Advanced Financial Accounting

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Accounting Concepts...................................................................................................................2
New Accounting Standard AASB 16..........................................................................................4
Key Disclosures...........................................................................................................................5
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The company that has been selected for the purpose of analysis is the RIO Tinto
Company that is based in Australia. The Annual Reports presented by the companies is based on
various accounting estimates, standards and assumptions that are made by the company’s
management for the key purpose of classification and recording of various types of items. While
finalizing the presented Annual Report of the company the company has applied various
accounting concepts like fair value estimates, historical value measurement, going concern
approach, principle of materiality, uniformity, objectivity and disclosures of various financial
information were some of the common terms involved in the financial report. The AASB 16
Standard lays out the various courses of actions for the company that introduces a set of single
lessee accounting model and requires recognition of various assets and liabilities for all leases
with a term of more than 12 month of time period by the lessee. The AASB 16 Standard replaced
the AASB 117 Standard “Leases” and the introduction of AASB 16 doe removes and eliminates
the classification of operating and finance lease which the companies used to classify and report
for the leases undertaken (Brumm and Liu 2019). The application of the accounting standard
from the view point of companies in the aspect of AASB 16 and AASB 117 will be well
evaluated for the purpose of analysis and comparison.
Discussion
Accounting Concepts
The Annual Report presented by the company has been well prepared in accordance with
the Australian Accounting Standard Board which well adheres with the International Financial

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Regulatory System. The key accounting concepts that has been used by the company in the
financial report has been in the view and perspective of the revenue recognition, whereby
revenue is recognized when the same is earned by the company. In specific lines as stated in the
financial footnotes “Section 1 of the Financial Footnotes” it is stated that revenue is recognized
by the company on an individual sales when transfer of control takes place between the
customers (ASB, Zone and Network 2018). The key concepts that the company applies for the
purpose of various transactions can be well related with economic entity concept whereby the
transactions of the business are kept and maintained as a separate basis then the owners of the
company.
The application of the economic entity concept business and personal transactions can be
well differentiated. The company has also followed the matching concept principle while
preparing the Annual Report of the company whereby the company has recognized expenses in
relation to the revenue earned by the company in the same period as the revenue is recognized in
the Annual Report (Wouters et al., 2017). On the other hand, the key and important accounting
concept that has been followed by the company for the purpose of preparation of the Annual
Report of the company is the Materiality Concept whereby all the transactions and the associated
disclosures and financial footnotes in comparison to the same has been presented in the Annual
Report of the company. The auditor of the company has further issued an unqualified opinion
about the Annual Report of the company that states that the company has materially disclosed all
the relevant information in accordance with the various assets and transactions that was carried
and reported for the financial year. The Annual Report of the company has been well prepared
with the concept of going concern approach whereby the Annual Report of the company has
been prepared within the concept that the RIO Tinto Group will be well continuing g there