Advanced Accounting Issues Assignment

Running head: ADVANCED ACCOUNTING ISSUES
Advanced Accounting Issues
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Question 1:.................................................................................................................................2
a) Depicting how the goodwill impairment charge reported above be disclosed in QBE’s
financial statements:...................................................................................................................2
b) Depicting whether QBE’s chairperson is considered an intangible asset, and adequate
disclosure is been depicted in their financial statement:............................................................3
Question 2:.................................................................................................................................4
a) Identifying the benefits that might accrue to Lion Nathan with sales and leaseback
transactions:................................................................................................................................4
b) Depicting whether the related leases is finance or operating lease:......................................5
c) Depicting whether Lion Nathan account for any profit or loss on the sale of the pubs:........5
d) Depicting whether any change in depreciation could be seen if pubs are sold and then
leased back by Lion Nathan:......................................................................................................6
Reference and Bibliography:......................................................................................................7

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Question 1:
a) Depicting how the goodwill impairment charge reported above be disclosed in QBE’s
financial statements:
The goodwill impairment is mainly considered a charge that is imposed by
organisation in the annual report when carrying value of the goodwill exceeds the fair value.
In addition, the overall valuation of goodwill impairment is mainly considered an earnings
charge that is recorded by the companies in their income statement. This record in the income
statement is mainly conducted to identify whether goodwill is not able to demonstrate the
financial results. Adams, Mezzullo and McManus (2015) mentioned that impairments charge
directly allow the organisation to reduce the goodwill value according to the change in its
future financial gain.
There are different ways in which the overall goodwill impairment charges
could be recorded in the annual report of QBE’s. In addition, the
impairment expenses are recorded in two statement of the annual report,
which directly help in adjusting the fair value of an asset. The annual
report of QBE needs to needs to adjust goodwill impairment charge of
about $600 million and one-time impairment charge of $150 million. The
impairment charges need to be recorded in annual report of the
organisation, which could help in improving the financial viability of the
organisation. The relevant measure could eventually help in declining the
goodwill of QBE from its financial report. The overall onetime impairment
charge of $150 million will mainly be deducted from the income
statement, which could directly reduce the total profit for the year.

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Moreover, the goodwill impairment charge of about $600 million will
mainly be reflected in non-current assets of the balance sheet. Hence, the
impairment change will mainly reduce the value of goodwill in the annual
report. Bebbington and Larrinaga (2014) stated that use of impairment expenses
directly allow the organisation to adjust their intangible assets, which
could help in depicting the fair value of the organisation.
b) Depicting whether QBE’s chairperson is considered an intangible asset, and
adequate disclosure is been depicted in their financial statement:
The relevant intangible assets need to be disclosed in the financial report of QBE, as
it might help in improving the financial report. However, the reputation of
the chairperson cannot be considered intangible assets, which is
adequately depicted in IFRS 3, and IE16-IE44. The relevant measures directly
indicate that the individual person cannot be considered an intangible asset of an
organisation. According to the relevant Initial Accounting for Internally Generated Intangible
Assets, it could be identified that -any kind of work or programmes can be considered
intangibles assets (Cortesi et al. 2015). However, the person that is contributing to the
intangible asset cannot be considered an intangible asset of an organisation. This can be
identified from the paragraph 33 A, where it states that artist related works like literary work,
television programmes and plays can be identified as intangible asserts. However, persons
having the talent to create the programs and play are not considered intangible assets, where
it cannot be listed in the annual report of an organisation.
However, the programs and policies, which try to increase the financial income of the
company in future, can be listed in the annual report of QBE. Hence, the CEO cannot be
listed as the intangible assets of the organisation as per the AASB and IFRS rule. Drury

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(2013) mentioned that the relevant rules and regulations directly state that the organisation
can list the intangible assets, which could provide relevant future income for the organisation.
The organisation could also use the contract based, technology based, customer-related based
and marketing related intangible assets, which could be listed in annual report of the
organisation. Therefore, it could be assumed that QBE cannot enlist the reputation of CEO, as
the intangible assets in their annual report.
Question 2:
a) Identifying the benefits that might accrue to Lion Nathan with sales and leaseback
transactions:
From the overall evaluation of the Lion Nathan, case relevant benefits that could be
identified from operations. This could eventually allow the organisation to reduce the overall
tax that is been given and maximise their retained income. The relevant sale of the property
could eventually allow the organisation to increase their cash reserves, which could raise the
investment capacity of Lion Nathan. The leaseback transaction could also help in improving
the overall profitability of the organisation. This lease transaction could eventually allow the
organisation to get deductions in their tax amount, which in turn could help in increasing the
retained income that could eventually raise shareholders wealth. Hoyle, Schaefer and
Doupnik (2015) mentioned that reduction in overall tax expenses directly allows the
organisation for retaining more income in the business, which could directly help in
improving shareholders wealth.
Moreover, the sales value could eventually allow the organisation to obtain more
cash, which could in turn help in improving its investment capability. Furthermore, the high
cash reserves could eventually allow Lion Nathan to conduct the required level of

