Essay on Corporate Accounting

Added on - 28 May 2020

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Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the Student:Name of the University:Author’s Note:
1CORPORATE ACCOUNTINGTable of ContentsPart A...............................................................................................................................................2Part B...............................................................................................................................................7Reference List..................................................................................................................................9
2CORPORATE ACCOUNTINGPart AIntroductionThis essay has been constructed in order to have an idea about the process that is used inorder to have an understanding of the process that is used in order to calculate the “recoverableamount”, “value-in-use” and the “fair value less the cost of disposal”. In the current businessworld, it is essential to maintain an effective financial statement and accordingly sustain theoperational activities. An understanding of the recoverable amount is essential in order to gain anidea about the amount that can be recovered and accordingly maintain competitive edge.
3CORPORATE ACCOUNTINGExplanation of the Recoverable Amount, Value-in-Use and Fair Value less cost of disposalRecoverable AmountRecoverable amount is an accounting word and refers to the market value of an asset that islarger or the value that is provided by the organization that is being used at the present timeperiod. The idea of recoverable amount is generally utilised in the idea of ascertaining the fixedasset impairments (Gordon and Hsu 2017). The recoverable amount is known as the highestvalue that can be attained from any kind of asset. There are two normal processes with the helpof which one can attain the value of any kind of asset and the two processes are:By making use of the asset in the businessBy selling off asset to othersThe worth of the asset of the business is known to be the “present value” of the anticipatedfuture cash flows that is seen the usage of the asset (Bond, Govendir and Wells 2016). The assetvalue that is sold is known to the “fair value of the asset less the costs to sell the asset”. Theamount that is found to be the highest out of the two options is known as the recoverable amount.The recoverable amount is utilised in order to assess the impairment (Vanza, Wells and Wright2018). The factor that the recoverable amount is the highest value is because of the fact that themanagement of any organization looks to select the option that has the best value maximisingability.The principles of accounting addresses the organizations to record their instances in thebalance sheet where the “carrying amount” of any asset is higher than the value that can be
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