Date: December, 16, 2013

BTEC LEVEL 7
ASSIGNMENT ADVANCED PROFESSIONAL DIPLOMA
ACCOUNTING (PGD)

[Rights Reserved] | International Study Group

 Assignment Front Sheet

Qualification Unit number and title

Unit 10: Financial Reporting

Pearson BTEC Level 7 Advanced Professional
Unit Code: AA/0010/P013
Diploma in Accounting (PGD)
Credit value: 10 credits

Student name Assessor name

Date issued Completion date Submitted on Validity

16th December 2013 16th January 2014 12th April 2014

Assignment Title Applying Accounting Standards

Assignment No 10- AA/0010/P013-IND

Hand-in Policy
You must complete this assignment on time. If you experience difficulties, you must inform your tutor
accordingly.
Late Work Policy
Consideration will be given to students who have valid reasons for late submission (eg, illness).

Plagiarism
In cases of plagiarism, college regulations will be applied. You must declare that this assessment is your own
work by signing the following statement:

Learner declaration

I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.

Student signature: Date:

 Learning outcome, Assessment Criteria and Contextualisation of the assignment which gives learner’s the opportunity to submit evidence in
order to achieve PASS
Contextualisation Task no
Learning Outcomes Assessment Criteria

LO1
AC 1.1 The need for a conceptual
A conceptual framework for
framework
financial reporting
AC 1.2 The fundamental concepts of
relevance and faithful representation (‘true
and fair view’)

AC 1.3 The enhancing characteristics of

comparability, verifiability, timeliness and
understanding
AC 1.4 Recognition and measurement
AC 1.5 The legal versus the commercial
view of accounting
AC 1.6 Alternative models and practices
To Achieve M1, effective judgements have been made and
an effective approach to study and research has been
Applied
1
To Achieve M2, a range of sources of information has been
used
To Achieve D2, autonomy/independence has been
demonstrated

LO2
AC 2.1 Reasons for the existence of a
A regulatory framework for
regulatory framework
financial
reporting AC 2.2 The standard setting process

AC 2.3 Specialised, not-for-profit, and

public sector entities
LO3
AC 3.1 Statements of cash flows
Financial statements
AC 3.2 Tangible non-current assets

AC 3.3 Intangible assets

AC 3.4 Inventory

AC 3.5 Financial assets and financial

To Achieve M1, complex problems with more than one
liabilities
variable have been explored
To Achieve M2, a range of methods and techniques have
AC 3.6 Leases
been applied and a range of sources of information has 2
been used
AC 3.7 Provisions, contingent liabilities,
To Achieve D2, autonomy/independence has been
and contingent assets
demonstrated
AC 3.8 Impairment of assets

AC 3.9 Taxation

AC 3.10 Regulatory requirements relating

to the preparation of financial statements

AC 3.11 Reporting financial performance

LO4
AC 4.1 The concept and principles of a
Business combinations
group
AC 4.2 The concept of consolidated
financial statements
AC 4.3 Preparation of consolidated
financial statements including an associate
To Achieve M1, an effective approach to study and
research has been applied
To Achieve M2, relevant theories and techniques have been
applied
To Achieve D2, autonomy/independence has been
demonstrated
LO5 AC 5.1 Limitations of financial statements
Analysing and interpreting
financial statements AC 5.2 Calculation and interpretation of
accounting ratios and trends to address
users’ and stakeholders’ needs

AC 5.3 Limitations of interpretation

techniques

AC 5.4 Specialised, not-for-profit, and

public sector entities
Assignment brief
Unit 10: Financial Reporting
Unit Name number and
Unit Code: AA/0010/P013
title
Credit value: 10 credits
Pearson BTEC Level 7 Advanced Professional Diploma in Accounting
Qualification
(PGD)

Start date 16th December 2013

Deadline/hand-in 16th January 2014

Assessor Faraz Ahmad

Assignment title Applying Accounting Standards

Scenario One (Task 2)

The following information is available for Prof. David (working as a teacher in a recognized university) for
the tax year ended 30th June, 2012:

Basis Salary £3000

Bonus £800
Entertainment allowances £200
Conveyance allowances £150
House allowances £2000
Property income £2400
Collection charges on property £240
Life insurance premium £60
Income of non-professional writer £350
Clothing, Costumes expenses £500
Personal expenses £1000

Notes:
1. Tax deducted at source is £880
2. In last three years his average rate of tax was 25%, 20% and 15% respectively

