ACC80005 Financial Accounting Theory
Semester 2, 2015
THIS ASSIGNMENT IS TO BE UNDERTAKEN INDIVIDUALLY OR IN GROUPS OF UP TO 4
The Accounting Standards AASB 117 - Leases requires financial leases to be capitalised by the lessee. For these leases, an asset and the associated liability are recorded in the statement of financial position. However, operating leases are not required to be capitalised. Lease payments under an operating lease shall be recognised as an expense in the statement of comprehensive income. The cash flows associated with the lease payments are the same regardless of how the leases are accounted for (i.e. whether they are accounted for as a financial lease or an operating lease).
• If the cash flows are the same, would the decision to record future lease payments as a liability or record lease payments as expenses or simply disclose in notes to the accounts matter from an investors’ point of view.
a) Present arguments supporting the view that the accounting choice should matter, drawing on behavioural theories in accounting and finance. (750 words) [Behavioural theories are discussed in Chapter 11 of the text book]
b) Present arguments supporting the view that the accounting choice should not matter, drawing on the Efficient Market Hypothesis (EMH). (750 words) [EMH is explained in Chapter 10 of the text book]
• Would the decision to record future lease payments as a liability or record lease payments as expenses or simply disclose in notes to the accounts matter to the company (i.e. the lessee).
c) From the lessee’s point of view, discuss the implications of these accounting choices for leases drawing on Postive Accounting Theory (PAT). Students are expected to utilise the bonus plan hypothesis and debt covenant hypothesis of PAT when answering this question. (750 words) [PAT is discussed in Chapter 7 of the text book]
d) What are the economic and social consequences associated with the accounting choice for leases? (750 words) [Social and economic consequences are covered in several chapters including Chapters 3,4,7, 8, 9 and 12 of the text book]
Note: This is a research assignment and as such the assignment should provide your personal/group view based on academic research evidence, theory and original thought. It is essential that students read beyond the text book to obtain a good mark for this assignment.
Students are expected to draw on the following in their assignment:
• relevant accounting theories
• at least 12 scholarly articles from academic journals listed in the Australian Council of Business Deans (ABDC) 2013 Journal Rankings List. (This list is available at http://www.abdc.edu.au/pages/abdc-journal-quality-list-2013.html. The list of accounting journals can be obtained by sorting the spreadsheet by FOR (Field of Research) Code. FOR code for accounting, auditing and accountability is 1501. However, relevant research is sometimes published in journals listed under the other FOR too.)
• professional literature
Some guidance on reading scholarly journal articles is provided on the Blackboard site of this unit.
To avoid plagiarism, students are required to provide a reference whenever they include information from other sources in their work. Further details regarding plagiarism are available in Section C of the unit outline.
Referencing convention required for this unit is the Swinburne Harvard System. Helpful information on referencing using the Swinburne Harvard System can be found at: http://www.swinburne.edu.au/lib/studyhelp/harvard_style.html
Group work guidelines
The assignment can be submitted individually or as a group. A group may consist of up to 4 students. There are four parts to this assignment. Each part carries equal weighting. While this is a group assignment, the parts can be allocated among the group members so that each part is the sole responsibility of one group member (provided the group has four members). However, the groups should ensure overall quality and consistency of the entire assignment. The allocation of parts of the assignment among group members should be explained on the assignment submission cover sheet. The following format should be adopted for this.
Name of the student Responsibility
Denis Mayer Part A
Nitesh Agrawal Part B
Viet Nguyen Part C
Heyun Yin Part D
A group project is the collective responsibility of the entire group, and if one member is temporarily unable to contribute, the group should be able to reallocate responsibilities to keep to a schedule. In the event of longer-term illness, other serious problems involving a member of a project group or where equal contributions are not forthcoming and this cannot be resolved by the students themselves, it is the responsibility of the other members to make the project supervisor aware of the situation straight away.
The assignment must be submitted with a duly filled assignment cover sheet. All group members must be satisfied that the work has been correctly submitted. Any penalties for late submission will apply to all group members, not just the person who submitted or whose work resulted in a late submission.
