HA3011 - Advanced Financial Accounting: Ardent Leisure Group Analysis

This report provides an in-depth analysis of advanced financial accounting concepts with reference to Ardent Leisure Group Limited, an Australian-based leisure and entertainment company. The report identifies and describes key accounting concepts such as accrual, going concern, cost, conservatism, and consistency, explaining their significance in financial reporting. It further discusses the conceptual framework and measurement issues in accounting, including objectivity, consistency, matching, and revenue recognition, while also exploring different measurement methods like historical cost, exit price, fair value, and current cost accounting. The report also addresses issues related to each measurement method. Finally, the report examines fundamental qualitative characteristics like relevance and representational faithfulness, emphasizing their importance in providing useful financial information to stakeholders. The analysis is grounded in the company's financial statements and relevant Australian accounting standards. Desklib provides a platform to access similar solved assignments and past papers for students.

Running Head: ADVANCED FINANCIAL ACCOUNTING
ADVANCED FINANCIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Accounting Concept...............................................................................................................2
Conceptual Framework and Issues in Measurement..............................................................5
Fundamental Qualitative Characteristics...............................................................................8
Conclusion................................................................................................................................10
Reference..................................................................................................................................12

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Introduction
The aim of this report is to do the analysis on the advanced financial accounting.The
analysis will be done with the reference of Ardent leisure Group Limited. It is the Australian
based company, which operates and invests in the leisure as well as entertainment businesses.
Hence,this report includes the discussion on identification and description of the accounting
concepts with the reference of the company. In addition, with the reference of the conceptual
framework as well as measurement in the accounting, discussion will be done on the issue of
measurement of the company. Lastly, fundamental qualitative characteristics such as
relevance as well as representational faithfulness in the relation to the useful information of
the financial statements will be discussed with the reference to the company (Asx.com.au.
2019).
Discussion
Accounting Concept
Accounting is described as the basic assumptions as well as the principles and rules
that works based on recording the transactions of business and preparation of the financial
accounts. For maintaining, the consistency and the uniformity in the preparation as well as
maintaining of the books of accounts there are certain principles and rules thathave been
evolved. These principles and rules are classified as the concepts and the conventions. These
lay the foundations of the maintaining and preparations of the accounting records. Hence,
accounting concepts makes the assumptions that business owners and the business
organization are two different independent bodies for accounting purposes (Franzen and
Weißenberger 2015). Following are the description of some of the accounting concepts:
 Accrual Concept

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This concepts of accounting helps in recognizing the revenues when it became
receivables. It is fundamental accounting principles, which has the requirement of recording
the revenues and expenses that is being recorded in the period of their occurrences apart from
the fact that whether the cash has been received or not (Kieso, Weygandt and Warfield 2016).
 Going Concern Concept
This conceptassumes thatthe organization continues to carry their activities for the
indefinite time-period. Every business organizations have the continuity of life that is not
dissolved in near future. It is the most important accounting assumption as it helps in
providing the basis in order to show assets value in the balance sheet of the company. This
concept enhances for charging the depreciation on fixed assets. It helps the investors by
assuring that the organization will continue for getting the income on its investments (Dixon
and Gaffikin 2014).
 Cost Concept
This concept is the basic underlying guidelines require that the asset to be recorded in the
cash amount at the time of acquiring the asset. It is the principles that requires that the assets,
liabilities as well as the equity investments has to be recorded at the original cost such as the
record of the machine, plants or the building are recorded at the actual prices paid (Perera
2016).
 Conservatism Concept
This is the principle that is general concept for the recognition of the liabilities and the
expenses at the time when there is the uncertainty of the outcome. However, it recognizes
assets and the revenues when there is assurance of it to be received. Therefore, it provides
clear guidance for recording of the estimates and uncertainty cases (Edgley 2014).

