HA3011 Advanced Financial Accounting: AASB 16 and Company Analysis

This report analyzes the accounting practices of the Tassal Group, focusing on key accounting concepts like going concern, consistency, accruals, matching, materiality, conservatism, and economic entity concepts. It then delves into the changes introduced by AASB 16, the new accounting standard for leases, explaining its impact on financial statements and providing specific examples related to the Tassal Group. The report highlights the transitional provisions and key disclosures the company made regarding its accounting for leases, comparing AASB 16 to AASB 117. The analysis includes discussion of the company's approach to ethical considerations related to financial reporting and the responsibilities of accountants in maintaining integrity and confidentiality. The report utilizes the Tassal Group's annual report to provide practical examples and demonstrate the application of accounting principles and standards, addressing the assignment's requirements comprehensively.

Running head: ADVANCE ACCOUNTING INFORMATION
Advance accounting information
Name of the student:
Name of the university:
Authors note:

1
ADVANCE ACCOUNTING INFORMATION
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................3
References:.................................................................................................................................3

2
ADVANCE ACCOUNTING INFORMATION
Answer to question 1:
Tassal group is one of the largest producer of Tasmanian grown and Atlantic salmon
in the global. It was founded in 1986, and this company is listed in ASE (Australian securities
exchange) since 2003. Tassal group is the public limited company and headquarters are
established in Hobart, Australia and Tasmania. As well as this company is supplying salmon
to both areas domestic and international markets. There are several brands in the tassel group,
aquatics, superior gold, Salamanca Seafood Company, de cost seafood. In the tassel group,
several fundamental assumptions within which accounting operates, it is main to follow
accounting concept for better understanding:
Going concern concept: According to the tassal group annual report, it was assumed that
the business should continue for a force able (unlimited) period, and there is no intention to
close the organization or scale down its operations significantly. This shows that it will not be
closed in the future until and unless there is evidence for closure. So in tassal group, this
concept says that once the business starts its operation, it is now going to close down its
service in near fur seeable future. It is because of this concept we are able to distinguish
between capital and revenue expenditure (Morales and Zamora 2018).
Consistency concept: According to these assumptions, accounting practice one selected and
adopted should be applied consistency year after year. It eliminates personal biased and helps
in achieving comparable results. This is because of using different accounting methods for
individual years. For example, in the case of one financial year used a straight line as
depreciation methods while in case of next year using written down value method. As well as
for using a different way of depreciation, the company’s financial statement will differ
compared with the previous year. (Read and Yezegel 2015).

3
ADVANCE ACCOUNTING INFORMATION
Accruals concept: As per this assumptions in the books of accounts, transactions are
recorded as soon as it is entered into the books but not at the time of settlement. .i.e. when the
sale is services are rendered, receivable of cash is immaterial. So this concept says that
whether income is received or not, whether expenses are paid or not if it is of the current
year, then it shows to be recorded in books of accounts.
Matching concept: In tassal group limited generating income in business, there are certain
expenses which it incurs. So this concept says that all costs of the period should be matches
again revenue/ income. Thus that correct profit/loss/ cost of production can be ascertained as
well as anyone checking or reviewing the company’s financial statements that can be
confident that all the aspects of the transactions are recorded at the particular time (Nobes
2015).
Materiality concept: In this concept says that books of accounts should not conceal any
material information. So that information is considered as substantial information whose
observe/ non-disclosure in accounting effects the decision of the user, and he may suffer
losses so that the financial statements represent the financial position entirely, financial
results of a business (Amin, Krishnan and Yang 2014) and cash flow.
Conservatism concept: In conservative theory to the accounting which requires a high of
degree security of expenditures, revenue and losses doing projects before, legally they can
make any profits, to ensure financial reports which are authentic and appropriate. The
conservatism concept enables the company to stop following the aggressive policy of
business and focus on conservative policy. Thus this tends to make the financial statements
more traditional in nature.

4
ADVANCE ACCOUNTING INFORMATION
Economic organization concept: The transactions of an organization must be separated
from owners. With the help of this intermingling, personal and business operations in the
statement of financials of the company are not possible.

5
ADVANCE ACCOUNTING INFORMATION
Answer to question 2:
AASB has brought about specific changes for lease accounting being the change in
the removal of difference between operating as well as financial leases for lessees having
leases to be included in the balance sheet. AASB 16 shall have a significant impact on
companies. New leasing standard should affect business. Under existing accounting standard,
there is no such obligation for making future payments as per operating lease that can be
included in the balance sheet (Morales and Zamora 2018). There are specific changes for an
accounting standard that would impact in involving of the lease liability and use of assets in
the balance sheet of the company. AASB 16 refers to modifications related to accuracy in
financial statement presentation through the reflection of obligations and provides with
information for investors as well as shareholders through financial reporting. The changes
brought will lead to an increase in EBITDA. The new standard will affect expenses. The
impact can also be in a bank that would create breaches in case company are not concerned
about financiers. The following result would be company might include their right to use
assets in the balance sheet with the increase of assets and the financial statements to be
audited. In AASB 16 there are some objective of the new accounting standard for lease. (Paik
et.al 2016).
 In the books of accounting treatment of lease is provide of lesser and lessees including
presentation and disclosure (Morales and Zamora 2018).
 Non- applicability: lease right for mines and explorations, lease of biological assets,
intellectual property right, service concession arrangement, and right licencing
agreement (Edgley 2014).

