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Business Management Case Study Assignment

AMAZON – case study

Video resources:

Jeff Besos discusses the business model of the company:

How Amazon works:

Watch the two videos and answer the following questions:

  1. What is Amazon’s mission?
  2. What is the company’s approach on innovation and investments?
  3. How would you define the company’s relationship with its competitors?
  4. What is the company’s value proposition?
  5. What are the sources of the competitive advantage of Amazon?
  6. What is the company’s business model?
  7. What are the main aspects of the external environment that affect the company?
  8. What are the strengths and weaknesses of the company?
  9. Which of the following shall IAS 41 be applied to?
  10. Bearer plants related to agricultural activity
  11. Agricultural produce at the point of harvest
  12. Land related to agricultural activity
  13. All of the above
  14. Agricultural produce is the harvested produce of the entity’s biological assets.
  15. True
  16. False
  17. Which of the following does define “bearer plant”?
  18. A living plant that is used in the production or supply of agricultural produce
  19. A living plant that is expected to bear produce for more than one period
  20. A living plant that has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales
  21. A and C
  22. All of the above
  23. Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for __________.
  24. Sale
  25. Conversion into agricultural produce
  26. Conversion into additional biological assets
  27. A and B
  28. All of the above
  29. Which category would he wool fall under while it is still on the sheep in case of a sheep ranch?
  30. Biological assets
  31. Agricultural produce
  32. Products resulting from processing after harvest
  33. Unmanaged stock
  34. Where should a company recognize gains or losses arising in the period on: initial recognition of a biological asset at the fair value less costs to sell; and from a change in fair value less costs to sell recognized?
  35. Both in comprehensive income
  36. Both in profit or loss
  37. In other comprehensive income; in profit or loss
  38. Both in profit or loss unless the fair value measurement is clearly not reliable
  39. Which of the following assumptions is correct?
  40. The land on which the sheep grazed falls within the scope of IAS 41
  41. The wool growing on the sheep falls within the scope of IAS 41
  42. Wool sheared from the sheep and ready for further processing falls within the scope of IAS 41
  43. The woolen yarn made from the wool falls within the scope of IAS 41.
  44. Regarding the recognition of the wool before harvest: can the wool be recognized separately from the sheep? In other words, do the sheep have their own value, and does the wool growing on the sheep have its own value?
  45. Yes, absolutely.
  46. No, they’re recognized as the same thing.
  47. It depends on volume of wool.
  48. It’s entirely up to the owner of the wool.
  49. Can we measure the wool growing on the sheep at the point of harvest on a basis other than fair value less costs to sell?
  50. No, never.
  51. Yes, if the market is falling.
  52. Yes, if they’re ready for harvest.
  53. Yes, when there is inability to measure fair value reliably, as discussed in IAS 41.30
  54. The sheep ranch has a contract with a company to supply half of the harvest (wool) at €200 per tone (of wool). Can these contract prices be used instead of fair value when measuring the value of the wool at the point of harvest?
  55. Only if the current market value is above €200.
  56. Yes, in any circumstance.
  57. No, under no circumstances.
  58. No, unless the fair value cannot be measured reliably.


  1. Which of the following statements represents the primary focal point of the guidance in IAS 2?
  2. It prescribes the criteria an entity must follow when allocating inventory costs to operating divisions under divestiture.
  3. It prescribes how an entity must account for inventories in its financial statements.
  4. It prescribes the criteria an entity must follow when recording inventories acquired in a business combination.
  5. It prescribes the accounting treatment an entity must follow when acquiring inventories via derivative instruments.
  6. A real estate company wants to diversify its operation and purchases properties that are planned to be ready for sale in about a month. How must the company classify the purchased properties?
  7. The properties should be classified as property, plant and equipment under IAS 16.
  8. The properties should be classified as investment property under IAS 40.
  9. The properties should be classified as inventory under IAS 2.
  10. About an acquisition of tires (inventories) made by Speedway you know the followings:
Speedway Auto Manufacturers
Date: 21 March 2021
Purchase price60.000
Shipping costs400
Import duties1.000
Consumption taxes900
Transportation costs to the warehouse300
Note: 2% discount for immediate payment


Also see: Business Management Assignment

Speedway took advantage of the discount. Owing to the location of the factory in a certain economic zone, Speedway is able to recover the consumption taxes once the proper claim for refund is filed. What is the amount Speedway should book as the cost of purchase of the tires?

