Newsletter and Financial Statements

This newsletter provides updates on the latest changes in accounting standards in Australia and internationally, including AASB 2017-5, AASB 2017-6, AASB 2017-7, and the voluntary tax transparency code. It also provides guidance on complying with AASB 101 for Blake Ltd, including the classification of assets and liabilities, recording of accumulated depreciation, and presentation of dividends and finance costs.

Running head: NEWSLETTER AND FINANCIAL STATEMENTS
Newsletter and Financial Statements
Name of the Student
Name of the University
Author’s Note

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Answer to Question 1
CHANGE IN ACCOUNTING STANDARDS IN AUSTRALIA
NEW AUSTRALIAN ACCOUNTING STANDARD (22.12.201): The Australian
Accounting Standard Board (AASB) has introduced three major changes in the accenting
standards with a new standard AASB 2017-5. As per AASB, the date from which these
amendments will begin from 1 January 2022 after some editorial corrections. As per AASB
2017-6, the amendments under AASB 9 financial statements will be providing permission to
the companies in the measurement of amortization cost of fair value with the assistance of
comprehensive income and financial assets. In AASB 2017-7, according to this change,
interest from joint ventures and associates needs a business organization to record the long-
term interests in the joint ventures and associates while using AASB 9 Financial Instruments
before the application of any allocation of impairment loss (aasb.gov.au, 2018).
MATERIALITY JUDGMENT (22.12.2017): In this statement, AASB has issued some
requirements for materiality judgment. Thus, it is required for the directors, trustees and
others responsible for the preparation of financial statements to develop continuous
materiality judgment. For this reason, AASB has published the practice statements
containing the guidance for making materiality judgment (aasb.gov.au, 2018).
TAX TRANSPERECNY CODE (25.01.2018): In order to provide transference and
comparability related to the crucial tax related information and situation, AASB has
introduced a voluntary tax transparency code. Due to the request from the tax authority,
AASB has issued a draft guideline related with the aspects of suggested tax reconciliation
with the help of tax commutation rate (aasb.gov.au, 2018).
FINANCIAL REPORTING FRAMEWROK FOR CHARITIES (14.02.2018): As a part
of the financial reporting framework, AASB has issued a research paper based on the
requirements of present financial reporting for charities. The main purpose of this
amendment is to increase in conversation for financial reporting in the charity sector for
enhancing transparency. It leads to the submission of ACNC review (aasb.gov.au, 2018).
REDUCED DISCLOSURE REQUIREMENT OF AASB (22.12.2017): This particular
standard provides disclosure concessions for the companies of Tier-2 related with AASB 16
Leases. It needs to be mentioned that Tier 2 helps in the reduction of burden of disclosure
along with the auditing costs irrespective of for-profit and not-for-profit organizations
(aasb.gov.au, 2018).

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CHANGE IN ACCOUNTING STANDARDS INTERNATIONALLY
Answer to Question 2
The accounting standard of AASB 101 consists of the standards and regulation for the
preparation and presentation of general purpose financial statements in order to be ensured that
they are comparable with the current year’s and previous year’s financial statements of other
companies. In addition, it provides the structure and rules for minimum requirement of the
companies (Hodgson & Russell, 2014).
In case of Blake Ltd, it can be noticed that the company follows a single statement for
profit and loss and comprehensive income statement. It can be noticed that the adopted statement
of financial position failed in the classification of the assets as non-current and current assets.
Same aspect can be seen for liability section as the accountant has not distinguished into current
ANNNUA IMPROVENENTS IN 2015-17 CYCLES (23.2.2018): As per IFRS, the man
objective of this amendment is to bring change in the aspect of interest previously held from
joint operations, consequence of income tax payment and others that are classified as equity
with the presence of borrowing cost (ifrs.org, 2018).
ISSUE OF NARROW-SCOPE AMENDMENTS TO IFRS 9 AND IAS 28 BY IASB:
For the ease of implementation, IASB has introduced amendments to IFRS 9 Financial
Instruments and IAS 28 Investments in Associates and Joint Venture. With the
implementation of these standards, it will be easy for the business entities in measuring pre-
payable financial assets with the assistance of negative compensation at fair value. In
addition, the changes in IAS 28 will provide the necessary clarification related to the
acceptability of the business organizations in for long-term interests in associates and joint
ventures (ifrs.org, 2018).

