Accounting Systems: Historical vs. Fair Value
Added on 2020-04-01
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Running head: ACCOUNTING STANDARDS AND THEORYAccounting standards and TheoryUniversity NameStudent NameAuthors’ Note
2ACCOUNTING STANDARDS AND THEORYTable of ContentsIntroduction................................................................................................................................2Part A.........................................................................................................................................2Part B..........................................................................................................................................5Part C..........................................................................................................................................8Part D.........................................................................................................................................9Conclusion and Recommendation..............................................................................................9References................................................................................................................................11
3ACCOUNTING STANDARDS AND THEORYIntroduction The current report presents a critical analysis of business situation together with theapplication of pertinent accounting theories with reference to the operations of the firmWesfarmers Ltd. The study elucidates in detail the objectives of the General PurposeFinancial Reporting and Qualitative Characteristics of financial information related to theconceptual framework. Moving further, the report analyses the extent to which financialreport of Wesfarmers meets the disclosure requirements for PPE and satisfies the objective ofthe general purpose financial reporting. Part AObjective of General Purpose Financial Reporting As per the Conceptual Framework declared by the IASB during IASB stated under OB1 toOB 11the primary objective of general purpose financial reporting is to communicatepertinent and dependable information regarding a reporting entity to different users (Goodwinet al. 2015). The efficient allocation of different scarce resources can also be augmented ifthe ones who undertake decisions regarding resource allocation have the access to appositefinancial information based on which the decisions are made. In addition to this, the generalpurpose financial reporting also intends to provide an appropriate technique that can assistmanagement as well as governing bodies for discharging their responsibilities (Chand andPatel 2014). However, as per the Conceptual Framework stated under OB1 to OB 11, thepurpose of delivering information to specific users is helpful for shaping as well as analysingdiverse decisions regarding resource allocation (Yao et al. 2015). Nevertheless, the renderingof responsibility by reporting corporations in the course of general purpose financial
4ACCOUNTING STANDARDS AND THEORYreporting is surrounded by the wider objective of delivering information effective for shapingand analysing decisions. Qualitative Characteristics of financial information According to the Conceptual Framework for Financial Reporting, the qualitativecharacteristics of different helpful information include the following:-Relevance- According QC5 of Conceptual Framework for Financial Reporting,financial information that is relevant can help in making a difference in variousdecisions that are undertaken by users (Hu et al. 2015). However, information mightbe capable of establishing a distinction in a particular decision even when certainusers decide not to acquire advantage of it. As per the stipulations mentioned underQC7, financial information also have the potential of making a distinction in differentdecisions if the same has certain predictive value or else confirmatory value else wiseboth. -Materiality- In accordance to the rulings mentioned under QC 11 of ConceptualFramework for Financial Reporting, a specific information is said to be material incase if omission of the same or misstatement of can exert influence on the decisionsmade by different users based on financial information (Laing and Perrin 2014)-Faithful Representation- As mentioned under QC 12 to 16, financial reports need tobe complete, free from errors as well as neutral. This helps in complete depiction thatcan help in presenting information that is essential for a user for understandingdiverse phenomenon that is hereby depicted (Biondi and Lapsley 2014).
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