The assignment should be structured in such a way that the four (4) requirements are addressed separately. The entire assignment should not exceed 3000 words (+/- 10 percent) (excluding title page, table of content and reference list but including footnotes and endnotes). An abstract or an executive summary is not required. Please provide a word count on the cover sheet.
Formatting of the assignment
Page margins: Top - 2.54 cm; Bottom - 2.54 ?m; Left - 3.2 ?m; Right - 3.2 ?m.
Paper: Portrait, A4 size (8.27 inch x 11.69 inches)
Font size: 12 pt
Line Spacing: 1.5 lines
Paragraph spacing: 6 pt (both before and after the paragraph)
Page numbers: Insert page numbers at the bottom of the page
The assignment must be submitted through the Blackboard assessment submission system (via Turnitin) and by placing a printed copy in the specially assigned assignment drop box located on level 11 of the BA building. i.e., both online and hard copy submission is necessary. Students must also keep an electronic or photocopied version of their assignment for evidentiary purposes.
A duly filled Assessment Cover Sheet (and signed by all group members) must be submitted with the soft copy and hard copy versions of the assignment. The standard Assessment Cover Sheet is available from the Current Students website.
The assignment must be submitted via the Turnitin facility available on Blackboard no later than 5.00pm on 26th October 2015. Only one group member should submit the assignment via Turnitin.
Naming the soft copy
The electronic copy that is submitted via the Turnitin facility should be named according to the following convention. It is imperative that this naming convention be followed.
Last name 1_Last name 2_ Last name 3_Last name 4 (in the case of a submission by a group of 4 students).
E.g., If the names of the 4 group members are Denis Mayer, Nitesh Agrawal, Viet Nguyen and Heyun Yin, the file name should be written as follows:
Marking of the assignment
The Assignment carries 25% of the total marks for this unit.
Marks are allocated on the basis of individual performance as well as the group performance. Each part of the assignment will be marked separately and added together to calculate the group mark. 5/25 marks will be based on the overall quality of the assignment.
Individual student marks are calculate as follows:
• 60% of the mark (or 15/25) is based on mark for the part of the assignment the student was mainly responsible.
• 40% of the mark (or 10/25) is based on the mark for the entire assignment. Worked example of mark calculation
Name Responsibility Mark for each parts Student’s mark
Denis Mayer Part A 4.5/5 (4.5/5)*15 + (16/25)*10 = 19.9
Nitesh Agrawal Part B 1/5 (1/5)*15 + (16/25)*10 = 9.4
Viet Nguyen Part C 5/5 (5/5)*15 + (16/25)*10 = 21.4
Heyun Yin Part D 2.5/5 (2.5/5)*15 + (16/25)*10 = 13.9
Entire Group Overall quality 3/5
Total marks 16/25
Following marking rubric is used when marking each part of the assignment and when judging the overall quality of the assignment.
Assignment Marking Rubric
(80-100%) Very good/Distinction (70-80%) Good/Credit (60-70%) Satisfactory/ Pass (50-60%) Unsatisfactory/No pass (0-50%)
Knowledge and understanding of the topic (20%) Demonstrates thorough
understanding of the topic gained from extensive use of relevant sources. Excellent selection of relevant journal articles and other references. (16-20 marks) Demonstrates an adequate
understanding of the topic. But some gaps in the knowledge exist.
Good selection of relevant journal articles and other references. (14-16 marks) Demonstrates basic understanding of the topic with gaps in the knowledge of the topic.
Have selected some relevant journal articles and other references. (12-14 marks) Demonstrates some understanding of the topic obtained from a few key sources. Several gaps in the knowledge of the topic. Includes journal articles and other references that are of little relevance.
(10-12 marks) Unsatisfactory
understanding of the topic and extensive gaps in knowledge. Inadequate use of relevant journal articles and other references. ( 10 marks)
Analysis and argument
(research, logic and coherence of argument)
(30%) Very thoroughly researched and analysed. Effective use of relevant material for forming arguments. Draws on relevant theories. Comprehensive
identification and discussion of issues.
Critically evaluates material. Makes persuasive arguments relating to both positive and negative aspects. Excellent application of research paradigm/theoretical perspective to the analysis. (24-30 marks) Well researched and analysed.
