Contemporary Issues in Accounting

This report analyzes the adherence of Webjet with the recognition criteria of conceptual framework and qualitative characteristics of financial reporting. It also discusses the general purpose financial reporting objectives.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
From the analysis part of the report, it can be seen that Webjet adheres to the guidelines and
principles of AASB conceptual framework in order to prepare and present the financial
statements. Thus, full compliance of Webjet can be seen with the conceptual framework
objectives, criteria to recognize financial aspects and both fundamental and enhancing qualitative
characteristics.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
General Purpose Financial Reporting Objectives............................................................................3
Recognition Criteria.........................................................................................................................6
Qualitative Characteristics of Financial Reporting........................................................................10
Conclusion and Recommendations................................................................................................11
References......................................................................................................................................13

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The objective of this report is to take into consideration the major aspects of accounting
conceptual framework for the companies operating in Australia. For the purpose of this report,
Webjet Limited (Webjet) is taken into consideration. It needs to be mentioned that Webjet is a
major online travel agency (OTA) having operation in the regions of both Australian and New-
Zealand. The company is well-known for its online travel tools and technology
(webjetlimited.com, 2018). This particulr report can be segregated into three major parts. The
main area of focus of the first part is to analyze the general purpose financial reporting
objectives. The aim of the second part is to analyze the adherence of Webjet with the recognition
criteria of conceptual framework. The last part emphasizes on the qualitative characteristics of
financial reporting.
General Purpose Financial Reporting Objectives
In Australia, the presence of the Conceptual Framework of Australian Accounting
Standard Board (AASB) can be seen that provides the companies with the required rules and
regulations for financial reporting and it is the responsibility of the companies to follow all these
rules and regulations of AASB conceptual framework (aasb.gov.au, 2018). This is also
applicable for Webjet. AASB conceptual framework has certain objectives that Webjet is needed
to take into consideration and the following discussion shows them:
First Objective: This particular aim of general purpose financial reporting states that the
financial statements of the business organizations must contain the information that helps the
users of the financial information in assessing the current financial position. It implies that the

4CONTEMPORARY ISSUES IN ACCOUNTING
financial statements should have all the required information about assets, liabilities and equity
(aasb.gov.au, 2018). It can be seen from the 2017 Annual Report of Webjet that the company has
release their Consolidated Balance Sheet that includes all the required information for the aspects
like assets, liabilities and equity. It can be seen in below:
(Source: webjetlimited.com, 2018)
Second Objective: The particular objective of general purpose financial reporting points
towards the responsibility of the entities to release all the information that can help the users of
the financial information to judge the company’s financial performance; and this information can

5CONTEMPORARY ISSUES IN ACCOUNTING
be of revenue, expenses, income, income and loss (aasb.gov.au, 2018). As per the 2017 Annual
Report of Webjet, it is visible that the company has released their Consolidated Statement of
Profit or Loss; and this statement contains all the information about the above-mentioned aspects
that assist the investors and users in gaining understanding about the financial performance of the
organizations. It can be seen from the following table:
(Source: webjetlimited.com, 2018)

6CONTEMPORARY ISSUES IN ACCOUNTING
Third Objective: This objective of the general purpose financial statements states that the
business entities are responsible for providing all the information to the users for the assessment
of the change in the financial performance over the previous year for projecting the future
financial performance of the entity (aasb.gov.au, 2018). According to the 2017 Annual Report of
Webject, one aspect is visible that the company has released the Consolidated Statement of
Change in Equity and the Consolidated Statement of Cash Flows that contain all the information
related to the change in financial performance and change in cash position of the company over
the year. This process helps the investors and other users in understanding the change in financial
performance of Webjet. It can be seen from the following figure:
(Source: webjetlimited.com, 2018)
Recognition Criteria
The conceptual framework of AASB has introduced certain criteria for the recognition of
asset, liability, equity, revenue and expenses. It is needed for the companies to adhere to all the

7CONTEMPORARY ISSUES IN ACCOUNTING
recognition criteria at the time to recognize the above-mentioned financial aspects. This aspect is
also applicable for the financial reporting of Webjet and these are shown below:
Asset: There are different assets in Webjet. The conceptual framework of AASB puts the
obligation on the management of Webject to adhere to the policies and guidelines of AASB 116
Property, Plant and Equipment under section 334 of the Corporations Act 2001 for
recognizing their business property, plant and equipment (PPE) (aasb.gov.au, 2018). It can be
observed from the 2017 Annual Report of Webjet that the company considers their PPE in the
balance sheet at the historical cost value less accumulated depreciation and losses from
impairment. AASB conceptual framework has also put the obligation on Webjet to comply with
the regulations and principles of AASB 102 Inventories for the purpose of the recognition of
inventories (aasb.gov.au, 2018). As Webjet is a service provider, the companies does not have
any inventory. According to the conceptual framework of AASB, Webjet is needed to follow the
principles of AASB 138 Intangible Assets for recognizing their intangible assets (aasb.gov.au,
2018). The company considers the intangible assets at cost value after subtracting accumulated
amortization and accumulated impairment losses. These can be shown below:
(Source: webjetlimited.com, 2018)

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Liability: As per the regulations of AASB conceptual framework, Webjet has the obligation to
comply with the regulations of AASB 132 Presentation of Financial Instruments at the time of
the recognition of their business borrowings. The 2017 Annual Report states that the company
considers the borrowing in the balance sheet at fair value. Another major liability is provision
and the obligation on the company is to comply with the guidelines of AASB 137 Provisions,
Contingent Liabilities and Contingent Assets for recognizing them (aasb.gov.au, 2018). As
per the annual report, the business entity considers the creation of provision when any present
obligation can be seen due to any past event. Apart from this, as per AASB, Webjet is needed to
follow the guidelines of AASB 16 Leases for the recognition of leases. These can be shown
below:
(Source: webjetlimited.com, 2018)

