Accounting Issues and Solutions for Pewter Limited

McKenzie and Associates
668, George Street,
Melbourne, VIC 3000.
10th July 2018
Mr. Con Pewter
Managing Director
Pewter Limited
Level6, 510 King William Street
Adelaide SA 5000
Dear Pewter
Thank you for writing an email dated 05th July 2018 for providing an opportunity to help you
regarding the various numbers of issues in accounting that the company is confronting. I am
presently working as accountant for the accounting firm and through this email an opportunity
has been given to me for providing the advice on accounting issues.
The annexed letter will cover the solutions of all the issues in relation to accounting and the
presentation of financial statements thereon. The solution will be given with reference to the
relevant accounting standards of Australia. The letter has been marked to Ms. Maria McKenzie.
It has been a pleasure of serving you and thanking you for being our continued client. I am in the
opinion to hear you about the queries or the solutions given. I will be happy to help you.
Yours Faithfully
(Accountant)

ACCOUNTING ISSUE INVOLVED AND SOLUTIONS
Every company has its own system of accounting for the transactions in the books of accounts
and that too shall be done in accordance with the relevant accounting standard and the other
provisions of the Corporations Act 2001 and other similar statutes. But before discussing the
compliance with the requirements, it is necessary to have the accounting and similar issues
identified within the organization and then the treatment of the same shall be checked with
reference to the relevant laws of that particular country. In the given case of Pewter Limited,
there are major accounting issues involved in the treatment of various items and the same
accounting issues have been explained below:
 In the given case, it has been resolved that the company – Pewter Limited has given the
guarantee for any damage which is caused to the ship Steve Irwin. The accounting issue
is that whether the guarantee given shall be classified as the contingent liability
representing off the balance sheet or the guarantee shall be classified as the actual
liability.
 Second issue is that when the uncertain event for say ship has been badly damaged due
to Japanese whalers has occurred then the amount so incurred shall be accounted for in
the books of accounts as expense or it shall be shown as the liability
 The third issue is that whether the guarantee amount so disclosed will be reflected in the
Profit and loss account or the statement of the balance sheet.
 The fourth issue of accounting is that whether the repair costs so determined shall be
capitalize to the name of brand or else shall be charged to the statement of the profit and
loss account.
 The last and major accounting issue involves is that whether the company’s position of
the net worth will increase or work down.
The above issues have been identified from the statement made by you. The answer to all the
accounting issues involved has been mentioned in the below list.
 At first, the accounting treatment and the disclosure shall be detailed as to how the
guarantee shall be classified as the Contingent Liability. In accordance with the