Heritage Asset Valuation and Financial Reporting
Added on 2020-04-01
13 Pages2895 Words163 Views
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Running Head: ACCOUNTINGCourseNameInstitution AffiliationPart A
ACCOUNTINGa) Measurement and bureaucratic processes helps generate economicmeasurements that provide a scale that is used in accounting to assess profit or lossmade by a company. Therefore calculations are not generally based on hypothesis orguesswork since an already established measuring scale is used. In addition, thesemeasuring instruments produce reliable numbers that are vital to the production ofuseful financial statements. For instance, the sales of Recce Group grew by 9.2% to$2,276m and profit after tax reduction was up to 16.1% on the prior year at $192.2mfor the year ending 30 June 2016. Therefore, this calculation was done by using theactual figures and statements in order to ensure accuracy (Cairns & Tarca, 2011).b) All accounting statements are guided by the set rules and regulations and anyfirm that ignores the outlined standards is subjected to the law. The financial report isprepared in accordance with Australian Accounting Standards, Interpretations andother authoritative pronouncements of the Australian Accounting Standards Board andthe Corporations Act 2001. Therefore, the financial report covers the firm’s andcontrolled entities as a consolidated entity and all the arithmetic calculations shouldalways be correct so as to provide the real financial position of a firm. Consequently,the consolidated financial statements of the firm should also comply with theInternational Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board (IASB). Historical cost convention is a greatdeterminant of the financial reports and therefore the set standards of arithmeticshould be regarded in order to ascertain financial statements (Chalmers & Godfrey,2011).
ACCOUNTINGc) In accounting, depreciation involves the allocation of the cost of tangible assetover its useful life. For accounting purposes, businesses depreciate long term assetsand as well as for tax purposes. The cost of tangible assets purchased by firms can bededucted as business expenses for the purpose of tax. In addition, depreciation is anaccounting convention that allows a firm to write off the value of an asset over timeconsidering it as a non-cash transaction. Depreciation expenses do not represent anycash transaction but it indicates the value of an asset used over a period of time( Deegan, 2012). d) In accounting, income is an excess of revenue over expenses for an accountingyear. The amount of money received by a firm over a specific period is calledrevenue. It’s an increase in assets or decrease in liabilities. The gross activity made bya firm quantifies revenue. The gross profit generated by a company at the end offinancial year helps calculate revenue hence determining whether the company madeprofit or loss. However, there might be instances where non real cash items areintroduced in the income statement such as devaluation and depreciation which mayaffect the value of the firm’s real income. In this case it is true that income can be cashor non cash depending on the items represented in the income statement.e) Financial statements report on company’s equity, income, and cash flow. Theyindicate an entity’s financial activities to parties which include investors, managementand tax officials. Financial statements provide vital information that is used by
ACCOUNTINGdifferent persons for different reasons. They are presented in a structured manner withconventions accepted by accounting and regulatory personnel. They are therefore veryuseful in determination of whether a firm will attract the right investors and thissometimes affects how they are represented. Business managers try to paint the rightimage of the firm and sometimes might manipulate the figures to suit their interest.Similarly, financial statements are affected by human interpretation and error andeven at some cases by international manipulation indicating that they are not onlydeterminants of future decisions.f) There are different general accepted accounting principles which of the basicaccounting principles and guidelines, the detailed rules and standards issued by FASBand its predecessor the Accounting Principles Board (APB), and the generallyaccepted industry practices. Although, the information provided by professionalaccountants should be reliable, consistent, and comparable, the different accountingrules used yield different statements which give different positions.Part Ba.I believe accounting practice has deteriorated to a ritual of rules of simple compliance. In the past, the accounting history has been characterized by a quick intensification of enormous groups of accounting standards and other technical rules even though abrupt cooperate fall and other related financial reporting breakdowns have endured despite these massive regulatory measures. In an environment like this, the most regulated are the financial report hitherto also the least reliable commodities. The accounting profession is affected by a mediocre
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