Accounting Theory and Issues | Report

Accounting Theory and Issues

Executive Summary
The report has been developed for demonstrating the significance of adopting standard
accounting policies for developing high-quality financial reports. In this context, the annual
disclosures of an ASX listed company that is Afterpay Limited, has been examined and
evaluated in the present report. This is done for developing an understanding of the accounting
policies adopted by the company for development of its financial reports.

Introduction
The company Afterpay Touch Group Limited was incorporated for the purpose of merger
between Touchgroup Limited and Afterpay Holdings Limited. The company came into existence
on 30 March 2017. The company has experienced an incredible journey of from Afterpay to now
Afterpay Touch (Annual Report, 2017). The company is driven by passion and compassion to
serve its customers the best retail experience. Since its commercialization in the year 2015 there
are various and rapid changes that have taken place in the company. The company has grown
rapidly and its initial public offering has also been launched in the year 2016. In this short period
of time the company has partnered with the most privilege retail brands of Australia and also
many global leading brands that have helped the company to become the first choice of its
customers. The company has become Australia leading Buy Now and Pay Later service (Annual
Report, 2017). The company has successfully created a retail community which is delivering
incremental value to all its customers and key stakeholders. The report analyses the major
accounting policies that has been used by the firm and the manner in which its financial
statements are prepared. In addition to this to gain a better perspective, various other areas are
also analyzed and assessed.
Section 1: Identify Key Accounting Policies
The financial statements presented by the company Afterpay Touch has been prepared in
accordance with the standards and norms explained by the AASB. The securities of the Afterpay
Touch company is listed on the Australian Securities Exchange ltd. In June 2017 the company
has completed its merger of Afterpay Holdings Ltd and Touchcorp Ltd. The accounting policies
of the company are in compliance with the guidelines prescribed by the Australian Accounting
Standards Board and other authoritative pronouncements of the Australian Board (Annual
Report, 2017). The financial statements are prepared on the basis of historical cost. The
company is also following the accounting policies discussed by the IFRS (International Financial
Reporting Standards).
Afterpay Touch’s major accounting policy is AASB 2014-4 which constitutes of
Acceptable Methods of Depreciation and Amortization. The accounting policy has been
amended, once it was called AASB116 and AASB 138. In addition to this there are other