Question 3: In preparing its accounts for the year ended 30 June 20X5, XXY plc has the following accounting issues: a) An advertising campaign has just taken place at a cost of $150,000. The directors expect that the campaign would create $500,000 of additional profits over the next two years. b) A licence of $160,000 has been purchased on 1 January 20X5. It expects to generate benefits over the next 4 years. Licences are being depreciated on a straight line basis. c) A staff training programme has just been completed for $120,000. The directors expect additional profits of $300,000 over the next three years period. Required: State how the transactions above would be recognised in the financial statements of XXY plc on 30 June 20X5.

Question 3: In preparing its accounts for the year ended 30 June 20X5, XXY plc has the following accounting issues: a) An advertising campaign has just taken place at a cost of $150,000. The directors expect that the campaign would create $500,000 of additional profits over the next two years. b) A licence of $160,000 has been purchased on 1 January 20X5. It expects to generate benefits over the next 4 years. Licences are being depreciated on a straight line basis. c) A staff training programme has just been completed for $120,000. The directors expect additional profits of $300,000 over the next three years period. Required: State how the transactions above would be recognised in the financial statements of XXY plc on 30 June 20X5.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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