Financial Statements Analysis

Running head: FINANCIAL STATEMENTS ANALYSIS
Financial Statements Analysis
Name of the Student:
Name of the University:
Author Note

1FINANCIAL STATEMENTS ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
1. Contingencies and Provisions......................................................................................................2
2. Recognition Criteria and Measurement associated with provision or contingent liability..........3
3. Contingency recorded..................................................................................................................4
4. Plant and Equipment under financial leases................................................................................5
5. Treatment of leases......................................................................................................................5
6. Reclassification of the leased item..............................................................................................7
7. Non-current asset – impairment method......................................................................................7
8. Valuation Method for Non Current Assets..................................................................................8
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

2FINANCIAL STATEMENTS ANALYSIS
Introduction:
In this particular assignment, the issues pertaining to accounting is presented in context of
Fairfax media. The analysis has been done for evaluating whether the accounting facts and
figures are presented in compliance with the prescribed accounting standard so that the financial
statements prepared are reliable for its internal as well as external users. For this purpose, data
and facts have been extracted from the annual report for year 2017.
1. Contingencies and Provisions:
Contingency refers to the liabilities and assets that are not accounted in the business and
have happened on an urgent basis. Disclosure of contingences is done by segregating into
number of financial components in the financial statements. In the financial report, contingencies
are disclosed by presenting in sub heading such as guarantees and defamation. Amount of
contingencies are disclosed net of GST amount that is payable or recoverable from taxation
authority (Armstrong et al. 2015).

3FINANCIAL STATEMENTS ANALYSIS
Recognition of provision is done by the group when it has constructive or legal
obligations for sacrificing the future benefits resulting from past events or transactions. For
future operating lease, no provisions are required by organization. Measurement of provision is
done using the discount cash flow methodology at the present value of best estimate of
expenditure that is required for setting the present obligation. Risks pertaining to prison are
factored into cash flow using a discount rate. Recognition of any amount of provision resulting
from past events and with passage of time is recognized as finance cost. Unless the dividends are
declared, there is no recognition of provision for dividend as liability.
2. Recognition Criteria and Measurement associated with provision or contingent liability
The measurement issues and recognition criteria in association with contingencies and
provisions are discussed below:
The carrying value of guarantees is measured at fair value in accordance with AASB 137.
Reporting entities in the group are sued for defamation and any other similar matters in the