Detailed Analysis of Accounting Framework for Metal X Ltd: Finance

This report provides a detailed analysis of the accounting framework adopted by Metal X Ltd, focusing on its compliance with the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The report examines the measurement requirements, qualitative characteristics like relevance and faithful representation, and enhancing characteristics such as comparability, verifiability, timeliness, and understandability. It assesses the financial statements, including the income statement, balance sheet, and cash flow statement, to evaluate Metal X Ltd's financial performance and position. The analysis covers key aspects like revenue recognition, the adoption of new accounting standards, and the impact of financial reporting on decision-making by various stakeholders. The report concludes that Metal X Ltd effectively adheres to the accounting framework, demonstrating strong financial health and promising investment potential within the mineral exploration and mining sector.

Running head: ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Analysis of Accounting Framework of Metal X Ltd
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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Table of Contents
Part-1..........................................................................................................................................3
Part -2.........................................................................................................................................5
Part -3.........................................................................................................................................7
Part -4.......................................................................................................................................11
Part-5........................................................................................................................................17
Part-6........................................................................................................................................17
Conclusion................................................................................................................................18
References................................................................................................................................19

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Part-1.
Measurement requirement of Accounting framework.
Requirement 1.
The reporting entity must require to faithfully disclose their claims against the company,
Economic resources. The entity should represent, whether the money the money that has been
raised from the investors and other stockholder has been utilized judiciously by the company.
Requirement 2.
The entity should disclose in their notes to account about the impact of the particular
measurement methods on the fund flow statement, Income statement, and the Statement of
position.
Requirement 3.
The cost of a specific measurement used by the entity must be vindicated by the advantages
of reporting that information to current and probable investors, lenders and other creditors.in
other words it can said that any material information about the entity measurement financial
performance must be readily available to the users of financial information.
From the analysis of the information of the financial statement of the Metal X Ltd it is found
that the company aptly followed the conceptual framework requirement. The financial report
of the entity is prepared as per the requirement of the corporation requirements of the
company Act 2001 and Australian standard of accounting. The books of accounts of the
company has been made on a historical basis, with exception in some particular cases like
investment which are available for sale, derivative and copper trade receivables. All these
exception items are measured at the fair value.

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
In the combined statement of Income statement of cost of sales in the comparative statement
have been restated as follows.
Concentrated revenue has been revised to be represented net of treatment and refining
charges, which is amounted to be 26670670, which were earlier included in the cost of sales.
The amended presentation is more consistent with the terms of the underlying concentrates
sales agreement where treatment and refining changes are included as part of the pricing
formulae. Also, it is also revealed that such adjustment has no impact on the gross profit or
net profit for the year ended 30 June 2017(Andriof, and Waddock 2017).
Further it is also revealed that the in the year 2018 the entity has adopted the new accounting
standards, which has been issued by the Australian accounting standard Board (the AASB)
which are necessary to the operation and effectiveness for annual reporting.
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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Part -2
To proliferate the effectiveness and utility of the financial information, the qualitative
features of the company play a vital role.
Relevance

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Relevance in accounting is refers to the concept of useful information. This means the users
economic and financial decision on the company must get influenced while investing their
money in the business of the company. The information collected by users relevant for a
particular period of time may not be necessarily relevant for every time. The authenticity and
relevancy of the financial information minimizes decision-makers uncertainty about future
acts.
Faithful representation
Information and transaction data of the company authentically represent the transaction and
events that occur during a period. This means that the financial statement should not be
manipulated to drive the interest of the shareholder in order to make some illegitimate
activities of the enterprise.
Faithfull representation says that business operation of the entity should be accounted for in a
manner that demonstrate the real financial nature. The operating transaction should be should
reveal both legal and nature. This terminology is referred as the entity is focussing on the
main fact of the transaction rather than focussing only on the form.
From the analysis of the economic statement of the entity it is noticed that the enterprise has
given a proper and appropriate disclosure of the material information in their footnotes which
is considered to be relevant in influencing the decision of the users of the financial statement.
For, instance the company has disclosed the significant accounting estimates and assumptions
with respect to the impairment of property, plant and equipment, financial risk policies, tax
consolidation and the tax sharing arrangement, derivative financial instrument, Long term
Incentive plan, performance Right, share option, business acquisition.

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Part -3
Enhancing qualitative characteristics
1. Comparability
Financial statements that are comparable, with unswerving accounting standards and policies
used over every accounting period, allow users to make understanding decision about the
developments and enactment of the corporation over time. Apart from this, comparability
also means, the aptitude to effortlessly compare an entity financial statements with those of
other companies. Comparability means the degree to which accounting standards and policies
are consistently applied from one period to another.
The qualitative features of accounting information are very vital because they make it at ease
for both organization management and investors to use a corporation financial statements to
make well-informed decisions. (Kieso, eygandt, and Warfield, 2016).
Income statement of the Metal X Ltd the year 2017 and 2018.

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Verifiability
Verifiability refers to the confirmation and certification of accounting information
demonstrated in financial statements by independent auditor.
Accounting data and information included in the books of accounts is deemed to be verifiable
if it reassure that financial Information authentically represents the economic condition and

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
position of the company. This helps the individual who study the financial of the company to
confirm that statement show faithful representation. Verifiability concept is not only about
identifying if the expectations or accounting policy adopted by the enterprise has adopted is
correct or incorrect. Inspite it is about identifying that the data or operation which the
organization is demonstrating is useful and material.
The objectives of the Verifiability is only to identify the whether the information which has
been recorded are as per the relevant laws and regulation guidelines and in conformity with
the standards (Freeman et.al 2014).

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
2. Timeliness
This features represent of accounting says that the information should be made
available to the users as soon as possible. This immediate transfer of information is
necessary because the more delay it caused, the value of the information reduces.
3. Understandability

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ANALYSIS OF ACCOUNTING FRAMEWORK OF METAL X LTD
Information should be properly classified, characterized so that it can helpful for the users of
the financial statement to understand and interpret the business operation of the company to
make their investment decision.
This concept says that a person with basic knowledge in accounting and finance should be
easily able to comprehend the information displayed in the business books of account.
With the study and the analysis of the financial records of the entity it can be observed that
the entity has prepared financial which is aptly in compliance with the requirement of the
fundamental and enhancing qualitative features. (Henderson, 2015).
Part -4
Financial reports for making decision
Financial statement of an entity is used by the various stakeholder for different
purposes in making their investment or financial decision. (Kieso, Weygandt, and Warfield,
2016).
The different users of the company stakeholder are following.
 Financial Institution: Assess the health of the company to grant money for the
business.
 Workers of the company: It helps the workers to determine the business continuity.
 Lenders: determine the company credit worthiness.
Income statement of the company