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Prescribed Standard in Accounting Name of University: A Case Study

   

Added on  2020-03-04

14 Pages1684 Words445 Views
Running head: CONTEMPORARY ISSUES IN ACCOUNTINGContemporary Issues in AccountingName of Student:Name of University:Author’s Note:

1CONTEMPORARY ISSUES IN ACCOUNTINGExecutive SummaryThe report is intended to check the compliance of the financial report with the prescribedstandard. The various aspects of the study have been further able to state about the introductionof prudence to address the disparity in the report. The latter section of the report has shownrational for shareholders to invest in the companies. The findings of the report have revealed thatthat the accounting standard of both the company is in compliance with AASB and CorporationsAct 2001. In addition to this, the standard is based on historical cost evaluation, except for fairvalue assessment of asset and liabilities. The revenue recognition of the companies has beenfurther seen to be based on “AASB 118 Revenue”, “AASB 111 Construction Contracts andInterpretation 13 Customer Loyalty Programmes”. The main consideration for delay in theadoption of the new accounting standards has been seen to the main consideration for theadoption of prudence. The main rational for the investors to invest is due to the increasingrevenue and operating margin for both Qantas Airways and Virgin Australia Airlines.

2CONTEMPORARY ISSUES IN ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................3Conceptual framework of Accounting for both the companies.......................................................3Prudence theory applied in both the companies..............................................................................4Criteria followed for financial data..................................................................................................4Rationale for the shareholders investing in the companies.............................................................5Conclusion.......................................................................................................................................6List of Appendix..............................................................................................................................7References......................................................................................................................................13

3CONTEMPORARY ISSUES IN ACCOUNTINGIntroduction Jet Star runs under the brand name of Qantas Airways and recognised for being the lowcost airline operator from Australia (Qantas.com. 2017). Virgin Australia is discerned as thesecond largest airline operator after Qantas Airways operating in Bowen Hills in Brisbane(Virginatlantic.com. 2017).The study is indented to check the compliance of the financial report with the prescribedstandard. The various aspects of the study have been further able to state about the introductionof prudence to address the disparity in the report. The latter section of the report has shownrational for shareholders to invest in the companies.Conceptual framework of Accounting for both the companiesThe analysis of the financial statement has revealed that the accounting standard of boththe company is in compliance with AASB and Corporations Act 2001. In addition to this, thestandard is based on historical cost evaluation, except for fair value assessment of asset andliabilities. The revenue recognition of the companies has been further seen to be based on“AASB 118 Revenue”, “AASB 111 Construction Contracts and Interpretation 13 CustomerLoyalty Programmes”. Despite of the adherence to the aforementioned standard, both thecompanies is yet to adopt the new standard “AASB 15 Revenue from contracts with thecustomers” on or after 1st January 2018. Both the companies has been further seen to bedetermine whether there is a possibility of replacing the prevailing standard of “AASB 117 forleases” and revise the framework based on AASB 16. Jet Star and Virgin Airlines has further

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