Accounting Issues: Year Ending 30 June 2018

Running head: FINANCIAL AND MANAGEMENT ACCOUNTING
Financial and Management Accounting
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FINANCIAL AND MANAGEMENT ACCOUNTING
Answer to Part B
Subject: Re Accounting Issues: Year Ending 30 June 2018
From:
Sent: 11 September 2018
To: Margaret Montana
From:
Dear Margaret,
I am highly obliged that you provided me the opportunity to highlight the various types
of the accounting issues in the firm. I would like to state that in general revaluation is considered
as an adjustment which is used to record the purchasing the fixed asset and usually recorded at
the cost price. It is also probable that the market value of the assets will be changing overtime
and the business will be able to choose where it wants to continue measuring the assets using the
revaluation model or historical-cost basis with the use of revelation model in which the financial
records reflect the updated market value of the assets. In addition to this, the revaluation model
allows downwards and upward adjustments which results in appreciation or decrease in the asset
value on the other hand the impairment of losses will only allow downward adjustments.
It needs to also understood that the revaluation provides the business with the option to
show the carrying cost of the fixed asset as per the revalued amount. Subsequently the
revaluation pertaining to the fair value of the assets less the accumulated depreciation is treated
under the accumulated impairment losses. As per this approach the companies are able to take
the various types of the initiatives which are able to include the carrying amount not affecting the
materiality or the fair value in the reporting period.

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FINANCIAL AND MANAGEMENT ACCOUNTING
It needs to be also seen that any event related to loss in the inventory is considered under
the category of expense. In addition to this, the impairment loss can appear on the I/S as per
COGS or Gross profit. In cases of the larger write downs it needs to be discerned of the
impairment comes under operating expenses.
The change pertaining to the depreciation is required for reallocation of the costs of the
tangible assets pertaining to the tax purposes and accounting. It is also essential in allocation of
the depreciation expense for the cost. The changes related to the impairment in accounts will be
conducive in depicting the permanent reduction for the value in the asset of a company which is
normally discerned as a fixed asset. The testing of impairment is essential in terms of the
depictions of the various types of the consideration which is seen to be related to the situation
when the book value of the assets surpasses cash flow benefits.
The disclosures amortization is required for the declaration of depreciation. In addition to
this, it needs to be assured that disclosures associated to the impairment needs to be taken into
account by disclosure on the recoverable amount of the fixed asset. The impairment normally is
seen to exist among the fair value of the asset below the carrying amount. The disclosures related
to the revaluation needs to be related to the various concepts such as capital goods which owned
by of the business.
The reporting on the performance without upsetting the managers needs to be based on
the several types of the considerations which are associated to initiating the changes by
compliance to relevant rulings of the accounting standards. The independent auditor’s
responsibility is also seen with prime importance of considering the materiality issues considered
in the evaluation of the accounts.