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Principles of Financial Accounting Assignment

   

Added on  2020-04-01

8 Pages1410 Words51 Views
Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the Student:Name of the University:Author’s Note:

1CORPORATE ACCOUNTINGTable of ContentsAnswer to Part A:...............................................................................................................2Answer to Part B:...............................................................................................................5Reference List....................................................................................................................7

2CORPORATE ACCOUNTINGAnswer to Part A:According to the principles of financial accounting, there can be circumstancesthat the financial reports of a firm may consist of assets that do not havedisproportionate valuations. For the determination of the asset value, it is essential tocontrast the carrying value of the assets with some other concepts related to value. TheAustralian Accounting Standard Board (AASB) in their Section 334 of the CorporationsAct 2001 has constructed Accounting Standard AASB 136 in relation to the impairmentof the assets. The main of these standards has been to lay down the processes that isincorporated by the entity to make sure that the assets are lower the carrying amount sothat the assets can be carried at a recoverable value (Picker et al. 2016). In situationswhen the amount which is recorded after the sale of the assets is lower than thecarrying value, then the assets are carried out at the recoverable amount. Inaccordance to this situation, the assets can be depicted as impaired. The companiesneed to indentify such impairments according to the defined standard as an obligatorydisclosure during the time of indentifying the loss of impairment. If the recoverable value is lower than the carrying asset value, then theimpairment is comprehended. The value requires being more than the fair value and alesser value of the asset that is in use and the selling cost. If the carrying amount of theasset is higher than their recoverable value, then in accordance to “Paragraph 59 ofAASB 136” the carrying asset value requires to be minimized to its previous (Kabir,Rahman and Su 2017). According to AASB 2014, this minimization is treated as animpairment loss. Furthermore, there is a variation in the mechanisms that is utilizedwhile recording the impairment loss variation and this is reliant on the evidence that

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