This case study discusses the requirement of AASB 16 in relation to property, plant, and equipment assets. It also analyzes the accounting of Sea Eagles by an auditing team.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Case study
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Contents MAIN BODY..................................................................................................................................3 The requirement of AASB 16 in relation of property, plant and equipment assets....................3 Sea eagles accounting analysis by auditing team........................................................................3 REFERENCES................................................................................................................................5
MAIN BODY The requirement of AASB 16 in relation of property, plant and equipment assets. AASB 116 has the objective to prescribe the proper accounting treatments related to the property, plant and equipment so that the users can have the financial statement regarding the investments in its property, planned equipment (Joubert, Garvie and Parle, 2017). There have been issues in accounting of the property, plant and equipment for having proper reorganizations of assets, determining proper carrying amounts and depreciation charges and impairments lost related to them.As per the guideline’s depreciation is about the systematic allocations for the depreciable amount of an asset over its useful life. The depreciation method is applied to assets at least to each financial year ends and significant changes in patterns of copromotion of the future economic benefits embedded in assets. So, there can be changes in accounting estimates in accordance with AASB 108.As per the auditing, it can be stated as their depreciable amount of the assets must be allotted on the systematic review over the assets estimates useful life (Shah and et.al., 2019). This can be clearly recognized as a profit and loss statement. Sea eagles accounting analysis by auditing team. As per thecase of the Sea Eagles Ltd have experienced the strike which have affected their number of operating plants. The company it is not appropriate to report the depreciation expenses on the plants and equipment and machinery as they are not in use during the strike. As the point mentioned by their position it is inappropriate to charge their period cost as there was no revenue arising with production (Garg, Peach and Simnett, 2020). To support the statement, it can be added to determination regarding estimation of the asset useful life clearly stated in paragraph 6 of AASB 16 that the period over assets is expected should be available for uses by the entity. In addition to that the number of production or the similar units needed to be obtained from the assets by entity. Reading to the proper guidelines of AASB16 paragraph 56 states proper focus on the expected usage of assets, expected wear and tear, technical or commercial obsolesces along with legal and similar limits on the use of different assets. On the other hand, in case it has been clearly stated as there was no production during the time of strike which inculcate no level of wear and tear of the operating plants. The discussion in the auditing team. The unit production deprecations method has allocations of depreciation based on 3
the residual use of assets (Brumm. and Liu, 2019).This method can only be used when there is assets output. So as the period of the strike, there can be no deprecations per the significant guidelines of AASB16. 4
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
REFERENCES Books and Journals Online Brumm, L. and Liu, J., 2019. New leasing accounting standard. Taxation in Australia, 53(8). p.449. Garg, M., Peach, K. and Simnett, R., 2020. Evidence‐informed Approach to Setting Standards: A Discussion on the Research Strategies of AASB and AUASB. Australian Accounting Review. Joubert, M., Garvie, L. and Parle, G., 2017. Implications of the New Accounting Standard for Leases AASB 16 (IFRS 16) with the inclusion of operating leases in the balance sheet. The Journal of New Business Ideas & Trends, 15(2). pp.1-11. Shah, F and et.al., 2019. Implementing AASB 16 Leases: Are Preparers Ready?. 5