Accounting Standards Review: Allegiance Coal Limited Analysis

This report delves into the contemporary accounting issues faced by Allegiance Coal Limited, examining the company's adherence to IFRS, IASB, AASB, and the Corporation Act 2001. It evaluates the company's compliance with the objectives of general-purpose financial reporting, including providing adequate information about its financial position, changes in economic resources, and cash flow. The report also assesses whether Allegiance Coal meets the recognition criteria for financial statement elements like assets, liabilities, income, and expenses, highlighting the company's methods for measuring and reporting these elements. Furthermore, it analyzes the qualitative characteristics of the company's financial reporting, such as relevance, faithful representation, comparability, verifiability, timeliness, and understandability, concluding that Allegiance Coal demonstrates strong compliance with accounting standards and statutes.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Author Note:

2CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
In this project, light will be shed on the contemporary issues that prevail in the accounting
environment of the company. For achieving the said objective, the company that has been
selected is Allegiance Coal Limited. It will closely examine whether the company has followed
the guidelines prescribed by IFRS, IASB, AASB and the Corporation Act 2001. It will also
demonstrate the various recognition criteria that have been used by the company. The report will
highlight the quantitative as well as qualitative compliances of the company.

3CONTEMPORARY ISSUES IN ACCOUNTING
Table of Content
s
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Compliance with the Objectives of General Purpose Financial Reporting.....................................4
Recognition Criteria evaluation.......................................................................................................8
Qualitative characteristics of financial reporting...........................................................................13
Enhancing Qualitative characteristics of financial reporting.........................................................13
Conclusion.....................................................................................................................................15

4CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The report deals with the various contemporary issues that are being faced by the
organisations in the modern world due to increase in the complexity of the transaction. The
issues are primarily based or are concerning the financial reporting and accounting undertaken
by the business entity. The conceptual framework lays down several disclosure as well as
principles that are needed to be complied with by the company. The issues are related to such
compliance and accounting by the company in respect of the financial statements1. International
Accounting Standard Bporad plays a major role in guiding the companies in abiding by the
principles laid down in the conceptual framework. Proper follow up done by the companies in r
expect of the principles makes the job of the accountants very easy. The report focuses on the
extent of the compliance maintained by the company in respect of the various conceptual
framework guidelines and various other principles. .
Compliance with the Objectives of General Purpose Financial Reporting
It is compulsory on the part of the companies to follow the guidelines and principles stated
out in the conceptual framework. This particular section will ensure that proper emphasis is
given on the extent that the company is in compliance of guidelines given out in the conceptual
framework2. The various objectives of the conceptual framework of IASB have been listed
below along with proper corresponding explanation:
1 Hoque, Zahirul. Methodological issues in accounting research. Spiramus Press Ltd, 2018.
2 Carnegie, Garry. Pastoral accounting in colonial Australia: a case study of unregulated accounting. Routledge,
2014.

5CONTEMPORARY ISSUES IN ACCOUNTING
 The first objective is to ensure that the companies make sure that the users get adequate
and appropriate information regarding the current financial positon of the company. The
information should be based upon the real and correct data regarding the economic
resources available with the company. The same can be found in the statement of
financial position of the company3. Allegiance Coal has ensured that adequate
information is available to its stakeholders in respect of the current financial position of
the company. The information has been clearly stated in the statement of financial
position or the balance sheet and the profit and loss account of the company.
3 Carnegie, Garry D., and Brendan T. O’Connell. "A longitudinal study of the interplay of corporate collapse,
accounting failure and governance change in Australia: Early 1890s to early 2000s." Critical Perspectives on
Accounting 25, no. 6 (2014): 446-468.

6CONTEMPORARY ISSUES IN ACCOUNTING
 The second objective of the guidelines is to ensure that the users are able to stay updated
with any changes that have occurred in the economic resources as well as the financial
claims on the company. The changes taken place in this respect can be found out by
looking at the statement of changes in equity and the income statement of the company.
Allegiance Coal has ensured that all the information regarding changes in the resources
of the company is given out in the financial statements4.
4 Smith, Malcolm. Research methods in accounting. Sage, 2017.

7CONTEMPORARY ISSUES IN ACCOUNTING
 The third objective makes it clear that the users of the financial statements must be in
receipt of information pertaining to the cash flow generated by the company. Due to the
compulsion made by the guidelines the companies require to provide the shareholders
with appropriate information regarding cash flow of the company. Allegiance Coal has
provided adequate information regarding its cash flow to the stakeholders.

8CONTEMPORARY ISSUES IN ACCOUNTING
Recognition Criteria evaluation
All the entities are required to fulfil the recognition criteria as laid out in the conceptual
framework. The requirements include the various elements of the financials of the company like
the expenses, income, assets and liabilities. The recognition criteria’s look forward to satisfy the
definition of the elements, explanation of the flow of the economic benefits and the ways in
which its value can be measured5.
5 Ho, Simon SM, Annie Yuansha Li, Kinsun Tam, and Feida Zhang. "CEO gender, ethical leadership, and
accounting conservatism." Journal of Business Ethics 127, no. 2 (2015): 351-370.

9CONTEMPORARY ISSUES IN ACCOUNTING
Assets:
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10CONTEMPORARY ISSUES IN ACCOUNTING
From the balance sheet, it is clear that the company maintains its tangible assets like the property
plant and equipment at cost less accumulated depreciation. The method of depreciation
employed by the company is straight-line method. In case of the intangible assets the company,
they are initially recorded at cost and subsequently adjusted or reduced by the impaired amount6.
Liabilities:
6 Edwards, John Richard, ed. Twentieth Century Accounting Thinkers (RLE Accounting). Vol. 34. Routledge, 2014.

11CONTEMPORARY ISSUES IN ACCOUNTING
From the balance sheet of the company, it is clear that the company maintains and measures the
trade payables, which are short term in nature at amortised cost, and the same amount is not
discounted for the same reason7. In case of long-term liabilities like the borrowings, the
company initially records it at the fair value of the consideration received less transaction cost.
After the initial recognition, the borrowings are recognized at amortised cost and the difference
between the cost and the redemption is recorded in the income statement of the company.
Income:
It is clear from the balance sheet of the company that the company recognizes its revenue only
when it is probable economic benefits from the transaction are going to flow in the entity and the
amount of such inflow can be measured reliably8. The amount of the revenue is measured at the
fair value of the consideration that has been received by the company.
Expense:
7 Beattie, Vivien. "Accounting narratives and the narrative turn in accounting research: Issues, theory, methodology,
methods and a research framework." The British Accounting Review46, no. 2 (2014): 111-134.
8 Sikka, Prem. "Accounting and taxation: Conjoined twins or separate siblings?." In Accounting forum, vol. 41, no.
4, pp. 390-405. Elsevier, 2017.

12CONTEMPORARY ISSUES IN ACCOUNTING
From the income statement of the financial statements it is clear that the expense incurred in
respect of the qualifying assets are capitalised with the asset and the rest are recognised in the
period in which they’re incurred.
In case of short term employee benefits expenses the company makes sure that they are settled
within a period of 12 months from the time of their reporting. In case of long-term liabilities in
respect of employee benefit expense is measured by calculating the present value of the future
payments that are needed to be made in this respect9.
Qualitative characteristics of financial reporting
Along with the quantitative features of the financial statements, the qualitative features of
the financial statements are also very important for the users of the same. The various qualitative
features of the financial statement prepared by Allegiance Coal Ltd. are as follows:
9 D. Carnegie, Garry. "The present and future of accounting history." Accounting, Auditing & Accountability
Journal 27, no. 8 (2014): 1241-1249.