Assignment - Financial Accounting Principles

Added on - Mar 2020

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ASSIGNMENT 1Assignment 1Name of the studentName of the UniversityAuthors note
ASSIGNMENT 1Table of ContentsAnswer to Part A:..........................................................................................................3Answer to Part B:..........................................................................................................6References & Bibliography:..........................................................................................8
ASSIGNMENT 1Answer to Part A:As per the financial accounting principles, there might happen that thefinancial statement of organizations has assets that do not have excessivevaluations. For ascertainment of value of assets, the carrying value of assets needsto be contrasted with some value concepts. Australian accounting standard boardsunder section 334 of Corporations Act, 2001 makes accounting standard AASB 136impairment of assets. The objective of standards deals with prescribing theprocedures that is applied by entity for ensuring that assets are not carried at morethan recoverable amount. If the amount that is recorded after the sale of assets isless than carrying amount, then the assets are carried at recoverable amount. Withreference to this, assets can be explained as impaired. Organization are required torecognize the impairment as per this standard as mandatory disclosures and time ofrecognizing impairment loss.If the recoverable amount is less than carrying value of assets, then theimpairment is realised. The amount should be higher of fair value less value ofassets in use and cost of selling. If the carrying value of an asset is more than theirrecoverable amount, then according to “Paragraph 59 of AASB 136”, then thecarrying value of assets should be minimized to its former. As per AASB 2014, thensuch minimisation is adjudicated as an impairment loss. Nonetheless, there isvariation in techniques that is used in variation of recording impairment loss and thisis dependant upon fact that whether assets is recorded at costs and is pursuant tomodel of revaluation. Impairment loss needs to be realised immediately as perparagraph 60 of AASB 136”. This is done unless the assets are carried at revaluedamount that is ain compliance with another standard. The model of revaluation is
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