Advance Financial Accounting Report 2022

Running head: ADVANCE FINANCIAL ACCOUNTING
ADVANCE FINANCIAL ACCOUNTING
Name of the Student:
Name of the University:
Author Note

ADVANCE FINANCIAL ACCOUNTING1
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Requirement 1: -.........................................................................................................................2
Accounting concepts..............................................................................................................2
Requirement 2: -.........................................................................................................................5
Changes in new accounting standard for lease AASB 16......................................................5
Issues with example...............................................................................................................6
Requirement 3: -.........................................................................................................................6
Disclosures of the firm regarding its accounting for lease.....................................................6
Effect of transition..................................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................9

ADVANCE FINANCIAL ACCOUNTING2
Introduction
This report is prepared to analyse the disclosure made by the firm in their annual
report. For this report the chosen firm is Blackmores Limited. Blackmores Limited is an
Australian company which produces and sells health supplements foods and drinks across
Australia. The firm was founded by Maurice Blackmore in 1930 by opening its first retain
store in Queensland. Now it is an ASX 200 company having the market capitalization of $ 2
billion. The main business of Blackmores Limited is to produce and retail a range of health
supplements which contains high portion of minerals, vitamins and herbs. Currently, firm is
not limited only to the Australian market but also supply their products in more than 17
countries apart from Australia. The Blackmores Limited also an important employer of
Australia and current have more than 800 employees. This report analyses the annual report
of the firm for the year 2017 as well as 2018 with the objective of identifying and analysing
the accounting concepts used by firm in their financial calculation as well as in financial
reporting. Secondly, this report analyses the changes incorporated in the new accounting
standard for lease AASB 16. Further, report summarize the disclosers of the firm regarding
their transition procedure to AASB 16 from AASB 117.
Discussion
Requirement 1: -
Accounting concepts
As per the annual report of Blackmores Limited for the year 2018, the firm uses the
following accounting concepts in their financial reporting; -
 Business entity concept: - As per this concept firm and owner of the firm are two
separate entities. Thus, any obligation in firm cannot affect its owner’s wealth.
While, any obligation of owner can not affect the assets of the firm (Blackmores

ADVANCE FINANCIAL ACCOUNTING3
2019). The example of this accounting concept is that when owner invest money in
the business then it is recorded as the liability by the firm. Hence, this is used by the
firm to report their liability and other obligations. The example of using this concept
by the chosen company’s annual report is that the firm reported the equity capital in
the liability side of the balance sheet (Bayern 2016). In the basis of this statement
firm report each and every transaction between the firm and owner of the firm in their
financial report.
 Money Measurement Concept: - This concept ensures that all the financial
transaction of firm must be reported in terms of money only. This accounting concept
is also used by the firm in their financial reporting as all the financial related
transactions are reported by the firm in Australian Dollar in annual report (Korol
2015). If firm does not use this standard and not report their transactions in terms of
money then readers of financial statement will find difficulties in identifying the
importance of the transactions.
 Going Concern Concept: - This concept states that every firm needs to prepare and
report its financial transaction as well as financial information by assuming that the
firm will continue its operation for infinite period of time in future (Agostini 2018).
The chosen firm that is Blackmores Limited uses this accounting concept in their
capital management. This accounting concept is the main reason behind carry
forwarding the balances of several accounts to the next year (Omer, Sharp and Wang
2018). This accounting concept can be understand in better with the help of following
example: - if firm purchases a machinery which have a life of 10 years then firm
needs to charge an amount in their expenses as depreciation in the books of account
each year for next ten year and remaining balance in the asset side of the balance
sheet.