Accounting Issues: Year Ending 30 June 2019

This letter addresses accounting issues for the year ending 30 June 2019 and provides solutions. The issues include adopting a new standard on fair value of assets and disclosing a particular asset in the financial statement.

Running head: Financial Accounting and Reporting
Financial Accounting and Reporting
Name of Student
Name of the university
Author Note

1Financial Accounting and Reporting
Re: Accounting Issues: Year Ending 30 June 2019
Maria McKenzie ([e-mail])
668 George Street,
Melbourne VIC 300
5 September 2019
Con Pewter ([e-mail])
Managing Director, Pewter Ltd
Level 6, 510 King William Street,
Adelaide SA 5000
Dear Mr Con Pewter
This letter has been written to inform you that we have received the letter forwarded by your
company. The issues that have been highlighted in the letter have been properly analysed and
according to that the solution has been provided. There has been found two issues in the
letter. Both these issue are related to the company and the company wants a suggestion and
advice.
The first issue that has been highlighted is that the marketing manager Martin Kellick has
heard from the other companies about adopting or referring a new standard on fair value of
assets. The other directors of the company also get confused after hearing the news deliver by
Martin Kellick. The directors were thinking that will it be applicable to their company. They
were also thinking about the existence of any such standard. The company is also trying to
decide whether they should make the applicable changes to fair values for all the assets that
the company had. The board of directors of the company had taken a decision to lower the
cost of the inventory for the last year. The reason behind this is that the net realisable value of
the company is less than the original value. Fair value of an asset means the estimated price at
which the asset can be sold. Revaluation of asset is made with very ample steadiness to
ensure that the carrying cost of the asset does not come in a different way from the
determined fair value at the end of the financial year. In the absence of the proper guidance of
AASB 108 accounting policies of the Australian Accounting Standard board and the relevant
changes in the estimation, errors and calculations in Accounting is a basic reason for
selecting or applying new or existing accounting policies. AASB 13 Fair value measurement
incorporates that the IFRS 13 Fair value calculation is issued by the International Accounting
Standard Board (IASB).
The second issue that have been highlighted in this letter is for disclosing a particular asset in
the financial statement given by the company in the financial and annual reports. Jonny
Appleton the manufacturing and designing engineer of a machine for the company. This
machine will help the company to dry up the fresh produced materials used in the pickling

2Financial Accounting and Reporting
plant of the company. This item of the plant was produced in house. This reduce the cost for
the company, the additional materials that were need to purchase by the company was for the
machine. The cost of which is $250000. This process also reduces the manufacturing time for
the company by two hours per batch and the work is done very effectively and efficiently.
The manufacturing and designing engineer of this machine has got offer from the other
businesses for making a similar machine for the other businesses. The company also gets an
offer from one clients that the client will pay more to the company however if the company
manufactures the machine for the client. The client also told the company that this will help
in rising the goodwill of the company. The client wants the company to disclose the asset in
the financial statement of the company. According to the issue the company can show the
asset at this value to their financial statement as this will increase the goodwill of the
company. The journal entries for that will be purchase of raw materials debit and the cash
account to be credit, in this way it will come in the journal entries at the same value for
$,250.000. This machine will come in the asset side of the balance sheet. The value of the
machine will increase the value of the assets for the company. AASB 116 Accounting
standard for property, plant and equipment, this accounting standard is needed to be followed
for the treatment of the assets. The property, plant and equipment which are hold for sale,
have to be follow AASB 5 Non current asset held for sale and discounted operations.
The solution has been provided according to the issues. The company may implement the
changes in according to the given solution provided by our company.
If the company have any question regarding the solution please do not feel hesitate to contact
us.
Yours sincerely
Maria McKenzie
Firm Manager
McKenzie and Associates
Copy
Enc

3Financial Accounting and Reporting
References:
AASB, C.A.S., 2014. Business Combinations. Disclosure, 66, p.77.
Aasb.gov.au (2019). Australian Accounting Standards Board (AASB) - Home. [online]
Aasb.gov.au. Available at: https://www.aasb.gov.au/ [Accessed 5 Sep. 2019].
Australian Accounting Standards Board (2015). Fair Value Measurement. [ebook] Australia:
Australian Accounting Standards Board, p.38. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB13_08-15.pdf [Accessed 5 Sep.
2019].
Australian Accounting Standards Board. (2018). Compiled AASB Standard. [ebook]
Australia: Australian Accounting Standards Board., p.22. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB116_08-15_COMPoct15_01-18.pdf
[Accessed 5 Sep. 2019].
Dimitriu, O. and Matei, M., 2014. A new paradigm for accounting through cloud
computing. Procedia economics and finance, 15, pp.840-846.
KARAHAN GÖKMEN, M., 2013. ACCOUNTING CONSERVATISM: A LITERATURE
REVIEW. Muhasebe ve Vergi Uygulamalari Dergisi (MUVU)/Journal of Accounting &
Taxation Studies (JATS), 6(2).
Watty, K., Sugahara, S., Abayadeera, N. and Perera, L., 2013. Developing a global model of
accounting education and examining IES compliance in Australia, Japan, and Sri
Lanka. Accounting Education, 22(5), pp.502-506.
Yu, G. and Wahid, A.S., 2014. Accounting standards and international portfolio
holdings. The Accounting Review, 89(5), pp.1895-1930.