Arab Open University B293: TMA – 1st Semester 2015-2016 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 asses

Arab Open University
B293: TMA – 1st Semester 2015-2016


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 chapter 15, 16, 17,21 . This TMA requires you to apply the course concepts.

The TMA is intended to:
 Increase the students’ knowledge about the reality of the accounting as a profession.
 Assess students’ understanding of key learning points within chapter 15, 16, 17 and 21.
 Develop the ability to understand and interact with the nature of the financial statements in reality.
 Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.
 Develop basic ICT skills such as using the internet.

The TMA:
The TMA requires you to:
1- Review various study chapter 15, 16, 17 and 21 of ‘intermediate accounting’ within it.
2- Conduct a simple information search using the internet.
3- Present your findings in not more than 2,000 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: Nike Inc
Marks 100 (3) (2) 100




The TMA Questions
Financial Reporting on the Internet
(Case study1: lufthansa)

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 network airlines, low-cost carriers 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 gives it an edge over its competitors in terms of know-how.
It operates services to 18 domestic destinations and 197 international destinations in 78 countries across Africa, the Americas, Asia, and Europe using a fleet of more than 280 aircraft.
Besides its own passenger airline service (also known as Lufthansa Passage), Deutsche Lufthansa AG is a holding for several other airlines and further aviation-related companies, including, Austrian Airlines, Germanwings, Lufthansa Technik, and Swiss International Air Lines.
Access the Lufthansa group home web page at: www.lufthansagroup.com. From Lufthansa group’s home page and then “The Company”, click on “FINANCIAL INFORMATION”, followed by “Reports and results”, then select the year 2014 to display and download the “Annual report and accounts” 2014 on Form PDF.
Note: the financial statements of Lufthansa group are available at:
http://investor-relations.lufthansagroup.com/fileadmin/downloads/en/financial-reports/annual-reports/LH-AR-2014-e.pdf
Instructions Use the annual report and accounts of 2014 to answer the following questions:

1- What are the goals of lifthansa group? And explain the two strategies the company is using?
     [Marks 16]
2- Companies tend to use the consolidation financial statements rather than Saperate financials. Identify the advantages of consolidating the financial statements?
[Marks  8]

3- What are the most important market that the company focus on? And how do the deal with competition?

[Marks  16]

4- Write a memo, in no more than 200 words, explaining: (Hint: Explain and support your memo by suitable figures from the annual report.)
a. There are two type of leases in accounting explain them and mention the GAAP criteria to consider the lease as capital “finance” lease explain them in details.

b. Explain the difference between the operating lease and capital lease accounting wise?

c. How much is the lease obligation for the operating lease and finance lease for 2014?

    [Marks 15]
5- In the annual report Lufthansa 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.
      [Marks  9]
6- According to ISAB, Debt investments are accounted either by the amortize cost or by fair value method. To identify the method used there is certain model. Please explain the model and its criteria.

       [Marks 8]

     
7- 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- According to IAS 36 on Impairment of Intangible Assets how do Lufthansa account for impairment of intangible asset?
b- Who is responsible for estimating the useful lives of intangible assets?
c- How do Lufthansa account for its intangible assets?
d- What was the composition of identifiable and unidentifiable intangible assets reported
e- How much accumulated impairment did Lufthansa report from the intangible assets and goodwill?

     [Marks 20]







Case study: two

As of January 1, 2014 Silver Star Company has 1,600,000 outstanding shares. On May1, 2014 the company issued an additional 1,200,000 shares for cash, all 2,800,000 shares were outstanding as of December 31,2014.
On August 1, 2014, the company has also issued $600,000 of 20 year 8% convertible bonds at par.  Each $1,000 converts to 40 ordinary shares. None of the bonds has been converted to date. The interest expense on the liability component of the convertible bond on December 31, 2014 was $30,000.
The company net income after tax was 3,080,000 ( the tax rate 40%)

Required:

• Calculate the Basic and Diluted EPS.
[Marks 8]


          [Total Marks (Words) = 100(2,000)]




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: Lufthansa group)
References Recorded according to the Harvard style - Available on LMS