Arab Open University B291

| December 11, 2017

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Arab Open University
B291: TMA – 1st
Semester 2013-2014
Cut-Off Date: 8th of December
2013

About
TMA:
The TMA covers the
financial accounting concepts and practices in the businesses. It is marked out
of 100 and is worth 20% of the overall assessment component. It is intended to
assess students’ understanding of some of the learning points within Units 1 to
4. This TMA requires you to apply the course concepts.

The TMA is intended to:
ØIncrease the students’ knowledge about the reality of the accounting
as a profession.
ØAssess students’ understanding of key learning points within Units 1
to 4.
ØDevelop the ability to understand and interact with the nature of
the financial statements in reality.
ØDevelop students’ communication skills, such as memo writing, essay
writing, analysis and presentation of material.
ØDevelop basic ICT skills such as using the internet.

The TMA:
The TMA requires you to:
1-
Review various study Units (from
1 to 4) of ‘Financial Accounting’ within it.
2-
Conduct a simple information search
using the internet.
3- Present your findings in not more than 1,600
words. The word count excludes headings, references, title page, and diagrams.
4- You should use a Microsoft Office Word and Times New Roman
Font of 14 points.
5-
You should read and follow the
instructions below carefully. Each part of the process will carry marks for the
assignment.

Criteria for Grade Distribution:

Criteria

Content

Using E-library & Referencing

Structure and Presentation of ideas

Total marks

Financial
Reporting on the Internet: Sports Direct plc

Marks

100

(5)

(5)

100

The TMA
Questions
Financial Reporting on the
Internet
(Case study: Sports
Direct plc)

The internet is a good place
to get information that is useful to you in your study of accounting. For
example, you can find information about current events, professional accounting
organizations, and specific companies that may support your study.
Sports Direct is the UK’s
leading sports retailer by revenue and operating profit, and the owner of a
significant number of world-famous sport, fashion and lifestyle brands. Sports
Direct provides a full multi-channel approach to the UK and European Retail
markets. Its strategy includes identifying opportunities for improvement
through in-store specialist collaborations and acquisitions, developing online
opportunities and leveraging the SPORTSDIRECT.com fascia. The Group continues
to enhance its store portfolio and now operates out of over 500 stores in the
UK and internationally.
Access the Sports Direct home
web page at: .sportsdirectplc.com/”>www.sportsdirectplc.com.
From Sports Direct’s home page and then “INVESTOR RELATIONS”, click on “ANNUAL
REPORTS AND PRESENTATIONS”, followed by the year 2013 to display and download the
“Annual Report”: April 28, 2013 on Form PDF.
Note: the annual
report of Sports Direct plc is available at:
.sportsdirectplc.com/App_Media/SportsDirect/pdfs/Annual_Report_2013.pdf”>http://media.sportsdirectplc.com/App_Media/SportsDirect/pdfs/Annual_Report_2013.pdf
InstructionsUse the annual report of 2012/2013 to answer the following
questions:
1-
Explain how International
Financial Reporting Standards (IFRS) add to the integrity of Sports Direct’s
financial accounting information. Support your answer with evidence from the
annual report (Hint: some research is required here.)
[Marks (Words): 10(150)]
2-
As mentioned in p. 51,Directors’
responsibilities:
“The Directors have elected to
prepare the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practices (UK GAAP).”
Required: State the major sources of these practices. Support your answer
with evidence from the annual report (Hint: some research is required
here.)
[Marks (Words): 10(150)]
3-
As mentioned in p. 66, Notes to the Financial Statements:
“The critical accounting estimates
and judgements made by the Group regarding the future or other key sources of
estimation, uncertainty and judgement that may have a significant risk of giving
rise to a material adjustment to the carrying values of assets and liabilities
within the next financial year”
Required
a- Identify four items found in Sports Direct’s annual report
that are based on estimates and judgments.
b- Discuss the expected impact on the usefulness of the Company’s
financial statement of such estimates and judgments. Explain briefly why you
think that the calculation of depreciation is based on estimates rather than
actual information, relating your answer to Sports Direct’ fixed assets.
[Marks (Words): 16(150)]
4-
Sports Direct mentioned in its annual report, pp. 62-63
that:

