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Report On Accounting Policies Wesfarmers Plc

   

Added on  2020-02-19

18 Pages3454 Words240 Views
RUNNING HEAD: Accounting policies and estimates used by firm1Name of the Student-Title-Research proposal (Reaction of capital market to financial reporting)University Name-

Accounting policies and estimates used by firm2Table of ContentsIntroduction.................................................................................................................................................3Present description of company..................................................................................................................3Accounting policies followed by Wesfarmers..............................................................................................4Estimates used by Wesfarmers plc..........................................................................................................5Estimates used by rivals...........................................................................................................................6Comparison of accounting policies and estimates used by Wesfarmers and Morrison plc.....................6Assesse accounting flexibility..................................................................................................................8Evaluation of accounting strategies and policies.........................................................................................8Changes in accounting estimates by the Wesfarmers.............................................................................9Suggestion for accounting policies and estimates prepared by Wesfarmers........................................10Red flag in accounting report of Wesfarmers Plc......................................................................................10Conclusion.................................................................................................................................................13References.................................................................................................................................................14

Accounting policies and estimates used by firm3Introduction In this report, it is given that reporting frameworks of organization are depends upon theaccounting standards and reporting framework of organization. Accounting policies are thestandard and specific rules, procedure and accounting implication which are implemented by theorganizations to prepare their financial statements. This report reflects the study on the principlesrules, procedure and consistency in adoption of accounting policies used by organization. With aview to understand the practical implication of accounting policies and measures, WesfarmersPlc has been taken into consideration in this report. This company has adopted internationalfinancial reporting standards and establish harmonization in its GAAP rules and regulation andapplication international accounting standard. Present description of company Wesfarmers plc is an Australian conglomerate company having headquartered in perth.This company has increased its total turnover by 25% as compared to last five years data andresulted to overall total revenue to 65.98billion AUD in 2016. Company has been preparing itsfinancial statement by following GAAP rules and IFRS accounting standards in determinedapproach. This level of compliance in preparation of financial statement helps company toadhere with the international financial accounting system (Kieso, Weygandt and Warfield,2010).

Accounting policies and estimates used by firm4With the increasing ramification of economic changes, adoption of international policiesfor preparation of financial statement has become necessary. Accounting policies are veryimportant for the proper understanding of the information provided in the financial statements.Accounting disclosure is also an important part as many international accounting policies andstandards allow companies to make alternative treatment for same transactions. However, anentity is not allowed to change its adopted accounting policies for the particular transactions forconsecutive period (Cairns, et al. 2011).Accounting policies followed by WesfarmersThere are several accounting policies followed by Wesfarmers Plc while reporting itstransactions in the financial statements (Irvine and Moerman, 2017).Wesfarmers plc has adopted written down value method to reflects the true value of itsassets as per the IFRS rules and standards (Hussey and Ong, 2017).As per the AASB16 lease, Wesfarmers has made a provision to recognize the right-of-useassets representing to use underlying leased assets.All the consolidated financial statement of company and financial details shown would bedisclosed as per the AASB-5 IFRS rules and standard.All the intangible assets will be gone through under the impairment test each and everyyear. Loss arise from the impairment test firstly deducted from the goodwill amount thenafter from the other cash generating units of company as per the adopted IAS 136 byWesfarmers (de Ricquebourg and Jonathan, 2013).

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