B293: TMA – 1st Semester 2016-2017

The TMA Questions
Financial Reporting on the Internet
(Case study # 1: Lufthansa Airways)

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.

The Lufthansa Group is the world’s leading aviation group. Its portfolio of companies consists of hub airlines, point-to-point airlines and aviation service companies. Its combination of business segments makes the Lufthansa Group a globally unique aviation group whose integrated value chain not only offers financial synergies but also puts it in a superior position over its competitors in terms of know-how.
Access the Lufthansa Airways home web page at: http://www.lufthansagroup.com From Lufthansa airways home page and then “About Lufthansa airways”, click on “Annual reports”, followed by “Annual Reports”, then select the year 2015-2016 to display and download the “Annual report and accounts” 2015-2016 on Form PDF.
Note: the financial statements of Lufthansa Airways are available at:
https://investor-relations.lufthansagroup.com/fileadmin/downloads/en/financial-reports/annual-reports/LH-AR-2015-e.pdf
Instructions Use the annual report and accounts of 2015-2016 to answer the following questions:

1- Explain whether Qatar Airways Annual Report is primarily a financial accounting document or a managerial accounting document. Provide evidence that supports your conclusion.
[Marks 8]

2- What are Lufthansa Airways management Group strategies? (4 strategy with a brief explanation)
[Marks 9]
3- What are Lufthansa Airways management financial strategy?
[Marks 9]

4- GAAP has set certain criteria to consider the lease as capital “finance” lease explain them in details.
[Marks 8]




5- In the annual report Lufthansa airlines mentioned that they measure certain asset and liabilities using fair value measurement, according to FASB there are three level hierarchy for the fair value measurement technique explain them? Mention example from the balance sheet for asset and liabilities that were measured at fair value for each level, if available. [Marks 9]

6- Write a memo, in no more than 200 words, explaining: (Hint: Explain and support your memo by suitable figures from the Lufthansa annual report.)
a- Define intangible asset, and how did Lufthansa account for it?

b- Who is responsible for estimating the useful lives of intangible assets?

c- Provide examples from the annual report of intangible asset?

d- How much accumulated amortization as of 31 December 2015 did Lufthansa report from the intangible assets?

[Marks 20]
7- Explain why each of the following individuals or organizations would be interested in the financial information of Lufthansa Airlines report:
a. Lufthansa Airlines Board of Directors

b. Banks/ creditors

c. PricewaterhouseCoopers
[Marks 12]





















Case study # 2 : treasury shares

Orange company had the following equity section as of January 1, 2015:
Share capital – ordinary, $10 par 100,000 shares $1,00,000
Share premuim – ordinary $1,300,000
Retained Earnings $350,000
Total Equity $2,650,000

During 2015, the following transaction occurred:
• On March 10, Orange company has repurchase 20,000 treasury shares at a price of $12.
• On April 16, Orange company has sold 2,000 shares of the above mentioned treasury shares at a price of $11.
• On August 13, Another 3,000 shares of the above mentioned was also resold at price of $15.
• On October 20 , another 4,000 treasury shares were sold at a price of $11

Required:
• Prepare Journal enrties to record the above mentioned transsaction [20 marks]

• Prepare the quity section in the balance sheet at December 31, 2015 [5 marks]

GAAP has set certain criteria to consider the lease as capital “finance” lease explain them in details