Accounting Standards and Practice for Property, Plant and Equipment in Afterpaytouch

This study intends at analysing the accounting for Property, Plant and Equipment (PPE) in one of the ASX listed companies named Afterpaytouch. The findings of the report shows that Afterpaytouch has applied the professional judgements related to PPE accounting in the most appropriate manner and this has resemblance with other companies in the same industry like Bravura Solutions. The findings also show that reasonableness is there in the accounting treatment of PPE in Afterpaytouch since the rules and regulations of AASB 116 have been followed by the company. The report further finds that appropriate application and disclosure of PPE related information in Afterpaytouch reflects all the qualitative characteristics of financial information.

Running head: ACCOUNTING STANDARDS AND PRACTICE
Accounting Standards and Practice
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING STANDARDS AND PRACTICE
Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................3
a) Applied Professional Judgements in PPE..............................................................................3
b) Appropriateness of Applied Professional Judgments............................................................3
c) Reflection of Qualitative Characteristics of Financial Information.......................................4
Conclusion..................................................................................................................................5
References..................................................................................................................................6

2ACCOUNTING STANDARDS AND PRACTICE
Executive Summary
This study intends at analysing the accounting for Property, Plant and Equipment (PPE) in
one of the ASX listed companies named Afterpaytouch. The findings of the report shows that
Afterpaytouch has applied the professional judgements related to PPE accounting in the most
appropriate manner and this has resemblance with other companies in the same industry like
Bravura Solutions. The findings also show that reasonableness is there in the accounting
treatment of PPE in Afterpaytouch since the rules and regulations of AASB 116 have been
followed by the company. The report further finds that appropriate application and disclosure
of PPE related information in Afterpaytouch reflects all the qualitative characteristics of
financial information.

3ACCOUNTING STANDARDS AND PRACTICE
Introduction
The main intention of this report is the analysis and evaluation of diverse facets
related to the accounting ofPPE in Afterpaytouch which is an ASX listed company. The first
part discusses about the application of professional judgments related to PPE in
Afterpaytouch. The second part discusses about the reasonableness of the judgments applied.
The last part discusses about the qualitative characteristics of financial information regarding
the disclosures of PPE in Afterpaytouch.
a) Applied Professional Judgements in PPE
Afterpaytouch has disclosed the required information about PPE in the statement of
financial position and notes related to PPE. The main components of PPE in the company are
furniture fitting, computer equipment and leasehold improvements(afterpaytouch.com 2019).
The net book value of PPE in Afterpaytouch in 2019 and 2018 are 4.2 million and $4 million
respectively. Apart from this, Afterpaytouch has bought PPE worth $2.4 million in 2019 and
$1.3 million in 2018; and it has disposed of PPE worth $0.2 million in 2019; and the
recognized amount of depreciation in 2019 and 2018 are $2 million and $1.8 million
(afterpaytouch.com 2019).
It needs to be mentioned that the management of Afterpaytouch has applied
professional judgements in the form of accounting policies and estimates in the accounting of
PPE. In Afterpaytouch, significant accounting policies in PPE have been applied by the
management in two aspects. First, the company has applied professional judgment in
recognizing and measuring PPE; second, professional judgment has been applied in case of
useful life of PPE(afterpaytouch.com 2019). According to the applied professional judgment
in recognition and measurement of PPE, Afterpaytouch has considered historical costs for
stating PPE after the deduction of depreciation and accumulated impairment losses. In case of
accounting judgment in useful life of assets, Afterpaytouch has considered straight-line
method for the calculation of depreciation over the estimated useful life of PPE of three to
five years. This is how Afterpaytouch has applied professional judgment in the accounting of
Afterpaytouch.
b) Appropriateness of Applied Professional Judgments
Determining the appropriateness or reasonableness of the professional judgments
applied in the accounting estimates and policies is a crucial aspect since this determines the

4ACCOUNTING STANDARDS AND PRACTICE
correctness of the accounting treatments of the elements of financial statements. This can be
determined through comparing the accounting treatment of the selected company with
another company in the same industry and through comparing the accounting treatment with
the financial standards. These are shown below.
Bravura Solutions is another major company operations in the financial information
technology industry in which Afterpaytouch also operates. It can be seen that Bravura
Solution has also disclosed the information on PPE in the notes and there is many similarities
in the accounting treatment of PPE of this company with Afterpaytouch (Laing and Perrin
2014). First, both the companies have stated PPE at cost less accumulated depreciation and
any impairment loss. Second, both the companies have adopted straight-line method for the
calculation of depreciation on PPE (bravurasolutions.com 2019). However, it needs to be
mentioned that Bravura Solutions have disclosed the information on PPE on more elaborative
manner while Afterpaytouch has only emphasized on the main accounting judgments that it
has used for the accounting of Afterpaytouch(afterpaytouch.com 2019).
In Australia, all the rules and regulations for the accounting of PPE is provided in
AASB 116 Property, Plant and Equipment. As per AASB 116, Paragraph 7, PPE needs to be
recognized when they provide monetary assistance to the company and they are measurable
in reliable basis (aasb.gov.au 2019). In case of Afterpaytouch, PPE provides economic
benefit to the company and the company has measured the cost of it. Paragraph 15 of AASB
116 also mentions that the recognized PPE need to be measured at cost and Afterpaytouch
has followed this particular standard by measuring the PPE at cost. Based on the above two
aspects, it can be said that Afterpaytouch has appropriately applied the professional judgment
in accounting policies and estimates related to PPE.
c) Reflection of Qualitative Characteristics of Financial Information
According to AASB Conceptual Framework, there are five qualitative characteristics
of financial statements. The following discussion shows if Afterpaytouch’s disclosure for
PPE reflects these qualitative characteristics.
Relevance – Relevant information has the ability of creating difference in the procedures to
make decisions of the users. This characteristic reflects in the PPE disclosure of
Afterpaytouch since the company has disclosed the most relevant information about
Afterpaytouch that can be faithfully represented(aasb.gov.au 2019).

