HI6026 ACCOUNTING THEORY & CURRENT ISSUES
TRIMESTER 2, 2016
GROUP ASSIGNMENT Assessment Value: 20%
1. This assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook.
2. It is the responsibility of all students who have their name on the submitted work, to ensure that the work is in fact done by the group. NB: Incorporating another’s work or ideas into one’s own work without giving appropriate acknowledgement is academic malfeasance. Students should review all assignments for plagiarism checking (self-check) on Blackboard before final submission of hardcopy in the subject. For further details, please refer to the Subject Outline and Student Handbook.
3. Maximum marks available: 20 marks (e.g. 200/10 = 20).
4. Due date of submission: Friday Week 10, T2 2016
5. Assignment should be of an appropriate length (over 2,000; but under 4,000 words.
T2, 2016 ASSIGNMENT QUESTION
Bio-sustainable Feeds (BSF) Ltd., an Australian bio-research firm listed on the Australian Stock Exchange (ASX), has engaged research on sustainable aqua-culture feeds for two decades. Its research on a plant based feed (canola, corn, soya-bean, sunflower, etc., meal) costing $360 million AUD ($120 million collapsed when high-value piscavorian fish (e.g. fish eating species like salmon, trout, tuna, etc.) failed to thrive. Specifically, CBC (2016) noted that, while the plant-based fish feed was supposed to resolve the problem fish-based feed that are converted at a rate of 10.0 kg of low-value fish into 1.0 kg of high value fish (i.e. the normal conversion from a lower trophic level to a higher one), the conversion rate was actually 30.0 kg of plant based wet feed (before oven drying) to into 1.0 kg of high value fish—plus, over 1/3rd of the fish died (vs. less than 1/20th for the fish-based feeds), plus growing times nearly doubled, plus the mature fish were smaller (only 60 percent of the final weights of those grown on the fish-based feeds).
The above mentioned issues are compounded by accusations from environmentalists that diverting human-quality food crops into growing luxury fish is just as bad as diverting lowvalue fish into that production—it benefits the rich but puts the poor at increased risk of malnutrition or even starvation.
In response to the above issues, BSF Ltd. is researching the use of bacteria to produce fish feeds from wood chips, sugar cane residue, or recaptured methane gas (e.g. from dumps, sewage, food processing plants). The research, which has had some success at BSF Ltd. and other facilities (Rust, et al., 2011; Lothe, 2013; Sarker, et al., 2016), has cost BSF Ltd. $160 million AUD in research to date and is expected to cost another $200 million AUD in development costs to bring it to market.
BSF Ltd. received a $500 million AUD grant from the Commonwealth Scientific and Industrial Research Organisation (CSIRO, Federal Government of Australia) in return for BSF Ltd. spending at least $100 million AUD a year on alternative aquaculture feeds. CSIRO paid the funds to BSF Ltd. three years ago (in 2013), and (during those three years) BSF Ltd. has spent a total of $500 million AUD ($340 million plus $160 million) on research and has committed to spend $200 million in development cost over the next two years to develop an alternative aquaculture feed from the research done to date.
The expected net market value of the patent is $700 million AUD if sold in two years or $200 million AUD a year for 10 years if produced and sold (remember to adjust for two years) and the appropriate discount rate for this type of project is 8.0% pa.
CBC. 2016. Shift to plant-based fish feed could hurt health, environment, CBCNews Technology
& Science, (23 Mar/16), Retrieved on 11 Jul/16 from: http://www.cbc.ca/news/technology/aquaculture-feed-1.3262922
Lothe, R. 2013. Fish feed-research may help reduce world hunger, ScienceNordic, 17 Mar/13, Retrieved on 11, Jul/16 from: 20 http://sciencenordic.com/fish-feed-research-may-helpreduce-world-hunger.
Sarker, P.K., Kapuscinski, A.R., Lanois, A.J., Livesey, E.D., Bernhard, K.P., Coley, M.L. 2016. Towards Sustainable Aquafeeds: Complete Substitution of Fish Oil with Marine Microalga Schizochytrium sp. Improves Growth and Fatty Acid Deposition in Juvenile Nile Tilapia (Oreochromis niloticus). PLOS ONE, 2016; 11(6), Retrieved on 11, Jul/16 from: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0156684.
Rust, M., Barrows, F., Hardy, R., Lazur, A., Naughten, K., & Silverstein, J. 2011. The Future of Aquafeeds, NOAA/USDA Alternative Feeds Initiative, NOAA Technical Memorandum NMFS F/SPO-124, Retrieved on 11 Jul/16 from: http://www.nmfs.noaa.gov/aquaculture/docs/feeds/the_future_of_aquafeeds_final.pdf.
HI6026 ACCOUNTING THEORY & CURRENT ISSUES