Evaluation of Disclosures on Intangible Assets, Liabilities, and Income Tax Compliance

Running head: FINANCIAL ACCOUNTING
Financial accounting
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FINANCIAL ACCOUNTING
Executive summary:
The report demonstrate the critical evaluation of the disclosures related to intangible assets,
liabilities and income tax whether they are in compliance with the relevant accounting
standards of Australia. For the analysis purpose, Myer holdings limited and Adelaide
Brighton limited is selected from retail sector and material sector respectively. The evaluation
of the accounting policy and the associated disclosures are done by reviewing the annual
report for the financial year 2018. After the analysis of each section, the report also outlines
the recommendation concerning the accounts explained and its contribution to the
transparency and usefulness of accounting information.

FINANCIAL ACCOUNTING
Table of Contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................5
Evaluating the concept of reporting entity in the creation of quality information for financial
statements users:.........................................................................................................................5
Evaluating the compliance of the firms with the relevant accounting standard by comparing
the liabilities disclosure:.............................................................................................................7
Evaluating the compliance of the firms with the relevant accounting standard by comparing
the disclosure of intangible assets:...........................................................................................11
Evaluating the compliance of the firms with the relevant accounting standard by comparing
the disclosure of benefits, income tax expense and obligations:.............................................15
Conclusion:..............................................................................................................................19
References list:.........................................................................................................................20

FINANCIAL ACCOUNTING
Introduction:
The study elucidates the effects of the legal needs of the organizations listed on the
Australian stock exchange to conform to the financial reporting standards of Australia. It
demonstrates the compliance of the publically listed organizations to the relevant accounting
standards in various areas such as liabilities, leasing, earning per share, tax effect accounting
and intangibles. Reporting entity are required to make a reasonable expectation of the fact
that the users uses the framework of general purpose financial report to obtain an
understanding of the overall financial performance of entity. Assessment of the information
presented according to the reporting framework helps users in assuring the facts that
information have been represented faithfully. Such users can be employees, shareholder,
lenders, creditors and potential investors. It is essential for the entity to document whether
they have users who are dependent on assessing the entity as per the general purpose
financial reporting with the help of people charged with the governance (Efrag.org 2019).
The report prepared demonstrate the evaluation of compliance of reporting entire with the
relevant accounting standard in terms of contingent liabilities, intangible assets, earning per
share and taxation effect. For the analysis purpose, two companies have been chosen from
different industries that are Myer Holding limited from Retail industry and Adelaide Brighton
limited from Material industry.
For explaining the compliance of the reporting standards by different companies, it is
essential to discuss briefly the overview. Adelaide Brighton limited is a manufacturing
company based in Australia that is involved in the manufacturing of lime, cement and dry
blended products. Myer Holdings on other hand is a department store company that is based
in Australia and owns a designer brand for women’s wear and bide and sass. The evaluation

FINANCIAL ACCOUNTING
of the compliance of the companies with the relevant accounting standards are discussed in
the section below.
Discussion:
Evaluating the concept of reporting entity in the creation of quality information for
financial statements users:
The existing regulations and legislation specifying the entities about general purpose
financial reporting have number of implicit alternative reporting entity concepts. The concept
of reporting entity is associated with the objective of general purpose financial reporting
which requires the entities to prepare the general purpose financial report if they are
dependent upon it. Users will be provided assistance in determining the financial position and
performance of reporting entity with the help of disclosures of the industry and the
consequence of deployment. Therefore, it is essential for the reporting entity to deploy the
information for managing the resources with the help of administrative or legal structure. It is
evident from the reporting entity concept that is reflected in the statement that the creation of
company does not mean that they would qualify as the reporting entity. The objective of
preparing the general purpose financial report is associated with the dependence of user on
the report for evaluating and making decisions relating to the allocation of resources (Simnett
and Huggins 2015).
The concepts of reporting entity developed through the financial reporting framework
helps in making the reporting and financial accounting logical and consistent, enabling the
overall enhanced communication and economic development of accounting and increasing
consistent by enhancing the compatibility of the standards. In addition to this, there is a

FINANCIAL ACCOUNTING
significant contribution of the concept of reporting entity to the public confidence and in the
credibility of the financial information. Such reporting framework tends to emphasize on the
information usefulness that is contained in the financial report that is considered significant
for the users. However, there is criticizing of the focus of accounting principles on the
transactions and economic phenomenon that is expressed in monetary values (Aasb.gov.au
2019). It has been ascertained that the high quality of reporting helps users in providing
information that is relevant for making decisions and representing the economic reality of the
activities of company along with its financial condition in a faithful manner.
The current study on the importance of the reporting entity concepts is significant
because of continued growth of research in this particular area. This is in relation to the
substantial debate surrounding the implications of the approach of principle based concept to
the reporting entity and its potential impacts. It is pointed out by the researcher that there are
subjective issues in the basis of concept of reporting entity and this have a consequence on
the decision making of the individual. Nevertheless, the adopters and practitioner acts
genuinely and objectively in their compliance with the reporting framework which does not
results in generating significant cause of concern (Aasb.gov.au 2019). Furthermore, due to
the differential use of reporting methods, there is an impact on the quality of financial
reporting as well along with the concern of level of compliance. Therefore, accounting for
such issues would create an impact of the quality of the financial information provided by
reporting entity to the users of the financial statements. Some other researchers have also
presented the basis of arguments that the principle based approach of reporting entity does
not make any significant differences in the outcome of reporting. From the analysis of
different case studies by the researchers found that the concept of reporting entity is not
appropriately applied. Since the reporting entity concept is based on the principle, it is
essential to make choices that are made in the key financial information reporting. In such