Research on Australian Accounting Standard

Added on - 28 May 2020

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ANSWERFor the purpose of the conducting the research, the annual report of the year ending 30thof June2017 has been considered.As per paragraph number sixty seven of the Australian Accounting Standard number 116, thecarrying amount of the property plant and equipment shall be liable to be de recognized in thefollowing situations or the circumstances:1.When the particular asset is disposed off during the year or2.When the particular asset is not able to give any economic benefits to the company in thefuture years to come out of the utilization of that particular asset (AASB, 2014).Secondly, when the item is derecognized, the gain or loss shall be disclosed in the statement ofprofit and loss for that particular end.The similar fact and description has been given by the company in the Note number ten of theannual financial report of the company.In case, the company is in its routine business sells and purchase the property plant andequipment, then the applicability of this accounting standard will not be invoked rather theprovisions of the Australian Accounting Standard number 118 on Revenue Recognition shall beinvoked.As per the annual report of the company, the property plant and equipment has two majorheadings – plant and equipments and leasehold improvements. The company in total hasderecognized the non - current assets amounting to dollar 4.7 million (Company OfficialWebsite, 2017).S. No.DisposalsPlant andEquipment (In$ Million)LeaseholdImprovements(In $ Million)Total (In $Million)1.Ending 30thofJune 20174.50.24.72Ending 30thofJune 20164.00.44.4
The screenshot of the same is given hereunder from where the figures have been arrivedAs per the note number 10 of the annual financial report of the company, the company hasrecorded the loss on disposal of the property plant and equipment in the statement of profit andloss for that particular year end under the head of the “Other Expenses”. The detail of the sameis not available in the annual financial report (Company Official Website, 2017).By further analyzing the annual report, it has been observed that in the Note Number sixteen, inaccordance with the accounting standard on cash flow, the company has prepared thereconciliation statement for arriving at the Net profit from the cash flows from the operatingactivities of the company. In that statement, the net losses on disposal of the assets have beenmentioned as follows:S. No.DisposalsEnding 30thof June 2017Ending 30thof June 20161.Net Loss on Disposal4.54.1In this figure, the net loss on the disposal of the property plant and equipment has been included.The bifurcated figure for Plant and equipment and the leasehold improvements have not been
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