Contemporary Issues in Accounting

This report analyzes and evaluates the compliance of Amcor Limited with the standards and principles of conceptual framework for financial reporting. It covers the compliance of Amcor Limited with recognition criteria and qualitative characteristics of financial information. The report shows the level of compliance of Amcor Limited with the objectives of conceptual framework.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
The main aim of this report is to analysis and evaluation of the level of compliance with the
standards and principles of conceptual framework by Amcor Limited. This report shows the
compliance of Amcor Limited with the objectives of conceptual framework. In addition, it also
shows the compliance of Amcor Limited with recognition criteria. Lastly, the report shows the
compliance of Amcor Limited with the qualitative and enhancing characteristics of financial
information.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Compliance with General Purpose Financial Reporting Objectives...............................................3
Satisfaction of Recognition Criteria................................................................................................9
Qualitative Characteristics of Financial Reporting........................................................................13
Satisfaction of Enhancing Qualitative Characteristics of Financial Reporting.............................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
In today’s business world, the business entities are facing different kinds of issues due to
the presence of complex business operations. One of these major issues is accounting and
financial reporting issues as these are considered as contemporary accounting issues in the
business organizations. These rise of these kinds of issue can be see due to the non-compliance
with the principles and standard of required financial conceptual framework. In this process,
International Accounting Standard Board (IASB) plays an integral part as it provides the
companies with the required standards and principles that the accountants are required to be
complied with for financial reporting. This report takes an honest attempt in the analysis and
evaluation of the level of compliance with the standards and principles of conceptual framework
by Amcor Limited. Amcor Limited is an Australian high-quality packaging company for foods,
beverages, pharmaceutical products and others. Amcor Limited is in the top 100 companies of
Australian Security Exchange (ASX) (amcor.com 2018). Different part of the report analyzes
various factors of conceptual framework with respect of this company.
Compliance with General Purpose Financial Reporting Objectives
From the above discussion, it can be observed that the business entities are required to
follow the standards and principles of accounting conceptual framework. More specifically,
Amcor Limited is required to meet the conceptual framework objectives. There are three major
objectives of IASB conceptual framework.
First Objective: The first objective of conceptual framework states that the companies must
give the users required information about the current financial position of the entity that must

4CONTEMPORARY ISSUES IN ACCOUNTING
include the information of their economic resources (aasb.gov.au 2018). The information related
o economic resources can be found in the statement of financial position. In case of Amcor
Limited, the company provides the users with all required current information related to
economic resources through the statement of financial situation and it can be seen as follows:
(Source: amcor.com 2018)
Apart from this, the recent information related to the current financial position of the
entity can be found in the income statements (amcor.com 2018).

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
Second Objective: The second objective of accounting conceptual framework is provide the
users with the information related with the major changes in economic resources and financial
claims (aasb.gov.au 2018). These changes can be observed from the income statement and
statement of change in equity. From the analysis of the annual reports of Amcor limited, the
company provides all the information related to change in economic resources and financial
claims through the income statement and statement of change in equity (amcor.com 2018). It can
be found in below:

6CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)

7CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
Third Objective: As per the third objective of conceptual framework, the financial performance
of the companies must reflect from the cash flow statement of the companies (aasb.gov.au 2018).
Thus, the companies are required to provide the users with all the information related to cash
flow. In the annual report of Amcor Limited, the company publishes all the information of cash
flow through their cash flow statement and it can be found as below:

8CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
Moreover, Amcor Limited prepares their financial reports as per the regulations of
Corporation Act 2001 and Australian Accounting Standard Board (AASB). They have also
complied with International Financial Reporting Standards (IFRS) and International Accounting
Standards Board (aasb.gov.au 2018).

9CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
Satisfaction of Recognition Criteria
Apart from conceptual framework objectives, the requirement for the business entities is
to satisfy the recognition criteria of conceptual framework for major financial elements; they are
assets, liabilities, equity, revenue and expenses. Three major dimensions related to the
recognition criteria are satisfying the definition, the flow of economic benefits to or from the
business entities and the presence of measurable value. The following discussion shows the level
of satisfaction of recognition criteria by Amcor Limited:
Assets
Amcor Limited has reported different operating assets. One of them is Property, plant and
equipment (PPE) and their recognition is done in cost value after the deduction of depreciation
and impairment losses. Straight-line method is used for depreciating PPE. These recognition
criteria can be seen in AASB 116 Property, Plant and Equipment under section 334 of the
Corporations Act 2001 (aasb.gov.au 2018).
(Source: amcor.com 2018)
The company has intangible assets. The recognition of goodwill is done on cost value
after the deduction of impairment losses. Same as, other intangible assets are recognized at coat
value after the deduction of any impairment and amortization costs. All these rules can be seen in
AASB 138 Intangible Assets and IAS 38 Intangible Assets (aasb.gov.au 2018).

10CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
In case of trade and other receivables, Amcor Limited recognizes them at the invoice
value and then adjusts them with the recoverable value. It can be seen in the standard of AASB 9
Financial Instruments (aasb.gov.au 2018).
(Source: amcor.com 2018)
Amcor Limited recognizes them inventories at the lower of costs and net realizable value.
This regulation can be seen in the standards of AASB 102 Inventories (aasb.gov.au 2018).
(Source: amcor.com 2018)

11CONTEMPORARY ISSUES IN ACCOUNTING
Liabilities
The presence of different liabilities can also be seen in Amcor Limited. The company
recognizes their interest bearing liabilities in fair value basis after considering net transaction
cost. It can be seen in the standard of AASB 132 Presentation of Financial Instruments
(aasb.gov.au 2018).
(Source: amcor.com 2018)
The company recognizes provisions in the presence of any legal or constructive
obligation and they are measured on present value basis (aasb.gov.au 2018).
(Source: amcor.com 2018)
Equity
In Amcor Limited, the classification of ordinary shares is done as equity and they are
fully paid with no par value. In case of treasury shares, their recognition is done at cost value
after the deduction of equity. For this aspect, the company follows the standard of AASB 1004
Contributions (aasb.gov.au 2018).

