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An Exploration of the Conceptual Framework and Prudence in Financial Reporting

   

Added on  2019-09-16

12 Pages2186 Words185 Views
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Contemporary Issues In Accounting
An Exploration of the Conceptual Framework and Prudence in Financial Reporting_1

Executive SummaryThe analysis of annual reports of two listed companies is done which comes under the agricultural sector. The Australian agricultural company serves the beef cattle production in an effective manner by considering the usage of land and natural resources. The main activities of the company include pastoral properties development, marketing of products and services in order to promote the brand in the eyes of the customers. The Abundant Company engages in the commercialization of seeds for many types of food crops in Australia, development and acquisition.The analysis of the annual report is done on the main elements of financial statements. The revised conceptual framework is understood in order to include addressing the prudence in corporate reporting which is followed by the recommendations and conclusion.
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Table of ContentsExecutive Summary.........................................................................................................................1Introduction......................................................................................................................................3Annual report analysis.....................................................................................................................3Remuneration structure....................................................................................................................6Proposed conceptual framework......................................................................................................6Reasons of reference to prudence in the conceptual framework.....................................................8Criticism..........................................................................................................................................8Conclusion.......................................................................................................................................9Recommendations............................................................................................................................9References......................................................................................................................................11
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IntroductionThe conceptual framework is defined as the concept which was developed for the financial reporting. It is mainly the practical tool which assists the board to make the IFRS standards which are based on the concepts which are consistent (Lexicon.ft.com et al., 2016). It also assiststhe analyst in order to interpret the standards. It also supports the policies development of accounting policies when the IFRS are not applied to the specific transaction. The main objectiveis to improve the financial reporting through giving the clear, complete and update policies.Annual report analysisThe general purpose financial reports of both the companies are organised according to the companies Act, 2001, international financial reporting which is issued by the international accounting standard board, Australian Accounting Standards and its interpretations. The aim of general purpose financial reports is to give the information regarding the reporting entity to the potential and current investors, financial decision makers, creditors and lenders. The difference is annual reports is explained below which is done on the basis of main elements from the financial statement: 1.Inventory valuation The inventory valuation of Australian Agriculture Company is done at the lower of cost and the net realizable value (AACo et al., 2016). The cost is calculated on the basis of average cost which includes the transportation costs. The net realizable value is calculated by deducting the estimated cost of consumption from estimated the price of selling in the
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