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Corporate Accounting Assignment | Reporting Assignment

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Added on  2020-06-06

Corporate Accounting Assignment | Reporting Assignment

   Added on 2020-06-06

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Corporate Accountingand Reporting
Corporate Accounting Assignment | Reporting Assignment_1
Table of ContentsINTRODUCTION................................................................................................................................1PART A................................................................................................................................................1PART B................................................................................................................................................3CONCLUSION....................................................................................................................................5REFERENCES.....................................................................................................................................7Index of TablesTable 1 Calculation of impairment loss against all the assets in CGU............................................4Table 2 Allocation of extra impairment loss of patent on other assets in CGU..............................5Table 3 Journal entry of Gali Ltd....................................................................................................5
Corporate Accounting Assignment | Reporting Assignment_2
INTRODUCTIONAccording to the Company Act of Australia, every firm is mandatory obliged to prepareaccounts and publish it after auditing. In the globalized world, firms need to comply withinternational accounting and reporting standard to prepare their annual statements. IAS 36 laydown rules and regulations on impairment of assets that entities follow to assure that assets arenot carry forwarded beyond its recoverable amount. The current research thoroughly explains thecircumstances when an impairment test must be carry out and make journal entries for theimpairment loss with supporting calculations. PART AIAS 36, impairment of assets sets out the mandatory standards that company need tocomply with for reporting their assets. It states that every firm need to reduce their assetscarrying value to its recoverable amount (Buschhüter and Striegel, 2011). Here, recoverableamount is the amount that is higher of the following:Arm length price: Fair value less disposal cost/cost of sell Value in use: It is the potential cash inflows that an asset expects to generate, the amountis discounted to reflect its present value at an appropriate discounting rate (Husmann andSchmidt, 2008). The key principle of the IAS 36 is that any asssets in the financial statement cannot becarried forwarded more than its expected recoverable price though its sales or use. If in anycircumstance, the carrying amount of assets exceeds the recoverable money, then, such assets iscalled impaired. Amount by which carrying value is reducing to its recoverable price isrecognizing as impairment loss. The standard also applies on the group of assets that do notgenerate cash inflows separately or individually, called cash generating units (CGU). Thestandard applies for many assets except those on which, other specific standard applies such asinventory, financial assets under IFRS 9, investment property, biological assets, deferred taxassets, assets from employee benefits, non-current assets available for sale. Page 1 of 9
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