12CONTEMPORARY ISSUES IN ACCOUNTING
(Source: amcor.com 2018)
Revenue
Amcor Limited does the recognition of revenue from sales of goods at the time of the
transfer of risk and reward of ownership to the customers. No revenue is recognized in the
presence of significant uncertainty regarding considerations. It can be seen in the standards of
AASB 118 Revenue (aasb.gov.au 2018).
(Source: amcor.com 2018)

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Expenses
Two types of expenses are there; they are Finance expenses and Lease payments. The
company recognizes financial expenses in the income statement at the time of their occurrence.
Payment of lease is also recognized in the income statement on straight-line basis.
(Source: amcor.com 2018)
Qualitative Characteristics of Financial Reporting
Fundamental qualitative characteristics of financial information make them more
acceptable to their users. The following discussion shows the level of compliance with these
characteristic by Amcor Limited:
Relevance: Provided financial information must be relevant to become helpful in the decision-
making process of the users (Barth 2013). They must possess predictive and confirmatory value.
Amcor Limited develop their financial statements as per the standards of AASB and
Corporations Act 2001 and these information helps in getting future outcome in the presence of
previous evaluation information (amcor.com 2018).
Faithful Representation: Companies must represent financial information faithfully in the
absence of any influence and biasness (Gebhardt, Mora and Wagenhofer 2014). The auditors of
Amcor Limited has provided the opinion that there is not material misstatement in the financial

14CONTEMPORARY ISSUES IN ACCOUNTING
statements of Amcor Limited as they have been prepared as per the standards of IFRS, IASB,
AASB and Corporations Act 2001 (amcor.com 2018).
Satisfaction of Enhancing Qualitative Characteristics of Financial Reporting
Financial information become more useful in the presence of enhancing qualitative
characteristics. The following discussion shows the level of compliance with these characteristic
by Amcor Limited:
Comparability: The users of financial information can understand and identify differences and
similarities in different financial elements in the presence of comparability (Edmonds et al.
2016). In the presence of faithful representation of the financial statements, the users become
able to compare the financial information of Amcor Limited with other entitles and different
timeline from the same entities.
Verifiability: Verifiability characteristics are required for making financial information more
useful. In case of Amcor Limited, the provided justification and classification of different
financial items make financial information verifiable for the users (Henderson et al. 2015).
Timeliness: This characteristic helps in delivering timely financial information to the users.
Amcor Limited always publishes their annual report and financial statements on certain time of
the year so that the users can access them when required (Edmonds et al. 2016).
Understandably: Users can better use financial information if they are easy understandable.
Amcor Limited provided financial information in simple form and tabular formats for the easy
understanding for the users (Henderson et al. 2015).

15CONTEMPORARY ISSUES IN ACCOUNTING
Conclusion
The above analysis shows the fact that Amcor Limited has well complied with the
conceptual framework objectives of AASB while developing financial statements. At the time of
the recognition of necessary financial items, Amcor Limited complies with the standards of
AASB like AASB 9, AASB 116, AASB 138 and various others. Moreover, the financial
information of Amcor Limited posses both the fundamental and enhancing characteristics. Thus,
it can be concluded that Amcor Limited has fully complied with the standards and principles of
conceptual framework.

16CONTEMPORARY ISSUES IN ACCOUNTING
References
Aasb.gov.au. (2018). Conceptual Framework for Financial Reporting. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 8 Apr.
2018].
Aasb.gov.au. (2018). Contributions. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB1004_12-07_COMPjan15_07-15.pdf
[Accessed 8 Apr. 2018].
Aasb.gov.au. (2018). Financial Instruments. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB9_12-14.pdf [Accessed 8 Apr. 2018].
Aasb.gov.au. (2018). Intangible Assets. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-15_COMPoct15_01-18.pdf
[Accessed 8 Apr. 2018].
Aasb.gov.au. (2018). Inventories. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-15.pdf [Accessed 8 Apr. 2018].
Aasb.gov.au. (2018). Property, Plant and Equipment. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB116_07-04_COMPjun14_07-14.pdf
[Accessed 8 Apr. 2018].
Aasb.gov.au. (2018). Revenue. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_COMPmay09_01-10.pdf
[Accessed 5 Apr. 2018].

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Amcor.com. (2018). Amcor - Investor Relations - financial information and ASX
announcements . [online] Available at: https://www.amcor.com/investor-relations/about-us
[Accessed 8 Apr. 2018].
Amcor.com. (2018). Annual Report 2017. [online] Available at:
https://www.amcor.com/CorporateSite/media/Annual-reports/Amcor_Annual_Report_2017.pdf
[Accessed 8 Apr. 2018].
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Edmonds, T.P., Edmonds, C.D., Tsay, B.Y. and Olds, P.R., 2016. Fundamental managerial
accounting concepts. McGraw-Hill Education.
Gebhardt, G., Mora, A. and Wagenhofer, A., 2014. Revisiting the fundamental concepts of
IFRS. Abacus, 50(1), pp.107-116.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.