ADVANCED FINANCIAL ACCOUNTING.

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced financial accounting
Name of the student
Name of the university
Student ID
Author note

ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Introduction:..................................................................................................................2
Discussion:...................................................................................................................2
Description of accounting concepts:.............................................................................2
Issues of measurement and conceptual framework:....................................................2
Fundamental qualitative characteristics:......................................................................2
Conclusion:...................................................................................................................2

ADVANCED FINANCIAL ACCOUNTING
Introduction:
In the current paper, understanding of the various theoretical models has
been assessed by applying the knowledge of financial reporting issues in reference
to the AASB standards. The development of the conceptual framework has been
evaluated by gaining an understanding of the accounting for accounts. All such
evaluation has been done by analyzing the financial report of one of the listed
companies on ASX (Australian stock exchange). CSR limited is a leading product
company operating in Newzealand asnd Australia and is one of the oldest
manufacturing companies of Australia (Csr.com.au 2019). The products of company
form a part of industry that helps in creating building and home for the people. CSR
prepares its general purpose financial report according to the applicable Australian
accounting standard board requirements and its interpretation along with Corporation
Act 2001. The accounting regulatory framework has been understood by accounting
for the liabilities, assets and noncurrent liabilities. In addition to this, the paper also
demonstrates the understanding of the fundamental qualitative characteristics in
relation to the financial information presented in the financial report of CSR limited.
All the contents presented in the report is addressed by taking examples from the
CSR limited.
Discussion:
Description of accounting concepts:
In this section of the paper, the accounting concepts have been described and
illustrated using the examples of CSR limited and what types of accounting is used
for identifying and treating different accounts. Accounting concepts can be defined

ADVANCED FINANCIAL ACCOUNTING
as the conditions, postulates and assumptions for stating and recording various
accounts. Every organization prepares their financial statement in accordance with
the rules and criteria’s that are laid down in the accounting concepts. However, the
organizations depending upon their suitability and requirements, adopt specific
accosting concepts for preparing the financial report. The financial report of CSR
limited provides the significant and other accounting policies summarizing the basis
of measurements and is relevant in understanding the financial statements of the
users (Bailey and Samuels 2018). There is a consistency between the accounting
policies that are adopted in the current year for analysis and the previous financial
years. All the amendments to the accounting standards of Australia have been
adopted by the group which was applicable from 1st April, 2017. The financial report
of the company is not materially impacted by the revision of accounting standards or
adoption of any new standards.
The management of CSR limited has made key assumptions and critical
judgments in the process of application of key accounting policies with the
assumptions and judgments having significant impact on the amounts recorded in
the financial statements are recorded in the notes. A breakdown of the individual line
of items in the statement of financial performance is provided in the overview of the
financial performance of CSR limited. The accounting policies in the internal
reporting of segments used by the group are those which have been disclosed in the
significant accounting policies.
Assets that are transferred between the segments are recognized at the book
value with some specific treatments of expenses and revenue as per the accounting
policy of the group. The liabilities and assets associated with the segments and are
allocated to them if they are not allocated to operating segments (Schaltegger and

ADVANCED FINANCIAL ACCOUNTING
Burritt 2017). Some of the items that are not allocated to operating segments include
provisions, restructuring, corporate overhead, net finance cost and other significant
items. The accounting for the acquisition transactions is done according to AASB 10
Consolidated financial statements and the acquisition accounting at the fair value is
not required by the group. Some of the accounting policies used by organization in
relation to the accounts are listed below.
The property, plant and equipment of the organization are tested for the
impairment for ensuring that they are not recorded above their carrying value. Group
performs the assessment of each of the individual assets for impairment by
assessing their recoverable amount. The discounted cash flow forms the basis of
calculations of value in use that is expected to arise from cash generating unit or
assets. A significant improvement in the associated profitability and utilization is
forecasted by value in use projections that is prepared for the testing purpose of
impairment (Andon et al. 2015).

