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Assume that you are a graduate accountant working for Kapland and Associates an accounting firm situated at 396 Ann Street, Brisbane, QLD 4000.

Assume that you are a graduate accountant working for Kapland and Associates an 

accounting firm situated at 396 Ann Street, Brisbane, QLD 4000. The manager of your 

firm, Ms Miley Jaspen has asked you to draft a letter in response to an email received 

from a client - Mr Martin Wahlburg, the Managing Director of Shadow Ltd, raising 2 key 

accounting issues regarding his company - see the copy of the email on the next page.

The maximum length of the covering letter is . You should then address all the 

technical issues/discussion after the letter, each on separate pages as attachments [2], 

followed by a Reference List. The maximum word limit for all parts of the assignment 

should be

• Part A: Technical component 15% - This mark covers the technical content of your 

advice and the explanation on both of the issues, the calculations and the sources 


• Part B: Communication Skills - Letter Writing 5% - This mark covers the generic skills 

of business letter writing; layout, clear meaning, structure and organisation, 

appropriate tone and grammar, spelling and punctuation etc. throughout the whole 


• Part C: Communication Skills - Presentation 10% - The individually presented 5

minute video presentation will need to keep the audience engaged, containing only 

the student's advice; the presentation should be well-rehearsed and all

supplementary material, such as slides and visual aids must be of a professional 


Re: Accounting Issues: Year Ending 30 June 2019

From: Martin Wahlburg (u) 

Sent: 18 March 2019

To: Miley Jaspen (..au) 

Dear Miley

Thank you for your phone call this morning, as agreed I am emailing you regarding the 

accounting issues we briefly discussed. By the way to assist the accounting team in our 

decision-making process could you please make sure you reference any relevant sources 

relating to your advice, for example, AASBs, Corporations Act, and other relevant articles 

or websites. 

Issue 1.

Shadow Ltd has recently obtained some patents considered useful in its manufacture of 

leather handbags. The patents consist of:

• Patent HDBG459, acquired from a leather manufacturing firm for $541 000.

• Patent UBF871, obtained as part of a bundle of assets acquired from the conglomerate 

Underarmour Bag Fashions for $1,500,000.

Shadow Ltd is also in the process of preparing an application for a patent for a new process 

of softening leather. It has spent a number of years refining this process.

Our company accountant for Shadow Ltd is unsure how to account for patents under 

AASB's. Please prepare a detailed report on the principles of how to account for patents, 

using the examples above to illustrate the appropriate accounting procedures.

Issue 2.

I have also been analysing the financial reports provided by the accountant, who has 

been with the firm for a number of years. The other company directors have expressed 

concern over depreciation charges being made in relation to the company's equipment. 

In particular, they believe that the depreciation charges are not high enough in relation 

to the factory machines because new technology applied in that area is rapidly making 

the machines obsolete. The directors' concern is that the machines will have to be 

replaced in the near future and, with the low depreciation charges, the fund will not be 

sufficient to pay for the replacement machines. Please discuss and summarise our 

options for accounting for our equipment correctly.

Please respond by letter (not email) as I would like to present this to the Board. I look 

forward to hearing from you shortly. 


Mr Martin Wahlburg

Managing Director, Shadow Limited 

Level 5, 99 Mary Street, 

Brisbane QLD 4000

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