Changes in Accounting Standard by AASB from 1 December 2018 to 31 March 2019

This article discusses the changes in accounting standards by AASB from 1 December 2018 to 31 March 2019. It covers modifications in contract obligations, onerous contracts, right-of-use assets, and new accounting standards in Australia. The article also mentions the survey conducted by AASB on special purpose financial statements.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:................................................................................................................2
Answer to Question 2:................................................................................................................4
References::................................................................................................................................7

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ANSWER TO QUESTION 1:
CHANGES IN ACCOUNTING STANDARD BY AASB FROM 1 DECEMBER
2018 TO 31 MARCH 2019
AUSTRALIAN
Modifications in
AASB 20190x to
Accounting Standards
in Australia (24th
January 2019):
AASB has proposed this
new standard for making
considerable changes in
order to publish
conceptual framework
(Aasb.gov.au, 2019).
Besides, according to
AASB, the users of the
financial reports could
comment on any
shortcomings related to
the standard within 22nd
March 2019. The
standard would be
applicable to the private
sector firms and other
firms voluntarily electing
to apply the conceptual
framework.
Costs to be incurred for
meeting a contract
obligation- Onerous
contract (8th January
2019):
The objective of onerous
contracts is the
modification of AASB
137 for representing the
fact that meeting cost
takes into account
incremental costs
(Aasb.gov.au, 2019).
These costs mainly
constitute of material
costs and other expenses,
which are associated
directly with contracts
like depreciation incurred
on plant and machinery to
be used for the contract.
Right-of-Use Assets
of Not-for-Profit
Lessees (20th
December 2018):
AASB has planned to
amend a particular
standard in order to
provide a provisional
replacement for not-for-
profit lessees in order to
gauge the right-of-use
assets in accordance with
concessionary leases at
cost price rather than fair
value (Aasb.gov.au,
2019). The estimated
publication date of the
standard has been 24th
December 2018. In
addition, concessionary
leases could be defined as
those leases, which have
low market terms and
conditions for allowing
the organisations in
progressing with their
objectives. This draft
standard is reliant on
“AASB Exposure Draft
ED 286 Amendments to
Australian Accounting
Standards- Right-of-use
Assets of Not-For Profit
Entities”. By assuring
additional disclosure in
AASB 16, this standard

3FINANCIAL ACCOUNTING
aims to fulfil the
particular objective. As a
result, the users would be
able to gain additional
information for the users
of the financial statements
on concessionary leases
when there is no presence
of fair value.
New Accounting
Standards in
Australia (20th
December 2018):
Two new standards of
AASB have clarified
material and business
definitions and the same
is mentioned under
“AASB 3 Business
Combinations”
(Aasb.gov.au, 2019). The
intention is to assist the
organisations in
ascertaining whether
there is any requirement
for consideration of a
transaction in the form of
business combination or
asset acquisition. Along
with this, “AASB 2018-
7” aids in clearing out the
material definition as well
as its application in the
standards of AASB as
well as other
pronouncements. The
modifications would be
incorporated in “AASB
101 Presentation of
Financial Statements”.
The date of application of
these two standards is 1st
January 2019.
Outcome of survey
regarding the value of
the special purpose
financial statements (13th
December 2018):
A survey has been carried
out on the part of AASB
for ascertaining the value
of the special purpose
financial statements
(Aasb.gov.au, 2019). 78%
of the primary users have
cited that AASB has to
address the recognition
and measurement of
assets. Due to this reason,
transitional relief needs to
be increasing equity and
consolidation accounting
in business organisations.

