Assignment | Advanced Financial Accounting

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student
Name of the University
Author’s Note

ADVANCED FINANCIAL ACCOUNTING1
Table of Contents
Introduction...................................................................................................................2
Identification and Description of Accounting Concepts................................................2
Discussion on Issues of Measurement.........................................................................3
Fundamental Qualitative Characteristics......................................................................4
Conclusion....................................................................................................................7
References...................................................................................................................8

ADVANCED FINANCIAL ACCOUNTING2
Introduction
The managements of the companies are needed to take into consideration of
certain accounting concepts in the process of financial accounting and these
concepts are crucial for the business success. In Australia, the companies are
needed to comply with different requirements of the Accounting Conceptual
Framework of the Australian Accounting Standard Board (AASB) for the purpose of
financial reporting (Cheng et al.2014). This aspect helps the companies in
addressing the measurement related issue within the organizations. The AASB
conceptual framework states that the companies are needed to put major emphasis
on both the fundamental qualitative characteristics of financial statements for the
effective measurement as well as accounting treatments of the organizational assets
and liabilities (Simnett and Huggins 2015). Consideration of these aspects leads to
the development of effective financial accounting systems within the organizations.
There are three parts of the report. The first part of the report discusses about
different accounting concepts and relates them with the chosen company. The
second part of the report addresses the measurement issues of AASB in respect to
the selected company. The last part of the report discusses about the fundamental
qualitative characteristics of financial information of the chosen company. For the
purpose of the report, Cochlear Limited is taken into consideration.
Identification and Description of Accounting Concepts
It can be seen from the above that the Australian companies are required to
comply with the accounting conceptual framework of the AASB for the purpose of
financial accounting. In this process, the companies are needed to adopt the
accounting concepts provided in the conceptual framework of AASB (aasb.gov.au
2019). It can be seen from the conceptual framework of AASB that there are certain
accounting concepts that the companies are needed to adopt for the purpose of
financial reporting. These concepts are Financial statements and reporting entities,
Elements of financial statements, Recognition and Derecognition, Measurement,
Presentation and disclosure and Concepts of capital and capital management
(aasb.gov.au 2019). These concepts are discussed below in general and in relation
to Cochlear Limited.
Financial Statements and Reporting Entities – This accounting concept deals with
the role of financial statements and the concept of reporting entity. It states that the
main objective of financial statements is to provide information on the company’s
assets, liabilities, equity, income and expenses (Barth 2013). As per the 2018 Annual
Report of Cochlear Limited, the company has provide the financial statements such
as income statement, balance sheet and others that provide this information. Going
concern is considered as another major accounting concept which states that the
reporting entity is going concern and will continue for foreseeable future. According
to the 2018 Annual Report of Cochlear Limited, the main objective of the capital
management of the company is safeguarding their ability to continue as a going
concern (aasb.gov.au 2019).
Elements of Financial Statement – The main components of this accounting
concepts are definition of assets, liabilities, equity, income and expenses. According
to AASB conceptual framework, asset can be considered as a present resource of a
company as a result of past events. Liability can be considered as a present
obligation of an entity for transferring an economic resource due to past events
(Weil, Schipper and Francis 2013). After that, equity is considered as a residual