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 Consistency Concept
It refers to the principle under which, the accounting method or the principle once
adopted, continues to be followed consistently during the future period of accounting. This
consistency may be changed in case of the introduction of the new version of the accounting
method or principles. This conceptrequires the financial statements of the company to follow
same principles, practices and methods of the accounting. In this, once the company decides
the method of accounting, they stick to the same principle for the long time (Granof et al.
2016).
Application of Concept of Accounting by Company
The company has prepares general purpose financial statement according to the
requirements of Corporation Act 2001, Australian Accounting Standards as well as
Interpretations issued by Australian Accounting Standards Board (AASB) and Trust
Constitution. The company is for-profit entity for preparing the financial statements. The
financial report of the company consists of consolidated financial report. The company
adopts the significant policies for the preparation of the consolidated financial statements and
the policies are applied consistently to the years that are presented. The combined financial
report of the company presents consolidated financial statements that are supported by the
notes for the explanations of the contents of the financial statements (Asx.com.au. 2019).
The financial reports of the organizations are prepared in compliance with the
Australian Accounting Board, which ensures that financial statements comply with the
International Financial Reporting Standards that are issued by international Accounting
Standards Board (Asx.com.au. 2019).

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Conceptual Framework and Issues in Measurement
The conceptual framework is described as the system of ideas as well as the
objectives that leads in the creation of the set of the consistent rules and the standard.
Financial accounting and statements set the nature, limits as well as the functions of the
accounting. Conceptual framework helps in providing framework that sets the standard based
on that accounting is done. Moreover, conceptual framework help in the resolution of the
accounting disputes. It sets out the fundamental principle, which is not being repeated in the
accounting standard. In the financial reporting, the conceptual framework is the accounting
theory that is prepared by the standards setter against which the testing of the practical
problems can be done objectively (Macve 2015).
Measurement of Accounting is described as economical activities as well as the
financial computations, which is in unit, money and hours form. It is based on data evaluation
and basis for comparison of the accounting in the terms of the monetary amount. There are
different methods of the measurement that are useful in order to provide different views of
the position of the company. Measurements of accounting provide the link between the
formal number system as well as the objects and the events by rules of semantic that is
represented in the form of transaction (Zhang and Andrew 2014). Measurement of accounting
exhibits certain principles that are as follows:
Objectivity
The principle of objectivity helps in determining that the measurement in the accounting
of the transactions related to the assets and the liabilitiesshould must be supported by the
concerned documents. This is the principle, which represents reliability of the financial
accounting information as verifiable. It endures that the information presented or disclosed in
the financial statements are relevance as well as relevant (Barker and Penman 2017).

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Consistency
This principle describes that the accounting standards, rules or regulations of the
measurements of the accounting once selected should be consistent for the long time-period.
It is because, consistency of the measurement in the accounting helps in facilitating
comparativeness of the financial position and performances of the company (Kieso,
Weygandt and Warfield 2016).
Matching
This principle helps in matching the efforts with that of the benefits over the given period.
The cost is recognized as the assets for immediately generating revenue. The incurring of the
cost for the generation of the benefits is in the form of revenue (Schröter et al. 2014).
Revenue Recognition
It is described as the revenue, which is not recorded in the case of collecting cash rather it
is recorded in case if it is earned.Therefore, the principle of revenue recognition determines
the condition for the realization of income as revenue (Linsmeier 2016).
Measurement of the accounting includes following methods of measurements:
Historical Cost Accounting is one of the oldest as well as simplest accounting
methods as under this, asset actual costs are recorded.This method of accounting
considers the calculation done based on the assets original value.
Exit Price Accounting is described as the price that is recorded in case when the
company or the investors sell the investments when leaving the market (Watson
2015).

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Fair Value Accounting is known to be one of the most relevant, reliable as well as
most popular methods of measurements that are measured based on observable
market prices.
Current Cost Accounting is that method of measurement in which the assets are
valuated according to the currentreplacement cost. Moreover, the value that is
increase due to inflation is excluded from profit calculations (Vasarhelyi, Kogan and
Tuttle 2015).
Issues in the Measurement of Accounting
Exit Price Accounting
This accounting method assumes that the prices obtained should be in orderly transactions
between the market participants. This method provides information that is less reliable. In the
short period, the fluctuations in the fair values constitutes in the major changes in results.
Historical Cost Accounting
This accounting method,although most famous and applied by most of the company, still
this method does not possess adequacy because under this business profits measurement is
done by making the comparison of the revenue from the assets sold previously (Maskell,
Baggaley and Grasso 2016).
Fair Value Accounting
This accounting method for the measurement is consideredcomplex as compare to others
method. It is because this method possesses inherent subjectivity and the complexity of this
method may increase the chances of audit risk (Hoque 2018).
Current Cost Accounting

