Holmes Institute T1 2020: HA3011 Advanced Financial Accounting Report

This report provides an in-depth analysis of advanced financial accounting principles, with a specific focus on General Purpose Financial Reporting (GPFR) objectives. It examines the application of these objectives within the context of the REA Group Ltd, an Australian-based company. The report defines GPFR, outlines its objectives, and discusses the qualitative characteristics of financial information. It then analyzes the REA Group Ltd's financial statements, including the balance sheet, income statement, and equity statements, to illustrate how the company fulfills GPFR objectives. The report also addresses the Australian accounting regulatory framework, including the Corporations Act and Australian Accounting Standards. The conclusion highlights the importance of advanced financial accounting in modern business environments and emphasizes the role of GPFR in maintaining accurate financial records for stakeholders. The report also covers the elements of financial statements, such as assets, liabilities, equity, income, and expenses.

Advanced Financial Accounting

INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Advanced financial accounting includes the accounting processes, trends, mergers of
corporate operating firms, international exchange transactions and adjustments to the global and
local exchange financial statements (Chen and Komal, 2018). Specialized accounting also covers
a number of specialized financial management problems such as leasing arrangements, public
pensions, termination of overtime pay etc. For the better understanding of such concepts, this
report selects the REA Group Ltd which is Australian based company that founded in 1995. This
assessment covers the several topics such as define and critically discuss the objectives of
general purpose financial report (GPFR).
MAIN BODY
Describe the general purpose financial reporting:
General purpose financial report is a comprehensive report which containing the all financial
facts relating to an organization (de Azevedo and et.al., 2020). This would be established
or achieve all the users' needs, over those of a particular group of participants, including such
investors, shareholders, corporate leaders or expenditure planners. The term, the general purpose
financial report, suggests that the report represents a general assessment of the finance
department.
Objective of general purpose financial report (GPFR):
Supply of financial information of organization is valuable for the current and prospective
owners, borrowers and other stakeholders. It makes important decisions on supporting the client
with capital (Gaither, 2018). These decisions include the acquisition, selling or keeping of equity
and debt markets, and the issuance or settlement of loans and other credit types. General purpose
financial reporting has several objectives which are required to follow by the every organization
and these are as follow:
 The qualitative aspects of important financial information.
 Overview of the organization and the description of their operational work.
 Description of company's asset, liability, equity, income and expenditure and
guidance to encourage or evaluate the financial position.
 Criteria for incorporating properties and obligations (recognition) in annual
statements and instructions for whether to delete them (recognition).
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 Bases for measuring, and guidelines on when to use them.
 Requirement of financial information disclosure for the stakeholders along with
following all the guidelines.
 Concepts about money and the preservation of wealth.
GPFR cover the several quantitative characteristic which is easily available
through financial statements of the company. It is the simple model for representing the financial
condition of an entity and how they operated their management and governing board for the
possible accuracy. General purpose financial reports (GPFR) are a necessary element of open
financial statements by policymakers and other agencies in the government sector. It promotes
the improvement which is necessary for the organization. General purpose financial reports are
financial statements designed to fulfil the knowledge needs of consumers that are unable to allow
the production of financial reports customized to suit their particular needs.
GPFR cannot allow the information to the existing and potential investors and creditors.
Such consumers will find important information from other outlets, such as overall economic
trends and forecasts, global developments and political environment, and perspectives for
industry and business (Gao and Yan, 2019). Financial forecasts are often based on assumptions,
assessments, and formulas, rather than objective representations. The Conceptual Framework
sets the guidelines underlying those projections, judgements and models. The theories are the
primary objective the IASB and financial report preparers strive to achieve.
Like for other objectives, the concept of optimal financial reporting from the Conceptual
Framework is uncertain to be accomplished in full, at least not in the near term. it requires time
to consider, embrace and introduce new methods of evaluating transactions and other events.
Nonetheless, if financial statements are to grow and enhance its effectiveness, it is important to
set a target for which to aspire.
