Evaluation of Reporting Entity and Physical Capital Maintenance in Financial Reporting

Financial Accounting
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Abstract
This report has carried out an evaluation of the concept of reporting entity and physical
maintenance and their relevance in the financial reporting. The different characteristics evaluated
of a reporting entity has inferred that public sector bodies can also be classified as a reporting
entity on the basis of the dependency of the users on the financial information provided by them.
Also, the concept of physical capital maintenance provided by IFRS for determining the profit
helps in enhanced economic-decision making of the users by providing actual profitability
position of a company generated from its capital base. In addition to this, the adoption of AASB
standard 137 is very essential or providing effective disclosure regarding the type of provision
and contingent assets and liabilities by the ASX listed entities.
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Contents
Introduction................................................................................................................ 4
Part 1: Characteristics of a Reporting Entity and their Application on the
Government Organizations......................................................................................... 4
Part 2: Concept of Physical Capital Maintenance and its Impact on Increasing the
Decision Usefulness of Financial Information.............................................................6
Part 3: Quality of AASB 137 disclosures in financial reports of Woolworth and Origin
Energy........................................................................................................................ 8
Provisions................................................................................................................ 8
Contingent Liabilities............................................................................................. 13
Conclusion and Recommendation............................................................................13
References............................................................................................................... 15
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