Company Accounting

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student
Name of the University
Authors Note
Course ID

COMPANY ACCOUNTING1
Table of Contents
Answer to Question 1:................................................................................................................2
Answer to Question 3:................................................................................................................2
Answer to A:..........................................................................................................................2
Answer to B:..........................................................................................................................3
References:.................................................................................................................................6

COMPANY ACCOUNTING2
Answer to Question 1:
The board of director of Simba Ltd should not adopt the revaluation model. This is
because the revaluation model requires the business with the option of carrying the fixed
assets at the revalued model. Consequent to the revaluation model, the business would be
required to carry on the books based on the fair value of the asset following the deduction of
the subsequent accumulated depreciation and impairment losses (Hughes et al., 2019). As
evident, the board of directors of Simba Ltd are uncertain regarding the fair value of certain
items of fixed assets in the present accounting year and there are also certain assets that are
difficult to obtain. As a result, determination of fair value for certain assets appears to be
difficult.
Adopting the revaluation model would further create an impact on the fair value
materiality of the firm since the model would require the board of Directors of Simba Ltd to
continuously revalue the fixed assets sufficiently at the regular interval to assure that the
carrying value is not materially different from the fair value during any period (Andison &
Nasser, 2017). Undertaking the revaluation model without the sufficient knowledge regarding
the fair value of certain assets may provide results that may inflate the carrying amount of
certain assets in the statement of financial position. Furthermore, the board of directors
should understand that assets cannot be revalued every year or the cost might not decline. As
a result, no depreciation can be charged on the asset (Yao et al., 2015). If the fair value of
assets is unknown, then the sum of depreciation that is charged may be miscomputed.
Conclusively the board of directors of Simba Ltd should abstain from adopting the
revaluation model.
Answer to Question 3:
Answer to A:
The fair value of the Medibank investment is measured based on the fair value
measurement hierarchy
For the year ended 30th June 2018
Particulars
Level 1
($m)
Level 2
($m)
Level 3
($m)
Total
($m)
Financial Assets at fair value through
profit or loss
Australian equities 143.2 143.2
International equities 168.8 168.8