This document provides answers to questions related to accounting and financial management. It also includes news updates on accounting standards and corrections for mistakes in financial statements. The subject is Accounting and Financial Management, and the course code and college/university are not mentioned.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
0ACCOUNTING AND FINANCIAL MANAGEMENT Accounting and Financial Management Name of the Student Name of the University Author’s Note
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1ACCOUNTING AND FINANCIAL MANAGEMENT Table of Contents Answer to Question 1.................................................................................................................2 Answer to Question 2.................................................................................................................4 References..................................................................................................................................8
2ACCOUNTING AND FINANCIAL MANAGEMENT Answer to Question 1 NEWSLETTER NATIONAL NEWS FROM 1 DECEMBER 2018 TO 31 MARCH 2019 REVIEWDEAFTFORFATALFLAW: AASB2019-XPROPOSEDSTANDARD BY AASB (DATE: 24JANUARY, 2019) TheConceptualFrameworkforFinancial ReportingisintroducedbytheAASBfor important changes by the proposed standard of AASB 2019-X. Comments have been invited by AASB from the interested parties on or before 22 Match, 2019 (aasb.gov.au, 2019). NEWINTRODUCEDAUSTRALIAN ACCOUNTING STANDARDS (DATE: 20 DECEMBER, 2018) In order to give more accurate definition of the business,twonewstandardshavebeen introduced by AASB which are AASB 2018-6 and AASB 2018-7. AASB 2018-6 explains the definition of business under AASB 3Business CombinationandAASB2017-7explains definition of material by amending AASB 101 PresentationofFinancialStatements (aasb.gov.au, 2019). RIGHT-FOR-USEASSET’S ACCOUNTING STANDARD FOR NOT- FOR-PROFITCOMPANIES(DATE:24 DECEMBER, 2018) Some key amendments have been brought in by the AASB in the Australian Accounting Standards for the accounting operations of the Not-for-Profit companies by the introduction of AASB 2018-8. Under this new standard, the lessees of not-for-profit companies will get a provisional choice for measuring a class of right-of-use assets (aasb.gov.au, 2019). NEWCOMPLICAIONSFORAASB’S NEWREPOTINGPERIOD(DATE:30 JANUARY, 2019) Thenewcomplicationsforthefinancial reporting period on or after 1 January, 2019 have been brought in by the AASB. Three specific standards contain these complications; theyareAASB1FirstTimeAdoptionof Australian Accounting Standards, AASB 15 Revenuesand AASB 1059Service Concession Arrangement: Grantors(aasb.gov.au, 2019).
3ACCOUNTING AND FINANCIAL MANAGEMENT INTERNATIONAL NEWS FROM 1 DECEMBER, 2018 TO 31 MARCH, 2019 NEWLEASESTANDARDOFIFRS16 LEASES(DATE: 8 JANUARY, 2019) IFRS has brought certain key amendments in lease accounting through the introduction of IFRS16Leases.Underthisnewlease arrangements,itisnolongerneededto establishdifferencebetweenfinanceand operating lease since IFRS 16Leasesputs the obligation on the lessees to recognize right-of- useassetsandliabilitiesinthecompany’s balance sheet (ifrs.org, 2019). ALTERATIONSINFINANCIAL LIABILITIES(DATE:21FEBRUARY, 2019) Certain amendments have been brought in in IASStatementofCashFlowsbythe InternationalAccountingStandardBoard (IASB) in the financial year of 2017. Now, it is the obligation on the business organizations to ensure the needed disclosures related to the alterations in the liabilities as a result of the inclusion of different financial liabilities. The mainintentionoftheIASBbehindthe introduction of these amendments is to ensure the fact that the various users of the financial statementstoevaluatethechangesinthe liabilities (ifrs.org, 2019). IFRS’SDISCLOSUREINITIATIVES– PRINCIPLES DISCLOSURE PROJECT’S SUMMARY (DATE: 21 MARCH, 2019) A specific document has been published by the IFRS foundation for summarizing the works completedbytheIASBinrelationto DisclosureInitiative–Principlesof Disclosures.Twoaspectshavebeen summarizedinthisdocumentwhichare research and feedback on disclosure initiatives andtheboard’sdecisioninrelationto TargetedStandards–LevelReviewof Disclosure (ifrs.org, 2019). UPDATES OF THE IASB FOR JANUARY 2018 (DATE: 25 JANUARY, 2019) Certain updateshavebeen releasedby the IASBregardingtheirexistingaccounting standards.Theaspectsthathavebeen considered for discussion are amendments in IFRS 17, proposed amendments in IAS 12, Rate-regulatedactivitiesandExtractive Activities (ifrs.org, 2019).
