Accounting For Business Decisions Essay Samples

(CLASS INFORMATION)

PART A.

EXECUTIVE SUMMARY
Amcom Telecommunications Limited (AMM) is a publicly-listed company in the Australian Securities Exchange. Since 1988, It has been involved in the telecommunications business. The primary activities of the company include data networks for providing high-speed communication services to government agencies and blue chip corporate clients, hosted and cloud services such as unified communications platforms for enterprise needs, and IT Services for managed services, advisory, integrated solutions, and related services. An overview analysis of its financial statements revealed that the company has focused on increasing investments in non-current assets such as licenses and liquidating long-term borrowings. In 2014, the overall operations of Amcom improved resulting to an increase in shareholder wealth.

EXECUTIVE SUMMARY 2

Balance Sheet 4
Income Sheet 5
Statement of Cash Flows 6
Stockholders’ Equity Section of the Balance Sheet 7

Bibliography 10

The following financial statements and related computations are presented for comparison of Amcom Telecommunication Ltd’s current and previous period results:
Balance Sheet
For the current year, it shows that the company is investing heavily on fixed assets and paying off long-term debt. It also shows that more profits are being used for income generation instead of being liquidated as dividends to the shareholders.
Income Sheet
The company increased the shareholders’ interest by increasing revenues at a faster rate than its total expenses. There is no cost of goods sold in the income statement because the company is not primarily engaged in merchandising or manufacturing.
Statement of Cash Flows
The increase in the inflow from operating activities was due to the increased revenues as compared to the previous year. The increase in the outflow from investing activities was expected due to the increased investment in fixed assets. Although there was an increased repayment of borrowings, the cash flow statement reported an inflow from financing activities due to an equity raising undertaken by the company.
Stockholders’ Equity Section of the Balance Sheet
The overall improved operations of the company resulted to an increase in retained profits and a rise in contributed capital. Ultimately, there was an increased benefit provided to its common stockholders.
PART B.
Recently you received the following offers from the organizers of Melbourne Tennis Open 2015:
Now you can buy premium tickets to the coming Melbourne Tennis Open 2015 with signatures of your choice of popular tennis players like Rafael Nadal, Roger Federer to name a few. However, there are only 3,000 tickets that have these collectible features.
Retail price: $300 each 

Tennis club members: $280 each
Allow 5 days for delivery 

Describe the alternatives the organisers have in relation to recognizing revenues. Which would you recommend and why? 

The company can either recognize revenues at the time of ticket sale or at the time the Melbourne Tennis Open 2015 takes place. However, the general rule is that admission fees such as revenues from artistic performance, banquets, and other special events should be recognized when the event takes place. Therefore, it is best to apply the latter recognition principle.
Would your answer differ if you included in the sale of the tickets that if the customers are not happy the tickets may be returned within one month? 

Yes. The company would then be allowed to recognize revenues at the time of sale provided that they can reliably estimate future returns and recognize liability for the same based on past experiences.
Let us assume that the organisers contracted a selling agent that takes care of all selling and marketing responsibilities, gets 10% as commission. The policy states that no return no exchange. When should the organisers recognize revenue? 

The organizers should treat the transaction as a consignment and recognize revenues when the agents have sold the tickets.
With regards to the authenticity of the signatures, do you think the accounting profession have the skills to provide the services to authenticate? Discuss and show examples. 

I believe that accountants alone do not have the skills required to guarantee the authenticity of the signatures. It is best to approach an expert in this field. For example, the organizers can hire representatives from tennis organizations and sports memorabilia collectors.
Discuss the importance of Cost of Goods Sold (COGS) in this case. How is it applied? 

It importance because it combines the costs associated with every sale. It can also be the basis for determining the selling price of the goods and has implications for tax savings.
Let us say that the signatories will get a fixed fee for the effort, when would the 
organisers recognize the expense? 

Following the matching principle, the organizers must recognize the related expenses when they recognize the revenue related to the sold tickets. Therefore, they will recognize the expenses at the time the Melbourne Tennis Open 2015 takes place.
Assume that the signatories will get a 5% commission on the sales of their signed tickets. 
When would the organisers recognize the cost?
In this case, since revenues are recognized at the time of sale, the related expenses are also recognized simultaneously.
Bibliography
Amcom Telecommunications Limited, “Amcom Telecommunications Ltd: Annual Report 2014”. Web.http://investor.amcom.com.au/irm/ShowStaticCategory.aspx?
CategoryID=215&masterpage=32
Australian Accounting Standards Board, “AASB 118: Revenue”. Web. http://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_COMPoct10_01-11.pdf