Role of Professional Judgment in Accounting

FINANCIAL ACCOUNTING ASSIGNMENT
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
STUDENT ID

Introduction
BHP is an ASX listed entity and have yearend on 30th June
2018. Further, the financial statements of the entity are
prepared in compliance with requirement of Australian
Corporation Act 2001 and in compliance with the IFRS
and interpretations issued by IASB. It is engaged in
acquiring, discovering, marketing and developing the
natural resources from all over the world (Bhp.com
2019).

Role of the professional judgment in accounting
Role of professional judgement in accounting is –
Ensuring that the regulation related to accounting policies and
determining the ways for improving accounting in the general terms
Creating the climate of trust among the business managers and the
owners of the capital
Allowing the users of the financial statements in making reasonable
decisions on the basis of the financial information provided
Serving as the referee among the parties of economic life, specifically
the providers of accounting information and auditors who certify the
quality and thereby ensures the reliability (Aasb.gov.au 2019)

Impairment disclosures made by BHP
As per the disclosure made by the entity in context of impairment
BHP performs impairment test for all the assets if there is an
indication that the asset may get impaired, however goodwill is
tested for impairment at least annually. If carrying amount of assets
exceeds the recoverable amount of the assets, the same is impaired
and the impairment loss is reported in the income statement for
reducing the assets carrying value in balance sheet and to reduce it
to recoverable amount (Vogt et al. 2016).