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4ACCOUNTING AND FINANCIAL MANAGEMENT Answer to Question 2 It can be seen from the provided information of Whirl Limited that the new trainee accountant of the company has made many mistakes in the financial statements. The following discussion shows the necessary corrections:
5ACCOUNTING AND FINANCIAL MANAGEMENT Correction 1 –The new accountant has added the repair expenses with the property, plant and equipment in the balance sheet. In actual, repair expenses need to be recorded in the income statement since it is an expenses. Thus, $3000 is shown in the income statement Correction 2 –The trainee accountants has shown the dividend in income statement while subtracted it from share capital and added it with retained earnings. However, the dividend of $50000 needs to be adjusted from the retained earnings.
6ACCOUNTING AND FINANCIAL MANAGEMENT Correction 3 –The accountant has mistakenly shown the cash at bank and cash management account separately in the balance sheet. As per correction, both these values need to be shown under the cash and cash equivalent in the balance sheet. Cast at bank$92,000 Cash Management Account$120,000 Total$212,000 Correction 4 –By mistake, the trainee has shown both the trade receivable and inventory together, but they should be shown on separate basis. In actual, allowance for doubtful debt needs to be subtracted from the trade receivables. Trade Receivables$140,000 Less: Allowance for Doubtful Debts$3000 Total$137,000 Correction 5 –The trainee accountant has adjusted trade payable from the asset side of the balance side. As per correction, trade payable of $26,000 should be shown under the current liabilities in the balance sheet. Correction 6 –Both materials and work-in-progress are show separately in the asset side of the balance sheet, but in correction, they should be shown under inventory. Raw Materials$110,000 Add: Work-in-Progress$128,000 Total$238,000 Correction 7 –Prepaid insurance worth $3000 is mistakenly reported in the income statement of the company. As per correction, prepaid insurance is a current asset and needs to be shown in the balance sheet. Correction 8 –The trainee has reported the accumulated depreciation in the liability side. In actual, accumulated depreciation worth $30,000 should be deducted from property, plant and equipment. Property, plant and equipment and intangible assets$348,000
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7ACCOUNTING AND FINANCIAL MANAGEMENT Less: Accumulated depreciation$30,000 Total$318,000 Correction 9 –Both the provisions are separately recorded in the liability side of the balance sheet. As per correction, both these provisions should be recorded as the provision as current liabilities. Provision for warranty$6000 Add: Provision for annual leave$18,000 Total$24,000 Correction 10 –Both the long-term loans from Westpac and Commonwealth bank have been recorded separately in the balance sheet. As per the correction, they should be combined as loan under the non-current liabilities. Loan from Westpac bank$80,000 Loan from Commonwealth bank$20,000 Total$100,000 Correction 11 –The trainee accountant has not separated the assets and liabilities in the proper manner in the balance sheet due to the fact that only assets and liabilities have been reported. In accordance with the Paragraph 66-76 of AASB 101, the trainee accountant should segregate the assets and liabilities among current and no-current assets and liabilities (aasb.gov.au, 2019).
8ACCOUNTING AND FINANCIAL MANAGEMENT References Aasb.gov.au. (2019).Presentation of Financial Statements.Retrieved 7 April 2019, from https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf IFRS.(2019).Ifrs.org.Retrieved7April2019,from https://www.ifrs.org/news-and-events/2019/01/ifrs-16-is-now-effective/ IFRS.(2019).Ifrs.org.Retrieved7April2019,from https://www.ifrs.org/news-and-events/2019/02/feature-changes-in-financing- liabilities/ IFRS.(2019).Ifrs.org.Retrieved7April2019,from https://www.ifrs.org/news-and-events/2019/03/disclosure-initiative-principles-of- disclosure-project-summary-now-available/ IFRS.(2019).Ifrs.org.Retrieved7April2019,from https://www.ifrs.org/news-and-events/2019/01/january-iasb-update-published/ News.(2019).Aasb.gov.au.Retrieved7April2019,from https://www.aasb.gov.au/News/New-compilations-for-reporting-periods-beginning- on-or-after-1-1-19?newsID=310722 News.(2019).Aasb.gov.au.Retrieved7April2019,from https://www.aasb.gov.au/News/New-Accounting-Standard--Right-of-Use-Assets-of- Not-for-Profit-Entities?newsID=310718 News.(2019).Aasb.gov.au.Retrieved7April2019,from https://www.aasb.gov.au/News/New-Australian-Accounting-Standards? newsID=310717 News.(2019).Aasb.gov.au.Retrieved7April2019,from https://www.aasb.gov.au/News/Fatal-flaw-review-draft---Proposed-Standard-AASB- 2019-X-Amendments-to-Australian-Accounting-Standards---References-to-the- Conceptual-Framework?newsID=310721