Holmes Institute T1 2020: Advanced Financial Accounting Report

This report delves into advanced financial accounting principles, focusing on General Purpose Financial Reporting (GPFR). It describes GPFR, which provides comprehensive financial information for stakeholders, including financial statements like income statements, cash flow statements, and balance sheets. The report outlines the objectives of GPFR, which is to provide useful information for resource allocation decisions. It further explores the conceptual framework, illustrating how Appen Limited applies these concepts, and discusses the adoption of accounting standards like AASB 16 and IFRS guidelines. The report also analyzes how the company presents financial information, including deferred tax assets and liabilities, contract liabilities, and the valuation of financial instruments. Finally, it concludes that the company follows the objectives of general purpose financial reporting, helping stakeholders make strategic decisions.

Advanced Financial
Accounting

INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Describe the General Purpose Financial Reporting.................................................................1
2. Objective of general purpose financial report (GPFR)............................................................2
3. Conceptual framework.............................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Advanced financial accounting covers financial reporting patterns, entities mergers, foreign
currency transfers, regional and local market financial reporting changes (Bandara and Falta,
2019). Advanced accounting also lists a variety of specialized financial planning issues such as
swap transactions, public sector pensions, unemployment insurance termination etc. It provides
the specific guidelines for the organizations to record the financial information or produce
several reports which its users and take advantages. This assessment is based on Appen Limited
(APX) which is an Australian based company. This analysis cover the several topics
such General Purpose Financial Reporting (GPFR). Along with it, it covers the objectives of the
General Purpose Financial Reporting within existing conceptual framework project.
MAIN BODY
1. Describe the General Purpose Financial Reporting
A general purpose financial report (GPFR) is a comprehensive report containing all the
financial facts relating to an organization. This is intended to satisfy all the readers' interests,
other than from a single number of users, such as creditors, lenders, company managers or
project planners. The term, the general purpose financial report, suggests that the study reflects a
general assessment of the finance department. In a general purpose financial report, specific parts
include financial reports, which include investment profits and revenue, cash flow statements
etc.
It also covers all of the company' operating expenses to function and a balance sheet
showing just how much company makes as assets, or what it owes in obligations (BIANCONE
And et.al., 2020). The general purpose financial report also provides complete averages of the
different areas, such as costs, income, and liabilities. The businesses will have a lengthy list of
monthly costs, for example, which is required to manage the business towards its full capacity.
The general purpose financial research gives total sums instead of identifying all of the
expenditures on several pages, so users can see immediately clear how much it would be planned
to spend every month.
It has been critically evaluated that, GPFR has many users who wants financial information
to make strategic decisions. The files and knowledge in the report can be analyzed by creditors
and stakeholders to evaluate how the business has been doing monetarily, or whether investment
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decisions made in the business. If the document hits the general population, the public will read
the document to see how the corporation money is spent internal and external and seeing how
much that the company earns from goods or services. The general purpose financial report can be
analyzed by corporate leaders to see if any changes are needed to the budget to eliminate
obligations or reduce expenses.
2. Objective of general purpose financial report (GPFR)
Given the knowledge for users’ needs regarding general purpose financial reports which
help in identified in the position that is the objective of general purpose financial reporting.
Basically preparing financial reports which include the financial information to its users that is
useful to make and evaluating the decisions more about allocation of resources (Biancone,
Secinaro and Brescia, 2020). When general purpose financial accounts meet this goal, they
would also be the mechanism through which mangers and governmental institutions release their
responsibility to report consumers.
Clause of accountability information is an important matter which plays essential role in the
general purpose financial reporting process. The creation of transparency by reporting
organizations by GPFR is encompassed by the wider goal of supplying information that is useful
for creating and assessing decisions about the distribution of finite resources, as consumers
would eventually need the information for opinions about source allocation.
The prime objective of general purpose financial reporting is to offer comprehensive
information about monitoring company that is valuable to current and prospective shareholders,
borrowers and other lenders and allow them to make specific decisions (e.g., bond exchange or a
reporting entity’s stock instruments). Key customers need knowledge about the organization's
capital not only to determine the potential of an organization for possible net cash inflows, as
well as how quickly and successfully management has performed their obligations to leverage
current resources of the organization. The IFRS definition assumes that annual accounts of
general purpose cannot contain all the details that consumers might need to undertake business
decisions. They may also need to address individual information coming from other outlets.
