Assignment on the Corporate Accounting and Reporting
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Added on 2020-04-07
Assignment on the Corporate Accounting and Reporting
Added on 2020-04-07
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Running head: CORPORATE ACCOUNTING AND REPORTINGCorporate AccountingName of the Student:Name of the University:Author’s Note:Course ID:
1CORPORATE ACCOUNTING AND REPORTINGAnswer to Part A: One of the key accounting principles asserts the fact that there is no suchrequirement of assets, which have excessive valuations in the financial positionstatement. This in turn needs the requiring of several concepts of values with respect towhich the amount, which is carried by the asset, can be contrasted in order to see ifthere is surplus. The “Paragraph 1 of AASB 136” asserts that the impairment in theassets discusses about the methods, which are adopted by every enterprise in order toensure that the assets are being carried out at right amounts, which do not exceed thelevel of the amounts, which are recoverable. The paragraph also asserts that in casethe assets are carried over that of the amount, which is recoverable, the amountrecoverable through selling of the assets is lower than that of the amount carried by theasset. The asset, in such scenarios, can be considered to be impaired and the standardrequires the enterprise to realize the losses from impairment including the time of theimpairment loss and that of the disclosures which are essential (Legislation.gov.au2017). If for an asset the carrying value exceeds that of the recoverable value then theimpairment loss occurs. This in turn is higher of asset’s fair value minus the selling costsand the value, which is in use. Taking reference of the “Paragraph 59 of AASB 136”, ifthe recoverable value of an asset is less than the carrying value of the same, then thelatter needs to be minimized to that of its former. This kind of minimization is consideredas impairment loss. The technique of measuring the impairment loss may differ basedon the fact whether the asset is recorded at the cost level or pursues the revaluation
2CORPORATE ACCOUNTING AND REPORTINGmodel (Tricker and Tricker 2015). According to the same paragraph, the impairmentlosses need to be immediately realized, except when the carrying of an asset is beingmade at the amount, which is re-valued, and comply to some other standard. Thesestandards help in denoting the revaluation model as it is in AASB 116. Therefore, theimpairment loss, which is related to that of an asset which is re-valued, required to beconsidered as a decrease in the revaluation according to other standard (Amiraslani,Iatridis and Pope 2013). The two methods with the help of which impairment of assets can take place arethe revaluation model and the cost model. According to the “Paragraph 61 of AASB136”, in case of the cost model, when an impaired asset is recorded in terms of cost, theloss needs to be recognized immediately in profit or loss terms. This in turn implies thatthe loss is required to be recognized as expense in the statement of income for theconcerned organization (Cotter 2012). In accordance to that of the “Paragraph 60 of AASB 136”, when the revaluationmodel is taken into consideration, then while an impairment is carried out, like that ofplant, property and that of equipment, at the re-valued amount, then the impairment lossneeds to be treated similar to that of a decrease in the revaluation. For the purpose ofreiteration, the impairment loss on the re-valued assets is needed to be realized in thestatement of income in the first stage in order to ensure that it does not exceed thesurplus amount for the similar asset. The target can be achieved with the help ofdebiting of the leftover surplus account, which in turn is applicable to assets includingthat of the tax liability, which is deferred, before any kind of loss balance is consideredas expenses in the statement of income (Guthrie and Pang 2013).
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