Financial Reporting and Accounting Standards Assignment

Financial Reporting and Accounting Standards Assignment

Financial Reporting and Accounting Standards Assignment

Newsletter Changes in Financial Statements

Regulations of Financial Accounting Standards Board

It is stated by the Financial Accounting Standards Board that SEC adopt the US GAAP (Generally Accepted Accounting Principles) rules. For the public issuers it becomes compulsory to maintain their accounts. With the adoption of the GAAP rules the accounting standards get updated and improved in effective manner (ANT, 2015). As per the amendments new transition group formed in context to credit loss and new standard get introduced for the purpose of lease accounting and as per this standard organisation need to show the total balance of their assets and liabilities over the cover page of their statement of financial position. In order to render benefits to the different users they made few amendments in the EPS standard and make its calculation easier. By making amendments in the ASU 2016-01 they render clear view of the “Recognition and measurement of financial assets and liabilities

Financial Accounting Standards Board,

Presentation of financial statements

There is amendment made in AASB 101 which is related to the presentation of the financial statements. According to this amendment organisation no need to disclose the information which is relevant to the financial statements.  With this effect the number of notes prepared in order to render information.

Change in Statement of cash flows.

In 2015 there is amendment made in AASB 107 and as per the amendments there is effective reduction made in the disclosure requirements. Earlier this standard is used for the purpose of the preparing financial statement as per the Tier 1 reporting requirements in order to disclose the information of financial statements for the purpose of evaluating changes raised in the liabilities among financing activities with the change in the cash flows and non-cash changes.

Effect over the withdrawal of AASB 1031

With the amendment made in the AASB 108 the withdrawal of AASB 1031 Materiality get affected. As per the policy of AASB there is no need of rendering unnecessary guidance over the matters covered by IFRS. The amendment made in AASB 108 for the purpose of deleting AASB 1031 Materiality from the Australian Accounting Standard with the inclusion of interpretations.

AASB 108 equivalent to IAS 8

AASB 108 is get utilised for the purpose of the selection and application of accounting policies. It get utilised for the purpose of making accounting for changes in accounting policies. It get applied over the changes in accounting estimates and made corrections to prior period errors.

Change in the Accounting Policies

There is change in IAS 8 Accounting policies, changes in Accounting Estimates and Errors for the purpose of the applying accounting policies and changes among accounting for the purpose of estimating and reflecting corrective measures prior to errors.

With the change in the accounting estimate for the purpose of adjusting carrying amount of the assets and liabilities along with the related expenses.

Accounting Policies

Organisational functioning gets impacted with the failures of reporting

There was a case happened in the US as Enron Corporation become bankrupt even they have effective brand name in the market but their functioning get impacted with the effect of irregularity performed by their auditor’s. The irregular reporting converted into big scandal and as in the form of results company face bankruptcy. Due to the failure in the regular reporting they are not able to present the facts and figures in their reports according to the set standards or concepts which affect their functionality (Yuhao, 2010).

Report over the service performance information

For the purpose of decision making and accountability the service performance information is rendered by the Exposure Draft-ED 270. The information gets accessed by the users. The objective of board is to make issue of ED with the help of NFP entities.

The decisions made by boards include WOG (whole of government) as well as GGS (General Government Sector) as it gets applied to the financial statements.

Non-for-profit organisational Income

ED 260 “Income of Non-for-profit organisation” gets issued by the AASB. As per the ED it is proposes that:

  • Earn revenue with the help of the contracts from customers.
  • It renders guidance to the assist non-for-profit organisation affect the principle of AASB15.

The modification allow NFP organisation for reciprocal and non-reciprocal revenue under AASB 15 from contracts with customers as it eliminate the difference among the transactions of reciprocal and non reciprocal.

