Changes in Accounting Standards for Australian Companies - Desklib

This newsletter discusses the changes in accounting standards for Australian companies from December 2017 to March 2018. It covers topics such as disclosure requirements, reduced disclosure requirements, location of information with respect to IFRS standard, presenting EBIT and EBITDA in financial report, and making materiality judgement. The newsletter also provides an answer to a question related to AASB 101 guidelines for preparing financial reports. No specific subject, course code, or college/university is mentioned.

Financial Accounting
News Letter

NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHORS NOTE
COURSE ID

NEWS LETTER
Location of relevant assumptions and judgements for
disclosure:
The AASB requires an
organization to disclose
the information relating to
the significant judgements
and assumptions. In the
preliminary view of
AASB it has stated that to
make the accounting
policy of an entity more
useful by providing the
users of the financial
statements to make
relevant judgement and
Changes Stated in the Accounting Standards for accounting and reporting of Australian
Companies
Period 1st December to 31st March 2018:

assumptions while applying accounting policy
(Aasb.gov.au, 2018). The board requires an organization to
implement the accounting policy adjacent to the disclosure
unless the organization decides to disclose the accounting
policy close on another location which would be helpful in
improving in better understanding of uses. An organization
is required to disclose the accounting policy by clearly
highlighting the significant judgements or assumptions. The
preliminary view of AASB states that an entity is required
to make the disclosure of the accounting policy either in the
general disclosure or under the non-mandatory guidance.
Reduced disclosure requirements by AASB:
The AASB has released a statement in its preliminary that
dealt with the reduced disclosure requirements for the
companies under the Tier-2 that are reported for the
accounting of lease under AASB 16 (Aasb.gov.au, 2018).
In contrast to Tier-1 disclosure an entity that is disclosing
the relevant information under the Tier-2 will be able to
lower down the load of revelation with cost associated with
the preparation and presentation of the general purpose
monetary statement notwithstanding of the situation
whether they are profit making organization or non-profit
making organization.
Location of information with respect to IFRS Standard: In the feedback received
by AASB, there are

circumstances where the financial statements and annual
reports have turn out to be hard to determine and
comprehend due to duplication and disintegration of
information. In the initial opinion of AASB it is stated that
a general disclosure standard is necessarily required to be in
consistent with the IFRS standard for making disclosure of
information relating to an entity profit making report. The
location of information with respect to IFRS standard is that
profit making are required to address the single reporting
package by referring to International Accounting Standard
of ISA 720.
Presenting EBIT and EBITDA in Financial Report:
Conferring to the initial opinion of the AASB, EBIT and
EBITDA ought to be presented in the yearly monetary
report as it would helpful in reflecting the financial
performance with fair depiction of an entity’s present
expenditure based on their nature. As opinion by AASB
stating the EBIT and
EBITDA based on their
nature would help in
presenting the
combination of
expenditure and
expenditure functions that
causes disturbance in
analysis of expenses.
Making Materiality
Judgement
The preliminary view of the
AASB is to related to making
materiality judgements. The
AASB has stated that the
directors, executive and
directors are held as
responsible persons for
presenting and preparing the
financial statements to make
frequent decisions regarding
the materiality judgments. In
a practice statement released
by AASB it is associated to
making materiality
judgements that provides
guidance to the auditors and

Answer to question 2:
According to the AASB 101 there is a guideline that has been stated related to the
preparation of the fiscal report. The guidelines provided by AASB 101 assures that general
purpose financial statements should be comparable for an organization for both the previous
and current year (Hodgson & Russell, 2014). The situation of Blake Ltd evidently provides
that the accountant follows the single line format for reporting and presenting the financial
statements. As evident the accountant has not classified the current and non-current assets.
The accountant has also not classified the liabilities that requires segregation among the
current and non-current liabilities.
A recognition for cash and cash equivalent is required under AASB 107 for the Blake
Ltd. Certain accounting transactions namely the raw materials, WIP in raw materials and
WIP in the inventory under the current assets sections. The primary reason for classifying the
transaction under the non-current asset is that these transactions are input goods used in
manufacturing procedure (Warren & Jones, 2018).
The accountant of Blake Ltd requires classification of current liabilities for
transactions such as accounts payable and warranty provision, allowance for doubtful debts
and annual leave. These transactions are the portion of Blake Ltd normal operating cycle and
needs classification despite the dues are to be matured for more than twelve months
subsequent to the financial year. The similar accounting cycle is applicable to Blake Ltd for
the classification of the organizations assets and liabilities.
The accountant has erroneously recorded the accumulated depreciation for PPE under
the liabilities segment. In its place these transactions must be recorded under the asset side of
the balance sheet (Warren & Jones, 2018). The accumulated depreciation is viewed as the
consistent credit balance having contra effect on the asset account. The bookkeeper of Blake
the regulators.

Ltd is under obligation to deduct the accumulated depreciation from the property, plant and
equipment at the end of the financial year or accounting period to provide the fair value of the
asset.
Dividend paid by the company has been incorrectly recorded by the Accountant under
the income statement. An important assertion can be bought forward that dividends does not
constitute business income and it is obligatory for the accountant to record the dividend paid
into the stakeholder’s equity statement (Hodgson & Russell, 2014). Additionally, the finance
cost constitutes business expenditure and the accountant is obligatory required to take
account of the same before obtaining the profit before tax. On a conclusive note, the
accountant is required to follow the guidelines defined under paragraph 85 of the AASB 101
as this will help in healthier understanding of monetary statements.

Reference List:
Hodgson, A., & Russell, M. (2014). Comprehending comprehensive income. Australian
Accounting Review, 24(2), 100-110.
Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.
Media releases. (2018). Aasb.gov.au. Retrieved 5 April 2018, from
http://www.aasb.gov.au/News/Media-releases.aspx
News. (2018). Aasb.gov.au. Retrieved 7 April 2018, from http://www.aasb.gov.au/News.aspx