Impact of Financial Standards on Appliance Ltd

The assignment analyzes the impact of financial standards on Appliance Ltd by preparing various financial accounts such as income statement, balance sheet, and statement of change in equity. It also discusses the role of institutions like IASB, ASIC, ASSB, and IFRS in making effective operational determinations of all accounts. The document is based on a case study of Appliance Ltd and provides insights into how financial standards can influence business operations.

FINANCIAL ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Drafting financial reports which ascertains changes, development and news relevant with
financial reporting in a period................................................................................................1
QUESTION 2...................................................................................................................................3
Preparing the Journal entries..................................................................................................3
Income statement....................................................................................................................4
Balance sheet..........................................................................................................................5
Statement of changes in equity...............................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
There is always an influence of financial accounting that presents the financial disclosure of
the accounts for an adequate necessary as per making effective changes and determination of all
operations. Financial Reporting consists of various accounts and statements which are needed to
express the financial stability of an organisation, especially among the users of such accounts.
In the present report, there will be a discussion based on recent changes and development
made in the financial reporting style. It will be based on demonstrating current news, which will
be based on guidelines issued by ASIC, AASB and IASB with respect to better records of the
accounts. Along with this, there has been a preparation of various final accounts such as journal
entries income statement, balance sheet and statement of changes in equity for Appliance Ltd.
QUESTION 1
Drafting financial reports to ascertains changes, development and news
An Influence of various accounting and reporting techniques, which will be adequate in
making suggestive changes as well as reporting of all assets. Financial reports and accounts will
be adequate in making the qualitative changes in the operations as well as the management of all
transactional activities. Implicating the techniques, rules and regulations were based on preparing
an adequate financial report that will be helpful for proper recording and disclosure of all
accounts (Joubert, Garvie & Parle, 2017). Provision and policies have been set by various
accounting boards with respect to making suggestive changes in the operational practices and
management of it in the due period.
There are various boards, which are currently operating as per bringing suggestive
guidelines to the accounting professionals and auditors in an entity as per making effective
records in the statements. However, there are various financial reporting issues which have been
resolved by these organisations and boards with the motive of bringing a transparent financial
disclosure (Dunbar & Laing, 2017). In relation with this aspect, ASX listed various rules and
principles on which the framework and structure are needed to be followed by the firm which
makes the financial disclosure as well as operations in the capital markets.
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Australian Accounting Standard Board
This is a personal accounting board in Australia which is comprised for presenting the
fruitful disclosure of all accounts on which determination of actual financial status of an
organisation. It is concerned with the facts that states as this board is aimed at preserving an
adequate framework and structure of preparing the accounts or recoding data set.
However, there has been a list of various standards which will be helpful to the business
in analysing the actual amendments (Morris, 2017). It can be analysed such as First-time
adoption of Australian Accounting standards, share-based payments, business combinations,
insurance contracts etc.
International Accounting Standard Board
This board is created for making an adequate disclosure of the accounts which will be
based on presenting the appropriate framework and operational benefits for better recording of
all transactions. Governance and the execution of entire accounting process in an organisation
will be based on preparing reporting of statements. It is necessary that the accounting
professionals and auditors in an organisation must follow the instructions and make the fruitful
operational rise in the activities (Šehović & et.al., 2018). This board is comprised on delivering
information relevant with the procedures to be followed in preparing final accounts.
There has been an influence of various techniques and methods on which preparing the
statements like income statement, balance sheet and statement of change in equity. These are the
principles which is universally accepted and acknowledged by all countries in the world. It
brings fruitfulness to MNC’s in relation with getting the international investors (Nadeem, Zaman
& Saleem, 2017). Thus, it will positivity affect capital structure of the firm.
Australian Stock Exchange:
As per analysing the framework of ASX in capital market there have been various rule,
norms and amendments which were needed to be followed by accounting professionals. To bring
an organisation in the capital market as per making trade practices for buying and selling
securities in market (Babones, 2017).
There have been various rules, guidelines and amendments which have been set by this
authority such as:
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 Spread of shareholder: This rule comprises that there is a need to have at least 3000
non-affiliated shareholders with holding values at a minimum of 2000 each.
 Dual Listing: This norm is comprised on making suggestive changes and operational
motives for the business and if an organisation is listed for foreign exchange as they can
also have registration in ASX (Li, Sougiannis & Wang, 2017).
 Working capital: There will be an influence of various current activities such as seeking
of admission under profit test. Therefore, it is necessary to have working capital of at
least 1.5 million for the budgeted revenue of the organisation.
 Ongoing reporting: This rule in ASX which demonstrates that there is needed to have
adequate reporting of all the financial accounts of the business into summarized financial
statements.
Thus, Australian organisations which make the disclosures of all accounts on the
basis of half yearly and annually basis (Ashjaei & Nagaraja, 2018). It has been estimated
as the business which is currently operating as well as engaged in trade practices might
have ongoing activities. Moreover, business has to make fruitful disclosure and accounts
on regular basis.
International Financial Reporting Standard
The operational activities and records of the transactions which will be based on making
effective determination of all operational requirements in the business. Thus, this board is
comprised on issues or rules based on making effective analysis on financial reporting standards
as per making fruitful variations in each business activities (Kvaal, 2017). There are various rules
and regulations which is comprised of making disclosure of reports as per universally accepted
format.
