Revaluation of Assets and Fundamental Characteristics of Accounting Information

Business
Accounting
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1) Revaluation of the assets:
Revaluation of fixed assets are required to elaborately throw an insight representing the true
nature of the capital goods that is being owned by the business. It is noted that the aspect of
revaluation would be different from that of the aspect of depreciation which reduced the worth of
the capital items say land and building possessed by Telstra. The purpose of revaluation of assets
is to have faithful representation of the fixed assets possessed by the organisation (Asher, 2016).
The phenomenon would be quite suitable to contemplate business decisions whether to invest in
other businesses if the value declines or becomes stagnant or retain the same one owing to
increase in its value. So if the company say Telstra wants to sell the property it would tend to
have a revaluation process to have a greater profitability in this respect. Revaluation of the assets
are carried out to depict the true nature of the capital returns, arrangement of ample funds to
replace the assets and strive for its faithful representation (Bian, et al., 2018).
The aspect of revaluation of assets would be carried out with proper implications of the
Australian Accounting Standards Board (AASB). In this context the aspect of AASB 101 would
be cited which explores Presentation of Financial Statements ensuring the element of
comparability with past financial records of the organisation and with other corporations in the
industry as well (Aasb.gov.au, 2015). The aspect of General Purpose Financial Statements are
required to meet the user requirement for delivering information for the purpose and apparently
faithful representation of the financial items. It is noted that the aspect of AASB 101 thrives in
tandem with the international Financial Reporting Standards (IFRSs) as formulated by the
International Accounting Standards Board (IASB). This particular legislation apparently takes
into consideration the aspect of revaluation of the assets that would be likely to represent its
faithful valuation in the business scenario (Elliott & Elliott, 2015). This would definitely strike
for a comparative scenario undertaken by the organisation depicted through its financial
statement in the current year as compared to that of in the last year.
So through revaluation of the assets Telstra would strive to strengthen its balance sheet. This is
because when the company bought the land in 2010, it was worth $52 million while in a gap of 8
years it skyrocketed to four time its price at a worth of $200 million. The revaluation of that
particular land, Telstra would strive to estimate its existing and future worth to evaluate whether
the future worth would be higher than the historic value of the assets. It would be better for the
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organisation to showcase the enhanced value of the assets in its financial statement as it would
increase the weightage of the balance sheet (Bennedsen & Zeume, 2017). Telstra would
experience an increase in its fixed assets from $52 million to more than a worth of $200 million
owing to revaluation of the assets representing faithful representation of its assets.
2) Fundamental characteristics of accounting information in Australian businesses:
It is the demand of the contemporary times to emancipate fundamental characteristics to the
business to have the rightful information for the purpose of the users of the financial statements.
The users of the financial statements are necessarily the sorts of stakeholders on the likes of
creditors, suppliers, investors and tax authorities to lay out the fundamental qualitative
characteristics of business in the business scenario (Aasb.gov.au, 2019). AASB happens to point
out six characteristics of the accounting information having two fundamental characteristics
while the rest four qualities are enhancing in nature which raises the standards of the financial
reports prepared in the business scope. The fundamental characteristics of the accounting
information emancipating off the financial reports are as follows:
Fundamental characteristics –
The fundamental characteristics of the accounting information could be levelled in terms of
relevance and faithful representation in the following manner:
 Relevance – The aspect of relevance strives to point out the level unto which the
accounting information is suitable to have favourable business decisions (Warren &
Jones, 2018). In this aspect the accounting information for having its relevance need to
strive for its confirmatory value and predictive value. The confirmatory value strives to
provide information on the historical events. Again the predictive value happens to
provide information on the future events emancipating the fact that the business would be
in a suitable position to contemplate effective business decisions (Henderson, et al.,
2015). For instance the strong financials of the quarter for the business would be
enthusiastic to present the report to the creditors and suppliers for bagging more credits at
favourable terms and conditions.
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