Financial Accounting - Sample Assignment

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of Student:
Name of University:
Author’s Note:

FINANCIAL ACCOUNTING1
Table of Contents
Introduction......................................................................................................................................2
Task 1: Analysis of Expenses..........................................................................................................2
a. Determination of expenses.......................................................................................................2
b. Reasons for different method of classification of expenses used by the company.................3
Task 2: Accounting Policy...............................................................................................................3
Task 3: Notes to the 2016 financial statement.................................................................................4
a. Cost of plant, properties and equipment..................................................................................4
b. Depreciation amount................................................................................................................5
c. Depreciation period..................................................................................................................6
d. Depreciation method................................................................................................................7
e. Impairment...............................................................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

FINANCIAL ACCOUNTING2
Introduction
Ansell ltd is identified as a global leader in terms of providing various types of
production solutions. The main design and development and manufacturing activities of the
company is seen to include range of production solutions which is based on the increasing
demand of the customers. Some of the main products of the company includes industry gloves
and sleeve, medical grade glove, “protective clothing and medical safety devices” (Ansell.com
2018). The important discussions of the study have focused on an analysis of the expenses which
has determined the nature of the expenses for Ansell ltd. Some of the other depictions of the
study has been able to provide possible reasons on different methods of classification of
expenses. The second part of the report have provided the relevant disclosure of information on
accounting policies, changes in the accounting estimates and existence of any error. The last part
of the study is use the notes to financial statements for showing relevant treatment of
depreciation.
Task 1: Analysis of Expenses
a. Determination of expenses
Based on the depiction of annual report for Ansell Ltd. it needs to be discerned that the
company has followed the preparation of income statement by function of expenses. Henceforth,
the expenses are disclosed relevant to their function such as “distribution, cost of goods sold,
selling, general and administration expenses”. The aforementioned method of calculation of
expenses is used with a multistep format along with disclosing the individual expenses under
each function (Bott 2014).

FINANCIAL ACCOUNTING3
Figure: Classification of expenses by function
(Source: Sc-cdn-prod.azureedge.net. 2018)
b. Reasons for different method of classification of expenses used by the company
The main reason for following other method of expenses is mainly discerned with
simplicity of presentation of the information. Smaller companies tend to prefer disclosing the
expenses as per single step income statement. Henceforth, in such a case disclosing the expenses
by nature is more appropriate rather than following expenses as function method (Needles,
Powers and Susan V. Crosson 2014). The main reason for the classification of these expenses as
per functional role in larger corporations is more suitable for monitoring of the direct unit which
is immediately assigned to the individual outputs, material consumption, premium, rewards
which are directly linked to outputs. In addition to this, the use of simple method of single step
income statement is able to present the information of expenses with individual items such as
“beginning inventory, purchases, rent expense, depreciation expense, supplies expense, utilities
expense, interest expense and purchases” (Zhong and Li 2017).
Task 2: Accounting Policy
The statement of compliance with the accounting policy for the company is identified
with principles as stated under “Australian Accounting Standards adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001”. In addition to this, it is
further identified the group conforms with the “International Financial Reporting Standards
(IFRS)” and explanations accepted by the “International Accounting Standards Board (IAS)”
(Smyth and Whitfield 2017). The three issues in the annual report has been discussed with
“principles of consolidation”, “foreign currency” and “recoverable amount on noncurrent
asset”. During a consolidation process there are many possibilities that the effect of transaction
between entities in the groups are not fully eliminated. Some of the important issues in the
foreign currency has been depicted with differences in recording of foreign currency translation
reserve. The main issue for recoverable amount on the noncurrent assets valued at cost basis is
seen with changes pertaining to the carrying amount of noncurrent assets (Kallamu, Ashikin and
Saat 2015).