The IFRS System notes that some people, like securities and marketplace regulators, can
consider financial statements to be useful for general purposes. This is not considered the main
users, however, and financial statement reports are not targeted mainly at regulatory agencies or
other parties.
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3. Conceptual framework
In context of the Appen Limited, company follow the objective of general purpose of
financial reporting that is preparing financial statement for its users who are stakeholders of
organization. It simply their decision making process after evaluating the financial performance
and its position in the market among its competitors (Annual Report of Appen Ltd, 2019). With
the help of various financial statements external people able to make their investment related
decisions such as stakeholders which include the owner, customers, management, potential
inventors, shareholders, employees etc. General purpose financial reporting includes the income
statement, cash flow statement, change in equity, balance sheet etc. These statements are
published in the annual report which helps the stakeholders to made decisions over the past
performance of the company.
The Appen Group adopted all of the amended Accounting Standards and Interpretations
which are issued by the Australian Accounting Standards Board ('AASB') which is mandatory
for the reporting period (Crawford, Morgan and Cordery, 2018). Any new or revised accounting
principles or guidelines which are not yet obligatory were not implemented early. As of 1
January 2019, the company has accepted AASB 16 which replaces the AASB 117 'Leases,' and
removes operating leases and finance leases classifications for leaseholders. Apart from short-
term leases and lease agreements of low-value resources, the financial statements recognize right
of use assets and correlating lease liabilities.
Acceptance of straight-line operating lease expenses is substituted with right of use
accumulated depreciation on assets (Dhliwayo, 2018). The costs associated with the rental
agreement under AASB 16 will be greater in the previous times of the lease when contrasted to
the lease expenses under AASB 117. EBITDA performance, however are improving as the
research utilized is now offset by operating expenses and income statement depreciation. The
investment portion is reported in operating activities for categorization inside the cash flow
statement, and the main portion of the loan repayments is revealed individually in financing
activities. Company follow the several financial reporting standards of IFRS which provide the
several guidelines to the company that how to record each financial transactions in the books of
accounts.
The financial statements were compiled in compliance with the traditional expense standard,
with the exception of the reassessment of financial assets at fair value by benefit or loss, capital
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instruments at fair value by certain detailed profits, other property types, plants and machinery,
financial derivative securities and share-based fees, priced at market value. The combined
financial statements reflect the assets and liabilities of all Appen Limited entities as of 31
December 2019, and the performance of all the entities for the year ending of that time. Inside
these financial statements Appen Limited and its companies are related to as the 'Company.'
Appen Limited follows the objectives of general purpose of financial reporting and follows
other relevant conceptual framework (Ehalaiye, Laswad, 2020). Deferred tax assets and
liabilities are identified at the tax rates predicted to be implemented whenever the investments
are healed or liabilities decided to settle for impairment loss. It is based on the tax rates, except
that which is implemented or substantially enforced. When the accrued taxation on asset or
responsibility occurs from the original identification of goodwill and an asset or obligation in a
deal which is not a corporate arrangement and it does not impact the valuation or taxable
earnings at the time of the sale.
The duration of the turnaround can be monitored and the transient gap is unlikely to reversal
in the near future. For eligible transient discrepancies and unpaid tax losses, deferred tax reserves
are not accepted because it is anticipated that additional taxable sums will be eligible to use these
time is divided and losses. With any filing period, the carrying sum of accepted and
unacknowledged deferred tax assets is checked. The deferred tax reserves recognized was
reduced to the degree that future taxable income are no longer expected to be eligible for
repayment of the carrying number. Previously unrecognized DTA are known to the degree that
potential taxable incomes are expected to be eligible for recovery of the asset.
Those sums reflect liabilities that are accrued for goods and services rendered to the
companies related to the close of the budget year. These are calculated at amortized rates leading
to the short-term value, and are not reduced. The quantities are unprotected and usually payable
within 30 days of being recognized (Luke, 2019). Contract obligations are a responsibility of the
Company. To pass goods or services to a client and are accepted when the client pays payment,
or if the Group accepts the receivable as representing its absolute right to compensation
(whichever is earlier) until the Group has delivered the products or services with the customer.