General purpose financial report within existing conceptual framework project:
In context of the REA Group Ltd, which is a multinational multimedia marketing service,
specializes in real estate. They introduce modern technologies and their collective talent for
delivering the best product lines and the services offered to our clients and customers. One of the
main objectives of general purpose financial reporting is to disclose their financial information in
form of several reports for external as well as internal users (Hayoun, 2018). This information
are recorded in the different type of report such as balance sheet, income and loss statement, cash
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flow statement, fund flow or equity based statement etc. These statements contain the faithful
information which helps the inventors to make their decisions regarding future investment in the
company on the basis of their financial performance. As per the annual report of REA Group
Ltd, company generate revenue from properties and online marketing. In 2019, revenue was $
847,926 and $ 778,357 in the 2018, it is clearly observed that revenue of the REA Group Ltd
increases which shows the positive impact and it is the important qualitative characteristics
which shows the financial information. Profit for the 2018 year was $ 253,100 and it decreases in
the next year that is $ 105,278. This information helps the users to identify the reasons that what
reasons of decline are in the net profit. Due to increases in operational expenses in the 2019 was
reduces the overall profit, which is $ 368,502 in 2018 and $ 562,805 in 2019. Company is
following the above GPFR objective which is easy to understand by stakeholders to the purpose
of evaluation. As per the GPFR objective, company should describe their operational
activities as well as define the entities which they are reporting. Basically, they have to describe
the information about their subsidiary or holding reporting bodies.
In the statement of financial position that is Balance sheet which include the value of assets
and liabilities. With the help of this financial statement, external as well as internal stakeholders
required to analyse the information for the further evaluation. In the REA Group Ltd, value of
total assets of 2018 was $ 1,728,097 and in 2019 it was $ 1,581,731. These data include the value
of current assets and non-current assets. Similarly, value of total liabilities of the company is $
940,769 in 2018 and $ 905,435 in 2019. Total equity of the company is $ 940,769 in the year
2018 and in 2019 it was $ 905,435. REA Group Ltd discloses their financial information for the
purpose of fulfilling their general purpose financial reporting objectives.
Organization has to define the definition of assets, equity, liabilities, income, expenses
etc. these are the essential aspect of the reporting. It is important to publish or clearly highlight
the figures for the comparison purpose (Hsiao and Tsai, 2018). It helps the stakeholders who
include the customers, clients, existing or potential inventors, shareholders, employees, suppliers,
financial institutions etc. These people can evaluate the financial performance through evaluating
the financial information which published in the annual report for the evaluation. REA Group
Ltd follows the above discussed GPFR objective which is beneficial for them to improve their
operational efficiency as well as effectiveness. According to company’s equity statement, it has
been observed that contributed equity of the REA Group in 2018 was $ 91,325 which reduces in
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2019 and remain at $ 89,544. Reserves & surplus of the company in 2018 was $ 52,517 and in
2019 it was $ 68,120. In addition, retain earning of the company of 2019 was $ 747,312 and in
2018 it was $ 796,421. Company follow the several objectives of the general purpose of financial
reporting to fulfil all the requirements.
REA Group Limited and its reporting firms those work under the Group are a profit-making
entity for the preparation of the statement of Financial Statements (Shawver, 2020). The above
general purpose financial statements were formulated in conformity with the terms of the 2001
Corporations Act. Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’). The Group's financial reports must follow International
Financial Reporting Standards ("IFRS"), as provided by the International Accounting Standards
Body ("IASB").
Underneath the historical cost basis, such financial statements were designed on a
continuing safety is the most important except for financial obligations pertaining to dependent
consideration and dragging committee contract of assets and debts. The information provided in
the financial statements which are use of some important calculations for accounting. It also calls
for the practice of judgment on the implementation of the Group's accounting practices. For each
related note, the areas containing a greater degree of discretion or uncertainty, or areas where
judgments and projections are important for the financial statements are reported separately.
The Corporation is of the sort alluded to in the Financial Reporting Instrument 2016/191,
published by the Australian taxation office, involving the "rounding off" of numbers. In
compliance with that law, sums in the financial reports were rounded off to the next thousand
dollars, except as otherwise specified. Annual report reveals the Group’s results during the year
including output by division of activities, sales, expenditures, earnings per share, tax payments
on wages, intangibles and the annual disability estimate.
