7 – Another accounting textbook. A good starting point is chapter 14 of Financial Accounting by Craig Deegan. The 9th edition (published in
\n2020) is available online through the CQU library.
\n\uf0b7 Information from the internet via a search.
\n\uf0b7 We will also discuss the assignment question during one (or more) of the weekly workshops.
\n\uf0b7 In some cases you may come across interest rate swaps on investments. These types of swaps are different to the one in this question
\nas the interest is received from the investment rather than, as is the case here, being paid on a loan.
\nPage | 4
\nPaper Writing for ACCT19061 Advanced Financial Accounting Written Assessment – Write My Essay Today: No1 Oz Essay Writing Service Australia Rubric – grade miners score
\nContent The writing should demonstrate competence in the subject and the ability to articulate knowledge and communicate effectively. This requires
\nconsideration of the purpose of the writing task and the intended audience.
\nRelevance. Content is relevant when it contributes to fulfilling the purpose of the writing task. The relevance of content is also affected by the
\nintended audience (for example, their prior knowledge about a topic) and the scope of the writing task (for example, limitations such as word
\nlength). The document should:
\n\uf0b7 Include all relevant content: no relevant content should be omitted, and
\n\uf0b7 Not include any irrelevant content.
\nDevelopment refers to the ways the writing explores and illustrates the topic. It may include one or more of the following: research, synthesis,
\nanalysis, critique, identification, explanation, evaluation, – description, discussion, examination, justification, argument, and exploration.
\nLevel of detail. The level of detail (depth)should be appropriate for the writing task.
\nAccuracy. The content should be accurate: complete and free from error. Errors result from mistakes (for example, misstating a definition, using
\nof out-of-date material, and incorrectly interpreting and\/or applying an accounting requirement) or omissions (for example, omitting part of a
\ndefinition or part of an accounting requirement).
\nWriting style. This refers to word choice, word usage, sentence length\/structure, and paragraph length\/structure. The writing style should be
\nappropriate for the writing task. Some of the characteristics of the \u2018business writing style\u2019 are:
\n\uf0b7 Writing that is concise, clear, precise, and direct,
\n\uf0b7 The use of short sentences and paragraphs,
\n\uf0b7 The appropriate use of abbreviations and jargon, and
\n\uf0b7 The use of highlighting techniquesto help the reader access and understand the content. Highlighting techniquesinclude graphics(tables
\nand figures), white space, boldface text, italics, underlining, varied font sizes, and numbered and\/or bulleted lists.
\nPage | 5
\nTone is the use of words and writing style to convey the writer\u2019s attitude towards or feelings about a topic. The tone adopted by a writer should
\nbe appropriate for the writing task. For most business writing, the tone should be formal, objective, and impersonal.
\nSources. The content should be adequately supported by appropriate (authoritative, relevant, and credible)sources. Typicalsources used include
\nreferences to textbooks, journal articles, and accounting standards.
\nOrganisation The content should be well-organised which requires both of the following:
\n\uf0b7 An organisational pattern that is clear, logical, and appropriate for the writing task. Organisational pattern refers to the systematic
\narrangement (sequencing) of the writing.
\n\uf0b7 Good use of structuring elements. The structuring elements are the parts of a writing task that form the basis for an overall pattern and
\ninclude: the introduction, use of sections, headings and sub-headings, transitions, and conclusion.
\nWriting conventions Writing conventions. The writing task should follow the writing conventions (the rules of syntax, grammar, spelling, and punctuation) of standard
\nwritten Australian English. Sources should be correctly cited using the APA referencing style.
\nDocument design Standard of presentation. Presentation refers to the layout of the document: the way the writing looks on the page. The presentation should be
\nneat and tidy.
\nFormat – Best Help Writing My 99 Papers\u2014owl Essay Samples. The format of the writing task (which are specified in the assignment material) should be appropriate.
\nPage | 6<\/p>\n
ACCT19061 Advanced Financial Accounting<\/p>\n
Dear Board Members,
\nI am writing this memorandum to provide an overview of exchange traded share options and their potential use by Himalaya. Options are versatile financial instruments that can help companies manage risk and generate returns. Below is an explanation of key concepts related to options as well as a hypothetical example of how exchange traded options could benefit Himalaya.
\nWhat is an option? An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (the strike price) on or before a specified date (expiration date) (Hull, 2018). There are two main types of options:
\nCall options give the holder the right to buy the underlying asset, while put options give the holder the right to sell the underlying asset. For example, a call option on shares in FashionCo Ltd would give the holder the right to buy FashionCo shares, while a put option would give the holder the right to sell FashionCo shares (Hull, 2018).
\nExchange traded share options are options contracts that are traded on a public exchange such as the Australian Securities Exchange (ASX). The underlying assets are typically shares of publicly listed companies. When an option is purchased or written on an exchange, both the buyer and seller are obligated to fulfill the terms of the contract (Fabozzi & Modigliani, 2009).
\nExchange traded options fall under the category of derivatives according to accounting standard AASB 9 Financial Instruments since their value is derived from the price of the underlying asset (Deegan, 2020). Specifically, they are considered derivative financial assets or liabilities depending on whether the company purchases or writes the options (AASB 9, para. 4.2.1).
\nFor example, if on July 1, 2023 Himalaya purchased call options on shares of FashionCo Ltd, it would obtain the right to buy FashionCo shares at a preset strike price. This contract would be considered a derivative financial asset on Himalaya’s balance sheet. Conversely, if Himalaya wrote (sold) put options on the FashionCo shares, it would take on the obligation to purchase the shares from the option holder and this contract would be a derivative financial liability.
\nIn the hypothetical example, on September 1, 2023 Himalaya wrote (sold) 100,000 exchange traded call options on FashionCo shares at a premium of $2.50 per option. – . writing these options, Himalaya received $250,000 (100,000 options x $2.50 premium each) in exchange for taking on the obligation to sell 100,000 FashionCo shares at the $3 strike price if the options are exercised. This obligation is recognized as a derivative financial liability.
\nOn January 31, 2024 the options now have a fair value of $1.50 each to the holder based on current market conditions. Since the options are worth less than when originally written, Himalaya has benefited from writing the options as it has collected the $250,000 premium but faces less potential cost if the options are exercised. The reduction in fair value of the liability would be recognized as a gain. Therefore, in this example exchange traded options provided a beneficial way for Himalaya to earn income from the share market.
\nIn summary, exchange traded options can be a useful risk management and income generating tool when used appropriately. I hope this overview provides helpful context for the Board to consider Katherine’s recommendation. Please let me know if any part of the explanation requires further clarification.
\nReferences:
\nDeegan, C. (2020). Financial accounting (9th ed.). McGraw-Hill Education.
\nFabozzi, F. J., & Modigliani, F. (2009). Capital markets: Institutions and instruments (4th ed.). Prentice Hall.
\nHull, J. C. (2018). Options, futures, and other derivatives (10th ed.). Pearson.
\nAustralian Accounting Standards Board. (AASB 9) Financial instruments.
\nRegards,
\n[Your Name]
\nFinancial Accountant<\/p>\n","protected":false},"excerpt":{"rendered":"
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