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investments on hotels, which could improve revenue stream of the organisation. Malak
(2015) mentioned that companies with high investment scope could eventually allow the
organisation to generate the relevant profitability from investment that could increase firm
value and raise shareholder wealth.
b) Depicting whether the related leases is finance or operating lease:
The relevant lease needs to be a finance lease, as Lion Nathan could adequately enlist
the asset in balance sheet. The finance lease is mainly considered, as a general loan, where
the asset directly appears in the balance sheet. This finance lease also allows the organisation
to hold the asset as ownership, which could directly allow the company to initiate both
interest and depreciation in their books. These overall measures could directly allow Lion
Nathan to reduce the overall tax expenses and increase relevant retained income. However,
the operating lease method does not allow the organization to enlist the asset in their balance
sheet, which could in turn reduce its total assets (McEwen and Hunton 2015). The operating
lease method only allows interest expenses to be deducted from the annual report and the
company in their income statement calculates no depreciation. Therefore, it could be
understood that using operating lease does not provide Lion Nathan any kind of advantage for
improving its financial position in the annual report. Hence, It could be identified that using
the finance lease measure could eventually allow Lion Nathan to improve its capital assets,
which could be listed in the annual report.
c) Depicting whether Lion Nathan account for any profit or loss on the sale of the pubs:
Relevant entries need to be conducted by Lion Nathan on its income statement and
balance sheet to reflect the sale of pubs. This directory allows Lion Nathan for reducing the
total assets and depicting any kind of loss of profit that was obtained from the sale of pubs.
any kind of profit and loss will directly be reflected on the income statement where it would

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be stated as loss or profit from sale of asset. On the same aspect relevant deduction in the
balance sheet for a particular asset needs to be conducted adjusting the balance sheet
according to the current total assets of the organisation. In this context, Mo and Waples
(2015) stated that the use of asset sale directly allows the organisation to obtain the relevant
cash for supporting a new investment idea, which could provide higher returns from
investment. The detection of any kind of profits obtained by the organisation is directly
depicted in income statement, which portrays the current transaction that is conducted by the
organisation. Moreover, the cash transactions of the sale will also be reflected on cash flow
statement, relevant reductions from sale of assets will be depicted.
d) Depicting whether any change in depreciation could be seen if pubs are sold and then
leased back by Lion Nathan:
Depreciation is mainly calculated on the basis of actual value of an asset, which could
directly reflect in annual report of the organisation. There will be a change in depreciation
valuation that needs to be conducted by Lion Nathan in their annual report, as the lease value
will mainly be calculated for depreciation purposes. In addition, any kind of profit from the
sale of pub will directly increase the valuation of the Asset, while a loss would reduce the
valuation of the Asset. This relevant reduction or increment in the asset value could also
change the depreciation value, as Lion Nathan will be using finance leasing method. This
finance leasing method directly allows the organisation to depreciate the asset in the annual
books and record the assets in balance sheet (Smith 2017). Hence, the depreciation will
change for Lion Nathan in their annual report, as valuation of the Asset will change.

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Reference and Bibliography:
Adams, P.W.R., Mezzullo, W.G. and McManus, M.C., 2015. Biomass sustainability criteria:
Greenhouse gas accounting issues for biogas and biomethane facilities. Energy Policy, 87,
pp.95-109.
Bebbington, J. and Larrinaga, C., 2014. Accounting and sustainable development: An
exploration. Accounting, Organizations and Society, 39(6), pp.395-413.
Cortesi, A., Tettamanzi, P., Scaccabarozzi, U., Spertini, I. and Castoldi, S., 2015. Advanced
Financial Accounting: Financial Statement Analysis–Accounting Issues–Group Accounts.
EGEA spa.
DRURY, C.M., 2013. Management and cost accounting. Springer.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Malak, S.S.D.A., 2015. Cooperative learning: Buddy system in an advanced accounting
subject.
McEwen, R.A. and Hunton, J.E., 2015. Retraction: Is Analyst Forecast Accuracy Associated
With Accounting Information Use?. Accounting Horizons, 29(3), pp.749-749.
Mo, S. and Waples, E., 2015. AN EXPLORATORY STUDY ON THE
INTERRELATIONSHIPS IN COURSE PERFORMANCE OF ACCOUNTING
MAJORS. International Journal of Education Research, 10(2).
Smith, M., 2017. Research methods in accounting. Sage.

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Spiceland, C.P., Spiceland, J.D. and Schaeffer, S.J., 2015. Using a course redesign to address
retention and performance issues in introductory accounting. Journal of Accounting
Education, 33(1), pp.50-68.
Tucker, B. and Hoque, Z., 2017. Mixed methods for understanding accounting issues. The
Routledge Companion to Qualitative Accounting Research Methods, p.301.
Zeff, S.A., 2016. Accounting Textbooks as Change Agents: Finney's Intermediate and Finney
and Miller's Intermediate from 1934 to 1958. Accounting Historians Journal, 43(1), pp.59-
77.