The REA Group Ltd provides mortgage brokerage services, in which a loan agreement
between investment banks and the lender is the service offered by the group. Almost no other
services on request of the financial institution will be offered by the Company to the lender until
the mortgage has been created (Weetman, 2019). The organization is obligated to evaluation in
the context of an open and honest commission and a trail commission, in return for that mortgage
broking service. Revenue is revised for each reporting cycle depending on the variance in
component factor forecasts. Net profits per share shall be determined by splitting the gain
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allocated to the company's shares holders and minus any costs of servicing equity rather
than other common stock by weighted average outstanding ordinary shares during the period.
Income tax expenditure or income for the time frame is the tax due on the tax liability of the
previous cycle premised on the rate of income tax relevant to each authority, adapted by changes
in deferred tax assets and liabilities due to temporary differences and deferred taxes losses. The
Group evaluated the market price of cash equivalents, commercial receivables as well as trade
and other assets. Short-term instruments such as payable estimate their bearing numbers are due.
In the initial recognition, financial obligations are classified as fair value by means of profit or
loss or payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate. Everything investments initially, obligations are recognized at market value, and
free of directly associated acquisition expenses in the context of loans and advances and
payables.
From the overall discussion it has been concluded that REA Group Ltd fulfil the objectives
of General Purpose of Financial Reporting (Woodley, 2019). Company disclose the qualitative
characteristics of financial information. Define the various elements of the reports such as assets,
liabilities, expenditure, equity etc. In addition, Company follow the several Australian
accounting guidance or standards which provide the direction to record the financial information
and disclose in the annual report for the purpose of attracting potential investors or customers
towards organizations. Along with this, company maintain its capital and other financial
resources to operate their operational activities. In order to fulfil their general purpose of
financial reporting, company prepare several statements such as income statement, balance sheet,
cash flow, change in equity and statement for notes.
CONCLUSION
From the above discussion it has been concluded that in the modern business environment
organizations need to implement advances financial accounting. It helps the managers to record
all the financial information which are necessary to identify the actual financial position of the
company. Organization also make sure that, they will fulfil the objectives of GPFR which help
them to maintain their records in well manner.
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REFERENCES
Books & Journals
Chen, S. and Komal, B., 2018. Audit committee financial expertise and earnings quality: A meta-
analysis. Journal of Business Research. 84. pp.253-270.
de Azevedo, R. R. and et.al., 2020. Financial management information systems and accounting
policies retention in Brazil. International Journal of Public Sector Management.
Gaither, M., 2018. The role of forensic accounting in US counterterrorism efforts.
Gao, W. and Yan, H., 2019. April. Research on the Contents and Methods of Teaching"
Advanced Financial Accounting" in Local Undergraduate Colleges. In 1st International
Symposium on Education, Culture and Social Sciences (ECSS 2019). Atlantis Press.
Hayoun, S., 2018. The semio-logic of financial accounting: A non-essentialist conceptualisation
of the IFRS balance sheet. Accounting, Auditing & Accountability Journal. 31(7).
pp.2055-2082.
Hsiao, Y. J. and Tsai, W. C., 2018. Financial literacy and participation in the derivatives
markets. Journal of Banking & Finance. 88. pp.15-29.
Shawver, T. J., 2020. An experimental study of cooperative learning in advanced financial
accounting courses. Accounting Education, pp.1-16.
Weetman, P., 2019. Financial and management accounting. Pearson UK.
Woodley, D., 2019. Finance, Accumulation and Monetary Power: Understanding Financial
Socialism in Advanced Capitalist Economies. Routledge.
Online
Annual Report of 2019. [Online]. Available Through:
<https://rea3.irmau.com/site/PDF/3b60d90d-b3f2-4912-99be-aee71de170c6/
AnnualReporttoshareholders>
Objectives of the General Purpose Financial Reporting. 2020. [Online]. Available Through:
< https://annualreporting.info/the-objective-of-general-purpose-financial-reporting/>
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