“Property, plant and equipment are
stated at historical cost less depreciation less any recognised impairment
losses. Cost includes expenditure that is directly attributable to the
acquisition or construction of these items. Subsequent costs are included in
the asset’s carrying amount only when it is probable that future economic
benefits associated with the item will flow to the Group and the costs can be
measured reliably.
All other costs, including repairs and
maintenance costs, are charged to the income statement in the period in which
they are incurred.
Depreciation is provided on all
property, plant and equipment other than freehold land and is calculated on a
reducing balance basis or straight-line basis, whichever is deemed by the
Directors to be more appropriate, to allocate cost less assessed residual
value, other than assets in the course of construction, over the estimated
useful lives, as follows:

Freehold buildings

2% per annum – straight line

Long-term/short-term leasehold improvments

over the terms of the lease – straight line

Plant and equipment

between 5% and 33% per annum – reducing balance

The assets’ useful lives and residual
values are reviewed and, if appropriate, adjusted at each balance sheet date.
The gain or loss arising on disposal or
scrapping of an asset is determined as the difference between the sales
proceeds, net of selling costs, and the carrying amount of the asset and is
recognised in the income statement.”
Required
Write a memo, of no more than 400 words, stating
(Hint: support your memo by suitable figures from the Sports Direct’s
annual report.)
a-
The estimated useful life of
thefreehold
buildings being depreciated.
b-
How the useful life of assets
is determined.
c-
Sports Direct used different
methods to depreciate its assets. State what is meant by the consistency
principle and explain how the Company’s depreciation policy complies with that
principle.
d-
Explain why Sports Direct uses
of accelerated depreciation method for plant and equipment and uses of the
straight-line method for most of its other assets?
e-
Identify the basic
“accountable events” in the lives of property, plant and equipment. For
each event explain how they affect Sports Direct’s consolidated net income and
or consolidated cash flows (other than income tax payments) for the year ended
April 28, 2013.
f-
Referring to the definition of
assets in Units 1 and 3. Discuss how leases of property, plant and equipment
might qualify as assets of the lessee, Sports Direct under this definition.
[Marks (Words): 4 marks for each point (500)]
5-
Sports Direct’s consolidated
income statement reports amortization expense. State the types of assets
that would require amortization. State the method of amortization that is
generally used by the company. Support your answer by suitable figures
from the Sports Direct’ 2013 annual report.
[Marks (Words): 10(150)]
6-
State the circumstances under
which Sports Direct will record goodwill in their accounts. Give 2 examples of
internally created intangibles. Explain why Sports Direct makes a distinction
between internally created intangibles and other intangibles.
[Marks (Words): 10(200)]
7-
The Sports Direct’s annual
report includes gains and losses on disposal of assets. Report the amount(s) of
gains and losses on disposal and explain where in Sports Direct’s consolidated
income statement they are reported. Describe how gain or losses on disposals are
reported in Sports Direct’s statement of cash flows. Summarize the discussion
in the Sports Direct’s footnotes concerning the cause of disposals. Support
your answer by suitable figures from the Sports Direct’ 2013 annual report.
[Marks (Words): 10(150)]
8-
Identify the revenue
recognition method(s) used by Sports Direct as discussed in its notes on accounting
policies. Explain the rationale underlying the appropriateness methods
for Sports Direct.
[Marks (Words): 10(150)]
[Total Marks (Words) = 100(1,600)]
In your answer, you
should explain each point or inquire separately. Use the following headings
(below) to make up the different sections of your work:

Cover

The PT3 form (available on LMS)

Contents

Title and contents page

TMA

Financial Reporting on the Internet (Case
study:Sports DirectPlc)

References

Recorded
according to the Harvard style – Available on LMS

Good Luck!

Dr. Helal Afify

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