Accounting Standards and Transactions: Provision of Journal Entries and Deferred Tax Assets and Liabilities

Assessment

Table of Contents
PART A...........................................................................................................................................3
1...................................................................................................................................................3
2...................................................................................................................................................3
3...................................................................................................................................................4
4...................................................................................................................................................5
5...................................................................................................................................................5
Part B...............................................................................................................................................6
6. Provision of Journal entries, preparation of Schedule of temporary differences and
calculation of Deferred tax assets and Deferred tax liabilities....................................................6
7. Lease accounting.....................................................................................................................9
REFERENCES..............................................................................................................................11
Books and Journals....................................................................................................................11

PART A
1.
As per Australian Standard AASB 110, the events whether favourable or unfavourable that
occur between the end of the reporting period and the date when financial statement are
authorized. The transaction of fire on 7th July is occurred between the annual report date and
issue date. Hence, on this basis this are events occurring after the balance sheet date. The nature
of this event is non-adjusting event after the reporting period because there is no indicative of
conditions that arose after the balance sheet date. The applicable accounting standard this event
relates is AASB 102 Inventories. This standard prescribes the accounting treatment of
inventories such as closing stock is recorded at cost or NPV whichever is lower (Czerney, and
et.al., 2020). Yes, there is a requirement to disclose the stock loss or financial loss of $2 million
on the notes to accounts. It is because first this is a non-adjusting event and the loss of stock is
40% of total value of stock.

2.
As per AASB 110, the particular transaction of bad debt recovering is considered as
adjusting transaction or events after the reporting period. It is because this transaction provides
the evidence of condition that existed at the reporting period in the form of provision made
against bad debts. The applicable accounting standard relates to the present transaction is AASB
137 provision, contingent liabilities and contingent assets. This standard indicates that the
possible assets that arises from the past events and whose existence is in the balance sheet are
recorded or recognised in the financial statement at the time when the income occurrence. This
transaction will not disclose in the books of account because it is an adjusting transaction.
However, the particular transaction need to be adjusted in the financial statement of the end
reporting period (Dobson, 2020). The adjustment of this transaction is as follows:
Debtor a/c $550000
To Bad debt recovered a/c $550000
Bad debt recovered a/c $550000
To P&L a/c $550000
On this basis, the adjustment in the financial statement of MQE ltd is that their debtors i.e.,
accounts receivable value will be increased by $550000 that result into the total value of trade
receivable after adjustment is 4.037 million. Further, the income of the company will increase by
0.55 million due to this transaction adjustment. This should be done by the company as it affects
the decision-making of the financial statement of business.
3.
As per AASB 110, the nature of transaction of job seeker payment received from
government is adjusting event occurring after the balance sheet date. It is because the condition
regarding the profit of business should not fall by greater than 20%. Thus, this is an adjusting
event after reporting period. The applicable accounting standards relates to this particular
transaction is AASB 118 Revenue recognition. This standard state that the company should
recognise its business revenue on the accrual basis. Further, the principle of conservatism
indicate that the company should recognise its uncertain income at the time when it earned but
for uncertain loss the company should create provision at the time when it actually arises. This
particular transaction is a non-adjusting event thus it is not required to be disclose in the notes to