Helpful links:
1. http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=8xuahP8fB3Q&formid=765
2. http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=hT6DoVomfMs&formid=759
http://www.hmrc.gov.uk/working/forms/paye-forms.htm#3

Scenario Two (task 2)

On December 12, Metro bicycles sold 8 bicycles to the shop owner. At the date of this sale, Metro’s
perpetual inventory records included the following cost layers for the Metro bicycles:

Purchase date: QTY Unit Cost Total Cost

Nov. 9 6 £80 £4,800
Dec.1 4 £8.5 £3,400

10 £8,200
Scenario Three (task 3)

The Moore company has the Income statement for year ended December 31, 2007. All values are in
thousands (‘000)
(£)
Sales 970
Operating expenses, excluding depreciation 624
Depreciation expense 60
Loss on sale of equipment 16
Income before income taxes 270
Income tax expense 40

Net income 230

Moore’s balance sheet contained the comparative data at December 31, shown below.

2007 (£) 2006 (£)

Accounts receivable 75 60
Accounts payable 41 28
Income taxes payable 11 7

Accounts payable pertain to operating expenses.

Complete the operating activities section of the statement of cash flows using the indirect method.

Task 1 (LO1, LO2: 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 2.1, 2.2 and 2.3)
1. Explain conceptual framework and state its importance with example.
2. Comment on ‘true and fair view’. As being an auditor can you guarantee that the financial
statements are fair and true? Discuss the enhancing characteristics of comparability, verifiability,
timeliness and understandability
3. Define the concept of recognition and measurement and illustrate it with example.
4. State the difference between legal and commercial view of accounting. What are the alternatives
models and practices of financial reporting?
5. Explain regulatory framework for financial reporting and list down the reasons why does it exists.
What is the procedure to set these standards?
6. Comment how does regulatory framework differs in case of public entity, specialized and non-for
profit organisations.

Task 2 (LO3: 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10 and 3.11)

1. Prepare the partial cash flow statement for the year ended December’ 2007 (Scenario 3)
2. State the difference between tangible and intangible assets, explain their types and illustrate
them with the help of an example.
3. Describe the principles of inventory valuation and list down the methods for computing the cost
of inventory.
4. Using the average costing, LIFO and FIFO method compute the cost in the (Scenario 2).
5. Discuss briefly the financial reporting differences that may arise from choosing the FIFO method
over LIFO method
6. State the importance of using accounting standards on financial instruments. Define financial
assets and financial liabilities and what financial instruments are used.
7. Explain impairment loss. Identify the circumstances which may suggest impairment to assets.
What are the steps to calculate the impairment of assets?
8. Calculate taxable amounts and tax payable for Prof. David (Scenario 1)?
9. Describe the structure (format) and content of financial statements presented under IFRS
10. Comment why reporting financial performance is important from the company’s point of view
and define the earning per share and what does it reflect about the company.
Task 3 (LO4, LO5: 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 5.4 and 5.5)

1. Define the concept of the group as a single economic unit and state its principles.
2. Explain what consolidated financial statement is and illustrate it with the help of an example.
3. State the limitations of the financial statements.
4. Prepare a financial report for the top management of Moore’s company on the basis of its cash
flows (Scenario 3).
5. Comment how does financial statements and reporting differs in case of public entity, specialized
and non-for profit organisations.
Evidence Summary of evidence required Evidence Check
Task Title
checklist by student presented √/×

A conceptual framework
for financial reporting, A
Explain the conceptual framework
Task 1 regulatory framework Theoretical review
and regulatory framework
for financial
reporting

Prepare statement of cash flow,

explain tangible and intangible
Task 2 Financial statements Theoretical review
assets, inventory, taxations,
impairment of assets and leases.

Business combinations,
The concept of groups, explain the
Analysing and
Task 3 financial statement limitations and Theoretical review
interpreting financial
its importance
statements
Submission guidelines
You must:
• Complete all tasks
• Present your work in one business report-style document which should include a table of contents,
references list, foot or end notes if any and appendices if any.
• Complete, sign and submit the usual statement of authenticity.
• Submit your work in a single word processed document of 5000-6000 approx. words. This word limit is
only for guidance and is not applied on grading.
• Produce clear specific reasoning and arguments in support of your answers.
• Make appropriate reference to the relevant concepts, techniques and theories.
• Appropriately cite all information success (in the text and bibliography) as per references guidelines
given to you before.
• Due to late submission the maximum grade will be Pass.
• Declaration sheet must be signed if not then the assignment will not be accepted
• You are required to clearly write down your Edexcel I.D Number, ISG number and you complete name
as per the registration form.