Importance of Liabilities and Assets’ Measurement to Suncorp Group Limited

This article discusses the importance of measuring liabilities and assets for Suncorp Group Limited. It also covers essential measurements of PPE, intangible assets, financial assets, and financial liabilities. The article meets AASB CF’s qualitative characteristics and is useful for investors, creditors, and other accounting information users.

Suncorp Group Limited 1
SUNCORP GROUP LIMITED
By (Student’s Name)
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Suncorp Group Limited 2
SUNCORP GROUP LIMITED
Executive Summary
Suncorp is a public corporation which is headquartered in Australia. SUN remains a for-
profit entity with consolidated financial statement (FS) being prepared based on historical cost,
except when fair value (FV) measurement application is prerequisite by relevant accounting
standards. SUN presents its consolidated FS in AUD as the functional alongside presentation
currency and that of great proportion of its affiliates (Suncorp Group Limited 2017).
1. Importance of Liabilities and Assets’ Measurement to SUN
The importance of measuring liabilities and assets can be understood in different
perspectives. The first perspective is that liabilities and assets helps the company prepare its
financial statements like balance sheet which then help determine the financial position and
health (Bai, Krishnamurthy and Weymuller 2018). Knowing a Company’s financial position is
not only important to the SUN intrinsically, but also extrinsically. For example, investors will
want to know the Company’s financial position to make investment decisions in the Company
(Valaskova et al. 2018). Thus, when SUN correctly measures assets and liabilities and present
them in the balance sheet, it will convey a message to the outside stakeholders like investors who
will then decide to invest if the company has a convincing financial health or position and hence
a going-concern (Albrecher et al. 2018).
SUN will use measurement of liabilities and assets to prepare a balance sheet which helps
it communicate (at a glance) to the interested parties the idea of its financial position besides
displaying why SUN owns and owes (Atkeson, Eisfeldt and Weill 2017). The measurement of
assets and liabilities help creditors and investors to understand where their money went and
where it is presently through the balance sheet. This is because through such measurements, a

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comprehensive balance sheet is prepared which provides useful information regarding SUN’s
asset investment (Albrecher et al. 2018).
2. Essential measurement
PPE (Property, Plant, and Equipment)
The amortization alongside depreciation expenses linked to SUN’s corporate segment’s
PPE alongside non-business combination obtained intangible asset remain assigned to other
segment-oriented on respective utilization (AASB 116).
Intangible Assets
Intangible assets (IA) get recognized initially at cost minus all accumulated amortizations
besides all impairment losses’ accumulations. When SUN acquires IA in a business combination,
such an asset’s cost is its FV at date of acquisition (AASB 13). Goodwill gets recognized at cost
from combination of business and is consequently measured at cost minus accrued impairment
loss (AASB 138).
Financial Assets:
The financial assets at FV via loss or profits remain measured at FV via loss or profit
and get classified either as held for trade or designated as such following initial recognition as a
consequent: (i) If SUN is managing such investments, appraises performance as well as make
purchase alongside sales decisions on the basis of their FV according to SUN’s recognized risk
management or the investment strategies; and (ii) If SUN removes or reduces, meaningfully,
recognition or measurement inconsistencies. Financial assets at FV via profit/loss entail trading
securities alongside investment securities (AASB 13).
The non-derivative financial assets held-to-maturity investments stay recognized
initially at FV plus all unswervingly attributable costs of transaction on trade date and

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consequently measured at amortized cost utilizing the method of effective interest rate at every
date of reporting (AASB 13).
Non-derivative financial assets loans alongside other receivables describe those assets
with determinate or fixed pay which stay quoted within active markets including every kind of
direct finance or lending given to customers of a banking like finance-leases, and premium
unsettled. They are initially recognized on originated dated and measured initially at FV plus all
unswervingly attributable costs of transactions and consequently get measured at amortized cost
minus losses of impairment (AASB 13).
Available-for-sale financial assets include equity and debt securities that are envisioned
to get held for the indeterminate time duration, however that might get sold in reaction to the
alterations in interest or exchange rates and the need for liquidity. They remain recognized
initially at FV added to all unswervingly attributable cost of transacting and then measured at FV
at every date of reporting. FV loses and gains apart from foreign exchange losses besides gains
on debt security, remain recognized in additional comprehensive income till derecognized or
impaired, whereby accumulative losses alongside gains initially recognized in additional
comprehensive income get moved to loss or profit. Foreign exchange losses or gains on debt
security get recognized in loss or profit.
Financial liabilities
For non-derivative financial liabilities;
Financial liabilities at FV via loss or profits get classified either as held-for-trade or
designated after recognition initially. SUN recognizes liability at FV on point of trade with all
straightly attributable cost of transacting as incurred in loss or profit. FV gets established
utilizing offer prices if obtainable. FV changes get recognized in loss or profit and SUN

