Contemporary Issues in Accounting

The report intends to provide a clear overview of the various aspects related to conceptual framework and thus, Coca-Cola Amatil is considered for this report. It is one of the biggest distributors and bottlers of alcoholic and non-alcoholic beverages listed in ASX 100. It has conformed to all the conceptual framework objectives. Furthermore, the recognition criteria are followed as well on the part of the organisation. Finally, it possesses both fundamental and enhancing qualitative characteristics of the conceptual framework while presenting its financial statements.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract:
The report intends to provide a clear overview of the various aspects related to
conceptual framework and thus, Coca-Cola Amatil is considered for this report. It is one of
the biggest distributors and bottlers of alcoholic and non-alcoholic beverages listed in ASX
100. It has conformed to all the conceptual framework objectives. Furthermore, the
recognition criteria are followed as well on the part of the organisation. Finally, it possesses
both fundamental and enhancing qualitative characteristics of the conceptual framework
while presenting its financial statements.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction:...............................................................................................................................3
Meeting the objectives of conceptual framework and the needs of the users of the financial
statements:..................................................................................................................................3
Meeting the recognition criteria of the conceptual framework:.................................................9
Assets:....................................................................................................................................9
Liabilities:............................................................................................................................11
Equity:..................................................................................................................................12
Revenue:...............................................................................................................................12
Expenditures:........................................................................................................................13
Meeting the fundamental qualitative characteristics of the conceptual framework:................14
Meeting the enhancing qualitative characteristics of the conceptual framework:...................15
Conclusion:..............................................................................................................................16
References:...............................................................................................................................17

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction:
It is obvious that a business organisation would encounter certain kinds of issues
while carrying out its business operations. In the current era, the organisations encounter
accounting issues particularly due to the non-adherence of the guidelines and principles laid
down in the conceptual framework. Hence, these organisations are responsible to develop and
disclose their financial statements in a manner that they meet the requirements of the
conceptual framework. “International Accounting Standard Board (IASB)” and “Australian
Accounting Standard Board (AASB)” have issued the conceptual framework, which helps the
entities to obtain an understanding of the rules and regulations needed for developing and
disclosing their financial statements (Baker and Burlaud 2015). This report intends to provide
a clear overview of the various aspects related to conceptual framework and thus, Coca-Cola
Amatil is considered for this report. It is one of the biggest distributors and bottlers of
alcoholic and non-alcoholic beverages listed in ASX 100 (Ccamatil.com 2018).
Meeting the objectives of conceptual framework and the needs of the users of the
financial statements:
Based on the AASB and IASB conceptual framework, Coca-Cola Amatil is required
three important objectives in order to develop and disclose its financial statements. These
three objectives are demonstrated briefly as follows:
Conveying the true financial condition of the business:
According to this objective of general purpose financial reporting, the information
related to the economic resources of the corporation needs to be provided to the users so that
they could understand the actual financial conditions confronting the business operations.
Such information could be identified from the balance sheet statement of the business

4CONTEMPORARY ISSUES IN ACCOUNTING
corporations (Barth 2015). After evaluating the annual report of Coca-Cola Amatil of 2017, it
has disclosed all its economic resources in its balance sheet statement, which is illustrated as
follows:

5CONTEMPORARY ISSUES IN ACCOUNTING
Conveying the financial performance of the organisations:
In accordance with this objective, it is required for the organisations to represent their
financial performance by providing clear information about the revenues earned and expenses
incurred. This type of information is observed from the income statement of the firm
(Chaudhry et al. 2015). In case of Coca-Cola Amatil, such disclosures are made inherently in
the income statement, which are further supported by the notes to the financial statement. The
income statement of the organisation, according to its latest annual report of 2017, is
presented as follows:

6CONTEMPORARY ISSUES IN ACCOUNTING
Conveying the changes in the financial condition of the organisations:
As per this objective, any change that takes place in the financial condition of the
corporate entities needs to be conveyed to the users for improving their decision-making
process (Dichev 2017). Such information could be found from the statement of change in
owners’ equity and cash flow statement. Coca-Cola Amatil has disclosed both these
statements in its annual report to provide useful information to the users about the changes in
the financial condition. These two statements are illustrated as follows:

7CONTEMPORARY ISSUES IN ACCOUNTING

8CONTEMPORARY ISSUES IN ACCOUNTING
Hence, based on the above discussion, it is clearly evident that Coca-Cola Amatil
prepares its financial statements in such a manner that they adhere to the norms laid out in
AASB and Corporations Act 2001. In addition to this, it abides by the regulations of IASB
and “International Financial Reporting Standards (IFRS)” stringently. These evidences are

9CONTEMPORARY ISSUES IN ACCOUNTING
adequate to infer that Coca-Cola Amatil conforms to all the conceptual framework objectives
to meet the needs of its various users.
Meeting the recognition criteria of the conceptual framework:
Besides the objectives of conceptual framework, Coca-Cola Amatil is obliged to
adhere to the recognition criteria for realising the various financial elements such as assets,
liabilities, equity, revenue and expenditures. In compliance with IASB and AASB, various
aspects need to be taken into consideration at the time of realising the financial elements.
During realisation, Coca-Cola Amatil is required to take into account financial information
pertaining to the financial elements such as liabilities, assets and others (Gerber, Gerber and
Van Der Merwe 2015). Along with this, it is the duty of the accountants of the organisation
the aspects associated with faithful depiction of the above-stated financial elements. Finally,
Coca-Cola Amatil is required to take into account the benefits and costs of the financial
elements.
In order to meet such criteria, all the guidelines laid down in the conceptual
framework of IASB and AASB are required to be followed. This could be observed from the
recognition criteria discussion as follows:
Assets:
Since Coca-Cola Amatil functions in the Australian beverage industry, the main non-
current assets of the organisation include property, plant and equipment and leasehold
improvements. These assets are recognised at cost less impairment and accumulated
depreciation and it is associated with AASB 116 Property, Plant and Equipment and “Section
334 of the Corporations Act 2001”. This criterion is applicable in case of leasehold
improvements as well (Gordon et al. 2015).

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Fair value is used to realise trade and other receivables, which are realised at due
amounts and they are reviewed considerably for collectability on ongoing basis. If it is found
that some amounts could not be recovered fully or partially, allowance for doubtful
receivables is realised in the statement of comprehensive income of Coca-Cola Amatil.
Coca-Cola Amatil realises inventories at either cost or net realisable value, whichever
is lower in accordance with the norms of AASB 102 Inventories.

11CONTEMPORARY ISSUES IN ACCOUNTING
Liabilities:
The realisation of trade and other payables is carried out at amount due at the time the
products and services are rendered in accordance with “AASB 9 Financial Instruments”.
In case of provisions of Coca-Cola Amatil, which are current employee benefits and
non-current employee benefits, these are charged to the statement of comprehensive income
at the time of providing services along with the degree that the benefits remain with the
employees.

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Equity:
For Coca-Cola Amatil, the major equity items comprise of treasury shares, share
capital, reserves and non-controlling interests. However, the share capital does not have any
par value in compliance with “AASB 1004”.
Revenue:
The recognition and measurement of revenue is carried out at the fair value associated
with consideration obtained or receivable net of discounts, applicable amounts and

13CONTEMPORARY ISSUES IN ACCOUNTING
allowances of value added taxes like the goods and services tax of Australia. This complies
with the standard of “AASB 118 Revenue”.
Expenditures:
When the expenses take place, Coca-Cola Amatil realises them in its income
statement.

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Therefore, it is inherent from the above analysis that Coca-Cola Amatil has adhered
totally to all the AASB norms and guidelines in order to realise the various aspects of the
financial statements.
Meeting the fundamental qualitative characteristics of the conceptual framework:
There are certain fundamental qualitative characteristics laid out in the conceptual
framework and they are discussed as follows in the context of Coca-Cola Amatil:
Relevance:

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With the help of pertinent financial information, it is beneficial for the users of the
financial statements to make suitable decisions (Hales, Rees and Wilks 2016). Coca-Cola
Amatil supplies relevant financial information to its users regarding financial resources,
which is evaluated from the statement of financial position.
Faithful representation:
All the business organisations are obliged highly in representing their financial
information faithfully. This would enable in enhancing the value of financial information. In
accordance with the audit report of Coca-Cola Amatil, all the financial statements are
prepared to meet the requirements of IASB and AASB.
Meeting the enhancing qualitative characteristics of the conceptual framework:
There are certain enhancing qualitative characteristics laid out in the conceptual
framework and they are discussed as follows in the context of Coca-Cola Amatil:
Comparability:
This aspect enables the users to understand the variations and resemblances in the
economic resources of the business entities (Linsmeier 2016). As Coca-Cola Amatil prepares
its financial statements by following all the prevailing norms and regulations, the users could
contrast its financial information with the other organisations having distinct timelines.
Verifiability:
A strong linkage is observed in case of faithful representation and verifiability. This is
because with the help of faithful representation, the users would be able to verify the financial
information of the organisations (Macve 2015). As all the standards are followed on the part
of Coca-Cola Amatil, verification could be made easily and simply.

16CONTEMPORARY ISSUES IN ACCOUNTING
Timeliness:
Timely disclosure of financial information is crucial in order to benefit the users
(Mala and Chand 2015). In case of Coca-Cola Amatil, both annual and quarterly reports are
published for providing beneficial information to the users.
Understandability:
If the understandability of financial information is widened, the users could use them
purposefully. Coca-Cola Amatil presents its financial information in a format, which is
simple having all the essential categorisations and footnotes to ensure that they are user-
friendly (Miller and Oldroyd 2017).
Conclusion:
It is inherent from the above discussion that Coca-Cola Amatil adheres to the essential
guidelines and norms laid down in the conceptual framework of AASB and IASB when it
develops and reveals its financial information. In addition, it has conformed to all the
conceptual framework objectives. Furthermore, the recognition criteria are followed as well
on the part of the organisation. Finally, it possesses both fundamental and enhancing
qualitative characteristics of the conceptual framework while presenting its financial
statements.

17CONTEMPORARY ISSUES IN ACCOUNTING
References:
Baker, C.R. and Burlaud, A., 2015. The historical evolution from accounting theory to
conceptual framework in financial standards setting. The CPA Journal, 85(8), p.54.
Barth, M.E., 2015. Commentary on Prospects for Global Financial Reporting. Accounting
Perspectives, 14(3), pp.154-167.
Ccamatil.com., 2018. [online] Available at:
https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2018/Annual-
Report-2017.ashx [Accessed 14 Apr. 2018].
Chaudhry, A., Coetsee, D., Bakker, E., Varughese, S., McIlwaine, S., Fuller, C., Rands, E.,
De Vos, N., Longmore, S. and Balasubramanian, T.V., 2015. Conceptual Framework. 2015
Interpretation and Application of International Financial Reporting Standards, pp.29-37.
Dichev, I.D., 2017. On the conceptual foundations of financial reporting. Accounting and
Business Research, 47(6), pp.617-632.
Gerber, M.C., Gerber, A.J. and Van Der Merwe, A., 2015. The conceptual framework for
financial reporting as a domain ontology. In Twenty-first Americas Conference on
Information Systems, Puerto Rico (pp. 1-18).
Gordon, E.A., Bischof, J., Daske, H., Munter, P., Saka, C., Smith, K.J. and Venter, E.R.,
2015. The IASB's discussion paper on the Conceptual framework for financial reporting: a
commentary and research review. Journal of International Financial Management &
Accounting, 26(1), pp.72-110.
Hales, J., Rees, L. and Wilks, T.J., 2016. A Synthesis of Three Commentaries on
Measurement and Performance Reporting. Accounting Horizons, 30(4), pp.473-483.

18CONTEMPORARY ISSUES IN ACCOUNTING
Linsmeier, T.J., 2016. Revised model for presentation in statement (s) of financial
performance: Potential implications for measurement in the conceptual
framework. Accounting Horizons, 30(4), pp.485-498.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
Mala, R. and Chand, P., 2015. Commentary on phase A of the revised conceptual framework:
Implications for global financial reporting. Advances in Accounting, 31(2), pp.209-218.
Miller, A.D. and Oldroyd, D., 2017. An Economics Perspective on Financial Reporting
Objectives. Australian Accounting Review.