Advanced Financial Accounting

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

1ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Introduction......................................................................................................................................2
Description of Accounting Concepts...............................................................................................2
Changes that have been Incorporated in the New Accounting Standard for AASB 16 Lease........4
Key Disclosures Made by Beach Energy Limited on its Accounting for Leases............................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................9

2ADVANCED FINANCIAL ACCOUNTING
Introduction
Financial accounting is considered as a key branch of accounting that takes into
consideration the correct processing financial transactions that can be seen in a business. This
also involves in the development and presentation of financial accounts of a company for making
them available for public use (Edwards 2013). Professionals with the required educational
degrees carries out the accounting jobs within the organization and they are required to do so
while complying with the obligatory accounting concepts, principles, rules and guidelines. The
presence of different accounting concepts can be seen and the accountants are required to
incorporate these concepts in the development of the financial statements. Application of these
concepts provides the required direction to the accounting works of a company. In addition, they
are required to incorporate the recent changes in the existing accounting standards that have
already been applied for the preparation of financial statements (Weil, Schipper and Francis
2013). This report aims at identifying and describing the applied accounting concepts in the 2018
Annual Report of Beach Energy Limited (Beach Energy). After that, this report sheds light on
the recent changes that have been brought in the standards for lease that is AASB 16 Leases. The
last part provides a summary of disclosure made by Beach Energy regarding lease accounting
that includes transitional provision and effects of transition to AASB 16 from AASB 117 Leases.
Description of Accounting Concepts
The following discussion shows the identification and description of the accounting
concepts used in the 2018 Annual Report of Beach Energy as at 30th June 2018.

3ADVANCED FINANCIAL ACCOUNTING
Accrual Concept – This concept says that a business needs to recognize its revenue and
expenses once it is earned and assets are consumed respectively (Bushman, Lerman and Zhang
2016). Application of the same can be seen in the 2018 Annual Report of Beach Energy as the
company recognizes its revenue at the amount of consideration received or receivable. It implies
that revenue is not always recognized at cash basis as the company allows credit, but they
recognize it when it is occurred (beachenergy.com.au 2019).
Conservatism Concept – This concept states that a company is required to recognize the
revenue only in the presence of a rational certainty that it will be realized. This idea results in
more traditional financial accounts (Ruch and Taylor 2015). As per the 2018 Annual Report of
Beach Energy, the company has recognized the revenue once it is probable that there will be a
flow of economic benefits to the business which can be realizably measured
(beachenergy.com.au 2019).
Economic Entity Concept – According to this idea, all the transactions associated with business
need to be maintained separately from those of its proprietors. This eliminates the mixture of
individual and commercial transactions in the financial accounts of the corporation (Schaltegger
and Burritt 2017). This concept is strictly applied in the 2018 Annual Report of Beach Energy as
the “Basis of Preparation” note shows that all the financial statements include the financial
information of Beach Energy. No owner’s transaction is included in these financial statements
(beachenergy.com.au 2019).
Going Concern Concept – Corporations prepare their financial accounts based on the
supposition that the business will continue operating for a reasonably long time and carry out its
commitments as well as obligations (Unegbu 2014). As per Director’s Declaration in 2018