Contemporary Issues in Accounting: Analysis of TPG Company's Financial Statements
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This study analyzes contemporary issues in accounting with reference to TPG Company's financial statements. It evaluates whether TPG Company is satisfying the objectives of the conceptual framework, recognition criteria, relevance and faithful representation of the report, and enhancing qualitative characteristics of financial reporting.
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Running head: CONTEMPORARY ISSUES IN ACCOUNTING Contemporary Issues in Accounting University Name Student Name Authors’ Note
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2CONTEMPORARY ISSUES IN ACCOUNTING Table of Contents Introduction................................................................................................................................2 Evaluation whetherTPG Companyis satisfying the objectives of the conceptual framework.2 Evaluation whetherTPG Companyis satisfying the recognition criteria..................................3 Evaluation ofrelevance and faithful representation of the report..............................................5 Evaluation ofenhancing qualitative enhancing characteristics offinancialreporting..............6 Conclusion..................................................................................................................................8 References..................................................................................................................................9
3CONTEMPORARY ISSUES IN ACCOUNTING Introduction The current study analyses the contemporary issues in accounting that refers to exploration of the advanced notions of accounting as well as policies and understanding a range of issues with reference to the operations ofTPG Company. The current study presents an analytical understanding of efficacy of the firm to satisfy the necessities of the conceptual framework of particularlyconceptualframeworkofaccounting.Thestudythereforetakesinto consideration the objectivesof the conceptual framework, criteriafor recognition and presents the fundamental as well as enhancing characteristics of the guidelines. The study intends to analytically examine satisfaction of the objectives of the conceptual framework by the firm and analyses satisfaction of recognition criteria. In addition to this, the study also critically analyses fundamental and enhancingcharacteristics of financial reporting ofTPG Company. TPG can be considered to be a force particularly in the Australian telecommunications sector. The telecommunications as well as IT corporation specialises particularly in consumer along with services related to business internet and mobile telephone. EvaluationwhetherTPGCompanyissatisfyingtheobjectivesoftheconceptual framework Analysis of the report ofTPG Companyreveals that the financial assertions assist in handling different intentions of the pecuniary declarations, different qualitative uniqueness that again helps in establishing the effectiveness of financial statements.Rankinet al.(2012)asserts that there are different elements that can help in shaping the entire financial assertions. Nonetheless, the necessary components of financial declarations of the firm comprise of the current assets and liabilities along with non-current assets and liabilities and shareholders’
4CONTEMPORARY ISSUES IN ACCOUNTING equity. As rightly indicated byWilliams (2014), diverse items of financial pronouncements illustrate the overall financial health of the business concern. Moreover, the structure also assists in the process if analysis of financial condition of the firm from the viewpoint of earnings, operating expenditure along with the profit. Apart from this, the conceptual framework also illustrates thoroughly diverse criterion and decisive facets for recognition of different items in the financial statements of the business concern. Evaluation whetherTPG Companyis satisfying the recognition criteria Assets:As per the financial assertions recorded by the firm during the year 2016, the total assets of the firm stand at $358.6m down up from $253.9m in 2015. In addition to this, the assets of the firm are reflected in respect of Australian Dollars that are necessarily the functional currency of the specific corporation (Deegan 2013).The accounting items such as plant, property as well as equipment are mentioned at a cost after deduction of accumulated depreciationalongwithaccumulatedlossesofimpairment.Essentially,thecostalso comprises of expends that is directly attributable to the acquirement of specific asset. Liabilities:As is presented in the financial declaration of the business concern TPG Company, the entire liabilities of the corporation TPG Company amounts to $1991.2m during financial year 2016.In itself, the balance sheet of the firm registers current along with non- current interest bearing liabilities that can be used for the purpose of financing diverse functions of business operations ofTPG Company. According to the annual financial assertion of the corporationTPG Company, the liability in the balance sheet of the firm is registered founded on the historical cost and valued at the functional currency that is essentially in the Australian dollar (DRURY 2013). Additionally, the net defined liability of the corporation is enumerated at the fair value of diverse plan liabilities after deduction of the present value of the defined benefit obligations.The group necessarily derecognized a
