Current Development In Accounting Thought: Paragraphs 66-76 Essay

Question:

Discuss about the Current Development in Accounting Thought for Paragraphs 66-76.

Answer:

Australian

Webinar: australian reporting framework: (7/12/2017)

In consideration to the outreach stations that took placed in the last month in Sydney, Brisbane and Melbourne, the AASB conducted a webinar in order to share feedback provided at these sessions. This further investigated the type and nature of improvements which can be considered (News., 2018).

EXPOSURE DRAFT: AUSTRALIAN IMPLEMENTATION GUIDANCE FOR NFP PUBLIC SECTOR LICENSORS (21/12/2017)

Revenue attended from licences issued by the public sector makes up a considerable fraction of revenue belonging to public sector. However, it seems to be the accounting treatment for such licences under AASB 15 is highly unclear. In order to support those NFP public sector organizations that offers licenses, the AASB has released ED 283 amendments (Goodwin et al., 2017). This assists public sector licensors to differentiate licences from taxes. This also facilitates in understanding obligations important to public sector license agreements. This section determines the nature of the issued licences and recognises vital accounting needs.

new australian accounting standard (23/02/2018))

AASB 2018-1 made certain amendments to within Australian Accounting Standards that considered annual improvements available in the website of AASB. This standard made the amendments in alignment to the previously held interests within a joint operation (amending AASB 3 Business Combinations and AASB 11 Joint Arrangements), income tax effects of payments on financial instruments signified as equity under “AASB 12 Income Taxes” along with borrowing cost that is suitable for capitalization under “AASB 123 Borrowing Costs”(McClure, Lanis&Govendir, 2017).

ASB Submissio: acnc legislative review (07/03/2018)

After attaining the views of charity stakeholders by means of extensive outreach, the AASB in the last week made its submission to Legislative Review of ACNC. This recommended additional work to be carried out by ACNC, AASB along with the AUASB in consultation with the industry(News., 2018). This was done in order to generate an applicable reporting framework for all registered charities.

MEETING WAS HELD BETWEEN REPRESENTATIVES OF THE ASBJ AND AASB IN MELBOURNE (26/03/2018)

Representatives of the “Australian Accounting Standards Board (AASB)” and “Accounting Standards Board of Japan (ASBJ)” went for a meeting in Melbourne. This was the first meeting that was held among them (Hoopes, Robinson &Slemrod, 2018). This meeting provided updates in the areas of their respective frameworks of financial reporting, activities along with exchanged opinions on opportunities of cooperation. The ASBJ and AASB also explained certain technical topics in which both the boards are interested encompassing concerns associated with IFRS implementation. The concerns that were discussed were focused on the areas of impairment testing, intangibles specifically goodwill, virtual currencies, business communications withincommon control as well as equity accounting method along with comprehensive income. The meeting decided that both the boards look forward to generate more opportunities in order to associate with ASBJ on several beneficial projects(News., 2018). An in-depth understanding of ASBJ’s viewpoints can facilitate in recommending globally acceptable solutions to certain outstanding accounting concerns.

As laid out by AASB 101, it is necessary for the Australian organisations to develop the financial statements by adhering to certain norms and regulations. One of such norms is the representation of the general purpose financial reports, which could be contrasted between the existing and previous years for an organisation. Thus, it lays down the entire requirements for presenting the financial statements, guiding for their structure and basic needs for their content (Aasb.gov.au, 2018).

It could be observed from the financial statements of Blake Limited that the accountant of the organisation has not segregated the items accordingly before presenting the same to the users. Along with this, the accountant of the organisation has not categorised assets under two distinct heads, which are current assets and non-current assets. In a similar fashion, the segregation of liabilities needs to be made into current liabilities and long-term liabilities (AASB, 2014).

In accordance with “Paragraphs 66-76 of AASB 101”, assets and liabilities are needed to be classified into short-term and long-term. Along with this, the inventories of finished goods, work-in-progress and raw materials need to be represented in a single head, while receivables need to be categorised in the form of a distinct item. All these transactions are considered as portions of the input products needed in the manufacturing process.

Moreover, in compliance with “Paragraph 54 of AASB 101”, the investment in shares needs to be accounted by using the method of equity; however, it is recorded at cost in the provided statement of the organisation. Furthermore, it could be observed both deferred and current tax liabilities are merged together. However, as per “Paragraph 54 point numbers (n) and (o) of AASB 101”, they need to be represented in a distinct manner.

The receivables are to be categorised as amounts, which could be recovered before a year and above a year. This is because the balance sheet of an organisation comprises of both short-term receivables and long-term receivables (Cameron, 2014). Hence, if these liabilities are segregated properly and if they are disclosed effectively, it would be helpful for both the management of the organisation and the intended users of this statement to obtain a better overview of its financial position.

Another mistake that could be identified after careful assessment of the statement of financial position is that the accountant of Blake Limited has recorded accumulated depreciation in the liabilities section of the balance sheet statement. However, AASB 101 states that accumulated depreciation is required to be disclosed on the asset side of the balance sheet statement, even though the results would not vary. However, this amount would be wrongly debited in the income statement, which would have direct impact on operating cost and in turn, net profit after tax (Hodgson & Russell, 2014). Finally, dividend paid is recorded in the income statement of the organisation. However, it is not a business expense and thus, it needs to be represented in the section of owner’s equity. Instead, dividend payable per share is needed to be mentioned.

References::

AASB, C. A. S. (2014). Financial Instruments. Project Summary.

Aasb.gov.au. (2018). Retrieved 4 April 2018, from

Cameron, R. (2014). Applying the Materiality Concept: The Case of Abnormal Items. CORPORATE OWNERSHIP & CONTROL, 428.

Goodwin, J., Atilgan, Y., Simsir, S. A., & Ahmed, K. (2017). Investor reaction to accounting misstatements under IFRS: Australian evidence.

Hodgson, A., & Russell, M. (2014). Comprehending comprehensive income. Australian Accounting Review, 24(2), 100-110.

Hoopes, J. L., Robinson, L., &Slemrod, J. (2018). Public tax-return disclosure (No. w24318). National Bureau of Economic Research.

McClure, R., Lanis, R., &Govendir, B. (2017). Analysis of Tax Avoidance Strategies of Top Foreign Multinationals Operating in Australia: An Expose.

News. (2018). Aasb.gov.au. Retrieved 4 April 2018, from

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