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designates some short-term offshore borrowings at FV via loss/profit whenever they get
managed on FV basis.
Financial liabilities at amortized cost get initially measured at FV plus any directly
attributable cost of transaction and consequently measured at amortized cost utilizing EIM. The
SUN’s financial liability at amortized cost entail short-term borrowings besides deposits, debt
issues, preference shares as well as subordinated notes.
Employee Benefits
For short-term employee benefits; liabilities remain those anticipated to get fully
settled before12 months following a reporting period closure where employees render the
associated services. SUN measures such benefits at amounts anticipated to get paid when they
settle liabilities (AASB 119). Related on-costs like superannuation, compensation of workers,
and payroll tax are also encompassed in liabilities.
For long service leave and annual leave; include liabilities not anticipated to get fully
settled within 12 months following the closure of period for reporting. Such liabilities get
measured at PV of anticipated future payments to be made with regards to provided services by
employees leading to reporting date.
For share-based payments; their FV get recognized on straight-line framework as
expense over vesting time, with a correspond surge in equities. FV is computed on grant date as
FV of every granted share multiplied by number of expected share to ultimately vest. The FV of
share-centric payment remain anchored on share price’s market price, dividend entitlements as
well as market vesting conditions upon which such shares got granted.
3. Measuring Liabilities and Assets Meet AASB CF’s Qualitative Characteristics

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As reflected in SUN’s 2017 Annual Report, under the “statement of compliance” the
SUN’s consolidated FS remain general purpose FS that are prepared according to the Australian
Accounting Standards (AUS) (which include Australian Interpretations) adopted by AASB
(2019) alongside the Corporations Act 2001 (Cth). The consolidated FS remain in compliance
with IFRS as well as the Interpretations issued IASB.
Based on the annual report of SUN and analysis of its financial statements preparation
and presentation, it can be categorically stated that the measurements of liabilities and assets
discussed in question 2 above meets the AASB conceptual framework’s fundamental and
enhancing qualitative characteristics as provided for under QC1-QC32 of the CF. The
information meets such fundamental qualitative characteristics as including relevance (QC6-
QC10), materiality (QC11) reliability, faithful representation (Q12-QC16) and their application
(Q17-Q18). The info also meets the enhancing qualitative characteristics (QC19) including
comparability (QC20-QC25); verifiability (QC26-QC28); timeliness (QC29) and
understandability (QC30-QC32) and the application of enhancing qualitative characteristics
(Q33-QC34) hence making the info consistent since its accounting information are not only
useful but also understandable for decisions alongside reporting purposes.
SUN’s financial information meets the AASB’s goal of financial reporting of providing
useful info to both potential and current investors, creditors alongside other accounting
information users including standard-setting bodies and government to make both credit and
investment decisions. This means that SUN’s financial info remains useful because they are
relevant and faithfully represent specific liabilities and assets it claims to signify. Indeed, the
information’s usefulness given in the highlighted assets and liabilities in question are further
enhanced as they are understandable, verifiable, comparable and timely (QC4).

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In regards to relevance, SUN information is relevant as provided under the assets and
liabilities makes difference in making decisions because they meet both primary qualities of
timeliness and the secondary qualities of predictive value and feedback (confirmatory) value
(QC6-QC7). Specifically, the assets and liability information have predictive value (QC8)
because they have been utilized as input to process deployed by consumers in predicting future
results (Macve 2015).
The information about liabilities and assets also meet the materiality characteristics
(QC11) because any omission or misstatement of liabilities and assets in SUN will influence
users’ decisions made based financial info regarding SUN (Laswad and Redmayne 2015). SUN
financial information meets the faithful representation quality (QC12) because liabilities and
assets info have not only represented relevant phenomenon, but have also faithfully represented
the phenomena (financial health) it claims to denote because the info remain complete, free from
error and neural as confirmed by external auditor report by KMPG (QC13). SUN’s financial
report have effectively applied fundamental qualitative characteristics by initially identifying the
economic phenomenon with the potential to remain useful to users like financial position and
subsequently identifying info regarding this financial health like assets and liabilities most
relevant if availed and faithfully represented and then determined whether such information is
available by preparing a balance sheet.
In terms of reliability, the information presented as per AASB 101 by SUN under assets
and liabilities remain reliable because they remain verifiable, neutral and factual and faithfully
represented as required by the AASB concept framework. Moreover, they have met the primary
qualities of verifiability and representational faithfulness as confirmed by the external auditor

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report by KMPG. They are also neutral hence meeting the secondary quality which dictates that a
financial info must be neutral (Osadchy et al. 2018).

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https://www.aasb.gov.au/admin/file/content105/c9/Conceptual_Framework_05-19.pdf
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http://www.annualreports.com/HostedData/AnnualReportArchive/S/ASX_SUN_2017.pdf
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