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5CONTEMPORARY ISSUES IN ACCOUNTING financial liability at the time when the contractual obligations are mainly discharged or else cancelled. Financial assets along with liabilities are necessarily offset and as such the net amount that are presented in the assertion of financial position, the group possesses has a lawful right to offset the entire amount. Equity:A thorough study of the balance sheet statement of the firm TPG Company reflects the fact that shareholders’ equity of TPG Company is at $1779.2m during the financial year 2016.As declared in the annual declaration of the corporation, the derivatives mentioned in the fair value by using the profit and loss are enumerated at the fair value (Hendersonet al. 2015). Thus, the corporation utilizes diverse model specifically for accounting the derivatives that has the need for fair value enumeration procedure.As the financial report of TPG Company suggests the fair value of particularly equity as well as debt securities is necessarily ascertained by orientation to quoted bid price at the closing price at the date of reporting. However, if the same is unquoted, by utilizing valuation technique counting market multiples as well as analysis of discounted flow of cash. Inventory: The overall financial position of the firmTPG Companyalong with the degree of efficiency of corporations can be evaluated from the analysis of the inventory level of the corporation (Chandramohanet al.2015).In addition to this, the inventory of the firm TPG Company enhanced and increased to $12.0 m during the financial year 2016 from the recorded figure of $5.8 m in the year ago period.Nonetheless, deficiency or lack of capacity ofthecorporationtohandlethefirm’sinventorymightpossiblylessenthespecific competitive position of the business.Thorough analysis of the annual report of the firm TPG Company reveals the fact that inventories are mentioned at the lower of the specific cost as
6CONTEMPORARY ISSUES IN ACCOUNTING well as value that is net realisable. In this case, net realisable value refers to the approximated selling price in the normal course of operations, less approximated selling expends.
7CONTEMPORARY ISSUES IN ACCOUNTING Accounts Receivables, Provision for bad as well as doubtful debt As declared in the annual report of the business concern TPG Company, accounts receivables of the firm stands at $358.6m in 2016 and increased from $253.9 m in 2015.Analysis of financial statements of the corporation helps in understanding the figure for the non-current receivables.The statement declared in the balance sheet statements of the corporation shows an increase in receivables (both current as well as non-current). In addition to this, an increase in the accounts receivables of the corporation can direct the way towards decline in trade debtors along with sundry debtors (Boyleet al.2014). Besides this, the corporation necessarily detects trade receivables particularly at the fair value (Hendersonet al.2015). The fair value of particularly trade as well as other receivables is approximated at the current value of future flow of cash mainly at the interest rate (market). Again, as per the annual report of TPG Company reflects that the equity along with debt securities approximated at fair value is ascertained by referring to the quoted bid price at the closing period at the date of reporting. Evaluation ofrelevance and faithful representation of the report The fundamental qualitativecharacteristicsof effective financial informationpresented financial report include relevance as well as faithful representation of financial information. Relevance:AsrightlyputforwardbyWattsandZuo(2016),relevanceoffinancial information indicates towards the fact that financial information can present a difference in different decisions in case if it has specific predictive values. As rightly indicated byLoyeung et al.(2016), relevant pecuniary information can help in presenting a variance in the decisions by the users. Analysis of financial information presented in the report of the firm TPG Companycan help in making a variance in the economic decisions and the same has predictive value along with confirmatory value.
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8CONTEMPORARY ISSUES IN ACCOUNTING Materiality indicates towards an entity specific facet of relevance that is founded on the nature together with the magnitude of accounting items. This Information can be related mainly in the context of financial assertion of the firmTPG Company(Dagwellet al.2015). Faithful Representation: Faithful Representation reflects economic phenomenon both in words as well as numbers. In order to be effective, financial information not only has to be pertinent but also faithfully represented. Evaluation of the financial assertions of the firm mentionsclearlyaboutconsumerconfidence,Australia’seconomicfundamentals, international growth factors and trading partners along with the worldwide forces (Gelminiet al.2015). Also, financial declarations of the firmTPG Companyalso succinctly presents a financial performance both in numerals and words. Evaluation ofenhancing qualitative enhancing characteristics offinancialreporting Theenhancingqualitativecharacteristicoffinancialreportingreferstocomparability, verifiability,understandabilityaswellastimeliness.Essentially,thisreferstothe characteristics that can augment the overall effectiveness of information that is both pertinent as well as faithfully represented. Comparability:This factor indicates towards the information regarding a reporting entity that can essentially help different users to recognize and comprehend diverse similarities along with variancesamong differentaccountingitems. The reviewof functionsand operations helps in comparative financial information and assessment of the entire group and international operating environment (Dagwellet al.2015). The figures for different metrics such as operating margin, seat facets, revenue growth, international capacity, ASKs and many others for different period of time help in comparability of information.
