Accounting Standards and Liquidation: A Report on West Ltd Analysis

This report provides an accounting analysis of the liquidation of Fishy Tales Ltd and its subsequent acquisition by West Ltd. It highlights the importance of adhering to accounting standards, particularly AASB 3 concerning business combinations, and the ethical principles outlined in APES 110. The report examines the impact of the merger on West Ltd's financial statements, noting the increase in asset value on the balance sheet. It also addresses the marketing manager's limited accounting knowledge and the need for compliance with accounting standards. The analysis concludes with recommendations for West Ltd to ensure proper accounting practices are followed post-merger for optimal business integration and financial reporting.

Accounting
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Executive summary:
In the business for the owner and other person r to the business like creditors, supplier and other,
accounting is the internal and inherent parts of business management activities due to it connect
each financial part of the company. Good and solid accounting standards and practices provide
several benefits to the company and also encourage the investors to invest in such company. This
report is based on the business of West ltd. Company selling two types of brand products in to
different area or location in Australia. This report contained the liquidation of Fishy Tales Ltd.
Company which having business of selling fishy products. Before the liquidation of this
company, it performance in the business market is good. Hence the merging into another
company West Ltd. Company is a highly shocking new to everyone. This report has shown the
power of accounting into the business as the marketing manager of the West Ltd. Have good idea
for know how to sale product in the market but not proper knowledge about the accounting. So
this report assists marketing manager to get information about the accounting.
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Table of Contents
Executive summary.....................................................................................................................................2
Liquidation of Fishy Tales Ltd....................................................................................................................4
Effect of proposal on the financial statements of the West Ltd organization...............................................6
Recommendations:......................................................................................................................................7
Conclusion...................................................................................................................................................8
Reference.....................................................................................................................................................9
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Liquidation of Fishy Tales Ltd
This is the company before liquidation dealt in fishy products and sold their manufactured
product into the Australian market by giving the name of as Tropical Taste. This company goes
into the liquidation due to it not meet the liabilities of creditors to pay their unpaid amount and
thus company need to sell business assets in order to pay them. But the liquidation of this is done
get merger into the business of West Ltd. Which having also the same business and this company
acquired all the assets and liabilities of Fishy Tales company. Ownership of the company was
transferred or poises by West ltd. Company so the business of Fishy Tales Company can be run
by the West Ltd company. Reasons of the liquidation or can say purchased by West ltd company
business of Fishy Tales company is as under:
 Weakness in the part of internal control system internal controls:
The top and the middle level management of the Fishy Tales Company are responsible to set up
a proper and good control system within the organization. The management should ensure that
business each activity is under controlled situation and also follow other ethical requirements.
This company is not so much small but the management practices used by this company are not
good or enough to manage the business of the company effectively (Paul, et. al, 2018).
 Overvaluation of assets:
The company not follows the accounting standards regarding the valuation of assets like plat and
machinery, building and rest of the other business assets. It is must that every company like
Fishy Tales Ltd apply the application accounting and management norms in the business to
ensure about the facts of financial position or condition that can be used by the external parties.
The positive approach of the company of Fishy Tales to merge into the business of West Ltd or
can say this company needs to expand its business that’s why it obtained the assets and liabilities
of Fishy Tales
 Want to expand business and goodwill:
The West Ltd company treated itself as an advocate of sustainable fishing. It means, this
company not conducts its business activity in environmental behavior. The general public of the
area also get ensured from the previous campaign of West Ltd in which it not affected by its tune
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fishing. The Steve Irwin is the marketing manager of the West Ltd company and through his
report he showed that this company is the environmental love company which cannot harm to the
environment by its business activities. in his report, the report provide that there is no impact on
the company profitability and explained that if any damage made in the company ships then the
amount which is incur on repairing of such assets will need to capitalize because the purpose of
incurring such cost for marketing purpose (Bayerlein, and Timpson, 2017).
The company need to obtained and achieved higher level of success by working both company
together so that competition reduce between the companies and make encourage each company
in order to work together and achieved the desired goals.
In the following part it is seen how the proposal of acquiring of Fishy Tales business effect
financial position and statement of the West Ltd company.
The financial statement contains basically three types of statement or reports like cash flow
statement, balance sheet and the yearly income statement. From the marketing manager, Steve
Irwin shows that on the merger of Fishy Tales Ltd company there will be no effect on the West
Ltd company’s income statement but this will impact (positive impact) on balance sheet of such
company. As soon as merger of Fishy Tales into the West Ltd entity done, the financial assets of
the West Ld. Company increase due to the acquiring of Fishy Tales assets and liabilities.
Marketing Manager of this company (Steve Irwin) has a good idea about how to increase sale but
unable to manage sales according to fulfill the applications of accounting standards (Kwon, and
Wang, 2018).
When any company acquires any other company’s business then it effect purchasing company’s
financial position and even its financial statements. Here the purchasing company is West Ltd
Company the purchased company is Fishy Tales Company. The purchased of new business or
acquire it should be as per the accounting standards and stated in the respective accounts.
Following are the base on which the applications of accounting standards measured and need to
fulfill such requirement according to the accounting standards of the concern country (Carvalho,
et. al., 2016).
