Contemporary Issues in Accounting

Contemporary Issues in Accounting

CONTEMPORARY ACCOUNTING 1
Introduction
Conceptual framework defines the ideas and objectives that lead to creation of a consistent
set of rules and standards. The framework sets the nature, functions, limits of financial
accounting in order to prepare the financial statements of the company. There are three main
reasons for the development of conceptual framework and these are framework for setting
accounting standards, resolving accounting disputes, fundamental principles that do not
repeated in accounting standards. The main objective of the framework is to prepare the
financial statement as per the principles and standards so that researchers can use it (Lumen,
2018). In this report, ASX Limited has been taken into consideration to analyse the report by
using the annual report.
1.
Measurement requirement is the process of evaluating the asset and liabilities in monetary
terms in order to maintain the records and carried the amount in balance sheet. There are
different ways of measuring the assets and liabilities such as historical cost methods, and fair
value method (Australian Government, 2018). Historical cost method evaluates the assets on
the basis of original cost and the cost that is invested by the company at the time of
acquisition. The cost of asset is measured at the current amount as per the market is called
current cost method and it is also known with the name of fair value. It is observed that most
of the companies used the historical and fair value method in order to evaluate the asset.
As per the analysis of annual report of ASX limited, it has been seen that the company
complied the conceptual framework. It applied the fair value method and historical cost
method in order to evaluate the value of asset. For example-Plant and Equipment of the

CONTEMPORARY ACCOUNTING 2
company is measured at the fair value by subtracting the accumulated depreciation and the
other impairment value.
(Source: ASX Limited, 2018)
Trade receivable of the company is evaluated on the basis of fair value method
(Source: ASX Limited, 2018)
2.
There are three features of fundamental qualitative and these are materiality, relevance, and
the faithful representation. Materiality defines the small amount of transaction that does not
affect the profitability ration of the company. Faithful representation is the economic