Accounting Theory and Current Issues EXECUTIVE SUMMARY
Added on 2021-01-01
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Accounting Theory andCurrent Issues
Table of ContentsEXECUTIVE SUMMARY.............................................................................................................1INTRODUCTION...........................................................................................................................1PART A...........................................................................................................................................1Qualitative characteristics of financial reporting:..................................................................1PART B............................................................................................................................................2Decision of the Government for no specific regulation should be introduced from certaintheory's perspective:...............................................................................................................2(a) Public interest theory: .........................................................................................2(b) Capture theory:........................................................................................................3(c) Economic interest group theory of regulation: ......................................................3PART C............................................................................................................................................4(a) Ways to motivate the directors of the company related to revaluation of fixed assets:....4(b) Effects of the decision not to revalue the property, plant and equipment on the firm'sfinancial statements ...............................................................................................................4(c) The decision of not to revalue the property, plant and equipment adversely affect thewealth of the shareholders......................................................................................................5PART D ..........................................................................................................................................5Analysis of annual reports of Abundant Produce Ltd relating to impairment procedures:....5PART E............................................................................................................................................8(i) Reason for believing that the former accounting standard for leases did not reflecteconomic reality:....................................................................................................................8(ii) Reason for former accounting standard relating to off balance sheet lease liabilities:....8(iii) No level playing field between some airlines companies under the former accountingstandards:................................................................................................................................8(iv) New accounting standard for leases will not be popular with everyone and cause thisunpopularity:...........................................................................................................................8(v) Reasons why chairperson of the IASB said that new leasing standard will better informinvestor and had balance viewed for management decisions:................................................9CONCLUSION................................................................................................................................9
EXECUTIVE SUMMARYThis report is all about the accounting theory and current practical issues which are veryhelpful for an organisation to represent its financial information in fair manner. Qualitativecharacteristics should be included when a company makes its financial statements. In this report,perspectives of various theories are given related to Govt. decisions and there are two modelgiven for revaluation of fixed assets one is cost model and the other is revaluation model.Various issues relating to impairment testing process are given such as calculation of impairmentloss, impact on the financial statements etc. INTRODUCTIONFor any organisation which wants to present its financial statements in fair and truemanner, it should required to follow the various accounting theories and related practical issues.This report is divided into five task and in each task, different situation and scenario is givenwhich need to be carefully analysed (Ball, 2013). Task first defines the qualitative aspects of thefinancial reporting while task two describes the relevant theories in relation to Govt. decisions.Task three defines the revaluation models that is adopted by the companies and task four andfive has given a case study which is to be answered carefully. PART AQualitative characteristics of financial reporting:For understanding qualitative characteristics of financial reporting, firstly, the meaning offinancial reporting shall be understood. Financial reporting means disclosure of financialinformation of a company to the various stakeholders. The two fundamental qualitativecharacteristics of financial reporting are as follows:Relevance: The financial information used in the financial reporting of a company shouldbe relevant, because if it is relevant then only users of such financial reporting can takedecision by the help of these information.Faithful representation: Financial information incorporated in the financial reportingshould be represented faithfully at maximum extent to provide clear understanding (Ji,2017). 1
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