Intermediate Financial Accounting | Assignment
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Added on 2019-11-20
Intermediate Financial Accounting | Assignment
Added on 2019-11-20
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Running head: INTERMEDIATE FINANCIAL ACCOUNTINGIntermediate financial accountingName of the UniversityName of the studentAuthors note
1INTERMEDIATE FINANCIAL ACCOUNTINGTable of ContentsAnswer to Question 1:...............................................................................................................2Requirement a:.......................................................................................................................2Requirement b:......................................................................................................................3Answer to Question 2:...........................................................................................................5Requirement a:.......................................................................................................................5Requirement b:......................................................................................................................5Requirement c:.......................................................................................................................8Answer to Question 3:...............................................................................................................8Requirement a:.......................................................................................................................8Requirement b:......................................................................................................................9Reference:................................................................................................................................11
2INTERMEDIATE FINANCIAL ACCOUNTINGAnswer to Question 1:Requirement a:Entities or organizations do not have any voluntary change in accounting policies if itapplied Australian accounting standard at an early basis. In accordance with paragraph ofAASB 108, management of an organization can apply accounting policies from the recentpronouncement of other standard setting bodies. This is applied in the absence of anAustralian accounting standard that is applicable to a specific certain event, transactions andconditions. Standard setting bodies that is making recent pronouncements should havesimilar conceptual framework for developing accounting standards. If the entities arechoosing an accounting policy following pronouncement amendment, then such change oradoption of that particular accounting policy is accounted and they are divulged as avoluntary change in accounting policy. Voluntary change in accounting policies has animpact on current period. Furthermore, entities are required to disclose nature of change inaccounting policy if it is impracticable to determine the adjustment amount. Application ofnew accounting policy should provide relevant information (Stice&Stice, 2013). The change in accounting policies from cost model to revaluation model are requiredto determine the accounts that are to be restated. In the given scenario, Magenta Ltd isapplying a retrospective change that is regarded as the application of new accounting policyto the conditions, events and transactions as if the policy have been already applied. Changeis accounted according to transitional provisions that is applicable and is specified inrelevant standards is the initial application of Australian accounting standards resultschange in policy. Change is specified retrospectively if there is no specification of transitional
3INTERMEDIATE FINANCIAL ACCOUNTINGprocess. Magenta ltd is required to assess all the accounts that would be affected by thechange in accounting policy and implementation of revaluation model. In the event ofdiscovery of material error in presentation, measurement and recognition of elements offinancial report. In such situation, it is required by entity to restate the financial statementretrospectively as per AASB 108. Requirement b:Journal EntriesDr.Cr.DateParticularsAmountAmount1/7/2014Plant & Equipment A/c.Dr.$200,000 To,Cash A/c.$200,000 30/6/2015Depreciation Expenses A/c.Dr.$25,000 To,Accum Dep.- Plant & Equipment A/c.$25,000 30/6/2016Depreciation Expenses A/c.Dr.$25,000 To,Accum Dep.- Plant & Equipment A/c.$25,000 30/6/2017Depreciation Expenses A/c.Dr.$25,000 To,Accum Dep.- Plant & Equipment A/c.$25,000 Accum Dep.- Plant & Equipment A/c.Dr.$75,000 To,Plant & Equipment A/c.$65,000 To,Asset Revaluation Reserve A/c.$10,000 30/6/2018Depreciation Expenses A/c.Dr.$27,000 To,Accum Dep.- Plant & Equipment A/c.$27,000
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