Contemporary Issues in Accounting

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
Table of Contents
Introduction......................................................................................................................................2
1. Adherence to the Measurement Requirements............................................................................2
2. Adherence to the Fundamental Qualitative Characteristics.........................................................5
3. Adherence to the Enhancing Qualitative Characteristics..........................................................10
4. Are the Users of Financial Reports Able to Use the Report to Make Decisions?.....................12
5. Required Basic Knowledge.......................................................................................................16
6. General Purpose Financial Reporting Requirements.................................................................17
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

2CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Accounting conceptual framework provides the companies with the required standards,
principles and guidelines for the correct preparation and presentation of the financial statements
so that the users can extract required information about the companies for decision-making
purposes (Weil, Schipper and Francis 2013). In this report, the adherence of one Australian
company with various requirements of accounting conceptual framework is considered. For this
specific purpose, Astron Corporations Limited (Astron Corporation) is taken into
consideration. There are certain aspects that this study considers such as the requirements of
general purpose financial reporting, measurement requirements, requirement of knowledge for
the analysis of the financial statements, qualitative characteristics of financial reporting and
others.
1. Adherence to the Measurement Requirements
As per International Accounting Standards Board (IASB), measurement can be
considered as the process to determine the amounts that are required to be included in the
financial statements (aasb.gov.au 2018). Thus, the measurement of assets and liabilities has
direct implications on the recognition of income and expenses and profit as well. According to
the conceptual framework of IASB, companies should not adopt one single measurement
mechanism for measuring all of their assets and liabilities as the adoption of one single approach
for all assets and liabilities fails to provide the relevant information for decision-making
(aasb.gov.au 2018). According to the conceptual framework of IASB, there are four basis
available for measuring the assets and liabilities; they are Historical Cost Method, Current Cost
Method, Realizable Value Method and Present value or Fair Value Method. The following

3CONTEMPORARY ISSUES IN ACCOUNTING
discussion shows the compliance of Astron Corporation with these measurement requirements of
IASB:
(Source: astronlimited.com.au 2018)
Through the above statement, Astron Corporation has mentioned that they have not
adopted a single mechanism of measurement for different aspects of their financial statements as
the company has used both the historical cost method and fair value method for measurement
purposes. More evidences of this compliance can be obtained from below discussion:
(Source: astronlimited.com.au 2018)

4CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
The images from the annual report of the company provides the evidence that the
company has complied with the prime requirements of IASB conceptual framework that is not to
adopt a single measurement mechanism for all assets and liabilities. It can be seen that Astron
Corporation has adopted both the historical cost method and fair value method for the
measurement of different assets and liabilities with the aim to provide the users with the relevant
financial information about the asset and liability position of the company (astronlimited.com.au
2018).
2. Adherence to the Fundamental Qualitative Characteristics
Relevance and Faithful Representation are the two fundamental qualitative characteristics
of financial reporting; and the discussion is shown below:
Relevance: Financial information is relevant in case it can influence the decision of the users for
the allocation of scarce resources. In addition, relevant information is capable to make positive
difference in the decision-making process. For this reason, financial information must have
predictive and confirmatory values. In the presence of predictive value, the users can make their
own prediction; and in case of confirmatory value, users can get the feedback of previous
evaluation (Maimbo and Melecky 2014).