Contemporary Issues In Accounting

Contemporary Issues In Accounting
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Introduction
The aim of the report is to conduct an analysis of the accounting concepts that are
relevant to be considered by the business corporations in the present times at the time of
developing and presenting their financial reports. The critical accounting concepts that are
relevant to the general purpose financial reporting of business corporations are analyzed in the
report. This report has undertaken an evaluation of the application of conceptual accounting
framework principles adopted by a selected corporation, that is, Australian Pharmaceutical
Industries Limited (API), one of the leading health and beauty companies of Australia. The
overall analysis is supported by the pertinent data extracted from the annual report of the
company for the financial year 2018 to depict its compliance with the general purpose financial
reporting.
Critical Analysis of General Purpose Financial Reporting by API
Measurement Criteria Adopted by Company & its Compliance with Conceptual Framework
Requirements
As per the CF, a reporting entity listed on ASX need to provide a depiction of the
measurement approaches used for valuing its assets and liabilities. The measurement approach
selected by business entities as stated by the CF are historical cost and current value which is
further divided into fair value, value in use and current cost. An entity need to select an
appropriate measurement approach that is able to meet the requirements and objective of general
purpose financial reporting (Complied Framework, 2015). In this context, API Limited has
adopted the use of historical cost for presenting information in context of depicting the value of
its key financial items except for financial instruments and employee defined benefit plans are
valued with the sue of fair value approach. For example, it has valued its fixed assets such as
property, plant and equipment by the use of historical cost; intangible assets are recognized at
cost less accumulated amortization and impairment losses. The brand names are recognized at
fair value and software is capitalized at cots that are amortized with the use of straight line basis
method. Thus, it can be stated from examining the annual report of the company that it has
applied required approach or measurement to value its financial assets and liabilities that helps in
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providing accurate depiction of the financial information (API: Annual Report, 2018). The same
has been depicted below:
(Source: API Pharmaceutical Annual Report 2018)
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