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ACCT20074 | Final Assignment

   

Added on  2020-03-23

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ACCT20074 Final AssignmentTerm 2, 2017Student ID:..................................... Student name..............................................................Marker’s overall comments:The markers may include any final comments here.Overall Mark (Total) out of 50:0
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Question 1: The objective of GPFR is to provide the users of financial information (FI) including lenders, creditors and investorsthat helps them reach rational decisions as provide in OB2 of the Conceptual Framework (CF). Amazon has to giveuseful FI to the both existing and potential lenders, investors and creditors about the company. This is not onlyhelpful to Amazon itself but also very useful to these stakeholders (Deegan, 2013). To Amazon, meeting thisobjective will form the foundation upon which its financial position (FP), financial performance (FP) and credit-flow management will be accessed. The users of FI will then make the decisions on whether the Amazon is solventor insolvent and this to lenders is an important aspect when dealing with Amazon. To the consumers of FI forexample, Amazon investor, it is apparent from the case that they are aa worried lot as Amazon is under fire due tothe inability to generate enough profits. An investor will have an easy time to assess the potential of Amazon’sambitious strategies to avail ROI in case he chooses to invest. For the existing shareholders, giving the useful FI iscore role and important aspect of how the can track the performance, position and cash and cash equivalentgeneration and subsequent spending by Amazon. This makes them able to be sure that Amazon only engages ingrowth strategies that will trigger sales and hence better profitability that in turns leads to dividends earnings.Shareholders or the investors must use this FI to decide on whether to buy shares, sell shares or hold the Amazonequity or debt instrument (Draft, 2015). Failure to meet this main objective by Amazon, will dealt it a big blow asthe consumers of FI will think the company is hoarding critical information thus lose confidence in the firm. Thelenders or creditors want these information since they must track the ability of Amazon to pay for its liabilities andother forms of credit. Without this crucial, it would be hard for the lenders and creditors to have confidence in thefirm since they will not be sure of the firm’s liquidity or solvency. Lenders are only willing to lend to a creditworthiness firm and one that meets all its financial obligations. They require the FI of Amazon to track howAmazon received cash and how such receipts are spent to gauge its desirability to lend. This objective is,therefore, best apply to Amazon financial reporting. This is because since the company is under fire, the
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stakeholders or consumers of FI need these information now than ever before to have their confidence restored.Amazon must disclose everything in its possession to ensure that investors and shareholders are never misled intobuying, selling, or holding equities and debt instruments that will not yield any return to them in the long run.Amazon also needs to meet this particular objective to back up the Jeff’s ambitious strategies by explaining topotential investors that they can invest as they will get ROI eventually. As things are right now, it will be foolhardyfor any user of FI to blindly believe Jeff’s strategies as the profits are never realized enough putting the companyfinancial position at a compromising situation. References:Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.Draft, I. E. (2015). Conceptual Framework for Financial Reporting. 2015-05-01)[2015-07-20]. http://kjs. mof. gov.cn/zhengwuxinxi/gongzuotongzhi/201506 P.Marker’s Comments: The marker will provide feedback here.Mark (10):0Question 2: Assumption made when tackling this question is that Jeff Bezos is receiving bonus company stock on the basis ofaccounting outcomes (profits reported, for instance, or share price performance) to help determine whether JeffBezos or Amazon’s shareholders would give preference to use of conservative accounting methods like historicalcosts. The bigger problem with shareholders is that they want realistic profits rather than reported profits. Theyhold that where the CEO is compensated based on reported profits, such profits can be overstated just to allowthe CEO to receive the stock bonuses. In this regard, the shareholders will vehemently oppose conservativemethod like historical cost which would really allow Jeff to report unrealistic profits as well as overstate themthereby benefiting at the expense of the Amazon shareholders. The CEO would also prefer historical costing which
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