  1. 61.100
  2. 61.400
  3. 62.600
  4. 60.500
  5. Road Car produces car doors. The conversion cost according to IAS 2 in this case includes:
  6. Labor costs of factory workers who mold the doors;
  7. Depreciation of press used in the manufacturing process;
  8. Salary of the factory payroll director;
  9. Additional costs incurred for rework due to incorrect specifications.
  10. Rent expense for the factory;
  11. Maintenance costs for production equipment
  12. The selling price of an LCD screen that is used in computer monitors is currently €150 but the price at which they were purchased was €180. The whole computer monitor, including the LCD screen, sells for €500 and the total cost to manufacture (including the LCD screen) is €400. What conclusion would you draw from these facts?
  13. By comparing the cost of the LCD screen with its selling price, you conclude that the cost of the LCD screen would be written down.
  14. By comparing the selling price of the computer monitor with the cost needed to manufacture it, you conclude that the LCD screen inventories would not be written down.
  15. You conclude that an expense would be recorded to completely write off the LCD screen inventories, since the costs are not recoverable.
  16. Soft Plus Co. is a well-known soft developer company. You know the following information regarding one of their products:
  • Software development and production costs €900
  • Current selling price €1200
  • Cost to sell: €100

As a result of the competitor’s product reaching the market, we had to make the following revisions:

  • New selling price: €950
  • The cost to sell remains unchanged.

Determine the new carrying amount of the inventory.

  1. €900
  2. €1.100
  3. €850
  4. €950
  5. A retailer of perishable produce seeks to avoid obsolescence by arranging its produce in such a way that customers are most likely to purchase the oldest inventory first. The cost formula that is most appropriate for the entity is:
  6. first-in, first out (FIFO)
  7. last-in, first-out (LIFO)
  8. weighted average cost
  9. specific identification
  10. Which of the following statements define the term ‘net realisable value’?
  11. The estimated selling price in the ordinary course of business plus the estimated costs of completion less the estimated costs necessary to make the sale.
  12. The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
  13. The estimated cost of completion less selling price in the ordinary course of business.
  14. The estimated costs necessary to make the sale plus selling price in the ordinary course of business less the estimated costs of completion.
  15. Normal capacity is the production expected to be achieved on average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance.
  16. True
  17. False
  18. A company holds three distinct types of inventory in its warehouse at the end of its financial year. These are valued as follows:
Type A8,3008,00012,200?
Type B10,50010,70010,200?
Type C12,30012,00014,500?

Task. Calculate the value of inventory to be included in the company’s year-end accounts.


  1. Which of the following is a borrowing cost according to IAS 23?
  2. Actual cost of equity shares.
  3. Imputed cost of equity shares.
  4. Dividends on preferred shares not classified as a liability.
  5. Dividends on preferred shares not classified as a liability.
  6. Finance charges in respect of finance leases recognized in accordance with IAS 17 Leases.
  7. How shall an entity recognise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset?
  8. As an equity
  9. As an asset
  10. An a liability
  11. As an expense
  12. A qualifying asset is an asset that necessarily takes __________ to get ready for its intended use or sale.
  13. A substantial period of time
  14. At least 6 months
  15. At least 12 months
  16. No more than 12 months
  17. Which of the following cannot be a qualifying asset?
  18. Power generation facilities
  19. Manufacturing plants
  20. Intangible assets
  21. Financial assets
  22. Investment properties
  23. Assets that are ready for their intended use or sale when acquired are not qualifying assets.
  24. True
  25. False
  26. Aurora Ltd recently started the construction of a new gold mine. The company expects construction to take at least two years before the mine is ready for operation. It is also in the process of upgrading facilities at one of its existing mines, which is expected to take two months. Can the upgrade and the new mine be classified as qualifying assets under IAS 23?
  27. Only the upgrade can be classified as a qualifying asset.
  28. Only the new mine can be classified as a qualifying asset.
  29. It depends on the entity’s accounting policy for borrowing costs.
  30. The new mine, as well as the upgrade can be classified as a qualifying asset.
  31. A cable company is building a cable network covering many franchise areas. The construction is carried out sequentially for each of the areas. Once the construction is completed in each franchise area, the network will be available for use there. The expenditure is being funded from a general pool of borrowings. When should the capitalization of borrowing costs cease for an individual franchise area?
  32. When no further finance resources are available.
  33. At the completion of that individual franchise area.
  34. At the completion of substantially all of the franchise areas.
  35. At the end of the entire project.
  36. Mille Construction borrowed €50.000 on 1 July 2018 to construct a qualifying asset. The company has a year-end of 31 December 2018. The borrowings carry interest of 9% per annum. Expenditure of €45.000 was incurred on 1 July 2018 and the construction was still ongoing at 31 December 2018. Surplus funds were invested at 7% per annum. What amount of borrowing costs should be capitalized by Millennium Construction (Ignore the effect of compounding in calculating interest for simplicity)?

