Accounting and Financial Reporting

Running head: ACCOUNTING AND FINANCIAL REPORTING
Accounting and Financial Reporting
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1
ACCOUNTING AND FINANCIAL REPORTING
Executive Summary
The main purpose of the assessment is to analyse the business of Shopping Centre Australia
Property Group (SCP) which is engaged in real estate investment. The assessment would be
assessing the different accounting regulations which are applicable to the business and the role
which the management of the company plays in managing the operations of the business. In
addition to this, the changes which have taken place in retail market would also be considered
and the impact of the same on the business of SCP would also be assessed in the analysis which
is conducted below in the assignment.

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ACCOUNTING AND FINANCIAL REPORTING
Introduction
The main purpose of the assessment is to analyse the business of Shopping Centre
Australia Property Group (SCP) which is engaged in real estate investment trust business. The
assessment would be identifying the accounting regulations which are applicable on investment
properties business and further analyse what changes have been brought about in the industry.
The assessment would also be discussing about the flexibility management for estimating the
value of investment properties. The assessment considers that significant changes have been
made in retail industry and therefore would be evaluating the impact of such changes on the
financial statement of SCP (Tschopp & Huefner, 2015). The assessment would finally be
recognising the consequences of the changes in retail industry on the annual reports of the
business of SCP.
Discussion
Accounting Policies related to Investment Properties
The management of SCP is engaged in business of real estate investment and therefore
the management needs to adhere to relevant accounting policies in order to have an appropriate
reporting framework. The management of the company needs to follow the regulations which are
established in IAS 40 which deals with accounting for properties which are used for earning
rental income. As per para 16, which is included in IAS 40, an investment property is to be
recognised as an asset when it is probable that future economic benefit associated with the
property would flow to the company and the cost of the property can be appropriately measured.
Further more para 20 and para 23 states that investment property should be measured at cost. As
per para 30, the standard permits investment property to be initially recognised follow fair value
model or cost model.
The management of SCP needs to adhere to such provisions as stated above and the
business has the option of valuing the property at cost model or following fair value model (Noe
et al., 2017). In addition to this, the management of SCP needs to appropriately disclose the
method of valuing the investment properties of the business and appropriately provide breakup
of the costs which is considered in the estimation of the total cost of the investment property. The