Constructing And Reconstructing System Essay

Question:

Discuss about the Constructing and Reconstructing System.

Answer:

Introduction

Telstra is one of the leading technologies and Telecommunication Company from Australia that offers full range of services related to telecommunication sector and competes with all the other telecommunication companies. They deliver services to more than 17 million mobile services, 3.5 million retail services for broadband and 6.8 million services to fixed voices. They believe that more the people are connected, more opportunities they will have. Therefore, they are assisting in creating the exceptional connectivity for everyone. They believe in content and technology solutions which are easy and simple to use and are valued by the customers. They always focus on serving and knowing the preference of the customers better as compared to others. As the leading information and Telecommunication Company from Australia, Telstra always provides a helping hand towards their customer to improve their living standard through better connectivity (Telstra.com.au, 2017).

On the other hand, Amaysim is the telecommunication company that is focussed on providing the telecommunication services and make the home internet and mobile experience of the customers with exceptionally simple through solving the unnecessary issues and letting the customers to get the superfast speed at pocket-friendly price. They believe in providing the services in such a way that the customers will have minimum number of complaints with regard to the telecommunication services. They are confident that at least 93% of their customers will tell their loved ones or mate regarding the exceptional good services of the company. Further, they believe in no lock-in contacts that mean if the customers with Amaysim it is just because they want to be with the company and not because they are forced to be with the company (Amaysim.com.au, 2017).

Annual reports and its compliance with AASB conceptual framework

From the Financial statement of Telstra it is recognised that the financial report of the company is a general purpose financial report and is prepared by the profit entity as per the requirements of the Australian Corporation Act 2001, the Accounting Standards those are applicable in Australia and other conceptual framework and interpretation of AASB (Australian Accounting Standard Board) and also complies with the IFRS (International Financial Reporting Standards) and the interpretations issued by the IASB (International Accounting Standards Board) (Kober, Lee & Ng, 2013). Further, the report is prepared in Australian Dollars unless it is stated otherwise and the value are rounded off to nearest million dollars ($m) under the available option of ASIC. The historical balue approach is used for preparation of the statements except for some financial instruments those are transacted at fair values.

On the other hand, in the way like Telstra, Amysim’s financial report is also a general purpose financial report that is prepared by the profit entity as per the requirements of the Australian Corporation Act 2001, the Accounting Standards those are applicable in Australia and other conceptual framework and interpretation of AASB (Australian Accounting Standard Board) and also complies with the IFRS (International Financial Reporting Standards) and the interpretations issued by the IASB (International Accounting Standards Board). Further, the report is prepared in Australian Dollars unless it is stated otherwise and the value are rounded off to nearest thousand dollars ($’000) under the available option of ASIC. The historical value approach is used for preparation of the statements except for some financial instruments those are transacted at fair values.

Telstra Corporation Limited

Amaysim Australia Limited

2015 ($ Million)

2016 ($ Million)

2015 ($ Million)

2016 ($ Million)

Total assets

40445

43286

53

117

Table 1: Total assets of Testra and Amaysim

(Source: Created by Author)

It can be identified from the above table that for both 2015 and 2016 the total asset of Telstra is significantly higher as compared to that of Amaysim. It can be said that Amaysim does not have enough savings to purchase the assets or invest in the assets.

Tangible asset

Telstra Corporation Limited

Amaysim Australia Limited

2015 ($ Million)

2016 ($ Million)

2015 ($ Million)

2016 ($ Million)

Tangible assets

20450

20581

0.6

1.0

Table 2: Tangible assets of Testra and Amaysim

(Source: Created by Author)

It can be identified from the above table that for both 2015 and 2016 the tangible asset of Telstra is significantly higher as compared to that of Amaysim. It can be said that Amaysim does not have enough savings to acquire the tangible assets or invest in the assets.

Intangible assets

Telstra Corporation Limited

Amaysim Australia Limited

2015 ($ Million)

2016 ($ Million)

2015 ($ Million)

2016 ($ Million)

Intangible assets

9332

9229

77

8

Table 3: Intangible assets of Testra and Amaysim

(Source: Created by Author)

It can be identified from the above table that for both 2015 and 2016 the intangible asset of Telstra is significantly higher as compared to that of Amaysim. It can be said that Amaysim does not have enough savings to acquire the intangible assets or invest in the assets.

Treatment of assets

The assets of Telstra like plant property and equipments including the the construction under progress are transacted at cost after deducting the impairment and depreciation. Further, the cost involves the purchase costs and the costs that are directly attributable for bringing the assets to the condition and location required for the intended use (Kent and Zunker, 2015). The borrowing costs are capitalised that are attributable to production, acquisition or construction directly. All the other borrowing costs are identified as the expenses under the income statement at the time of incurring.

Telstra provide depreciation for the plant, property and equipment including the leasehold property and building and excluding the freehold on straight line method under the income statement and the depreciation are provided for the useful estimated life of the assets. Further, the assets are started depreciated only after the assets are installed and are ready to use. The useful lives of the significant assets like equipment, plant and property are shown as below –

For estimating the residual values and useful lives of the assets the company apply their management judgment. If the useful life or the residual lives are to be modified the expenses of depreciation is to be changed from the date of the reassessment and till the revised useful life of the asset.

Treatment of assets

The assets of Amaysim like plant property and equipments including the the construction under progress are transacted at historical cost after deducting the impairment and depreciation. Historical costs involves the cost spend for purchasing the asset and the costs that are directly attributable for bringing the assets to the condition and location required for the intended use. Subsequent costs are taken into account under the carrying amount or are recognized as separate cost only in the circumstance where it is likely that the future economic advantages will flow to the company with regard to the asset and the associated costs can be reliably measured. The borrowing costs are capitalised that are attributable to production, acquisition or construction directly. All the other borrowing costs are identified as the expenses under the income statement at the time of incurring.

