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Reply to the email correspondence from Magenta and Associates regarding the accoutring issues

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Added on  2020-05-28

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2 9 January 2018 Christopher Sampson Geelong Street, Melbourne, VIC 3000 9 January 2018 Christopher Sampson Managing Director, Beachlife Ltd Level 7, 927 William Street, Brisbane QLD-4000 Dear Christopher Sampson The information in the email regarding the accoutring issues sent to me on 13 November 2017 is acknowledged by Magenta and Associates. Therefore, by using the adjustment entries on the accounting issues Beachlife ltd could adequately draft the annual report and depict their actual financial position. In addition, Beachlife ltd also needs to

Reply to the email correspondence from Magenta and Associates regarding the accoutring issues

   Added on 2020-05-28

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718 Geelong Street,Melbourne, VIC 30009 January 2018Christopher SampsonManaging Director, Beachlife LtdLevel 7, 927 William Street,Brisbane QLD-4000Dear Christopher SampsonThe information in the email regarding the accoutring issues sent to me on 13 November 2017 is acknowledged by Magenta and Associates. In response to the email relevant amendments and advice is been drafted in the letter, which could be useful for the board of Beachlife Ltd in making adequate decision. Furthermore, the amendments and advice provided by the accounting team is reliable, as it is backed by years of experience and high-end professionals. The adjustment needed for the accounting issues is depicted in the letter, which could be presented to the board of Beachlife Ltd. Therefore, by using the adjustment entries on the accounting issues Beachlife ltd could adequately draft the annual report and depict their actual financial position. I whole heartedly thank you for providing our organisation with the opportunity to serve you with the problems faced in the accounting treatment. Rest assured any other accounting issues arising in the preparation of the annual report can be dealt with us. However, for the current accounting issues adequate sources are provided, which could allow the board in eradicating the accounting issues.Beachlife Ltd comes under public limited company structure, where it needs to acknowledge the regulation imposed by Corporation Act 2001. In addition, Beachlife ltd also needs to comply with Section 292, Section 296 and Section 334, which is used in drafting annual report of the organisation (Aasb.gov.au 2018). These clauses and sections directly force the organisation to comply with accounting standards, which are used in the preparation of the annual report. Therefore, the use of AASB standard and IAS standard are mainly used by the organisation to ethically portray their actual financial condition in the annual report. Moreover, the advice on accounting issue that is provided to Beachlife ltd mainly comprises of AASB standards dealing with the issues. The issues regarding warranty expense and loss isdirectly addressed in the letter, which could help in drafting accurate financial report.Stating the measure used in confining the infringement claim to the annual report:The major accounting issue that is faced by Beachlife ltd is claim from infringement of patent, which could, incur in immediate future. This issue is mainly not providing the
Reply to the email correspondence from Magenta and Associates regarding the accoutring issues_1
19 January 2018Christopher Sampsonaccurate financial condition of the company, where relevant loss can be expected by the organisation. In the particular situation, contingency liability measure could be used by the company for addressing the accounting issue. The current financial report of the organisation needs to include contingency liability section in the annual report for addressing the patent accounting issue. The contingency measure is mainly taken from AASB 137 paragraph 10, where the treatment of the issues can be identified. The paragraph mainly states that any kind of loss, which will be incurred in near future due to the actions taken past will come under contingency liability (Aasb.gov.au 2018). This situation will mainly be recorded in balance sheet section, where liability of the company will increase. The ruling of AASB 137 mainly consists of the all the relevant contingency liabilities that is faced by organisations (Adhariani, Sciulli and Clift 2017).The table below mainly indicates the probability or chance of loss, which might incur by the company in immediate future. However, the highest probability section and chance will be chosen by the organisation to enlist in their annual report. This mainly indicates the probability of 60%, where $50,000,000 will be enlisted in the annual report of Beachlife Ltd. The highest probability is chosen due its high chance of occurrence in near future, which could allow the company to take accurate measure for depicting its loss in annual report.ParticularsValueProbability1st chance$87,000,000 30%2nd chance$50,000,000 60%3rd chance$30,000,000 40%The above measure could allow the company in depicting the future loss in their annual report, which has a probability of 60% occurrence. Therefore, the board with the advice for infringement of patent expense could adequately draft its annual report. Hence, the board of Beachlife Ltd could conduct the advised measure for reducing the impact of accounting issue in the annual report. This would require the board to enlist 50,000,000 in the contingency liability section of the annual report (Hudson 2016).Stating the measures that could be used for second accounting issue identified by the board of Beachlife Ltd.Christopher Sampson mainly identified the second problem, which was faced by Beachlife Ltd, while preparing their annual report was the inclusion of warranty expenses. This inclusion of the expenses could eventually allow the organisation in depicting its actual financial position for the fiscal year. In AASB 137, relevant measures that needs to be taken for warranty expense is adequately discussed. In accordance with AASB 137 Paragraph 14(a), the obligations, which intends to raise expenses of the organisation are enlisted in its annual report (Jones 2017). Moreover, the issue also arises, whether to enlist sale of equipment in current fiscal year or next fiscal year. AASB 118 Paragraph 9, is mainly used inrecognising the sale of equipment in the current fiscal year. This directly indicates that with the revenue recognition method depicted in AASB 118, revenue generated by the company
Reply to the email correspondence from Magenta and Associates regarding the accoutring issues_2

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