Financial Accounting and Reporting

This presentation provides an overview of financial accounting and reporting, focusing on the importance of financial statements, professional judgement, and impairment of assets. It explores the case of Wesfarmers and discusses the implications of impairment on financial users. The presentation also covers the AASB 16 standard and the disclosure of impairment assets. Recommended practices and characteristics of financial information are highlighted. References are provided for further reading.

FINANCIAL ACCOUNTING
AND REPORTING

Introduction
• Financial accounting is the analysis , summary and
reporting of business transaction
• It incudes the financial statement of the company
• It helps the users in decision making process
• Governed by both local and international standard

Financial Reporting
• It provides the management and financial
information of business
• It includes income statement, balance sheet and cash
flow of the company
• It help the user in the decision making process
• It help the investors to know the financial position of
the company

Overview of the Company
• The company is Wesfarmers
• It is a conglomerate based company
• It headquarter is in Perth, Western Australia
• It was founded in 1914
• It got registered in 1984

Meaning of Professional
Judgement
• It is the process in which the management take
different assumption regarding the business
• The judgement are taken related to the
industry norms
• It should be based upon the ethics and norms of
the company.

Implications of professional
judgements upon financial users
• If the judgement is not proper than it can
affect the decision making process of the
financial user
• If the risk is not be judged properly by
the management than it can affect then
financial poitionof the company

Impairment written down of the
company
• The asset which are impairment by the company are
property, plant and equipment, goodwill and
intangible assets
• The estimation taken as the future value of the cash
flow has been discounted to the present value
• It is done so that it all the risk factor into
consideration regarding the impairment of the asset

Classification of impairment asset in
regards with company
• Buki it is brand value = $18 million and
goodwill = $777 million and it also had write off
deferred tax = $92 million and $66 million as
written down of stock
• Targets – Goodwill = $47 million, Brand name =
$238 million and other fixed asset = $21 million

AASB 16 – Impairment of Asset
• Accounting standard related to impairment of asset
• Contain all the rules and principles
• It state asset should be recorded at recovery value but if
the recoverable amount is more than recovery than the
asset should be considered as impairment asset
• The amount between the two should be consider as loss

Disclosure of Impairment Asset
• It should show all the amount which is
recorded in income statement
• It should show the reversal amount
which is recorded in income statement
• It should show the amount which is
been consider in the equity of the
company

Professional Judgement in
Impairment of asset
• In 2017 the discount rates was 8.9%
and 11%
• In 2018 the discount rates is 8.6% and
11.8%

Recommendation regarding
Impairment asset
• The risk should be consider properly in the
professional judgement
• Management should check all factors
related to the industry norms
• Discounting factor should be consider as
per the industry norms

Characteristic of Financial
Information
• The information should be relevant to the users
• It should be available in time
• It can be compare with other years to know the
performance of the company
• It should be easily understable
• It should be properly presented

Conclusion
• Financial accounting help the company to record their
accounting transaction
• Financial reporting help the company to provide there
report to financial user
• Professional judgement help the company to make
assumption related to the business
• Impairment asset are the asset which does not able to
recover the original amount of the asset.

Bibliography
• André, P., Dionysiou, D. and Tsalavoutas, I., 2018. Mandated disclosures under
IAS 36 Impairment of Assets and IAS 38 Intangible Assets: value relevance and
impact on analysts’ forecasts. Applied Economics, 50(7), pp.707-725.
• Banker, R.D., Basu, S. and Byzalov, D., 2016. Implications of Impairment
Decisions and Assets' Cash-Flow Horizons for Conservatism Research. The
Accounting Review, 92(2), pp.41-67.
• Caldecott, B.L. and McDaniels, J., 2014. Stranded generation assets: Implications
for European capacity mechanisms, energy markets and climate policy.

• Henderson, S., Peirson, G., Herbohn, K. and Howieson, B.,
2015. Issues in financial accounting. Pearson Higher
Education AU.
• Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced
accounting. McGraw Hill.
• Libby, R., 2017. Accounting and human information
processing. In The Routledge Companion to Behavioural
Accounting Research (pp. 42-54). Routledge.

•THANK YOU