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Advanced Financial Accounting Doc

   

Added on  2020-12-09

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ADVANCEDFINANCIALACCOUNTING
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Table of ContentsINTRODUCTION...........................................................................................................................11. Difference between monetary items and non-monetary items, providing two examples ofeach.............................................................................................................................................12. Accounting treatment required when a reporting entity has foreign currency monetary itemsat reporting date...........................................................................................................................23. Monetary items can be assets or liabilities, incomes or expenses arising from foreigncurrency transactions or functional currency transactions. ........................................................34. Consolidation refers to merger of different companies of same industry...............................4CONCLUSION................................................................................................................................4
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INTRODUCTIONTopic advanced financial accounting focusses on consolidation of subsidiaries, foreigncurrency transactions, foreign operation operating (Board, 2004). This report emphasizes onproviding differences and accounting treatment of business activities, foreign currencytransactions, gains recognised on sale of assets on consolidation. This report comprises ofaccounting treatment of different reporting entities according to AASB 121, The Impact ofAlteration in Foreign Exchange Prices. Providing description of business entity transactions withthe help of examples. Accounting treatment when a reporting entity has overseas currencymonetary items at reporting day, difference between qualifying financial items and otherinternational currency monetary items. And also adjustments that need to be made inconsolidated financial statements.1. Variations between monetary items and non-monetary items, providing two examples foreachDifferences are given in table below:Cash ItemsNon cash ItemsFinancial items are calculated in units ofcurrency. These currency are received in assetsand liabilities but paid in fixed or definablenumber of units of currency. Monetary itemsare grow up from transaction of foreigncurrency and in exchange rate change comefrom date of settlement and the date oftransaction. Non financial items are studied in status ofhistorical cost. That cost using for exchangerate come from foreign currency that will betranslated on particular date. These items arealso measured at fair value for the exchangerate that will be translated from foreignconversation rate.Cash items such as cash and cash equivalentslike pensions, other employee performanceincentives to be given in cash, cash earningsare recognised as a liability and provisions thatare to be settled in cash.Non monetary items like goods and servicesthat will be intangible but they have hispresence such as goodwill, property, plant andequipment, inventories, prepaid amounts, andreserves that are to be accomplished by thetransfer of a non monetary asset.
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