9CONTEMPORARY ISSUES IN ACCOUNTING
Equity: The AASB conceptual framework puts the obligation on Webjet to follow the principles
of AASB 132 Financial Instruments: Presentation to recognize equity (aasb.gov.au, 2018).
According to the policy of the company, Webjet takes into account the fully paid ordinary shares
as equity.
Revenue: As per the conceptual framework of AASB, Webjet is needed to comply with the
guidelines of AASB 118 Revenues to recognize their revenues (aasb.gov.au, 2018). It can be
seen from 2017 Annual Report that Webjet measures their revenues on fair value basis and it can
be shown in below:
(Source: webjetlimited.com, 2018)

10CONTEMPORARY ISSUES IN ACCOUNTING
Expenses: AASB conceptual framework states that it is needed for the companies for the
recognition of expenses at the time of the outflow of future economic benefit from the company
(aasb.gov.au, 2018). Some of the major expenses head for Webjet are lease expenses, taxation
expenses, employee benefit expenses and others.
Qualitative Characteristics of Financial Reporting
According to AASB conceptual framework, financial information of the business entities
should have the qualitative characteristics of financial reporting so that they can become more
useful for the users. They are discussed below:
Fundamental Qualitative Characteristics: Relevance and Faithful Representation are two
fundamental qualitative characteristics of financial information (Lawrence 2013). It can be seen
from 2017 Annual Report of Webjet that the financial statements of the company contain the
financial information for the year of 2017 and 2016; and it indicates towards the attempt of the
company to provide their users with the most relevant financial information for the purpose of
their investment decision-making process. It can be observed at the same time that Webjet
adheres to the principles of AASB, Corporations Act 2001, IFRS and IASB that ensures the true
and faithful representation of the financial statements of the company (Barth, 2013).
Enhancing Qualitative Characteristics: Comparability, Verifiability, Timeliness and
Understandability are for enhancing qualitative characteristics of financial reporting (Tayeh, Al-
Jarrah and Tarhini 2015). It needs to be mentioned that Webjet has provided their financial
information in the way so that the users can compare them with other corporations and the
different timeline of Webjet. For this reason, Webjet provides the financial information of the
previous year in present financial statements (Zeff, 2013). After that, the noted to the financial

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statements of Webjet provide the users with the scope to verify the used accounting assumptions
and estimates of the financial statements. Moreover, Webjet releases the financial statements on
quarterly, half-yearly and annual basis that maintains timeliness of their financial information.
Most importantly, Webjet provides all the needed justification and clarification of the accounting
treatments in the notes to the financial statements that help the users in gaining understanding
about various accounting and financial treatments in the annual reports (Henderson, et al. 2015).
Conclusion and Recommendations
It can be observed from the above discussion that Webjet has fully complied with all the
requirements of the conceptual framework of AASB. The presence of the compliance of Webjet
with the objective of conceptual framework is evident in the financial statements of the
company. After that, Webjet does not have any issue in the recognition and recoding of asset,
liability, equity, revenue and expense as the company has fully followed all the recognition
criteria provided by AASB Conceptual Framework. Lastly, it can also be seen that the financial
information provided by Webjet has presence of both the fundamental and enhancing
characteristics in them. Thus, the recommendation for all the companies is to keep complying
with all the requirement and characteristics of conceptual framework so that accounting issues
can be avoided.

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References
Aasb.gov.au. 2018. Conceptual Framework For Financial Reporting. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf> [Accessed 11
August 2018].
Aasb.gov.au. 2018. Financial Instruments: Presentation. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/AASB132_07-04_COMPoct09_02-10.pdf>
[Accessed 11 August 2018].
Aasb.gov.au. 2018. Inventories. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-04_COMPjun09_01-09.pdf>
[Accessed 11 August 2018].
Aasb.gov.au. 2018. Leases. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/AASB16_AmendStd_02-16.pdf> [Accessed
11 August 2018].
Aasb.gov.au. 2018. Property, Plant And Equipment. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/AASB116_08-15_COMPoct15_01-18.pdf>
[Accessed 11 August 2018].
Aasb.gov.au. 2018. Provisions, Contingent Liabilities And Contingent Assets. [online] Available
at: <http://www.aasb.gov.au/admin/file/content105/c9/AASB137_07-04_COMPjun14_04-
14.pdf> [Accessed 11 August 2018].

14CONTEMPORARY ISSUES IN ACCOUNTING
Aasb.gov.au. 2018. Revenue. [online] Available at:
<http://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_COMPoct10_01-11.pdf>
[Accessed 11 August 2018].
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Economics, 56(1), pp.130-147.
Tayeh, M., Al-Jarrah, I.M. and Tarhini, A., 2015. Accounting vs. market-based measures of firm
performance related to information technology investments. International Review of Social
Sciences and Humanities, 9(1), pp.129-145.
Webjet Limited. (2018). Our Story - Webjet Limited. [online] Available at:
https://www.webjetlimited.com/our-story/ [Accessed 11 Aug. 2018].
Webjetlimited.com. 2018. Annual Report For The Year Ended 30 June 2017. [online] Available
at: <https://www.webjetlimited.com/wp-content/uploads/2017/10/FY17-Full.pdf> [Accessed 11
August 2018].
Zeff, S.A., 2013. The objectives of financial reporting: a historical survey and
analysis. Accounting and Business Research, 43(4), pp.262-327.