9CONTEMPORARY ISSUES IN ACCOUNTING Verifiability:This facet helps in assuring users that information reflects faithfully specific economic event that it purports to reflect. The financial statements of the firm necessarily conform to the Corporation Act of thee year 2001 together with diverse Listing Rules mentioned under the Australian Stock Exchange (ASX). The financial report of the firm reflects the fact that the administration of the corporationTPG Companyhas selected the strategy of delivering disclosures that subsequently can aid the investors of the firm to comprehend financial performance along with the financial position of the corporation (Loyeunget al.2016). The continuous disclosures presented by the corporation can hereby help in enhancement of the financier confidence as regards transparency, integrity as well as reliability of the form’s operations along with the financial assertions of the corporation. Timeliness:Timeliness implies that information is available to different decision makers just in time for influencing the decision. Understandability:Theprocessofcategorising,characterisingaswellaspresenting information distinctly as well as precisely can make the information understandable. Analysis offinancialstatementsassistsinaptlyrepresentingnotestothefinancialassertions, significant accounting strategies that in turn can help in enhancing overall understandability. The procedure of both preparations along with presentation of financial assertions of the corporation also pursues the specific conceptual framework of particularly CF of Australian Accounting Standards Board (AASB) (Loyeunget al.2016). This in turn helps in gaining clear understanding as regards both definition as well as objectives of financial assertions together with the scope, specific criteria for the purpose of recognition of data. In particular, the AASB framework also assists in understanding the entire procedure of measurement of diverse accounting items in the financial assertions. In view of that, then financiers can investigate the overall effectiveness of the operations by way of utilization of the financial assertions of the corporation prepared using accounting standard of AASB. Maintenance of
10CONTEMPORARY ISSUES IN ACCOUNTING compliance with pertinent standards for enumeration and guiding principles can help in averting diverse attempts of intentional misstatements and ensure steadiness of the financial information. Conclusion In conclusion, it can be said thatfinancial assertions assist in analysing diverse items of financial assertions of the firmTPG Companyand presents diverse notions of financial dimensions.Besidesthis,thepresentstudyalsoassistsincomprehendingtheissues associated to measurement in the current context of the current AASB standards and structure with special orientation to the functionalities of the corporationTPG Company. In addition to this, the current study also aids in acquiring deep understanding as regards the issues associated to the measurement of diverse of financial reports in the perspective of AASB. Additionally, the above study also aids in acquiring an oversight on the association between the measurement system implemented in the firm and the provision of specific decisions.
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11CONTEMPORARY ISSUES IN ACCOUNTING References Boyle, D.M., Carpenter, B.W. and Hermanson, D.R., 2014. The accounting faculty shortage: Causes and contemporary solutions.Accounting Horizons,29(2), pp.245-264. Chandramohan, A., Agrawal, A., Subramani, P. and Munipalle, P., 2015. The Impact of Globalization ACIS 5034 Global Issues in Accounting and Information Systems Spring 2015. Dagwell, R., Wines, G. and Lambert, C., 2015.Corporate accounting in Australia. Pearson Higher Education AU. Deegan, C., 2013.Financial accounting theory. McGraw-Hill Education Australia. DRURY, C.M., 2013.Management and cost accounting. Springer. Gelmini, L., Bavagnoli, F., Comoli, M. and Riva, P., 2015. Waiting for Materiality in the Context of Integrated Reporting: Theoretical Challenges and Preliminary Empirical Findings. InSustainability Disclosure: State of the Art and New Directions(pp. 135-163). Emerald Group Publishing Limited. Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015.Issuesin financial accounting. Pearson Higher Education AU. Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015.Issuesin financial accounting. Pearson Higher Education AU. Loyeung, A., Matolcsy, Z., Weber, J. and Wells, P., 2016. The cost of implementing new accountingstandards:ThecaseofIFRSadoptioninAustralia.AustralianJournalof Management,41(4), pp.611-632.