ADVANCED FINANCIAL ACCOUNTING
Measurement basis of provisions:
(Source: Csr.com.au 2019)
The table above depicts the critical accounting estimated for provisions such
as product liability, provision for future claims and uninsured loss and measurement
of provisions for environmental rehabilitation and restoration along with legal claims.
Any investment in joint arrangements is classified either as joint ventures or
joint operations. The obligations and contractual rights of each investor form the
basis of the classification of such investments instead of the legal structure and
hence judgments are required for such classification.
Measurement basis of net investment:

ADVANCED FINANCIAL ACCOUNTING
(Source: Csr.com.au 2019)
The table below depicts the accounting policies adopted by the group for
treating accounts such as foreign currency, tax consolidation, cash and cash
equivalent, goods and service tax and option liabilities on non controlling activities.
Other significant accounting policies:
(Source: Csr.com.au 2019)
The group uses the exchange rate at the date of transactions for accounting
all the foreign currency transactions during the financial year. Any differences in the
exchange are brought accounted in the profit and loss. Translation of all the assets
and liabilities are done at the exchange rate along with the expense and income

ADVANCED FINANCIAL ACCOUNTING
items being translated at average exchange rate at the end of reporting period
(Csr.com.au 2019). For the option liabilities on non controlling interest, the liability
that s initially redeemed is recorded against the equity along with recognition of the
financial liability at expected redemption amount present value.
Issues of measurement and conceptual framework:
Conceptual framework is the set of objectives and ideas that helps in creating
a consistent set of standards and rules for assisting the preparers of financial
statements. With the adoption of the framework by organization, practitioners are
provided with a base of discussion and consistency in the comprehension of the
financial elements. The basis of measurement is provided by the International
accounting standard board and there are different basis of measurement that can be
employed by organization in varying combination and in different degrees. There are
five different basis of measurement that are provided by the accounting standard
board that comprises of current cost, historical cost, present value of future cash
flows and net realizable value (Ifrs.org 2019).
Concerning the basis of preparation provided by the standard setter for
organization, it is seen that CSR limited has prepared its financial report on the basis
of historical cost. However, the company has used the fair value measurement basis
for certain financial liabilities and assets. It is required by the group to make the
assumption and estimates about the carrying value of liabilities and assets in
preparing the financial report. The assumptions and estimates made by the
management are based on the factors that under certain circumstances are
considered to be reasonable along with the historical experience. The historical
measurement basis is derived from the event of price of transactions that gave rise

ADVANCED FINANCIAL ACCOUNTING
to the items that are being measured. In the event of impairment, there is reduction
in the historical cost of assets. Furthermore, for the measurement of assets at
amortized cost for applying the basis of historical cost measurement of financial
liabilities and assets. The measurement basis has been selected by the organization
by accounting for the nature of information in both the financial performance
statement and statement of financial position (Iasplus.com 2013). It is likely that the
organization would select different basis of measurement for liabilities, assets,
income and expense when considering the factor and cost constraint. The issue of
measurement bases can be illustrated with the help of accounts as presented in the
financial report of CSR limited.
Measurement basis of revenue and provision:
(Source: Csr.com.au 2019)
Recognition of trading revenue is done when some of the conditions are met
by the firm and measurement is done at the fair value. Some of the conditions that
are required for recognizing the revenue include significant rewards and risk
attributable to the ownership of goods, existence of arrangement using persuasive

ADVANCED FINANCIAL ACCOUNTING
evidences and fixed seller price of seller to buyer. Payment on the operating lease is
done over the period of lease using the straight line basis.
Measurement basis of net finance cost:
(Source: Csr.com.au 2019)
Accrual of interest and income is done on the timely basis at the applicable
and effective rate of interest and refer to the principal outstanding amount.
Capitalization of the funding costs is done along with its amortization on subsequent
basis over the facility term. The interest components of discounted liabilities assets
and liabilities are unwinding by treating as a finance cost (Linsmeier 2016).

ADVANCED FINANCIAL ACCOUNTING
Measurement basis of trade receivables:
(Source: Csr.com.au 2019)
The above table presents the measurement basis of one of the items of
statement of financial position. Recognition of trade receivables is done initially at the
fair value and subsequently they are measured at the cost of amortization. Valuation
of inventories on other hand is done at the lower of net realizable value and cost. In
addition to this, recognition of trade payables is done when there is obligation on part
of the group to make future payments resulting from the purchase of goods and
services.

