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Qualitative Characteristics of Accounting Information

   

Added on  2019-11-25

20 Pages5020 Words158 Views
Financial Accounting

Financial accountingContentsPart – I (qualitative characterictis)...............................................................................................................3Part-I............................................................................................................................................................3Introduction.................................................................................................................................................3Qualitative characteristics of accounting information.................................................................................4Conclusion...................................................................................................................................................7Part-II...........................................................................................................................................................8Introduction.................................................................................................................................................8Concept of fair value...................................................................................................................................8Limitations of fair value accounting...........................................................................................................10Conclusion.................................................................................................................................................12Part-III (Intangibles)...................................................................................................................................13Introduction...............................................................................................................................................13Measurement and recognition..................................................................................................................14Evaluation on JB Hi-Fi................................................................................................................................15Conclusion.................................................................................................................................................16References.................................................................................................................................................182

Financial accountingPart – I (qualitative characteristics)Executive SummaryThe main aim of AASB is to identify, as well as project the concepts that are related to qualitative features of financial information. Such qualitative features help in making the information useful for the purpose of economic decision making for the end users. In this report, the major emphasis is to evaluate the qualitative features that enables in smooth decision making.The report initiates with the introduction of the concepts of conceptual framework and qualitative features. It is then followed by the qualitative features of the accounting information. A detailed analysis and characteristics of the accounting information is projected in an informative manner. At the end it is concluded that the qualitative characteristics helps in increasing the corporate reporting value.Part-IIntroductionThe key objective of financial reporting is to offer high quality corporate financial information concerning various economic entities, especially of financial nature, useful in effective decision-making. Such provision of high-quality information is significant because it can assist in influencing stakeholders in making credit, investment, and other decisions that can enhance the overall efficiency of the market. According to the conceptual framework for financial reporting, financial information is useful only if it adheres to the qualitative characteristics. Business owners can utilize such accounting information to undertake a financial analysis of their companies (Mark & Michael, 2016). Without the presence of the proper information if becomes 3

Financial accountingdifficult to take proper decision. The business owners are unable to take proper action if the qualitative features are absent. Such information plays a leading role in influencing the decision making process. Decision making can be effective when the qualitative features are established and presented in a better fashion. Besides, qualitative characteristics consist of business owners’ perceived significance of the financial information.Qualitative characteristics of accounting informationThe fundamental qualitative characteristics are faithful representation and relevance that can enhance the quality of financial reporting. In short, the qualitative features helps in providing a strong foundation to the financial reporting and making decision making more meaningful in nature. Further, other characteristics like verifiability, timeliness, comparability and understandability form part of the conceptual framework to enhance decision-usefulness when these are properly established (IASB, 2010).Based on the conceptual framework, accounting information can be regarded as relevant if it possesses the ability to manipulate the financial decisions of users by assisting them to assess present, past, or future scenarios. This means that relevant information must have confirmatory or predictive value. Besides, the predictive value can assist users in assessing the past, future, and present events (IASB, 2010). Furthermore, to possess predictive value, information must not be in the kind of explicit forecast. Nevertheless, the capability to make anticipations from financial statements is maximized by the kind in which the detail on the past is reported. In addition, information can have confirmatory value if it assists the users in confirming or verifying their prior assessment. On a whole, information can be considered as relevant when it is offered in a timely way so that decision-making can be influenced. The second characteristic isa faithful representation that represents faithfully the events and other transactions it intends to 4

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