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Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting

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Added on  2020-05-16

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The value of those assets can also be determined with the help of expert valuation as they can estimate the value of the asset with the help of the cash flow generating capacity of the asset (Shapiro, 2008). If the company strictly wants to follow the fair value measurement technique for the valuation of assets then either they need to value the asset on the basis of the values of the similar assets or they can value the asset with the help of expert’s valuation techniques.

Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting

   Added on 2020-05-16

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Running Head: Financial AccountingFinancial Accounting
Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting_1
Financial Accounting2Table of ContentsQuestion 1.............................................................................................................................................3Question 2.............................................................................................................................................4Part (i)................................................................................................................................................4Part (ii)..............................................................................................................................................5Question 3.............................................................................................................................................7Part (i)................................................................................................................................................7Part (ii)..............................................................................................................................................7Part (iii).............................................................................................................................................8Part (iv)..............................................................................................................................................8Part (v)...............................................................................................................................................8Part (vi)..............................................................................................................................................9Part (vii).............................................................................................................................................9References:..........................................................................................................................................11
Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting_2
Financial Accounting3Question 1Fair value method of accounting is applied to those assets which have active market availableas fair value accounting is based on the market based valuation techniques and not on the entity based valuation techniques. Market based valuation technique is solely based on the active market available for the asset (Brigham & Houston, 2012). The assets which have no available market can be recorded at either historical cost say cost of acquisition or other valuation methods are applied for their valuation. As per AASB 13 the assets which have no active market available are exchanged between willing buyers and willing sellers. The value of those assets can be recognised using the exchange value of the asset or by taking into account the cash flows that are generated by those assets. As per AASB 13 the value of assetswhich have no active market can be estimated by taking into account the value of the similar assets which have active market (Chandra, 2011). The similar assets which are marketable must be having their fair value or say market value available and with the help of that we can arrive at the nearby fair value of the assets which have no active market. The value of those assets can also be determined with the help of expert valuation as they can estimate the value of the asset with the help of the cash flow generating capacity of the asset (Shapiro, 2008). If the company strictly wants to follow the fair value measurement technique for the valuation of assets then either they need to value the asset on the basis of the values of the similar assets or they can value the asset with the help of expert’s valuation techniques. AASB 13 fair value measurement also contends that the assets which have no active market available are to be valued at either historical cost or on the basis of the cash flow generating capacity ofthe asset (Van Horne James, 2002).
Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting_3
Financial Accounting4Question 2Part (i)01-Jul-15Cost of Printing Machine $ 39,800 Installation Cost $ 4,200 Residual Value $ 1,800 Useful Life10Depreciation4220Straight line Method of Depreciation is usedJournal EntriesDateParticularsAmount ($)Amount ($)30-Jun-16Depreciation A/C Dr4220To Machine4220(Being depreciation charged on machine)Profit & Loss A/C Dr4220To Depreciation4220(Being depreciation transferred to P & L A/C)30-Jun-17Useful Life5Residual Value $ 1,200Cost of Machine $ 39,780Depreciation $ 7,716Journal Entries30-Jun-17Depreciation A/C Dr7716To Machine7716(Being depreciation charged on machine)Profit & Loss A/C Dr7716To Depreciation7716(Being depreciation transferred to P & L A/C)
Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting 7 Running Head: Financial Accounting_4

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