Accounting and Financial Reporting: Financial Statement Disclosures, Share Capital, Income Tax, Revaluation of Property, Impairment of Assets

Running head: ACCOUNTING AND FINANCIAL REPORTING
Accounting and Financial Reporting
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1ACCOUNTING AND FINANCIAL REPORTING
Table of Contents
Question 1: Financial statement disclosures....................................................................................2
Part i:............................................................................................................................................2
Part ii:...........................................................................................................................................4
Question 2: Accounting for share capital........................................................................................5
Part i:............................................................................................................................................5
Part ii:...........................................................................................................................................6
Question 3: Accounting for income tax...........................................................................................7
Part i:............................................................................................................................................7
Part ii:...........................................................................................................................................8
Question 4: Revaluation of property, plant and equipment.............................................................9
Question 5: Impairment of assets..................................................................................................11
References:....................................................................................................................................12

2ACCOUNTING AND FINANCIAL REPORTING
Question 1: Financial statement disclosures
Part i:
Scenario 1:
It is clearly evident from “Paragraph 51 of AASB 116” that when any modification is
made in the useful life of an asset, it would be taken into account as a modification in accounting
estimate as well (Laing & Perrin, 2014). Therefore, it is not necessary to restate accounts
retrospectively. The impact of the change would be on the financial reports of the prospective
years.
Lastly, the accounting estimate change is to be disclosed in the form of notes to accounts
of Superstore Limited.
Scenario 2:
The amount due of $20,000 would be included as accounts payable in the current liability
section of the balance sheet statement of the organisation in 2018. As the repairs expense
pertained to the last date of the financial year 2017, it could not be shown as expense in the 2018
income statement of the organisation, since there is no provision for the same under accrual,
matching and accounting principles. Therefore, for adjustments, the use of retained earnings
account would be made, since the repairs expense account has been closed.

3ACCOUNTING AND FINANCIAL REPORTING
Scenario 3:
An event is said as non-adjusting, if there is decline in value of investment after the
reporting year. “Paragraph 21 of AASB 110” cites that the events are to be disclosed as financial
footnotes at the time they contain material amounts. If no material amounts are present, these
events could be ignored (O’Donnell et al., 2015). Although no adjustment is needed for asset
valuation in order to report in the balance sheet statement of 2018, adequate disclosure should be
provided as financial footnotes. However, investment is to be written down to $250,000 in 2019,
which would result in loss for Superstore Limited. Under such condition, profit and loss account
or revenue account is to be debited by $350,000 and investment account is to be credited by
$350,000.
Scenario 4:
It is evident from “Paragraph 8 of AASB 110” that a firm has to account for adjusting
events by adjusting the probable financial impact in the financial statements before they are
issued and finalised (O’Donnell et al., 2015). Thus, an adjusting event is an event, in which a
fraud or error is detected after the reporting date. Therefore, advertising expense and Max are the
two accounts that require adjustments.