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ACC701 Accounting Theory Assignment - doc

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Accounting Financial (ACC701)

   

Added on  2020-05-28

ACC701 Accounting Theory Assignment - doc

   

Accounting Financial (ACC701)

   Added on 2020-05-28

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Running Head: Accounting Theory1Accounting Theory
ACC701 Accounting Theory Assignment - doc_1
Accounting Theory2Executive Summary:A large departmental store named Sunshine Ltd is earning big profits from last two financial years and the general manager of the company wants to maintain the same growth rate of profit for coming financial years as well.The manager of the company approached the accountant to suggest some ways to maintain the same growth rate in the profit for coming financial years. The reason for manager’s concern was that the economist predicted that the economy will face a slowdown in coming financial years. That’s why manager wants the accountant to suggest out some ways to maintain the same growth rate of the profit. The method of charging depreciation used by the company was Straight line method since the company came into existence. The manager suggested to the accountant to change the method of depreciation from straight line to sum-of-years-of-digits method such that the profit figures will be revised and the slowdown in the economy will not affect the company’s growth rate. Following the orders of manager the accountant changed the method of depreciation from Straight line to Sum-of-years-of-digits method but the accountant felt that the reason for changing the method of depreciation is a valid reason and its disclosure will affect the reputation of company’s goodwill. In the eyes of law it is a wrongful act as not to disclose the method of charging depreciation from Straight line to sum-of-years-of-digits method and company is liable for fines and penalties.
ACC701 Accounting Theory Assignment - doc_2
Accounting Theory3Table of ContentsIntroduction:..........................................................................................................................................4Accountant’s Role for Changing the Method:.......................................................................................4AASB116 and its impact:......................................................................................................................5The Impact of Change on Financial Statements:...................................................................................5Ethical Responsibility and Governance:.................................................................................................5Shareholders Perspective:.....................................................................................................................6Conclusion:............................................................................................................................................7References:............................................................................................................................................8
ACC701 Accounting Theory Assignment - doc_3

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