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Sunkick Coffee Corp. Candidate Comments

Essay by   •  September 20, 2018  •  Term Paper  •  906 Words (4 Pages)  •  157 Views

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4120 Marking Guide

Sunkick Coffee Corp.

CANDIDATE:        Joanne Monteiro                

MARKER:        Jonson Nguyen                

Overall Comments (consider ranking, time management, writing style, format, use of case facts, role etc.)

A lot of the issues related to the accounting policies were identified and discussed adequately. If this was done consistently with the following two indicators, you would have a solid first memo.

Indicator #1: Candidate recognizes and discusses the significant risks and opportunities associated with the changes in the business strategy

Not addressed

Candidate does not recognize and address the indicator.

Nominal Competency

Candidate recognizes 2 accounting issues and attempts to discuss them but does not conclude

                

Reaching Competency

Candidate recognizes and discusses some (2) of the accounting issues, and discusses in depth.  

Competent

Candidate recognizes 3 or more issues, discusses at least 2 in depth and concludes for each issues.

Marker Notes:

Discusses= supported by case facts, may contain minor technical weaknesses

Sufficient Depth= supported by case facts, technically correct

Description

Identifies

Discusses

Sufficient Depth

Appropriate Accounting Treatment

SIGNIFICANT ISSUES

Franchise Fee

Recognizes this is a rev rec issue- when should the franchise fee be brought into revenue?

Identifies the rev rec criteria and attempts to discuss whether the criteria apply.

Considers whether the revenue can be recognized up front vs. over time as performance is completed

Concludes on how to treat a portion of fee for equipment and tangible assets vs. the fees for future services

Sudbury location

Is the $100,000 and tangible asset?

Recognizes and attempts a discussion as to the accounting alternatives for this transaction.

Discusses if it is a refund/ a tangible asset

Concludes that as Sunkick plans to operate the franchise the transaction should be recorded at FMV at the date of acquisition, and the liabilities (lease, bank loan, etc.) be recorded at the amount estimated to be required to discharge the obligation.

Supplies

Attempts to discuss how the supplies should be accounted for

Is Sunkick acting as principle or agent?

Discusses applying specific case facts.

Concludes

Loans to Franchisees

Are they impaired?

Is an allowance necessary?

Refers to IAS 39.63  and applies specific case facts: franchisees have either paid only interest or have not made any payments

Concludes:  We should stop accruing interest on the impaired loans, and write them down to their fair value. This would reduce net income and impact bonuses

Indicator #2: Candidate discusses several of the weaknesses with respect to the proposed IT system and suggests how they can be resolved.

Not addressed

Candidate does not recognize and address the indicator.

Nominal Competency

Candidate recognizes 1 of the system weaknesses

                

Reaching Competency

Candidate recognizes and discusses some (2) of the IT system issues in sufficient depth. Candidate concludes on issues without adequate discussion.

Competent

Candidate recognizes 3 or more issues, discusses at least 2 in depth and concludes as to how Sunkick should proceed

Eightball Consulting Inc. (ECI)

Issue

Implication

Recommendation

Identifies that EIC specializes in web design and not in developing point-of-sale (POS) systems

X

X

X

Identifies concern over how ECI was chosen- they did not consider any other venders.

X

X

Identifies that ECI did not consult with the users to determine their needs

Recognizes security concern if the same system is used to transmit POS system and Customer web browsing.

X

X

The system is not integrate so we will still have to do manual entries into the general ledger, creating the risk of errors.

X

Hardware Needs- questions the needs for a third PC in each store if all it does is upload data to the server.  

The system seems quite costly.

$1.6 million for 300 computers plus a server works out to an average price of $5,316 per computer,

Should we consider an off the shelf system?

X

X

Is implementation plan realistic/ feasible?

Concludes- we should put a request for proposals and ask several different vendors to respond.  Then they can evaluate suppliers and select the best for the job.

X        

Indicator #3: Candidate discusses ethical issues.

Not addressed

Candidate does not recognize and address the indicator.

Nominal Competency

Candidate identifies using case facts an ethical issue

X

Reaching Competency

Candidate recognizes and discusses some (2) of the ethical issues in sufficient depth. Candidate concludes on issues without adequate discussion.

Competent

Candidate recognizes and discusses some (2) of the ethical issues in sufficient depth. Candidate concludes on issues with adequate discussion.

 

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