Financial Accounting - Study Material with Solved Assignments

This study material provides solutions to questions related to financial accounting, including performance outcomes of investment firms, conceptual framework, AASB 101 or IAS 1, and accounting policies. The material also includes references to relevant research and publications.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
University Name
Student Name
Authors’ Note

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FINANCIAL ACCOUNTING
Table of Contents
Solution to Question 1:...............................................................................................................2
Solution to Question 1 (Part A):.................................................................................................2
Solution to Question 1 (Part B):.................................................................................................3
Solution to Question 2:...............................................................................................................3
Solution to Question 3:...............................................................................................................4
References..................................................................................................................................6

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FINANCIAL ACCOUNTING
Solution to Question 1:
Solution to Question 1 (Part A):
Performance outcomes of the investment firm stems from acquired income on the investment
in the form of interest as well as dividend and alterations in fair value of investment while the
same are being held. Specific information as regards holdings of the company that need to be
acquired includes the following:
-Fair value of shares held by the investment corporation
-Comparison of administration of alterations of fair values investment by the business
enterprise to the alterations in similar investment markets
-Information on turnover of portfolio and associated transactions namely commission
-Information regarding risks involved in the portfolio (Camfferman and Zeff 2015)
-Interest as well as dividend earned
-Movements in value of shares during the year
Solution to Question 1 (Part B):
According to the directives of conceptual framework, a specific financial items that satisfies
definition of income or else expenditure liability/asset need to be identified in case if it is
viable that any economic benefits in the upcoming period related to the item will flow in the
upcoming period (Brown et al. 2014). In addition to this, the item also can be enumerated
with reliability.

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FINANCIAL ACCOUNTING
However, when it is about the conceptual framework, earnings of the business enterprise is
identified in the assertion of income when enhancement in economic benefits in upcoming
benefit associated to an enhancement in asset/liability has occurred that can reliably
enumerated. In actual fact, appreciation of fair value of particularly investment securities
necessarily reflects the increase of asset (Henderson et al. 2015). Essentially, this can be
considered to be an important component that represents overall performance of the firm.
Solution to Question 2:
AASB 101 or IAS 1 does not necessarily permit departure from particularly Accounting
Standards, even in state of affairs where the managers shape the viewpoint that adherence
would be deceiving and conflict with the purpose of financial assertions. For that reason, the
managers have the need to deliver additional disclosure to alleviate the perceived misleading
factors (Picker et al. 2016). In this case, disclosures have the need to include the following as
mentioned below:
- The title of the pertinent standard that in this occasion AASB 136 otherwise IAS 36
Impairment of Assets
- It calls for proper recognition of an impairment loss to certain extent that the entire carrying
amount of a specific asset or group of assets surpasses the entire recoverable amount (Yu and
Xu 2015)
- That the application of the same can be perceived to the misleading as management is of the
view that impairment is necessarily temporary in nature (Preiato et al. 2015)
-Again, requisite adjustment in the opinion of the management to attain a fair representation
that is to say, that specific expenses that have the need to be decreased and the carrying
amount of the asset increased by $80000.

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FINANCIAL ACCOUNTING
For the purpose of simplification, taxes have necessarily been overlooked in this specific
solution. Nevertheless, supposing a rate of tax of approximately 30%, and that the
impairment does not have an effect on base of tax, the requisite adjustment would also
enhance tax expends along with deferred tax liability by approximately $24000.
Solution to Question 3:
In the current state of affairs, the board of directors has resolved to alter the accounting policy
for the purpose of capitalising specific gains/losses on the cash flow hedges identified in
other comprehensive earnings. Prior to this, this kind of gains/losses were capitalised for
different hedged items, however, the directors are of the view that taking this kind of
gains/losses to profits or else losses can be considered to be a more suitable treatment.
Therefore, the board of directors of the reporting entity is encountering the problem of
selecting a solution as regards the disclosures (Preiato et al. 2015). Therefore, it is suggested
that there should be a need to maintain a proper track of the data along with particulars of
depreciation so that even when they are lost it is effortlessly recoverable. Furthermore,
specific steps are obligatory in a bid to prevent virus from going into the computer that
comprises of different information. There is no need to alter the accounting policy or else
disclosure processes.

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References
Brown, P., Preiato, J. and Tarca, A., 2014. Measuring country differences in enforcement of
accounting standards: An audit and enforcement proxy. Journal of Business Finance &
Accounting, 41(1-2), pp.1-52.
Camfferman, K. and Zeff, S.A., 2015. Aiming for global accounting standards: the
International Accounting Standards Board, 2001-2011. Oxford University Press, USA.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Picker, R., Clark, K., Dunn, J., Kolitz, D., Livne, G., Loftus, J. and Van Der Tas, L.,
2016. Applying IFRS Standards. John Wiley & Sons.
Preiato, J., Brown, P. and Tarca, A., 2015. A comparison of between‐country measures of
legal setting and enforcement of accounting standards. Journal of Business Finance &
Accounting, 42(1-2), pp.1-50.
Yu, C. and Xu, J., 2015, March. Research on accounting conservatism and investment
efficiency of IT enterprises: A perspective of impairment of assets. In Information
Technology and Applications: Proceedings of the 2014 International Conference on
Information technology and Applications (ITA 2014), Xian, China, 8-9 August 2014 (p. 113).
CRC Press.