Estia Health Limited Accounting Concepts Report 2022

ADVANCED ACCOUNTING 1
Estia Health Limited accounting concepts report
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ADVANCED ACCOUNTING 2
Introduction
This is a short report containing several accounting concepts that are applied by the
different public listed companies on the Australian stock market. For this particular report,
however, the major focus and concentration is laid on Estia Health Limited as the firm of
interest. Additional emphasis within the report will be drawn to the several accounting principles
and guidelines that business entities are required to apply when preparing the various accounting
reports and records. Among some of the most significant standards that will be discussed in this
report will include the newly revised AASB16: LEASES. Much of the attention will be directed
towards assessing the various ways and impacts that this change will have on the financial
reporting g of the company in the forthcoming financial periods. For purpose s of proper and
reliable data collection, sources such as the company websites, the company annual report of
2017-18 and other online sources will be used. It is upon such information and data that the
different conclusions and discussions will be based and therefore the discussions are provided as
below:
The various accounting concepts that are used by Estia Health Limited
Internationally accounting concepts and principles are described as the different
guidelines, rules and or standards that each profit-making entity should follow when preparing,
recording and presenting financial information and data to the concerned stakeholders. This
information plays a very significant role to the benefit of these different stakeholders within an
organization. Therefore according to these rules and guidelines that are provided by the standards
such as IFRS, ISAS, AASB’s and so on. These Generally Acceptable Accounting Principles
(GAAPS) are subdivided into the four major fundamental principles and the other minor

ADVANCED ACCOUNTING 3
concepts. The major concepts, therefore, include the consistency, going concern, prudence and
accrual concepts. The other additional concepts, however, include concepts such as materiality,
matching and the accounting equation concept among others. Additionally, discussions
concerning the above-identified accounting concepts are therefore discussed below concerning
the company reports and financial records.
Prudence concept of accounting
According to the requirement of the prudence concept, an organization should exercise a
high level of conservatism when recording and preparing financial records. By such a
requirement the accounting officer or personnel is therefore expected to only recognize revenues
and expenditures that the organization or entity has incurred (HLB Mann Judd, 2019). Therefore
a company’s revenues and or incomes or expenses should not be overstated in anticipation that
such incomes will be earned or expenses incurred. This principle is as well applicable to other
aspects such as liabilities and assets in the balance sheet extract. Alternatively, the concept
guides that delayed revenue realizations by the company should be used as a practice of
promoting conservatism within the company (Deloitte, 2016). Therefore, according to this
particular concept of accounting, the Estia Health Limited Company has applied such an
accounting principle through aspects maintaining accounts such as the non- current assets. For
instance, it is the company accounting policy to recognize all its non-current assets as “assets-
held- for- sale” until it is fully ascertained that such assets have been sold off. Additionally, it is
also a policy to value all these assets at the lower value of the carrying amount or netbook value
thereby enhancing the principle of prudence when preparing the accounting records.
The accrual principle of accounting

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Slightly different from the prudence concept, the accrual principle of accounting on the
other projects that an accounting entry should only be recognized when there is right to realize
such a transaction. Therefore, simply this particular accounting postulates that accounting
transactions are recognized at the time of transacting and not during the period when cash is
received or paid (Kiabel, 2014). According to this principle incomes and expenses are realized
when the business has the right to income or obligation to pay in the future. Such an accounting
is however mostly applicable to transaction cases that involve credit sales and credit purchases or
an entity. Such a system of accounting, therefore, requires an entity to prepare the current
liabilities and receivables accounts in the balance sheet. In line with fulfilling such an accounting
principle, the Estia Health Limited financial records fully reflect the application of such an
accounting concept as there is full disclosure of the net amounts of receivable and current and
non-current liabilities.
Concept of consistency accounting
The consistency principle of accounting is a concept through which an accounting officer
or entity should use or apply a uniform type, method, or approach of valuing, recognizing,
recording and reporting of the several aspects of financial accounting within the financial reports
(Legaspi, 2014). The major objective as to why such a level of consistency is emphasized is to
ensure that there is uniformity within the reports which will ultimately ease the process of
decision making by any interested stakeholder in the entity. For example, the concept of
consistency can be upheld through aspects such as the amount in which items and transactions
are recorded, the method of valuing assets, obligations and so many other forms of recording. To
ensure consistency, the Estia Health Limited has over the years recorded its transaction amounts
in million dollars and this is coupled with the amortizations of all the loans available to the