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This accounting methodfor the measurement is consideredmore subjective because this
method is not based on the actual transactions. In the situation where decisions have to be
taken for the short-term, this is not the suitable method (Cannon and Bedard 2016).
Application of Measurement of Accounting by the Company
In the case of Ardent Leisure Limited Group, the financial reports are prepared in
accordance with the convention of historical cost that are modified by investment properties ,
property , plant and equipments as well as derivative of financial instruments revaluation that
are held at the fair value. The company uses the old measurement method of accounting.
There is the major drawback of this method consists that it uses the original costs of the
assets rather than taking current valuations of market (Asx.com.au. 2019).
Fundamental Qualitative Characteristics
For making useful decisions of the accounting information, classification has been
done on the three important categories that are constraint of cost, qualitative characteristics
enhancement and qualitative fundamental characteristics. Therefore, the usefulness of the
accounting standard depicts two important characteristics that are as follows:
Relevance
Financial statements providedifferent financial information, which is then used by the
investors and the creditors for evaluating the financial performances of the
company.Therefore, for enhancing useful decisions by the users, the financial statement must
possess the characteristics of relevance. Hence, relevance is the concept, under which the
information are generated by the system of accounting that impacts the decisions of the users
of the financial information. It helps in improving the speed of receiving the financial
statements by the internal as well as external parties that improves relevance of the financial
information they receive. The relevance of the accounting information helps the users of

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financial statement for predicting the future.Information is useful when it creates the
difference to the users for the decision-making. For the information to be relevant, it must
have two main quality that is predictive value and confirmatory value. The former value is
assigned to the information that are useful in the process of predictive. The latter is the value
that is assigned to the information in case for providing the feedback on the prior evaluation
that is done by confirmation and correction. Hence, the company must makes the effort in
order to provide relevant information to the decision-making users (Mbobo and Ekpo 2016).
Under the case of Ardent Leisure Limited Group, they make attempts in order to
provide the financial information relevantly to the users of the financial statements. The
company also provides additional information through the notes in the annual reports that is
assumed useful for understanding of the performance of company (Asx.com.au. 2019).
Representational Faithfulness
It is the concept that is being usedin the context of financial statements for producing
it accurately that helps in reflecting the business conditions. All the information that is
presented in the financial statements should represent faithfully the events, which occurs
during the given time -period. The accounting reports of the company must reflects accuracy,
reliability and verifiability of the financial position including the cash flows, debt as well as
performance of the company. Hence, the information is described as faithfully represented in
the case of the financial information free from bias and is neutral. The faithfully
representation of the financial information has the characteristics, which helps in reflecting
accurate information on the resources of the company, their obligations, claims, business
transactions and much more. Representational faithfulness also represent the completeness of
the financial information that means that financialstatement provides complete information
and no relevant transactions are excluded. Moreover, the neutrality of the financial statements

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means that how much the financial information is free from the biasness (Zinchenko and
Pervichko 2014).
The company Ardent Leisure Limited Group faithfully represents the financial
performance through the financial statements of the company. They makes the effort for
disclosing the financial information that is complete, neutral and free from the biasness
through the annual report of the company. The company makes required estimates and
judgments on the assets and liabilities based on the accounting standards (Asx.com.au. 2019).
Conclusion
Therefore, it is concluded from the analysis that the concepts of the accounting sets
out the rules, principles and the assumptions, based on which transaction of the accounting is
recorded. These concepts include going concern, matching concept, cost concept, accrual
concept and so on. Moreover, in this report discussion has been done on the conceptual
framework. It is the objective system, which creates the consistency in the company’s rules
and regulations that enhances uniformity of standards in accounting.Further, under this
report, measurement of accounting and its issues are discussed. Measurement of the
accounting helps in providing the scope of the comparison and evaluation of the financial
performance and positions of the company. Although, certain challenges are faced by the
company by the adoption of the accounting measurement methods.These challenges occur
because choice of the methods affects the assets and liabilities valuations. Lastly,
fundamental qualitative characteristics is discusses in which relevance and representative
faithfulness are the two important aspects that enhances the presentation of the financial
information that is useful for the ultimate users.

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