The amount of borrowing costs incurred for the year ended 31 December 2018 is………. Interest income of …….. was earned on the investment of surplus funds. The amount of borrowing cost to be capitalized is therefore…….. .

  1. VERO CRUISE is building a new cruise liner that will take at least three years to complete. Read the following information, and then select the correct statements from the list below:
  • On 1 January 2018, engineers started drawings fir the crise liner.
  • On 1 July 2018, prototype scale models were built to identify the best design.
  • On 1 January 2019, construction of the cruise liner started.
  1. Capitalization of borrowing costs would start on 1 January 2018.
  2. Capitalization of borrowing costs would start on 1 January 2019.
  3. Capitalization of borrowing costs would start on 1 July 2018.
  4. Engineers drawing is not considered an activity necessary to prepare the asset for its intended use under IAS 23.
  5. Over the past two years, Modern Company has developed a computer software to be used internally and/or to be sold to prospective buyers. In accordance with IAS 38, the group capitalized the development costs incurred during the development phase and recognized an intangible asset of €1 million. If Modern Company borrows funds for the purpose of funding such software development, should it capitalize borrowing costs as part of the carrying amount of the internally generate intangible asset?
  6. Yes, because intangible assets that take a substantial period of time to build are qualifying assets.
  7. No, because only acquired tangible assets can be qualifying assets.
  8. No, because IAS 23 states that intangible assets are not qualifying assets.
  9. It depends on whether the computer software is to be used internally or sold to prospective buyers.
  10. Company Y has incurred €850.000 in capital expenditure during the year, constructing a bottling plant for its beer division. At the year-end, €100.000 related to the construction of the plant is included in creditors. The bottling plant is funded from the entity’s pool of general loans (see below). The plant is considered to be a qualifying asset under IAS 23 Borrowing Costs, and the company therefor capitalizes borrowing costs related to the qualifying asset.

Y had borrowings outstanding for the year, as shown here

BorrowingsMaturityInterest rate per annum (payable monthly)
Bond €100.000Two years – principal repayable on maturity15%
Long term loans €250.000Three years – principal repayable on maturity7%
Debentures , €1.000.000Five years – principal repayable on maturity8%
  1. Calculate the borrowing costs to be capitalized.
  2. Suppose that Y had not issued its debentures, and only had a bond and a long-term loan. Calculate the borrowing costs to be capitalized.
  3. YUKKA Ltd. started the construction of an asset on 1 January 2019. For this purpose three loans were outstanding at the start of the year as follows:
 Amount, $’000Interest Rate, %
Loan 180,00011
Loan 270,00015
Loan 340,00017

The funds were used on the asset as follows:

1 January 201925,000
1 May 201920,000
1 October 201915,000

The construction of the asset was completed on 31 December 2019.


(a) The Borrowing Cost eligible for capitalization at 31.12.2019. (b) The Cost of Asset to be reported in the statement of financial position at 31.12.2019

Last Updated on May 21, 2021

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