Appropriate use of relevant material for forming arguments. Draws on some aspects of the theory/theories. Adequate
identification and discussion of issues. Evidence of some
critically evaluation of material. Makes somewhat convincing arguments relating to both positive and negative aspects. Very good application of research paradigms/theoretical perspectives to the analysis. (21-24 marks) Competently research and analysed. Good use of relevant material. Draws minimally on theories. Majority of relevant issues identified and discussed.
Arguments relating to most positive and negative aspects are presented. Some arguments may be underdeveloped. Good application of research
paradigms/theoretical perspectives to the analysis. (18-21 marks) Minimal research and analysis. Basic use of relevant material. Draws minimally on a theory or irrelevant theory used. Little analysis and discussion of relevant issues. Arguments relating to some positive and/or negative aspects are presented. Some arguments may be underdeveloped, unclear or not adequately supported. Adequate application of research
paradigms/theoretical perspectives to the analysis. (15-18 marks) Inadequate research and analysis. Less than basic use of relevant material. Does not draw on any theory. Little analysis and discussion of relevant issues. Majority of the relevant issues are not identified. Arguments are basic, not supported, incoherent and one-sided. Poor application of research
paradigms/theoretical perspectives to the analysis.
( 15 marks)
Addressing the assignment tasks (10%) All requirements of the assignment are addressed. Coverage of requirements is well balanced. (8-10 marks) Majority of the requirements of the assignment addressed adequately. Coverage of requirements is balanced overall.
(7-8 marks) Majority of the requirements of the assignment addressed adequately. But coverage of requirements is unbalanced. Disproportionate emphasis on some issues. (6-7 marks) At least half of the requirements of the assignment addressed. But coverage of requirements is unbalanced. Disproportionate emphasis on selected issues. (5-6 marks) Most requirements of the assignment are not addressed. Disproportionate emphasis on selected issues.
( 5 marks)
(80-100%) Very good/Distinction (70-80%) Good/Credit (60-70%) Satisfactory/ Pass (50-60%) Unsatisfactory/No pass (0-50%)
Conclusion (10%) Outstanding conclusion, drawing together the research evidence original thought. Conclusion is clear, concise, logical and convincing. (8-10 marks) Conclusion draws together research evidence and original thought. Conclusion is clear and coherent. However, some
support still lacking to make the conclusions and
recommendations convincing. (7-8 marks) Conclusion draws some research evidence and some original thought. But some gaps exist.
(6-7 marks) Acceptable conclusion summarising the key points. Some points missed. (5-6 marks) Poor conclusions. ( 5 marks)
Presentation (writing style, editing,
punctuation, grammar and structure) (20%) No easily
discernible errors in expression, spelling or grammar. Demonstrates a professional standard in writing. Guiding the reader
with logical flow of argument and presentation of material.
(16-20 marks) Minor errors in expression, spelling and/or grammar. Professional structure, guiding the reader through logical flow of argument and material.
(14-16 marks) Appropriate use of expression. Some spelling and grammar errors. Appropriate structure and organisation of work.
(12-14 marks) Minimum
requirements met for spelling, grammar, expression and writing structure. Adequate presentation. (10-12 marks)
Poor spelling and expression, little attention to grammar
Weak flow/links. Poor presentation of work.
( 10 marks)
Quality of referencing
(10%) Makes extensive use of relevant academic journal articles and other appropriate sources. All sources are cited correctly in text and referenced correctly according to Swinburne Harvard style.
(8-10 marks) Reasonable use of relevant academic journal articles and other appropriate sources. However, sources are predominantly nonrefereed work. Sources are mostly cited correctly in text and referenced correctly according to Swinburne Harvard style.
(7-8 marks) Some use of academic journal articles and other appropriate sources. Most sources are cited in text and referenced appropriately at end of report. (6-7 marks) Minimum use of quality academic journal articles and other relevant sources.
Most sources lack authority or are not current.
In-text citations and referencing is merely adequate. Some assertions need more support. Excessive reliance on few references. (5-6 marks) Little or no use of relevant academic journal articles and other appropriate sources.
Sources lack authority or are not current.
Errors in citing outside sources and not correctly referencing according to the Swinburne Harvard Style.
( 5 marks)