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Added on  2020-03-16

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FINANCIAL REPORTING

Table of ContentsFInancial Reporting.........................................................................................................................1Question 1........................................................................................................................................2Provisions:...................................................................................................................................2Issues:..........................................................................................................................................2Highest and Best Use:..................................................................................................................2Application to aged care home:...................................................................................................3Question2.........................................................................................................................................3Accounting Justification:.............................................................................................................3Relevant Issues:...........................................................................................................................3Calculations & General Journal Entries 1/7/16 to 30/6/17:.........................................................3Calculations & General Journal Entries 1/8/18:..........................................................................5Calculations & General Journal Entries 30/6/18:........................................................................5Question 3........................................................................................................................................6Accounting Justification:.............................................................................................................6Relevant Issues:...........................................................................................................................7Difference between two phases:..................................................................................................7Accounting for Research and Development:...............................................................................7Conclusion:..................................................................................................................................8Question 4........................................................................................................................................8Accounting Justification:.............................................................................................................8Deficit of Fund.............................................................................................................................8Net Defined Benefit Liability......................................................................................................8Net Interest...................................................................................................................................8Reconciliation..............................................................................................................................9

References......................................................................................................................................11

QUESTION 1Accounting Justification: AASB 13 defines “fair value” and it also provides standard guidelines for determination of fairvalue. Further it also outlines the disclosures to be made for fair value measurement. As perAASB 13 fair value measurement is market based and not entity specific based. Relevant Issues:Financial Institutions use fair value method for valuation of financial instruments in normalcourse of business. However it involves a lot of judgment and prudence while valuing tangibleassets (International Accounting Standards Board, 2014). Unrealized Loss and Gains which areaccruing to the concern on account of using fair value method doesn’t reflect the importance ofthat relevant asset to the organization. Moreover there are also inconsistencies regardingindividual businesses practices in using fair value for plant and equipment.1& 2 Determine subject of measurement and valuation premise:For determination of fair value it is important to whether the non-financial asset which is beingvalued is used in manner from which it can yield highest returns as on the date of measurement.It takes into account the ability of market participant to generate economic benefits from the useof non-financial asset or by transferring it to another market competitor who would use the assetin best and highest manner (Hu, Percy and Yao, 2015). The highest and best use of non-financialasset also considers use of the asset that whether it is physically possible, legally permissible andfinancially feasible or not.3. Determine MarketFor some asset and liability it may be possible that market information may not be available.However market information is available or not objective remains the same in both the cases i.e.to determine a price at which transaction will take place between two independent parties underthe prevailing market conditions (Palea, 2014). As per views of Liang and Riedl (2013) in otherwords it is an exit price from the purview of independent party that holds the asset or owes theliability.

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