ACCT3102 External Reporting Issues Exam Guide

School: The University of Sydney - Course: FINC 3015 - Subject: Accounting

Semester One Final Examinations, 2019ACCT3102 External Reporting Issues Page 1 of 9 This exam paper must not be removed from the venue School of Business EXAMINATION Semester One Final Examinations, 2019 ACCT3102 External Reporting Issues This paper is for St Lucia Campus students. Examination Duration:120 minutes Reading Time:10 minutes Exam Conditions: This is a Central Examination This is a Closed Book Examination - no materials permitted During reading time, write only on the rough paper provided This examination paper will be released to the Library Materials Permitted In The Exam Venue: (No electronic aids are permitted e.g. laptops, phones) Calculators - Casio FX82 series or UQ approved (labelled) Materials To Be Supplied To Students: 1 x 14-Page Answer Booklet Instructions To Students: Additional exam materials (e.g., answer booklets, rough paper) will be provided upon request. Answer ALL questions on the exam answer booklet. Show all calculations. Annuity table and present value table are provided at the back of this exam question paper. The exam includesfive(5) questions with a total of100 marksthat are equivalent to 50% of the total marks available for this course. Venue____________________ Seat Number________ Student Number|__|__|__|__|__|__|__|__| Family Name_____________________ First Name_____________________ For Examiner Use Only QuestionMark Total________

Semester One Final Examinations, 2019ACCT3102 External Reporting Issues Page 2 of 9Question 1: Extractive Industries(20 marks) Riri Ltd acquired Shining, a mining property in North Queensland, for $18.3 million on 1 July 2014, and treated it as an area of interest. Riri Ltd incurred the costs, as below: YearDetails$ Amount August 2014Right to explore500,000 2014 - 2015Exploratory study and drilling4,500,000 At the beginning of 2016, the technical feasibility and commercial viability of mining the diamond deposit were confirmed. The company's experts estimated that 20 million carats of diamonds could be commercially exploited. From March 2016 to June 2017, the company undertook the following capital investments: CostsEstimated Life (as at 30 June 2017) Mine buildings $5,600,00020 years Processing plant$12,000,00015 years Other equipment$3,000,0006 years Mine buildings cannot be economically removed from the mine location, but the processing plant and other equipment can be economically removed and have other uses. On 30 June 2017, Riri Ltd estimated that the costs of restoration as a result of development and construction activities would be $800,000 because the company wanted to portray itself as a responsible corporate citizen. A discount rate of 8% was identified as relevant for its diamond operation. Production began on 1 July 2017. It will take 9 years to exhaust the economically recoverable reserves, after which the mining property is expected to have a residual value of $200,000. Activities for the year ended on 30 June 2018 were as follows: Carats of diamonds mined................................................................3,000,000 Carats of diamonds sold...................................................................2,800,000 Selling price of diamond..............................................................$18 per carat Production costs(excluding depreciation and amortisation).........$20,000,000 Administration expenses................................................................$1,800,000 Selling expenses...............................................................................$800,000 REQUIRED: a)Assuming all costs incurred during the exploration and evaluation phases were capitalised, what are the amortisation expense and the total depreciation expense for the year ended 30 June 2018? No journal entry is required.(12 marks)