ADVANCED FINANCIAL ACCOUNTING
Measurement basis of goodwill:
(Source: Csr.com.au 2019)
The plant, property and equipment acquired by the company are recorded on
the historical basis that is it is measured at the historical cost of acquisition by
deducting the amount of depreciation. The initial measurement of the software is
done at cost irrespective of the fact that software has been developed internally or
acquitted externally. Intangible assets such as customer lists and trade names at the
date of acquisition are measured at fair value.
Fundamental qualitative characteristics:
The fundamental qualitative characteristics of faithful representation and
relevance help users and investors in providing information. The characteristics of
liabilities and assets and its contribution to the future flow of cash affects the
relevance of information that is provided by basis of measurement. Furthermore, the
material uncertainty and material inconsistency affects the basis of measurement
provided by the faithful representation of financial information. The basis of

ADVANCED FINANCIAL ACCOUNTING
measurement for liabilities, asserts, income and expenses of organization is
determined by considering the factor of cost constraints and some other specific
factors. Information is considered as relevant when it helps in making some
difference to the decision of users. It is possible when such information has
confirmatory or predictive value. On other hand, information is considered to faithfully
represent the facts when it is neutral, complete and free from errors. The level of
material uncertainty in the organization impacts the faithful representation of
information. Nevertheless, the qualitative characteristics of information are enhanced
by the factors such as verifiability, timeliness, understanding and comparability.
From the detailed understanding gained by conducting research on the
financial report of CSR limited, it has been found that the accounting policies in
addition with other significant accounting policies that summarize the basis of
measurement are relevant for gaining an understanding about the financial
statements. The overview of the financial performance that is depicted in the
financial report of the company is considered to be most relevant for the users of
financial statements as it provides a breakdown of the individual line items in the
financial performance statements. In addition to this, the items presented in the
balance sheet are considered to be most relevant for the users. CSR group
accounting policies of the reporting segments are considered relevant for the users
as the financial information are well explained considering the nature of evidence
and size of the items presented (Csr.com.au 2019). All the significant items that are
considered relevant in terms of their nature of incidences and size in explaining the
financial position and performance of the group are disclose separately. Therefore,
from the analysis of all the significant accounting policies, it is deduced that the
financial information presented in relation to the requirements of the accounting

ADVANCED FINANCIAL ACCOUNTING
policy helps in providing useful information for the users and assistance in their
decision making process (Outa et al. 2017).
CSR limited has reclassified the comparative information wherever applicable
for complying with the disclosure requirements of the current period and such
classification does not have any material impact on the overall financial report. It is
also opined by the organization that there will not be any material impact of the
litigation of asbestos in Australia and US. Moreover, the detailed disclosure on the
risk of price of commodity is not considered material to the group. All the accounting
policies are adopted and the basis of measurement has been determined by
accounting concepts for the fact that it does not create any material impact on the
performance of the group. In relation to the other party’s transactions, there were no
material amounts either receivable or payable to other parties. Moreover, any events
or transactions having material impact are disclosed adequately in the financial
report of the organization. The derailed analysis and evaluation of the facts and
figures presented in the financial report of the company provides the user with a true
and fair view about the financial performance of the entity. One of the points that are
disclosed in the financial report is regarding the impact of new lease standard on the
financial performance of the overall group. It is said that the impact of AASB 16
would have material impact on lease and they have not provided a reasonable
estimate of the impact that would be brought by this particular standard. The
declaration made by the directors also forms the basis of the fact that the financial
information resulted is relevant to the useful and is free from any material uncertainty
that gives the fair and faithful representation (Gulin et al. 2017). Nonetheless, any
accounts or transactions creating material impact or bring material uncertainty in the
statements has been adequately disclosed. Any uncertainty or inconsistency

ADVANCED FINANCIAL ACCOUNTING
impacting the materiality of the group has not been identified. In association with all
the factors that have been identified from the financial report, the opinion of the
auditors that the financial statements provides a true and fair view and they are
prepared according to the requirement of the relevant and applicable accounting
standards of Australia. All such points account for presenting the fact that the
financial information presented is relevant and faithful for investors. Therefore, it is
said that the financial information is of relevance to the investors in their decision
making process.
Conclusion:
The paper addressing the usefulness and guidance provided to the
organization using accounting concepts deduce the fact that such concepts are
considered useful to the practitioners as they are provided with great assistance in
different accounting treatments. All the issues of measurements and accounting
treatments have been explained by retrieving the examples from the financial report
of CSR limited. The financial report presents the measurement basis and principles
using the concepts of accounting. In addition to this, the financial report did not
mention about the adoption of revised conceptual framework, however, there is a
detailed presentation of different basis of measurements. It has also been
ascertained that the company provides its users with faithful and relevant financial
information that provides a great deal of assistance in the interpretation of the
information and investment decisions.

