HA3011 Advanced Financial Accounting Assessment 2022

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HA3011 Advanced Financial Accounting

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Contents
Introduction......................................................................................................................................3
Part 1: Identification and Description of the Accounting Concepts Used by the Selected
Company..........................................................................................................................................3
Part 2: Discussion of Changes that have been incorporated in the new accounting standard for
lease AASB 16 in Relevance to Selected Company........................................................................6
Part 3: Key Disclosures made by Costa Holding Limited on accounting for leases (AASB 16.....8
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The report has been developed for gaining an understanding of the key financial
accounting concepts. This has been carried out through examining the information published
within the annual report a selected ASX company. The analysis of the annual report is carried for
identifying the accounting concepts used by the company. This is followed by evaluating the
changes that have been introduced within the new accounting standard for lease AASB 16 within
the selected company in context of the relevant examples. Lastly, it summarizes the key
disclosures that the selected company has made in context of the leases accounting and the
impact of transition to AASB 16 from AASB 117. The company selected for the analysis
purpose is Costa Group Holdings Limited, a leading Australian horticulture company involved in
supplying products to the food retailers within the country.
Part 1: Identification and Description of the Accounting Concepts Used by the Selected
Company
The accounting concepts refer to the standardized principles and concepts that are used as
a basis for the development and presentation of annual accounts to the end-users. The accounting
concepts provides a basic framework for financial reporting by providing a set of necessary
assumptions and condition on which accounting of a firm needs to be carried out. As such, they
can also be referred to as postulates, assumptions or conditions that provide a basis for
development and presentation of the financial statements (Cunningham, 2014). The major
accounting concepts that have been used in development of annual report of Costa Holdings
Limited arte described as follows:
Dual Aspect Concept
This accounting concept states the recording of every business transaction in a dual
manner which means that each financial transaction will have two effect that is one on the debit
side while other on the credit side (Unegbu, 2014). The accounting concept is adequately
implemented within Costa Holdings Limited in the development and presentation of its various
financial statements. For example, issuing of an invoice to a customer leads to increase in the

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sales that are reflected within the income statement while accounts receivable is reflected as
assets within the balance sheet.
Money Measurement Concept
The accounting concept has stated that business entities need to record everything in
monetary terms. As per the concept, Costa Holdings Limited has recorded its various financial
transactions presented within the financial statements in the monetary terms as depicted below:
(Source: Costa Holdings Limited Annual Report 2018)
Accrual Concept
As per this accounting concept, revenue and expenses need to be recognized by an entity
at a specific period of time such as within a month or on annual basis. The concept has stated that
a business entity need to record its revenue and expenses within a respective accounting period
irrespective of whether they have been received in cash or not (Kiabel and Nwanyanwu, 2014).
As such, Costa Holdings Limited recognizes revenue when it has been realized while expenses
are recognized on the consumption of an asset. The recording of revenue by the company as per
the concept can be depicted as follows: