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• You are required to submit your answer before the finishing time. To submit your
answer, click on “Finish Attempt” on the bottom right corner in your Moodle site,
and then Submit ALL and Finish. If you do not submit your work, Moodle is set
up to automatically submit your work at the finishing time.
• You are not allowed to speak once the exam starts. If you have any questions,
please raise your hand.
• You should stay in sight of the webcam for the duration of the exam.
• You are not allowed to leave the room without seeking permission from the exam
invigilator. Toilet breaks are permitted but permission must be sought from the
You must answer all questions.
Analyse three differences between sustainability report and the annual financial report.
You can consider the differences from the perspective of the users’ focus and compliance
level. (5 Marks)
Question 2 (15 marks)
Cranbourne Ltd. has been measuring a Machine on Balance Sheet based on the historical
cost of $50,000. In the current year, the Directors would like to change to measure that
item based on the fair value.
a. Critically evaluate the decision of the Directors to change the measurement from
historical costs to fair value. (6 marks)
b. Suggest how the Directors of Cranbourne Ltd can measure the fair value of the
Machine. (9 marks)
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Question 3 (10 marks)
CLP is a listed company in the power generation industry. The raw materials used by the
company in its thermal plants power production are coals. In its 2019 annual report, as
shown below, there is a graph showing a trend of its CO2 emissions in consecutive years.
(Source: CLP annual report 2019. Retrieved from
a. How do you evaluate CO2 emission management performance in the past and the
future? Justify your answers using figures in the graph. (5 marks)
b. Based on figures in the graph, suggest an issue for a further investigation. Why do
you think it might be an issue? (5 marks)
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Question 4 (10 marks)
Edexcel Pty Ltd (Edexcel) is a firm owning and leasing two large commercial properties
in central business district of Melbourne. Every year Edexcel rewards its CEO with a
fixed cash bonus. In the last two years, because of the lengthy impact of Covid-19 on the
commercial rental market, the firm made big losses, the firm’s share prices substantially
reduced, the CEO received no bonuses although he worked very hard. Now it is time for
him to renegotiate and renew the contract with the shareholders for another 3 years.
The CEO is in his negotiation to reward him a bonus that is determined based on the net
profit of the firm.
a. Briefly explain the normative theory and the positivist theory. Suggest if the
positivist theory is adopted for this negotiation, how it would support the CEO
to increase his bonuses in the future? (5 marks)
b. Critically evaluate this accounting-based bonus plan and suggest an
alternative bonus plan. (5 marks)
Question 5 (5 marks)
‘X’ Ltd. produced only annual report up until 2015 to inform its financial performance to
shareholders. However, it started to produce a separate sustainability report from 2016
along with annual report to highlight its social and environmental performance, which
were not mandatory but have been adopted by other companies operating in the same
industry for a few years.
Required: Using one of the theories you have studied in this unit, provide an explanation
as to why ‘X’ Ltd would seek to highlight its environmental performance to external
stakeholders through sustainability report (5 marks)
END OF EXAM
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