ADVANCED FINANCIAL ACCOUNTING
References list:
Andon, P., Baxter, J. and Chua, W.F., 2015. Accounting for stakeholders and making
accounting useful. Journal of Management Studies, 52(7), pp.986-1002.
Bailey, W.J. and Samuels, J.A., 2018. Analyzing Two Investments—An Instructional
Case to Introduce Basic Financial Accounting Concepts. Issues in Accounting
Education Teaching Notes, 33(4), pp.18-29.
Barker, R. and Teixeira, A., 2018. Gaps in the IFRS conceptual
framework. Accounting in Europe, 15(2), pp.153-166.
Csr.com.au., 2019. Retrieved 30 May 2019, from
https://www.csr.com.au/-/media/corporate/files/annual-reports/2018_annual_report_-
for_31_march-2018.pdf
Gaynor, L.M., Kelton, A.S., Mercer, M. and Yohn, T.L., 2016. Understanding the
relation between financial reporting quality and audit quality. Auditing: A Journal of
Practice & Theory, 35(4), pp.1-22.
Gornik-Tomaszewski, S. and Choi, Y.C., 2018. The Conceptual Framework: Past,
Present, and Future. Review of Business, 38(1).
Grigoras-Ichim, C.E. and Morosan-Danila, L., 2016. Hierarchy of accounting
information qualitative characteristics in financial reporting. The USV Annals of
Economics and Public Administration, 16(1 (23)), pp.183-191.
Gulin, D., Hladika, M. and Mićin, M., 2017. Application of the Fair Value Concept in
Function of Achievement the Objectives of Financial Statement Users. In Country
Experiences in Economic Development, Management and Entrepreneurship(pp.
553-570). Springer, Cham.

ADVANCED FINANCIAL ACCOUNTING
Iasplus.com. (2013). Conceptual framework — Measurements and elements of
financial statements (IASB only). [online] Available at:
https://www.iasplus.com/en/meeting-notes/iasb/2013/march/cf [Accessed 30 May
2019].
Ifrs.org., 2019. [online] Available at: https://www.ifrs.org/-/media/project/conceptual-
framework/fact-sheet-project-summary-and-feedback-statement/conceptual-
framework-project-summary.pdf [Accessed 30 May 2019].
Linsmeier, T.J., 2016. Revised model for presentation in statement (s) of financial
performance: Potential implications for measurement in the conceptual
framework. Accounting Horizons, 30(4), pp.485-498.
Mala, R. and Chand, P., 2015. Commentary on phase A of the revised conceptual
framework: Implications for global financial reporting. Advances in accounting, 31(2),
pp.209-218.
Nobes, C.W. and Stadler, C., 2015. The qualitative characteristics of financial
information, and managers’ accounting decisions: evidence from IFRS policy
changes. Accounting and Business Research, 45(5), pp.572-601.
Novak, A., 2016. Issues in the Recognition versus Disclosure of Financial
Information Debate. Naše gospodarstvo/Our economy, 62(4), pp.52-61.
Outa, E.R., Ozili, P. and Eisenberg, P., 2017. IFRS convergence and revisions:
value relevance of accounting information from East Africa. Journal of Accounting in
Emerging Economies, 7(3), pp.352-368.
Paseková, M., Svitaková, B., Kramá, E. and Otrusinová, M., 2017. TOWARDS
FINANCIAL SUSTAINABILITY OF COMPANIES: ISSUES RELATED TO
REPORTING ERRORS. Journal of Security & Sustainability Issues, 7(1).

ADVANCED FINANCIAL ACCOUNTING
Rutledge, R.W., Karim, K.E. and Kim, T., 2016. The FASB's and IASB's New
Revenue Recognition Standard: What Will Be the Effects on Earnings Quality,
Deferred Taxes, Management Compensation, and on Industry‐Specific
Reporting?. Journal of Corporate Accounting & Finance, 27(6), pp.43-48.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting:
issues, concepts and practice. Routledge.
Whittington, G., 2015. Fair value and IFRS. In The Routledge companion to financial
accounting theory (pp. 237-255). Routledge.
Williams, P.F. and Ravenscroft, S.P., 2015. Rethinking decision
usefulness. Contemporary Accounting Research, 32(2), pp.763-788.