Assignment On Financial Accounting 2022

Running head: Financial Accounting Assignment
Financial Accounting Assignment
Name of the Student
Name of the University
Author Note

1
Financial Accounting Assignment
Executive Summary
The report consists of the financial accounting process and how it helps the company in
regards of the preparation of the financial statements. It also show about the different
accounting standard and how it should be implement in the financial statement of the
company. It also shows the difference in the accounting treatment of AASB 138 and AASB
136.

2
Financial Accounting Assignment
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
AASB 137 – Contingent Liabilities.......................................................................................3
Delta Ltd Case Study.............................................................................................................4
AASB 138 – Intangible Asset................................................................................................4
AASB 136 – Impairment of Assets........................................................................................4
Difference between AASB 138/ AASB 136 in Treatment of Accounting............................5
Companies View point about intangible asset.......................................................................5
Conclusion..................................................................................................................................5
Reference....................................................................................................................................7

3
Financial Accounting Assignment
Introduction
The process of the recording and summarizing the accounting transaction of the
company is been termed as financial accounting (Nobes 2014). It is done so that the company
is able to record all the transaction in the financial statement of the company so that the
individual will able to get all the information about the company. It state about the standards
so that the company is able to record it as per the norms which are been set by the standard in
related to the financial statement. This helps the company to properly present the financial
statement to the financial user of the company. It helps them to follow the guidelines about
how the company should treat the account and how they will able to do the calculation of the
same (Flower 2018). It also keep the principle of true and fair view in the financial statement
as the statement are meant in regards of the norms and rules stated in the accounting standard
of the company.
Discussion
AASB 137 – Contingent Liabilities
As per the accounting standard AASB 137 it state that about the contingent liability is
regarded as an obligation that arrive from the past event which the company have done and it
will be contingent to the happing of some uncertain events in future. The event which will
happen in future is not in the control of the company management (Wahlen, Baginski and
Bradshaw 2014). The contingent liabilities can also be recorded as when there was a present
obligation but the company is not able to recognised it due to the some past event as they
were not aware so that the company will have some outflow of the cash due to the event and
even it may happen that the company is unable to calculate the amount to be recognize as
contingent liabilities (Acharya and Ryan 2016).

4
Financial Accounting Assignment
The disclosure which the standard state that as all the important points related to the
contingent liabilities should be recorded by the company in the notes on account. As it state
that if the entity and the company is liable for some obligation, so the company shall account
the other entity part as contingent liability in the notes on account and it should record its part
as provision in the financial statement of the company (Aasb.gov.au 2019). If there is some
indicator that the company have some obligation in the future than it should also record the
same in the provision of the financial statement.
Delta Ltd Case Study
The company is been filled with a lawsuit and the person is been asking for the claim,
but it is been seen that the company thinks that they will able to win the case, but the lawyer
want to know as per the case they have to pay $500,000 if they lose the case. The AASB 137
state that if there is an indicator of the obligation than the company should record the same as
contingent liability and should disclose it in the notes on account of the company.
AASB 138 – Intangible Asset
AASB 138 shows the treatment regarding the Intangible Asset in the company. As per
the paragraph of the intangible asset it states that the company can only able to record
intangible asset in the financial statement when they fulfil the limit given in the standard. The
limit which are given is that when the company is able to have some amount of benefit from
the intangible asset and also it able to calculate the cost spend amount so if it able to fulfil the
requirement than it can able to record the same in the financial statement (Aasb.gov.au 2019).
It should disclose the same in the notes of account.
AASB 136 – Impairment of Assets
AASB 136 shows about the treatment of the Impairment of Asset as how the company
should able to recognise the impairment of asset in the financial statement of the company.

5
Financial Accounting Assignment
The paragraph state that the company can able to record it as impairment of asset when the
carrying amount is more than the recoverable amount of the asset (Davidson, Dey and Smith
2015). As it state the company is valued more than what it able to get from the market so it
should consider it as Impairment of asset and should also record the difference amount as loss
in the financial statement of the company. It also state that the company should check
whether there is any indication of the same in the financial statement so that it can able to
record the same as Impairment of Asset (Aasb.gov.au 2019). It should also compare the
indicator as by comparing the intangible asset value with the market value so that it can able
to know the real value of the asset.
Difference between AASB 138/ AASB 136 in Treatment of Accounting
It can be seen from both standard that there is huge amount of difference in the
treatment of accounting as in AASB 138 as it check the benefit which the company can get
from the asset and in AASB 136 it check the loss amount so this show that both standard
check different stuff so it is been said that the standard are having different accounting
treatment.
Companies View point about intangible asset
It can be seen that the company is earning good profit from the trade off the intangible
asset as they internally generate intangible asset and pass it on to other company in regards of
the asset so that it able to earn good profit from the sale so this is the reason that the
companies does not want to do the amendment in the standard of the intangible asset.
Conclusion
On a conclusive note, it can be said that it include about the financial accounting and
how it help them to present their financial statement to the user. It also should show about the

6
Financial Accounting Assignment
accounting standard and how the company should implement the same in the preparation of
the financial statement of the company.

7
Financial Accounting Assignment
Reference
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-15_COMPoct15_01-18.pdf
[Accessed 25 May 2019].
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content102/c3/AASB136_07-04_ERDRjun10_07-09.pdf
[Accessed 25 May 2019].
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB137_07-04_COMPjun14_04-14.pdf
[Accessed 25 May 2019].
Flower, J., 2018. Global financial reporting. Macmillan International Higher Education.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Wahlen, J.M., Baginski, S.P. and Bradshaw, M., 2014. Financial reporting, financial
statement analysis and valuation. Nelson Education.
Acharya, V.V. and Ryan, S.G., 2016. Banks’ financial reporting and financial system
stability. Journal of Accounting Research, 54(2), pp.277-340.
Davidson, R., Dey, A. and Smith, A., 2015. Executives'“off-the-job” behavior, corporate
culture, and financial reporting risk. Journal of Financial Economics, 117(1), pp.5-28.