Recoverable amount of Non-cash-generating Specialised Assets for non-for-profit organisation

As per the set paragraph 1-8 AASB 2015-X is finding in context to AASB including AASB 1048 “Interpretation of Standard” which is related to the Australian Accounting Interpretation. In the lack of guidance AASB 108 change in accounting estimates, accounting policies and errors renders a base for the purpose of selecting and apply the relevant accounting policies.

Question 2

Preparation of a statement of financial position and statement of profit and loss and other comprehensive income statement:

Statement of Financial Position of Smarties Ltd. as on 30th June 2015:

Particulars

Amount (in $)

Amount (in $)

Assets

 

 

Current Assets

 

 

Cash and cash equivalents

12

 

Receivables

118

 

Other Financial Assets

 

 

Inventories

92

 

Total current assets

 

222

Non-Current Assets

 

 

Receivables

 

 

Other Financial Assets

18

 

Investments

 

 

Property, Plant& Equipment

399

 

Intangible Assets

275

 

Investment Properties

 

 

Other Non - current Assets

 

 

Total non-current assets

 

692

Total Assets

 

914

 

 

 

Liabilities

 

 

Current Liabilities

 

 

Payables

114

 

Interest bearing liabilities

13

 

Provisions

9

 

Other liabilities

37

 

Total Current Liabilities

 

173

Non-Current Liabilities

 

 

Payables

 

 

Interest bearing liabilities

175

 

Provisions

10

 

Other liabilities

33

 

Total non-current Liabilities

 

218

Total Liabilities

 

391

Net Assets (total assets - total liabilities)

 

523

 

 

 

Equity

 

 

Contributed capital

400

 

Accumulated Surplus / Deficit

36

 

General Reserve

25

 

Profit as per P&L a/c

62

 

Total Equity

 

523

 Working Notes:

Intangible assets

Particulars

Amount

Patent

200

Goodwill (100 - 25)

75

Total Amount

275

Property, plant and equipment’s

Particulars

Amount

Investment

130

Administration office equipment (172-83)

89

Sales equipment’s (300 - 120)

180

Total Amount

399

Current Provisions

Particulars

Amount

Provision for annual leave

7

Provision for long service leave

2

Total Amount

9

Non-current provisions

Particulars

Amount

Provision for annual leave

5

Provision for long service leave

5

Total Amount

10

Statement of Profit and loss/ Comprehensive income statements as on 30th June, 2015:

Particulars

Amount (in $)

Revenue

 

Sales

1,106

Cost of sales

524

Gross Profit

582

Other Income

38

Total Income

620

 

 

Expenditure

 

Distribution costs

213

Administration costs

183

Depreciation

68

Other expenses

28

Finance costs

27

Total expenditure

519

Profit before tax (Total income -Total Expenditure)

101

Income tax expenses

39

Profit for the year

62

Working Notes:

Other Income

Particulars

Amount (in $)

Interest income

8

Gain on sale of office equipment

10

Proceeds from insurance claim

20

Total

38

Distribution costs

Particulars

Amount (in $)

Advertisement expenses

22

Distribution costs

70

Annual leave

6

Long service leave

2

Rent - sales showroom

8

sales staff salaries

95

shipping supplies

10

Total

213

Administration costs

Particulars

Amount (in $)

Administration expenses

143

Administrative salaries

30

Annual leave

2

Long service leave

1

Rent - administrative office

7

Total

183

Bibliography

  • ANT. (2015). Financial Reporting News. Accounting & Assurance News Today , 2-3.
  • C. A. (n.d.). Changes to the Financial Reporting Framework. Retrieved March 13, 2016, from http://www.nzica.com/: http://www.nzica.com/frameworkfeedback.aspx
  • PWC. (n.d.). Financial Accounting Standards Board. Retrieved March 3, 2016, from http://www.pwc.com/: http://www.pwc.com/us/en/cfodirect/standard-setters/fasb.html
  • Yuhao, L. (2010). The Case Analysis of the Scandal of Enron. International Journal of Business andManagement.