 Measure the value of all tangible assets and all tangible liabilities of the merger company
 Calculate the value of all intangible assets and liabilities of the entity at the time of
purchasing of new business
 It is also be must for the purchasing company that it should overlook at the non-
controlling interest and measure of such is mandatory.
 Evaluation of any goodwill has been generated from the purchase of business or not and
generate goodwill then it must be show by the purchased company at the assets side of
balance sheet under the intangible assets and if goodwill not generate, it indicate capital
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reserve and this is shown at the capital reserve head in the balanced sheet of the new
purchased company.
The AASB 3 (Australian Accounting Standard Board) is related to the merger, acquisition of
business. This ASSB is known as business combination because on the occasion of merging
purchase into the new business it make two separate entity into single entity and this is the
combination of two or more than two companies. Therefore on this basis it is known as AASB 3
related to business combination (Su, and Wells, 2018).
Effect of proposal on the financial statements of the West Ltd organization:
On the balance sheet: The balance sheet after the merger of Fishy Tales Ltd organization into
West Ltd increase the value of assets due to obtained more assets as compared to the acquiring of
liabilities. The net position of the company also increased and shows more than the previous
time. This is because company obtains other company business.
According to the information provided, it is stated that on the occasion of merging of Fishy into
the West that there is no impact on the income star5emjent of the West Ltd company. The reason
may that the merge of the company occurred at the time of financial year so that the income or
profit generated by the Fishy company used their such profits into the business so there was no
surplus amount of profit available in the business which can be shown I n the statement of
income of West Ltd company (Sedki, et. al., 2018).
There is the code which is should be followed by the company named Code APES 110 related to
the ethics for professionals:
Analysis of the above company is understand the lack of accounting standards which is main
reason here for evaluation of the proposal of acquire new business of into the West Ltd company.
In business, so many times situation occur which is faced by the marketing manager of the
company regarding fulfill the requirement of accounting because of the marketing manager only
little about accounting parts. As this business field is related to his professional that’s why he is
weak in this part of company management (Krupenye, et. al., 2017). This code of principles
contained mainly five basic principles which are as follow:
Integrity: APES code 110 states that this is mainly important and necessary thing which is need
to maintained in the working place. Under this, this code demands high level of honesty.
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Objectivity: sometime a situation occur when personal interest need to be wave for the interest of
public. This is important because of this company focus on its objectivity.
Professional Competence: Every customer have a right to get best quality goods and this should
be proved by the company as West ltd company follow the norms of environments (protest to
save environments).
Confidentiality: Privacy of data from the other company management must be high level matter.
This help to maintain the privacy of the company as the company information are kept in
confidential.
Professional behavior: It is must for the effective and good environment of business atmosphere
because this help in running the business successfully and efficiently (Krupenye, et. al., 2017).
Recommendations:
For the best use of other company business for their own purpose after merging, it is
recommended to the management of the company, accounting department and also the marketing
manager of West Ltd company that they should always focus on following the requirement of
accounting standards and also evaluate the impact of such accounting standards on the business
of purchasing company due to the increase or decrease in the value of assets and liabilities.
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Conclusion
Under this report seen that two companies same business and one company merge into the other
company or it can be said as other company acquired the business of one company. This report
contained the information of accounting related part to the organization of West Ltd as this
company marketing manager not knowing full information about the accounting parts of
business and he was unable to provide the impact of merger of company on its existing business.
This report had showed the collapse of Fishy Tales Ltd company and merger as per according to
the AASB 3 business combination into the business of West Ltd. Company. APES 110 showed
the ethical principles which are also explained and discussed in this report in brief detail. This
showed the five important ethics which is must in the ethics of professional business because
these are the important for improve the professional prestige.
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Reference
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programmes in Australia meet the needs and expectations of the accounting
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 Carvalho, C., Rodrigues, A.M. and Ferreira, C., 2016. The recognition of goodwill and
other intangible assets in business combinations–The Portuguese case. Australian
Accounting Review, 26(1), pp.4-20.
 Krupenye, C., Kano, F., Hirata, S., Call, J. and Tomasello, M., 2017. A test of the
submentalizing hypothesis: Apes' performance in a false belief task inanimate
control. Communicative & integrative biology, 10(4), p.e1343771.
 Kwon, S.H. and Wang, G., 2018. The change in the value relevance of accounting
information after mergers and acquisitions: evidence from the adoption of SFAS 141
(R). Accounting & Finance.
 Paul, M., Daikos, G.L., Durante-Mangoni, E., Yahav, D., Carmeli, Y., Benattar, Y.D.,
Skiada, A., Andini, R., Eliakim-Raz, N., Nutman, A. and Zusman, O., 2018. Colistin
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trial. The Lancet Infectious Diseases, 18(4), pp.391-400.
 Sedki, S.S., Posada, G.A. and Pruske, K.A., 2018. Differences Between US GAAP and
IFRS in Accounting for Goodwill Impairment and Inventory: Tax Treatment Under the
Internal Revenue Code. Journal of Accounting and Finance, 18(4).
 Su, W.H. and Wells, P., 2018. Acquisition premiums and the recognition of identifiable
intangible assets in business combinations pre-and post-IFRS adoption. Accounting
Research Journal, 31(2), pp.135-156.
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