ACC3615: SandyMandy Ltd is a Company that Specializes in the Disposal of Construction Waste: Accounting Theory Assignment, UOL, Singapore

Section A

1. SandyMandy Ltd is a company that specializes in the disposal of construction waste. The company does not find it useful to rely on modified historical cost values and is considering alternative valuations of its non-current assets. The company’s accountant has collected a range of values on three of its lorries (non-current assets). The information is presented in the table below:

The following additional notes on the three lorries may be relevant:

Truck P is used as a stand-by vehicle for when other lorries are off the road due to breakdowns or scheduled maintenance. If the use of Truck P was not available it is estimated that SandyMandy Ltd would have to spend £24,300 per annum to rent an equivalent truck from another firm. Annual maintenance costs for Truck P I £19,600. It is expected that a stand-by facility will be continuously offered to ensure that the company is able to operate even when its vehicles are off the road.

Truck Q is one of the company’s regularly used vehicles. It has an expected life of 12 years and the company is able to generate £38,500 annually during its expected life from the use of this asset.

Truck R is another of the company’s frequently used vehicles. It has an expected life of 8 years and is able to generate £35,000 annually for the span of its expected life.

The company’s expected return on capital invested is 10%.

Required:

a) What is deprival value? Critically assess the usefulness of deprival value for a
company like SandyMandy Ltd.

b) Calculate the deprival value for Trucks P, Q, and R to the nearest £1. You should ignore the effects of taxation

2. Compare, contrast, and critically evaluate two alternatives ‘positive/descriptive’ theories of accounting regulation in practice.

3. Describe and critically evaluate Chua’s (1986) attempt to classify different
approaches to the development of accounting theories.

4. What type of accounting theory might be understood as critical? Give examples of critical approaches and assess their contribution to accounting theory.

Section B
Answer any TWO questions from this section.
5. In relation to management control, what is the issue of myopia and how does it arise? How might one attempt to resolve this myopia problem?

6. How does the type of organizational unit or business context impact the method of setting budget targets? What issues are relevant in setting the difficulty level of targets?

7. How should management control systems be adapted in the context of a
company expanding into a new environment?

8. Outline the strengths and limitations of using market-based measures of
performance in the context of management control.