Amaysim provide depreciation for the plant, property and equipment including the leasehold property and building and excluding the freehold on straight line method under the income statement and the depreciation are provided for the useful estimated life of the assets (Bonner, 2015). Further, the assets are started depreciated only after the assets are installed and are ready to use. The useful lives of the significant assets like equipment, plant and property are shown as below

For estimating the residual values and useful lives of the assets the company apply their management judgment. If the useful life or the residual lives are to be modified the expenses of depreciation is to be changed from the date of the reassessment and till the revised useful life of the asset (He, Evans & He, 2016). Further, 4 types of intangible assets that are recognized by the company are – goodwill, software development, customer lists and brand or trademarks.

AGM report

The AGM of Telstra for the year 2016 was held on 11th October 2016, Tuesday at Grand Ballroom, Four Points By Sheraton (Darling Harbour), 161 Sussex Street, Sydney NSW. The meeting was held as per the listing Rule of 3.13.2 and the section 251AA (2) of Corporation Act. At the AGM o the company the following points were discussed –

  • Re-election and election of the directors
  • Grant for performance rights
  • Adoption of remuneration report

On the other hand, the AGM of Amaysim was held on 17th November 2016 at the Market Announcement Office, Australian Securities Exchange, 20 Bridge Street, Sydney NSW 2000. The meeting was held as per the listing Rule of 3.13.2 and the section 251AA (2) of Corporation Act. At the AGM o the company the following points were discussed –

  • Summarize the performance of the company for the financial year 2016
  • Provide the overview for their strategies and the business model and to explain the reasons that setting them apart from their competitors
  • Highlight the priorities for future years including their entry into broadband market.

Director’s report and closing statements

Under the director’s report of Telstra it is mentioned that that Telstra Entity falls under the category of company as mentioned in Australian Securities and Investment Commission Corporations (Rounding under Director’s or Financial Reports/) instrument 2016/191 that is dated on 24th March 2016 and the issued pursuant with regard to the section 341(1) of Corporation Act 2001. Owing to this, the amounts under the director’s report and that are mentioned in the attached financial report are rounded off to nearest million dollars ($m), except where mentioned otherwise. Further, the report was made on 11th August 2016 as per the resolution of the directors (James & Prout, 2015).

On the other hand, under the director’s report of Amaysim it is mentioned that the company’s board are committed for demonstrating and achieving the highest standards under the corporate governance. They have reviewed the practices of corporate governance against the recommendations and principles issued by ASX Corporate Governance Council (Bhimani 2015). Further, it is mentioned that the company falls under the category of company as mentioned in Australian Securities and Investment Commission Corporations (Rounding under Director’s or Financial Reports/) instrument 2016/191 that is dated on 24th March 2016 and the issued pursuant with regard to the section 341(1) of Corporation Act 2001. Owing to this, the amounts under the director’s report and that are mentioned in the attached financial report are rounded off to nearest thousand dollars ($’000), except where mentioned otherwise.

Issues in accounting with regard to IFRS and AASB

Various issues that are associated with the IFRS and AASb for accounting are as follows –

  • IFRS interpretations are written only for for-profit companies
  • IFRS do not consider the non-exchange transactions like taxes, donations and grants and also do not deal with the non-cash generating activities like infrastructure assets and heritage assets (Beaver, 2014)
  • Consolidation of GBEs into Government’s financial statement may entail the alignment of the accounting policies (Williams, 2014)
  • It also have issue with related party disclosures, emission trading schemes, disaggregated disclosures and reporting of service performance

Conclusion

From the above analysis it is concluded that AASB conceptual framework and IFRS play important role while the companies prepare their financial statement. From the financial statement of the companies it is identified that both the companies prepare their annual statement as per the requirement of AASB framework, interpretation of IFRS and as per the Corporation act 2001. Further, both the companies fall under the category of company as mentioned in Australian Securities and Investment Commission Corporations (Rounding under Director’s or Financial Reports/) instrument 2016/191 that is dated on 24th March 2016 and the issued pursuant with regard to the section 341(1) of Corporation Act 2001.

Reference

Amaysim.com.au 2017. Amaysim australia | Downloads. [online] Available at: [Accessed 18 Aug. 2017].

Beaver, W.H., 2014. Financial reporting: an accounting revolution. Prentice Hall.

Bhimani, A., 2015. Contemporary issues in management accounting. Oxford university press.

Bonner, S.E., 2015. Judgment and decision making in accounting. Prentice Hall.

Chester, G., 2014. Contemporary Issues in Accounting. Journal of Accountancy (pre-1986), 148(000005), p.102.

Griffiths, J.J., 2016. Recognition of Foreign Administrative Acts in Australia. In Recognition of Foreign Administrative Acts (pp. 51-89). Springer International Publishing.

He, L., Evans, E. and He, R., 2016. The Impact of AASB 8 Operating Segments on Analysts’ Earnings Forecasts: Australian Evidence. Australian Accounting Review, 26(4), pp.330-340.

James, A. and Prout, A. eds., 2015. Constructing and reconstructing childhood: Contemporary issues in the sociological study of childhood. Routledge.

Kent, P. and Zunker, T., 2015. A stakeholder analysis of employee disclosures in annual reports. Accounting and Finance.

Kober, R., Lee, J. and Ng, J., 2013. GAAP, GFS and AASB 1049: perceptions of public sector stakeholders. Accounting and Finance, 53(2), pp.471-496.

Telstra.com.au (2017). Downloads. [online] Available at: [Accessed 18 Aug. 2017].

Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.

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