Contemporary Issues In Accounting- Doc

Added on - 16 Sep 2019

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Contemporary Issues In Accounting
Executive summaryThe annual reports of two companies have been taken which lies under the food and beveragessector. Farm pride Food is the limited company which provide packs, grades, processes, suppliesand ,market the shell eggs and produce egg products with Australia and it also exports in AsiaWhereas 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 thecompany. 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 toinclude prudence to address the disparity in corporate reporting. Conclusion andrecommendations have been made on the basis of analysis.
IntroductionIn this present paper, the conceptual framework is set out which underlined the development offinancial statements for the external users. It is mainly a system of concept that flow from anobjective of determining the purpose of financial reporting. The conceptual framework is mainlyused to determine whether the framework has met the requirements of IASB in order to providemore consistent and useful set of standards as well as pronouncements. It should also resolve thenew 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 InternationalAccounting Standard board. The purpose of the financial reporting is to provide financialinformation 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 information1.InventoryHuon Aquaculture Company Limited is valued their inventory at ;lower of cost whichmeans that the cost is calculated on the average cost basis and it includes the cost ofpurchases such as transportation cost. The net realizable value of is calculated by thecompany through estimating the selling price in the ordinary course of business minuscost 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 costamortized 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 valuewhich is due in the short period of time whereas Farm Pride Foods Limited calculatetrade and other receivables initially at fair price and subsequently impairment cost is thereceivable carrying amount which is compared with present value of estimated futurecash flow and discount at the original interest rate.3.Plant, property and equipment’sHuon Aquaculture Company Limited calculate plant, property, and machinery at fairmarket value which is calculated by deducting accumulated depreciation andaccumulated impairment cost from historical cost whereas Farm Pride Foods Limitedcalculate plant, property and equipment's at cost basis in which accumulated depreciationor 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 amortizationis based on the lease and expense which are charged throughout the consolidated incomestatement. All marine leases have term period of thirty years. The group also has leasecommitments which are related to a range of equipment's, and they derive operating lease
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