Theory and Current Issues in Accounting

TCIA 1
RUNNING HEAD: THEORY AND CURRENT ISSUES IN ACCOUNTING
Theory and Current Issues in Accounting

TCIA 2
Executive summary
The report is developed with a purpose of understanding the current issues and theories in accounting.
For this purpose the Australian Accounting Conceptual Framework is critically evaluated. It was found
that financial statement consist of five elements namely assets, liabilities, and equity which are
recognized in balance sheet and revenue and expense are recognized in income statement. It was also
analyzed that the financial assets are measured on the basis of the fair value or amortized cost under
AASB 139. The assets are recorded at the amount of cash equivalents or fair value of the consideration
at the time of acquisition. Moreover complicated concepts are included in the disclosure practices
therefore no reference was given to it. The financial statements are beneficial in evaluating performance
and it is recommended that an entity shall use conceptual framework while making them.

TCIA 3
Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
1. Elements of financial statements............................................................................................................5
2. Recognition of financial statement’s elements........................................................................................5
3. Evaluation of characteristic of assets.......................................................................................................7
4. Evaluation of the measurement of the assets recognized in accounting framework 2014.....................7
5. Critical evaluation of historical cost of assets method preferred by accountants...................................8
6. Evaluation of the no reference to disclosure practices in financial reporting in Framework 2014..........8
7. Measurement and reporting procedure by ASX listed companies for the assets....................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

TCIA 4
Introduction
The report is developed to discuss the different aspects of Australian accounting framework. It gives an
insight of the elements presented in the financial statements and the contrasting characteristics of them
are compared as well. The characteristics of assets are also evaluated in the report. The report further
evaluates the criteria for measuring the assets and discusses the supporting arguments for assets
measurement. The report also discusses the need for measuring historical cost of assets by accountants.
Literature is drawn from the steward theory to analyze whether the stewardship function of accounting
is being promoted by accountants or not. Explanation is also provided for not giving any reference to
disclosure practice in the framework of financial reporting for 2014. The report further analyzes the
criteria for measuring and reporting the assets by a company listed in ASX by reviewing the financial
position through a selected statement of annual report.