Non GAAP financial statements

ACCT7102 Individual Case Study Assignment:
‘JJ Ltd: Revenue recognition and non‐GAAP Earnings’
(The case and questions are available for download from the ACCT7102 blackboard website,
Weighting: 25% of final grade
Due Date: By 1pm, Thursday 20 May 2021
Maximum Length: 1200 words
Individual or Group Task: Individual
Task Description:
This financial reporting case study is designed to examine the specific application of case
scenarios involving principally Topic 6 (Financial statement management) and Topic 5
(Revenue recognition). The case will be used to examine your report writing skills, general
accounting knowledge, and ability to critically evaluate complex case scenarios.
NOTE: This case is to be undertaken individually, which means you are required to
independently prepare your assignment.
1. Criteria & Marking.
A full marking criteria sheet is available from TurnItIn and will be discussed in Seminar 6. In
general, the case will assess your:
 accuracy of answer and interpretation of relevant accounting standards;
 presentation of a thoughtful and well supported answer;
 clarity of analysis; and
 professional presentation (which will take into account grammar, appropriate use of
technical language, spelling and punctuation).
Your submission will also be judged on its suitability for presentation to a fee‐paying client.
2. Plagiarism.
All cases will be reviewed for plagiarism and independent content. At the University of
Queensland, plagiarism is defined as follows:
Plagiarism is the act of misrepresenting as one’s own original work the ideas, interpretations, words
or creative works of another. These include published and unpublished documents, designs, music,
sounds, images, photographs, computer codes and ideas gained through working in a group. These
ideas, interpretations, words or works may be found in print and/or electronic media.
You are encouraged to read the UQ Student Integrity and Misconduct policy
(‐student‐integrity‐and‐misconduct) which makes
a comprehensive statement about the University’s approach to plagiarism, including the
approved use of plagiarism detection software, the consequences of plagiarism and the
principles associated with preventing plagiarism.
3. Late Submission.
An assignment (for which no extension has been granted) submitted after the due date and
time, will incur a late submission penalty. The penalty is at the rate of 5% (0.4 of a grade) of
the total available marksfor that particular piece of assessment, for each calendar day or part
thereof that the item is overdue. Late assignments may be submitted through TurnItIn since
all assignments automatically have a time/date stamp of when they are submitted. However,
please contact the course coordinator if you are submitting a late assignment.
4. Length.
The maximum word limit is strictly 1200 words (excluding a reference list and any figures and
tables). The maximum number of pages in Appendices is five pages. Any material exceeding
the word limit and Appendices page limit will not be read and the mark for the assignment
will be based on the material up to the point where the word limit was exceeded.
5. Referencing Style.
You are required to use the Harvard referencing style for in‐text citations and your reference
list. Details of the Harvard referencing style are available from the Library guide at:‐tools‐techniques/referencing/referencing‐style‐
guides#harvard. It is critical that the referencing style is consistently applied.
6. Format of Assignment
The assignment isto be prepared as a pdf document using 12 point font with 1.15 line spacing,
and 2.54cm margins (left, right, top and bottom). The questions may be included as headings
and will not be included in the word count. Please include your full name and student number
as part of the file name, e.g., ‘347185_Kathleen Herbohn’.
7. Submission
The assignment isto be submitted through TurnItIn, which is available in a separate case study
assignment submission folder on the course’s blackboard website. If you experience
problems uploading your assignment before the due date please contact AskIT for help, and
continue to try to upload the assignment until you are successful. A link to the AskIT
instructions on TurnItIn is as follows: <‐it/turnitin‐
assignments>. Note that assignment submission is a three‐step process and it is your
responsibility to check the assignment preview and confirm that the assignment has been
successfully submitted. You will need to keep a copy of the Submission ID as proof you have
submitted the assignment.

Case Study Assignment Questions
JJ Ltd is a network service provider that also manufactures and sells modems. The following
information relates to various transactions that have occurred during JJ Ltd’s fiscal year
ending 30 June, 2021. Assume that as an ASX‐listed company, JJ Ltd complies with the
requirements of AASB 15 Revenue.
In this assignment, you will be asked to evaluate whether revenue should be recognised in
relation to various transactions that occur during the year. In addition, the management of JJ
Ltd prepares non‐GAAP financial statements. You will be asked to evaluate this decision and
the non‐GAAP adjustments made to reporting earnings before tax.
Answer the following questions after reading the case study material ‘JJ Ltd” Revenue
recognition and Non‐GAAP Earnings’ available on the Blackboard site.
QUESTION ONE (3% out of 25%)

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In your opinion, does a contract exist between JJ Ltd and Mosh Ltd for the modems? Justify
your answer.
QUESTION TWO (6% out of 25%)

In your opinion, how many service obligations are there within the contracts between:
(a) JJ Ltd and Mosh Ltd; and
(b) JJ Ltd and Mel Ltd.
Justify your answers.
QUESTION THREE (5% out of 25%)

Determine the contract transaction price and allocate it to the performance obligation(s)
contained in the contracts between:
(a) JJ Ltd and Mosh Ltd; and
(b) JJ Ltd and Mel Ltd.
Show all explanations and workings to support your answer. Your answer should discuss the
impact of any future events.
QUESTION FOUR (8% out of 25%)

(a) What is the non‐GAAP ‘core profit before tax’ disclosed by JJ Ltd for the year ending
30 June, 2021? Show all working and any necessary assumptions to support your
calculation. Your answer should clearly highlight how the non‐GAAP profit before tax
is different from the GAAP profit before tax.
(b) The management of JJ Ltd is aware that there are both pros and cons associated with
issuing non‐GAAP financial statements.
i. Discuss in detail the pros and cons associated with preparing non‐GAAP
financial statements, supporting your answer with reference to at least three
(3) academic research articles. (HINT: Concentrate on the general results of the
articles. You do not have to completely understand the econometric models).
ii. In your opinion, why do you think JJ Ltd has decided to issue non‐GAAP
financial statements despite the drawbacks you have outlined in (i) above.
Justify your answer.
Marks will be allocated for effectiveness of the written communication, clarity of expression,
and referencing.

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