Financial Accounting: AASB Framework, Capitalized Costs, Intangible Assets, Employee Benefits

RUNNING HEAD: FINANCIAL ACCOUNTING
Accounting

Financial accounting 2
Contents
Question 1...................................................................................................................................................3
Part a.......................................................................................................................................................3
Part b.......................................................................................................................................................3
Part c.......................................................................................................................................................4
Question 2...................................................................................................................................................4
Question 3...................................................................................................................................................5
Question 4...................................................................................................................................................7
References...................................................................................................................................................8

Financial accounting 3
Question 1
Part a
According to the AASB conceptual framework, cash is defined as an asset for the company. The
definition of asset provided by the framework is that they are those future economic benefits
which are controlled or owned by the organization as an outcome of past transactions or events
(AASB. 2018). In case of Himalaya Ltd, the cash worth $20,000 was an asset for the café. The
same got stolen and for that, accountant needs to take it into consideration by passing a journal
entry. It is the situation of loss by theft and as per the accounting framework; loss is treated as an
expense for the entity. In accounting, all the expenses and losses will be debited and the cash
account will get credited. So the entry will be:
Loss by theft a/c $20,000
To cash a/c $20,000
This is how the accountant will record the event in café’s books of accounts.
Part b
The court has ordered to Himalaya Ltd to repair the environmental damage and the company is
not aware about the cost to be incurred for the repair work. The accountants are required to make
a provision for the environmental costs and disclose the related information in their financial
reports. The AASB 134 requires companies to prepare their Interim Financial Report in which
they have to make estimates regarding the environmental cost that are going to be incurred in