Initially lending and borrowings are accepted at the market value of the received payment,
regardless of transaction fees. Using the efficient interest approach these are calculated at
amortized expense. The valuation of the liabilities-settled investments at the time of the award is
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assessed at market value. Fair value is calculated separately using multiple linear regression
absolute valuation models which take the par value into consideration. The estimated dividend
yield as well as the risk-free interest level for the option, along with non-investing provisions
which do not dictate how the Company provides the benefits that allows the workers to earn
payment. Some other criteria for the project are taken into account.
Throughout the jurisdictions where it continues to operate the Appen Ltd Group is
subject to financial taxes. Particular course of action is needed to determine the taxation
provision. Mostly during normal course of business, there are several exchanges and
measurements conducted over which the tax dedication is unsure. The leader understands
liabilities based on the Appen's current understanding of tax legislation for expected tax audit
problems. Where even the expected tax result of these issues is distinct from the carrying values,
the deferred tax and provisions will be affected by such distinctions during the period in which
that measurement is made.
Restoration of deferred tax assets as eligible temporary variations, DTA are not recognized
if the Company finds it likely that potential taxable sums would be able to exploit those transient
discrepancies and losses (Poulton, Barnes and Clarke, 2018). AASB 16 was implemented and
use the retrospective approach such the quantifiable metrics was not restated. The present and
historical EBITDA figures are not exactly related. Significance’s revenue and portion result
system collects the former product significance before the acquisition.
It has been analysed that, Appen Ltd follow all the objectives of general purpose financial
reporting that is specially produce for the its users who are include internals as well as externals
people. Mostly inventors, creditors or owners to made strategic decisions in respect of the
company to maximise as well as fulfil its financial value. With the help of income statement,
users evaluate the company is in profitable form or not. In addition balance also helps in
addressing that company’s assets are able to pay off their liabilities or not. Along with it, there
are several Australian accounting concepts (AASB) or financial reporting frameworks (IFRS)
followed by the company to produce its financial reports.
CONCLUSION
On the basis of above discussion it has been concluded that, for the better preparation of
financial reports, company implement several accounting or reporting standards at the time of
producing financial statement for its users. Organizations publish their financial statements in the
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annual report which helps the stakeholders to make their decisions in respect of the company
after evaluating its financial performance.
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REFERENCES
Books & Journals
Bandara, S. and Falta, M., 2019. Usefulness of annual Reports: perceptions from Sri Lanka.
BIANCONE, P. And et.al., 2020. Popular Financial Reporting in Heritage and Cultural Hybrid
Organizations: The First European Experience.
Biancone, P. P., Secinaro, S. and Brescia, V., 2020. Popular Financial Reporting: A New
Information Tool for Local Public Groups. In Financial Determinants in Local Re-
Election Rates: Emerging Research and Opportunities (pp. 129-175). IGI Global.
Crawford, L., Morgan, G. G. and Cordery, C. J., 2018. Accountability and not-for-profit
organisations: implications of an international financial reporting framework. Financial
accountability and management. 34(2).
Dhliwayo, A., 2018. An Appropriate Financial Reporting Framework for the Public Sector in
East and Southern Africa. The International Journal on Governmental Financial
Management. 18(1). p.50.
Ehalaiye, D., Laswad, F., Botica Redmayne, N., Stent, W. and Cai, L., 2020. Are Financial
Reports Useful? The Views of New Zealand Public Versus Private Users. Australian
Accounting Review. 30(1). pp.52-64.
Luke, B., 2019. A Review of Third Sector Reporting Frameworks: Communicating Value
Created in Small and Micro Social Enterprises. In Handbook of Research on Value
Creation for Small and Micro Social Enterprises (pp. 26-45). IGI Global.
Poulton, E., Barnes, L. and Clarke, F., 2018. Financial Disclosure by Australian Residential
Aged Care Providers: Are They Suffering Dementia?.
Online
Annual Report of Appen Ltd. 2019. [Online]. Available Through:
<https://appen.com/wp-content/uploads/2020/04/Appen-Limited-Annual-Report-
2019.pdf>
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