In addition, rules which are based on preparing the income statement, balance sheet, change
in equity and cash flows will be presented by the organisation at the end of the period. It helps in
presenting the transparent information among external and internal users of such financial data
set (Joubert, Garvie & Parle, 2017). All the information and guidelines which are being
presented in framework of IFRS has funnel professionals in preparing better annual reports
which will be reliable among investors.
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QUESTION 2
Preparing the Journal entries
Journal entries Appliances Ltd as on 30th June 2018
Date Particulars Debit Credit
1st July 2017 Depreciation a/c Dr. 30000
To Accumulated depreciation on building A/c 30000
Depreciation a/c dr 255000
To accumulated depreciation on plant and
equipment
25500
0
30th June
2018 Deferred Tax assets a/c dr 142200
To income tax
14220
0
Working note:
Analysing the depreciation on building:
Building 900000
Residual value 0
Useful life 30
Depreciation Cost- residual value
Useful life
900000-0/30
Depreciation on building 30000
Analysing the depreciation on Plant and Equipment’s:
Plant and Equipment’s 2600000
residual value 50000
Useful life 10
Depreciation cost- residual value
useful life
2600000-50000/10
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Depreciation on plant and
equipment 255000
Income statement
Income statement for Appliances Ltd as on 30th June 2018
Particulars Details Details Amount
Sales of goods 12230000
Less: Cost of goods sold 4685000
Gross Profit 7545000
Interest Income 7000
Operating Expenses
Marketing expenses 623000
Salaries and wages 2740000
Administrative expenses 143000
Annual leave expenses 210000
Doubtful debts expenses 62000
Depreciation expenses 285000
Other borrowing expenses 6000
Other expenses 95000
Warranty expenses 64000
Income tax expenses 142200
Total operating expenses 4370200
Total operating income 3181800
Less: Interest expenses 64000
Less: Dividend paid 500000
Earning before tax 2617800
Less: Income tax 30% 785340
Net profit 1832460
Balance sheet
Balance sheet for Appliances Ltd as on 30th June 2018
Particulars Details Details Amount
Assets
Current assets
Cash on hand 41000
Cash management account 193000
Trade debtors 3276000
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Less: Allowance for doubtful debts 219000
3057000
Raw material inventory 624000
Finished goods inventory 1250000
Total Current Assets 5165000
Fixed assets
Land 500000
Building 900000
Less: Accumulated depreciation 30000 870000
Plant and equipment 2600000
Less: Accumulated depreciation 255000 2345000
Patent 150000
Total fixed assets 3865000
Less: Deferred tax assets 142200
Total Assets 8887800
Liabilities
Current liabilities
Trade creditors 615000
Provision for annual leave 200000
Income tax expenses 785340
Provision for warranty 55000
Total current liabilities 1655340
Non-current liabilities
Bank loan 400000
Total liabilities 2055340
Equity share capital
Share capital 5000000 5000000
Net profit 1832460
Total liabilities and equity capital 8887800
Statement of changes in equity
Statement of Change in Equity for
Appliance Ltd
Preferred
Stock
Common
Stock
Add.
Paid in
Capital
Retained
Earnings
Opening balance 0
Issue of stock 5000000
Net income 1832460
Dividends 50000
Cl. Balance 6782460
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CONCLUSION
On the basis of the above report, it can be concluded that the impacts of financial standards
or boards in preparing of the financial accounts in any business has a positive influence. There
had been discussions that were made over various institutions and boards that presented
guidelines to the professionals as per making an effective operational determination of all the
accounts. It involves boards such as IASB, ASIC, ASSB and IFRS. Further, there had been a
preparation for various final accounts such as income statement, balance sheet and statement of
change in equity for Appliance Ltd.
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REFERENCES
Books and Journals
Ashjaei, N. P., & Nagaraja, N. (2018). Effect of IFRS Adoption on Income Smoothing in Indian
Companies. Asian Journal of Research in Banking and Finance. 8(4). 48-60.
Babones, S. (2017). The Australian Securities Exchange endorses the distributed ledger—but
don’t call it blockchain.
Dunbar, K., & Laing, G. K. (2017). Deconstructing the Accounting Standard AASB 13 Fair
Value: Exit vs Entry Price for Assets. Journal of New Business Ideas & Trends. 15(2).
Joubert, M., Garvie, L., & Parle, G. (2017). Implications of the New Accounting Standard for
Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance
Sheet. Journal of New Business Ideas & Trends. 15(2).
Kvaal, E. (2017). The role and current status of IFRS in the completion of national accounting
rules–Evidence from Norway. Accounting in Europe. 14(1-2). 150-157.
Li, S., Sougiannis, T., & Wang, I. (2017). Mandatory IFRS Adoption and the Usefulness of
Accounting Information in Predicting Future Earnings and Cash Flows.
Morris, R. D. (2017). Discussion of: The Phoenix Rises: The Australian Accounting Standards
Board and IFRS Adoption. Journal of International Accounting Research. 16(2). 155-
157.
Nadeem, M., Zaman, R., & Saleem, I. (2017). Boardroom gender diversity and corporate
sustainability practices: Evidence from Australian Securities Exchange listed
firms. Journal of Cleaner Production. 149. 874-885.
Šehović, E., & et.al., (2018). Network Analysis on the in Silico Assigned Y Chromosome
Haplogroups in Western Balkan Populations. Genetics & Applications. 1(2). 36-43.
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