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and non-current liabilities. Thus, it is required for Blake Ltd to present the assets and liabilities
separately for greater understanding. For this reason, the company is required to comply with the
standard of AASB 101, Paragraph 66 to 76 in order to present the assets and liabilities in
current and non-current assets and liabilities. In addition, they need to follow the standards of
AASB 110 for the accounting treatment of cash and cash equivalent (Mayorga & Sidhu, 2012).
The classification of raw materials, work-in-progress under inventory and others need to
be done as current assets as these are used for the process of manufacturing. Same as the above,
items like provision for warranty, accounts payable, allowable for doubtful debts and annual
leave provision need to be classified as current liabilities as all these aspects are the liability of
Blake Ltd generated at the time of sealing or replacement of goods (AASB, 2014).
Moreover, there is a wrong classification of a transaction related to accumulated
depreciation of property, plant and equipment under the liability side. Thus, the accountant needs
to correct it by recording it in the asset side. The continuous increasing credit balance of
accumulated depreciation will be refried as contra asset account. Thus, the accountant needs to
credit the amount of accumulated depreciation rather than property, plant and equipment account
in the balance sheet at the end of the year as will help in the easy reporting of both the cost of
property, plant and equipment and the amount of accumulated depreciation worth $55,000
(Mayorga & Sidhu, 2012).
Apart from this, it needs to be mentioned that the payment of dividends has been wrongly
recorded in the income statement of the company. It should not be done as dividend payment is
not expenditure. Thus, it needs to be recorded in the statement of change in shareholder’s equity.
Moreover, the classification of finance cost needs to be done as expenses and needs to be

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considered before the calculation of profit before tax. According to AASB 101, Paragraph 85,
Blake Ltd is required to present the line of items in the profit and loss statement after reconcile
with the subtotal. With the aspects of these amendment, the users of financial information will
get greater understanding about the financial statements of Blake Ltd (AASB, 2014).

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References
AASB, C. A. S. (2014). Financial Instruments. Project Summary.
Hodgson, A., & Russell, M. (2014). Comprehending comprehensive income. Australian
Accounting Review, 24(2), 100-110.
IFRS . (2018). Ifrs.org. Retrieved 7 April 2018,
from http://www.ifrs.org/news-and-events/2017/10/international-accounting-standards-
board-issues-narrow-scope-amendments-to-ifrs-9-and-ias-28/
Mayorga, D. M., & Sidhu, B. K. (2012). Corporate disclosures of the major sources of estimation
uncertainties. Australian Accounting Review, 22(1), 25-39.
News . (2018). Aasb.gov.au. Retrieved 7 April 2018, from http://www.aasb.gov.au/News/New-
Australian-Accounting-Standards?newsID=263134
News . (2018). Aasb.gov.au. Retrieved 7 April 2018, from http://www.aasb.gov.au/News/Have-
your-say--AASB-Draft-Guidance-on-the-Tax-Transparency-Code---comments-due-soon?
newsID=263138
News . (2018). Aasb.gov.au. Retrieved 7 April 2018,
from http://www.aasb.gov.au/News/Webinar--The-Australian-Financial-Reporting-
Framework-for-Charities?newsID=263139
News . (2018). Aasb.gov.au. Retrieved 7 April 2018, from http://www.aasb.gov.au/News.aspx
News . (2018). Aasb.gov.au. Retrieved 7 April 2018, from http://www.aasb.gov.au/News/New-
Australian-Accounting-Standard?newsID=263140

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