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ANSWER TO QUESTION 2
As per (AASB 101), every Australian company have to prepare their profit-and-loss
statement in accordance to the currently prevailing acts and regulations. One such regulation
is the presentation of the (general purpose) profit-and-loss statement, which could be
compared with the current and earlier years from the viewpoint of the companies. Hence, this
particular standard represents the aggregate requirements needed to present the profit-and-
loss statements alongside providing instructions for the framework and primary requirements
for the data (Aasb.gov.au, 2019).
Correction 1:
After the profit-and-loss statements of Whirl ltd. has been analysed, it has been cited
that the accountant did not separate the elements efficiently before representing the financial
report to the end-users. It could be pointed out that the classification of the assets has not
been segregated into two specific sections, which incorporate (current assets) and (non-
current assets). Hence, the assets are required to be separated into two classifications as
mentioned above.
Correction 2:
In an identical manner like assets, the liabilities of a company are required to be
separated into (current liabilities) and (non-current liabilities) that are missing in the profit-
and-loss statement of Whirl ltd. (Standard, 2015).
Correction 3:
From “Paragraphs 66-76 of AASB 101”, it is possible to classify assets and liabilities
for short and long terms respectively. Further, stockpile, finished products and raw materials
is required to be under one head and receivables would be recorded separately.
Correction 4:
Besides, “Paragraph 54 of AASB 101”, requires to utilise the (equity process) for
share investments. Furthermore, Whirl ltd. has not recorded has not recorded share
investment at cost. Hence, the company is required to use this process for identifying equity
investments.
Correction 5:

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It has been observed that both negotiated and current tax liabilities have been
represented in the profit-and-loss statement of this company. In this respect, “Points (n) and
(o) of Paragraph 54 of AASB 101”, needs to be identify these liabilities in a segregated
manner.
Correction 6:
The receivables are to be classified as amounts to be received before and after "twelve
months". As, the operating statement of a company requires to classify the receivables for
short and long terms. Therefore, if the separation of these liabilities are made accurately
alongside proper disclosure, it becomes easier for Whirl ltd. for gathering data for the users of
financial report which represents the financial position of the company.
Correction 7:
According to the profit-and-loss statement of this company, the payment of dividends
has been properly mentioned in it. Moreover, it would not be recorded as business expense.
Rather, the payment of dividend is required to be represented in the shareholders' equity
section in the operating statement (Tassadaq & Malik, 2015).
Correction8:
The accountant of Whirl ltd. requires to present gathered depreciation by deducting
the same from non-current assets, instead of representing it as liability, which it has
mentioned in the profit-and-loss statement.
Correction9:
As per the statement of change in equity of this company, it has revealed the issuance
of the shares. Moreover, no categorisation has been mentioned for these shares. As per AASB
101, shares utilised under employee long-term incentive schemes and shares published under
dividend reinvestment scheme needs to be revealed separately.
Correction 10:
According to the profit-and-loss statement of Whirl ltd., it could be noticed that the
prepaid insurance and insurance expenditures are represented separately. Moreover, the first
one is to be deducted from the second one to get the total insurance expenditure, so that only
one value could be recorded in the operating statement.

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Correction 11:
The accountant of this company requires to mention the payment of dividend per
share in the financial report. It would allow the investors to gather knowledge regarding the
returns.
Correction 12:
The accountant requires to separate the direct expenditures and operating
expenditures. There are several other corrections required to be done by the accountant in
order to represent the operating statement properly to the user of financial reporting.

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REFERENCES::
Aasb.gov.au. (2019). Retrieved 31 March 2019, from https://www.aasb.gov.au/News/Fatal-
flaw-review-draft---Proposed-Standard-AASB-2019-X-Amendments-to-Australian-
Accounting-Standards---References-to-the-Conceptual-Framework?newsID=310721
Aasb.gov.au. News. (2019). Retrieved 31 March 2019, from
https://www.aasb.gov.au/News.aspx
Aasb.gov.au. (2019). News. Retrieved 31 March 2019, from
https://www.aasb.gov.au/News/Right-of-use-assets-of-not-for-profit-lessees?
newsID=310716
Aasb.gov.au. (2019). News . Retrieved 31 March 2019, from
https://www.aasb.gov.au/News/New-Australian-Accounting-Standards?
newsID=310717
Aasb.gov.au. (2019). News . Retrieved 31 March 2019, from
https://www.aasb.gov.au/News/How-special-are-special-purpose-financial-
statements---For-profit-User-and-Preparer-Survey-Results?newsID=310714
Aasb.gov.au. (2019). Retrieved 31 March 2019, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf
Standard, I. A. (2015). Presentation of Financial Statements. Balance Sheet, 54, 80A.
Tassadaq, F., & Malik, Q. A. (2015). Creative Accounting & Financial Reporting: Model
Development & Empirical Testing. International Journal of Economics and Financial
Issues, 5(2), 544-551.