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Contemporary Issues In Accounting
Executive summary The annual reports of two companies have been taken which lies under the food and beverages sector. Farm pride Food is the limited company which provide packs, grades, processes, supplies and ,market the shell eggs and produce egg products with Australia and it also exports in Asia Whereas Huon Aquaculture Company Limited is the vertically integrated agriculture company inAustralia and its aim is to manage risk, drive sustainability, and long-term growth of the company. The annual report's analysis is conducted on the basis of financial statement elements. The concept of the conceptual framework has been discussed and need of revision in order to include prudence to address the disparity in corporate reporting. Conclusion and recommendations have been made on the basis of analysis.
IntroductionIn this present paper, the conceptual framework is set out which underlined the development of financial statements for the external users. It is mainly a system of concept that flow from an objective of determining the purpose of financial reporting. The conceptual framework is mainly used to determine whether the framework has met the requirements of IASB in order to provide more consistent and useful set of standards as well as pronouncements. It should also resolve the new and existing problem with the development of confidence among the financial users. Annual reports analysisThe financial reports of both the companies are developed by considering the companies Act, 2001, interpretation of Australian Accounting Standard board, Australian Accounting Standards, and International Financial Reporting Standards which are issued by the International Accounting Standard board. The purpose of the financial reporting is to provide financial information to the investors, debtors, creditors, and other stakeholders in order to take a financialdecision within the specific period of time.Difference among the companies on the basis of financial information 1.InventoryHuon Aquaculture Company Limited is valued their inventory at ;lower of cost which means that the cost is calculated on the average cost basis and it includes the cost of purchases such as transportation cost. The net realizable value of is calculated by the company through estimating the selling price in the ordinary course of business minus cost of completion as well as necessary cost in order to make the sales. Whereas
inventory valuation is done by Farm Pride Foods Limited on the base upon cost amortized over the production life of the flock and that is between 50 and 60 weeks. 2.Trade and other receivablesHuon Aquaculture Company Limited calculates trade and other receivables at fair value which is due in the short period of time whereas Farm Pride Foods Limited calculate trade and other receivables initially at fair price and subsequently impairment cost is the receivable carrying amount which is compared with present value of estimated future cash flow and discount at the original interest rate. 3.Plant, property and equipment’sHuon Aquaculture Company Limited calculate plant, property, and machinery at fair market value which is calculated by deducting accumulated depreciation and accumulated impairment cost from historical cost whereas Farm Pride Foods Limited calculate plant, property and equipment's at cost basis in which accumulated depreciation or any other impairment loss is deducted from cost (Weil et al., 2013). 4.Contingent liabilitiesBoth the companies, namely, Farm Pride Foods Limited and Huon Aquaculture CompanyLimited do not have contingent liabilities at the end of the financial year. 5.Lease paymentsIn Huon Aquaculture Company Limited marine cost is recorded at cost and amortization is based on the lease and expense which are charged throughout the consolidated income statement. All marine leases have term period of thirty years. The group also has lease commitments which are related to a range of equipment's, and they derive operating lease
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