Contemporary Accounting Theory

Running head: CONTEMPORARY ACCOUNTING THEORY
Contemporary Accounting Theory
Name of the Student
Name of the University
Author’s Note

CONTEMPORARY ACCOUNTING THEORY1
Table of Contents
Part A.........................................................................................................................................2
Question (a)............................................................................................................................2
Answer to Requirement (i).................................................................................................2
Answer to Requirement (ii)................................................................................................2
Answer to Requirement (iii)...............................................................................................3
Part B..........................................................................................................................................3
Question (a)............................................................................................................................3
Question (b)............................................................................................................................5
References..................................................................................................................................6

CONTEMPORARY ACCOUNTING THEORY2
Part A
Question (a)
Answer to Requirement (i)
Asaleo Care Limited has prepared and presented their annual report for the year 2018.
As disclosed in Note 6.7 (a) in the 2018 Annual Report of Asaleo Care Limited, the financial
statements of the firm are general purpose financial statements and the firm prepared them by
complying with the requirements of Corporations Act 2001, Australian Accounting Standards
(AASB) and the interpretations of the International Accounting Standards Board (IASB)
(asaleocare.com, 2019). These financial statements have also adhered to the requirements of
the International Financial Reporting Standards (IFRS) issued by the IASB. It shows that all
the financial statements have been prepared as per the conceptual framework
(asaleocare.com, 2019). The major components are consolidated statement profit or loss and
other comprehensive income, consolidated balance sheet, consolidated statement of change in
equity and consolidated statement of cash flows (asaleocare.com, 2019).
Answer to Requirement (ii)
According to Paragraph 4.3 of the AASB Conceptual Framework, a business entity
is needed to consider two condition for the recognition of an item. First, there is a probability
that any future allied with the item will flow to or from the entity; and second, the item has a
cost value that can be reliability measured (aasb.gov.au, 2019). After that, as per Paragraph
6.3 (b) of the AASB Conceptual Framework, there are three categories of easement; they are
Cost-based measurement, Current market prices including fair value and Other cash-flow-
based measurements (aasb.gov.au, 2019).
Revenue – Asaleo Care Limited recognizes revenue when the control of the goods are
transferred to the customers and the company expects to receive the consideration amount in
exchange of the goods. This same recognition criteria is followed for revenue from sale of
goods, interest income, dividends and inter-segment revenue. Asaleo Care Limited measures
their revenues at fair value of the consideration received or receivable that is the amount of
sales invoice. It implies that Asaleo Care Limited has followed the recognition and
measurement criteria of the conceptual framework (asaleocare.com, 2019).
Assets and Liabilities – Asaleo Care Limited has mentioned in the notes to the financial
statements that the company has used the historical cost method for the preparation of the
financial statements where they have also used fair value measurement base. Asaleo Care