6
ADVANCE ACCOUNTING INFORMATION
 AASB 16 prescribe all types of accounting of lease with 2 exception. (Less than 12
months of lease and low value items with lease). So the treatment is to amortise
payment or SLM basis or others systematic basis.
Measurement of assets and liabilities under AASB 16 with examples :( Sacarin
2017.).
Company X (lessee) enters into the arrangement with company Y (lesser) to use a
building for 10 years. The agreement allows company x to use to the building for an
additional period of 5 years (The terms will be negotiated later between the parties if
company X wishes to extend the leased. It is not clear at the institution of the contract
while the lease expression will be extended beyond the original agreed period of 1o
years. Company X aggress to pay $ 50000 per year for the first 10 years (in
advance).it also incurred a direct cost of $ 80000 to enter into the lease.
Answer to question 3:
As per AASB 16 and AASB117 the company has made on its accounting for leases
including on the transitional provision and effect of the transition to the principle of
integrity creates an obligation for all the members of the tassal group. To be in
straightforward as well as honest in terms of all professional and also related to business
relations. Integrity imply fair deal as well as truthfulness (Morales and Zamora 2018).As per
AASB 16 if the report and other kinds of information are in knowledge of accountant return
as well as with other kinds of information then, he can violate into the principles.
Information which are so collected compresses of facts and incorrect information. If the
accountant some revealed the information. If becomes either in signification or delusive. In
such case, the bank finds the breach of principles by the accountant. If the accountant
enhance any kind of information to be or reckless. It is regarded a breach into the principles

7
ADVANCE ACCOUNTING INFORMATION
and also if the accountant is omitting any important statement or information which is
necessary to be calculated, if any such information is omitted it would misled about the
bank. Moreover, if any accountant is very well known about the connection with any of the
confidential report, so the tassal group and in such situation if he had taken any particular
pace which does not have any connection with the company, in this case he does not breach
into principles. Further, if an accountant is held for violation of ethical principles, the
supplied alter the information in the form of that report will be taken into account to take
steps with regards to the suitable matter. Alternatively, the accountant must maintain the
details confidential and not reveal them to its related third party who are related to the
banks. In that case he is in violation of ethical principles for the tassal group. In that case the
violation of equation and law of company auditors is answerable. (Jones, Comfort and
Hillier 2016).
As per AASB 16 “Leases eliminate the concept of finance and operating leases for
lessees which exist under section AASB 117 Leases, changing with the single business model
using which lessees must recognize all contracts on the balance sheet as a new lease liability
and right of use asset. A short term lease and a small value are excluded. Lessee liability
considers all the liability payments concerning the contract of assets, and this will be
discounted at the present cost of the lessee. There are specific rules, and the regulations of
lessors are not changed much over the years. There are certain moves which are brought to
the majority of contracts on the statement of the balance sheet, which was affected by the
IASB and improved the transparency, comparability and disclosure of organization leasing
activities. (Laing and Perrin 2014.).

8
ADVANCE ACCOUNTING INFORMATION
References:
Amin, K., Krishnan, J. and Yang, J.S., 2014. Going concern opinion and cost of equity.
Auditing: A Journal of Practice & Theory, 33(4), pp.1-39.
Edgley, C., 2014. A genealogy of accounting materiality. Critical Perspectives on
Accounting, 25(3), pp.255-271.
Jones, P., Comfort, D. and Hillier, D., 2016. Materiality in corporate sustainability reporting
within UK retailing. Journal of Public Affairs, 16(1), pp.81-90.
Laing, G. and Perrin, R.W., 2014. Deconstructing an accounting paradigm shift: AASB 116
non-current asset measurement models. International Journal of Critical Accounting, 6(5/6),
pp.509-519.
Morales-Díaz, J. and Zamora-Ramírez, C., 2018. The impact of IFRS 16 on key financial
ratios: a new methodological approach. Accounting in Europe, 15(1), pp.105-133
Nobes, C., 2015. IFRS ten years on: Has the IASB imposed extensive use of fair value? Has
the EU learnt to love IFRS? And does the use of fair value make IFRS illegal in the EU?.
Accounting in Europe, 12(2), pp.153-170.
Paik, D.G.H., van der Laan Smith, J.A., Lee, B.B. and Yoon, S.W., 2015. The relation
between accounting information in debt covenants and operating leases. Accounting
Horizons, 29(4), pp.969-996.
Partenie, D., 2014. Creative Accounting Methods Used For Tangible Assets From The Point
Of View Of Auditors.
Read, W.J. and Yezegel, A., 2015. Auditor tenure and going concern opinions for bankrupt
clients: Additional evidence. Auditing: A Journal of Practice & Theory, 35(1), pp.163-179.

9
ADVANCE ACCOUNTING INFORMATION
Sacarin, M., 2017. IFRS 16 “Leases”–consequences on the financial statements and financial
indicators. The Audit Financiar journal, 15(145), pp.114-114.