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Accounting Theory Assignment (DOC)

   

Added on  2020-03-28

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ACCOUNTING THEORY

Accounting theoryExecutive summaryIt is through the accounting policies and the framework that the organization performs. The performance of the business can be accessed through the policies undertaken and the pattern of the disclosures. The main aim of the report is to shed light on Australian Agricultural Company that is listed on the ASX. An in-depth analysis is done on the manager report. The report starts with the assessment of the major accounting policies followed by the identification of the policies that are key in nature. Further, the disclosure policy is studied and then the potential red flags are exposed. At the end, an analysis is made of the conceptualframework that stresses upon the strong foundation of the company and projects that it follows the compliance activity to a paramount level.2

Accounting theoryContentsIntroduction...........................................................................................................................................3Assessment of accounting policies and estimates.................................................................................3Assessment of the quality of accounting...............................................................................................4Investigative report...............................................................................................................................5Part – 1 – Major accounting policies selection......................................................................................5Part – 2 Accounting flexibility Assessment............................................................................................7Part – 3- Accounting strategy Assessment.............................................................................................7Part -4 - Disclosure quality Assessment.................................................................................................7Part – 5 Conceptual frameworks & compliance....................................................................................9Conclusion...........................................................................................................................................11References...........................................................................................................................................123

Accounting theoryIntroductionAustralian Agricultural Company Ltd is engaged in the production and selling of beef in Australia. The company is engaged in ownership, operation, and development of the pastoral properties that includes the production of beef, backgrounding and cattle processing and production of various other beef. This company has strong aim to be a global icon in the premium product of beef (AAC, 2016). AACo is striving to attain a formidable position in the market and hence, is executing strategy for the enhancement of the operational efficiency.Assessment of accounting policies and estimatesIt can be seen from the financials of the company that assumptions, estimates, and judgmentsare regularly evaluated with respect to contingent liabilities, revenue, assets, and liabilities. The company bases its estimates and judgments on experiences and other factors that are believed to be reasonable based on the scenario, and the result of which forms the basis of thecarrying amounts of liabilities and assets that are not apparent from the sources. In relation to significant accounting policies of the company, it can be viewed that its property, plant, and equipment (PPE) are recorded at historical cost minus accumulated impairment losses and depreciation (AAC, 2016). Such expenses comprise of the cost of replacing parts that are effectively eligible for capitalization during the occurrence of the expense of replacing the parts. Besides, the assets of the company are depreciated on a straight-line basis over the estimated useful life of the asset. Further, the company assesses such lives continuously (Lusardi & Mitchell, 2013). Furthermore, in relation to trade and other payables, the same arecarried at amortized cost and owing to their short-term nature, the same is not discounted. Nevertheless, within thirty days of recognition, the unsecured trade payables are paid off while others are paid within ninety days. The next accounting policy is associated with borrowings wherein the company identifies its borrowings on the date of the trade when the company becomes a party to the contractual instrument provisions. Moreover, during discharge of such obligations, the same borrowings are derecognized. On a whole, the borrowings are recognized at fair value fewer transaction expenses that are attributable to the issue of various instruments and are measured at amortized cost (Davies & Green, 2013). Lastly, in relation to consumables and other inventories, the company values the same at lower of cost and total realizable value. Further, the cost is ascertained based on an averagecost basis and consists of purchase cost including transportation costs. In the ordinary course 4

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