Analysis of Accounting Concepts and AASB 16 for Healius Healthcare Company

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Author Note

ACCOUNTS1
Table of Contents
Introduction......................................................................................................................................2
Discussion and Analysis..................................................................................................................2
Accounting Concepts...................................................................................................................2
AASB 16......................................................................................................................................4
Application of AASB 16 from AASB 117..................................................................................6
Conclusion.......................................................................................................................................9
References..................................................................................................................................10
Appendix....................................................................................................................................12

ACCOUNTS2
Introduction
Accounting concepts and principles are the key basis upon which the financial statement
of a company is prepared. The company that has been taken into consideration for the purpose of
analysis is the Healius Healthcare Company that has been considered. The important accounting
concepts that has been used by the company wile preparing the financial statement of the
company has been well outlined and presented in the financial statement of the company. The
application of the AASB 16 that comes into effect from the 1st January, 2019 has been well taken
into consideration. The application of AASB 16 and the effect of the implication of the same on
the financial statement of the company will be taken into analysis of the report. AASB 117 will
be scrapped in the year 2018. The primary purpose of this accounting standard was to provide
the users of the financial statements with information about the impact of the company’s lease
agreements on financial position, objectives and the cash flows of the organisation for a
particular year. The application of the same will be done by all the companies for the purpose of
reporting and classifying all the lease transactions carried on by the company.
Discussion and Analysis
Accounting Concepts
Like many of the corporate entities conducting business in the modern day business
environment, Healius also prepares its annual financial statements using different accounting
concepts. The primary of them is the going concern concept. This concept suggests that every
business conducts its business with the intention to carry on with it for the foreseeable future and
not shut it down at the earliest available opportunity (Enofe et al. 2013). As suggested by the
2019 annual reports of the organisation, the directors analyse the ability of the entity in

ACCOUNTS3
continuing as a going concern at the time of preparing the financial statements (Healius.com.au
2019). As it has not been suggested that the company plans to liquidate or wind itself up in the
near future, the statements suggest that Healius is a going concern that will conduct its business
for the foreseeable future. Another important concept which has been used by Healius in its
financial statements is the accrual concept. This concept states that any revenues or
expenditures or related obligations are to be recognised in the books of accounts as and when
they occur. It means that an expenditure already incurred in the current year should be
recognised in this year itself and not when the payment related to the expenditure is made by the
business. In its financial statements, Healius has recorded various items like current and non-
current trade payables and accruals. Although the payment for them would not be made in 2019
itself, they have been included the financial statements due to their existing obligation in the
current year. This improves the reliability of the financial statements (Azmi and Mohamed
2014).The next relevant concept that has been used is the consistency concept. This suggests that
an accounting concept that has been adopted in a particular year should be followed in the future
accounting periods as well. This is to ensure that the financial results obtained in different years
are due to the same underlying assumptions and principles that were followed (Peterson,
Schmardebeck and Wilks 2015). Any change in the accounting methods used in the treatment of
any particular item should be stated in the financial statements. The consistency concept is also
related to the recommendations and suggestions of the governing body guiding the preparation of
the financial statements. Particular items like leases, assets and contingencies should be recorded
in a manner that is consistent with the suggestions of the AASB. Otherwise, they would lead to
the company being penalised for not following accepted guidelines in preparing the financial
statements (Healius.com.au 2019). The materiality concept has also been used appropriately by