5ACCOUNTING STANDARDS AND PRACTICE
Faithful Representation – It is the obligation on the managers of the firms to present the
financial and accounting information in the most faithful manner. It can be seen from the
earlier discussion that Afterpaytouch has disclose the information of PPE by complying with
the appropriate standards and principles of AASB 116 which indicates that Afterpaytouch has
faithfully presented the information of Afterpaytouch (Oprean and Podoaba 2016).
Comparability – It can be seen from the earlier discussion that the information disclosed on
PPE of Afterpaytouch can easily be compared with the other companies like Bravura
Solutions and others. This indicates towards the presence of comparability characteristic in
the PPE disclosure of Afterpaytouch (Achim and Chiş 2014).
Verifiability – It is visible in the annual report of Afterpaytouch that the business has made
the disclosure of the underlying assumptions and estimates related to PPE accounting in the
appropriate section which helps the users in verifying the amounts disclosed under PPPE
(Nobes and Stadler 2015). Therefore, verifiability reflects in the PPE disclosure of
Afterpaytouch.
Timeliness – It needs to be mentioned that Afterpaytouch has made all the information and
disclosure related to PPE available in its annual report that is published by the company at a
certain time of the year (Choudhary, Merkley and Schipper 2017). This ensures the presence
of timeliness qualitative characteristic in PPE disclosure.
Understandability –Afterpaytouch has made the disclosure of information related to PPE in
simple language while disclosing all underlying accounting estimates related to PPE so that
the users with basic accounting knowledge can understand them (Barth 2013). This reflects
the presence of understandability characteristics of financial information.
Conclusion
The above analysis demonstrates the correct disclosure of all PPE related information
and accounting judgment in the appropriate section of financial statements by Afterpaytouch.
It can be seen from the above analysis that there is the presence of appropriateness in the PPE
related disclosure of Afterpaytouch since this is same as the PPE disclosure of Bravura
Solutions. In addition, the company has also followed the standards of AASB 116 for the
accounting of PPE. The above discussion also shows that the PPE disclosure of
Afterpaytouch reflects all the qualitative characteristics of financial information because of
the appropriate disclosure and accounting of PPE.

6ACCOUNTING STANDARDS AND PRACTICE
References
Aasb.gov.au. 2019. Conceptual Framework for Financial Reporting. [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 30 Sep.
2019].
Aasb.gov.au. 2019. Property, Plant and Equipment. [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB116_08-15_COMPoct15_01-18.pdf
[Accessed 30 Sep. 2019].
Achim, A.M. and Chiş, A.O., 2014. FINANCIAL ACCOUNTING QUALITY AND ITS
DEFINING CHARACTERISTICS. SEA: Practical Application of Science, 2(3).
Afterpaytouch.com. 2019. [online] Available at:
https://www.afterpaytouch.com/images/28082019-FY2019-Appendix-4E-and-Annual-
Report.pdf [Accessed 30 Sep. 2019].
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Bravurasolutions.com. 2019. [online] Available at: https://bravurasolutions.com/wp/wp-
content/uploads/2019/08/Bravura-Solutions-Limited-Annual-Report-2019.pdf [Accessed 30
Sep. 2019].
Choudhary, P., Merkley, K.J. and Schipper, K., 2017. Qualitative characteristics of financial
reporting errors deemed immaterial by managers. Available at SSRN 2830676.
Laing, G. and Perrin, R.W., 2014. Deconstructing an accounting paradigm shift: AASB 116
non-current asset measurement models. International Journal of Critical Accounting, 6(5/6),
pp.509-519.
Nobes, C.W. and Stadler, C., 2015. The qualitative characteristics of financial information,
and managers’ accounting decisions: evidence from IFRS policy changes. Accounting and
Business Research, 45(5), pp.572-601.
Oprean, D.B. and Podoaba, L., 2016. Importance, Role And Qualitative Characteristics Of
Accounting Information In The Decision Making Process. Calitatea, 17(S2), p.48.