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Qualitative Characteristics of Financial Accounting

   

Added on  2021-05-31

11 Pages1795 Words121 Views
Running head: ACCOUNTINGAccountingName of the StudentName of the UniversityAuthor’s Note

1ACCOUNTINGExecutive SummaryThe first part of the report involves in analyzing the role of ASIC and the result of their findings.The next part involves in the analysis of impairment write-downs in Wesfarmers. The next partputs emphasis on the compliance of Wesfarmers with the qualitative characteristics of financialinformation. The last part involves in testing the compliance of Wesfarmers with the objectivesof general purpose financial reporting for impairment computation.

2ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................3Role of ASIC...................................................................................................................................3Details of Impairment Write-downs in Wesfarmers........................................................................4Compliance with Qualitative Characteristics..................................................................................4Compliance with Objectives of General Purpose Financial Reporting...........................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10

3ACCOUNTINGIntroductionThe main objective of this report lies in the analysis and evaluation of all the necessaryaspects of impairment write-downs of the companies listed under Australian Security Exchange(ASX) and for the simplification of the report, Wesfarmers Limited is taken into consideration asit is a major company in the Australian retail industry (wesfarmers.com.au 2018). This reportalso puts focus on the role of Australian Securities and Investment Commission (ASIC) as acorporate regulator. Role of ASICASIC is an independent commonwealth body of Australia and its vision is to ensure thegrowth of Australian economy. Three major roles of ASIC can be observed. The first roleinvolves in the promotion of confidence and trust of the consumers and investors. The secondrole involves in ensuring efficient and fair market. The third role involves in providing efficientregistration services. Apart from this, ASIC involves in improving the financial reporting qualityas a part of their financial reporting surveillance program (asic.gov.au 2018).After the review of financial reports of the companies, ASIC has encountered with theissues related to impairment testing, asset valuation, revenue recognition, tax accounting andaccounting policy judgment and estimation (asic.gov.au 2018). As per ASIC’s findings for assetvaluation and impairment, in spite of the presence of large independent cash flow, the companiesidentify cash generating units (CGU) at high level. In addition, discounted cash flow method isused for fair value estimation (asic.gov.au 2018). ASIC has also highlighted the inefficiencies ofthe business entities about non disclosure of information of sensitivity analysis, accountingassumptions and fair value method techniques. As per ASIC, two major issues related to revenuerecognition are to recognize commission on the contracts of property development and therequired time to bring the revenue in account. According to ASIC, techniques of tax accountingand sufficiency of future taxable income in order to recover deferred tax assets is the main issuein tax accounting. ASIC has also found issues related to the improvement completeness andquality of all financial disclosures (asic.gov.au 2018).

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