Analysing Contemporary Accounting Issues: Carsales.com Report

This report provides a detailed analysis of contemporary accounting issues, primarily focusing on the financial reporting practices of Carsales.com Ltd. It examines the objectives of general-purpose financial reporting, the target audience of financial reports, and evaluates the primary objectives of the conceptual framework. The report scrutinizes recognition criteria, analyzes Carsales.com's financial statements regarding relevance and faithful representation, and assesses enhancing qualitative features of financial declarations. Key aspects covered include revenue recognition, asset and liability valuation, equity analysis, inventory management, and accounts receivable. The analysis aligns with Australian Accounting Standards Board and Corporation Act 2001 regulations, providing a comprehensive overview of the company's financial health and reporting compliance. Desklib provides access to this and other student-contributed assignments.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
University Name
Student Name
Authors’ Note

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Contemporary Issues in Accounting..........................................................................................1
Introduction................................................................................................................................2
Objectives of the General Purpose Financial Reporting............................................................3
Target audience of the General Purpose Financial Reports.......................................................3
Evaluation of primary objectives of the conceptual framework................................................3
Scrutiny regarding recognition criteria......................................................................................4
Analysing financial reports of the firm Carsales.com................................................................4
Appraisal of financial statements regarding relevance and faithful representation...................7
Analysis of enhancing qualitative features of financial declaration..........................................8
Conclusion................................................................................................................................10
References................................................................................................................................11

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The current study at hand elucidates in detail various systems along with methods of
accounting that can consequently facilitate the system of tracking, assessing, scrutinizing,
controlling and at the same time directing business operations of Carsales.com Ltd as the
particular point of reference. In actual fact, the study aims to present investigative findings of
various of different dimensions that again can assist in highlighting the necessities of
evaluating conformity towards specific set of laws and purposes of conceptual framework.
Also, the current study helps in analysing degree to which financial statements meet the
necessities of recognition criteria from the financial reports of the firm (). Moving further, the
current study carries out a detailed evaluation of fundamental qualitative along with
enhancing features of financial reports.
Carsales.com Ltd (listed in the ASX as CAR) can be considered to be largest online company
that operates in the automotive, motorcycle as well as marine classifieds sector in the nation
Australia. The company attracts higher number of customers who are comparatively more
interested in purchasing or else selling cars, trucks, caravans, motorcycles as well as boats
than any other classified group of websites.
Objectives of the General Purpose Financial Reporting
The objective of the general purpose financial reporting is deliver key financial information
regarding the reporting entity. This information is said to be effective to various subsisting
along with potential financiers, lenders and creditors in arriving at decisions about delivering
resources to the reporting entity. In essence, the decisions include purchasing, selling else
wise holding equity along with various debt instruments and presenting or settling loans as
well as other forms of credit (Rankin et al. 2012).

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Target audience of the General Purpose Financial Reports
The primary audiences of the general purpose financial report are existing and prospective
financiers, debtor of the business as well as creditors in framing specific decisions about
presenting possessions/resources to the entity (Ao 2015).
Evaluation of primary objectives of the conceptual framework
In essence, conceptual Framework indicates towards the intention as well as principles of the
GPFR. Basically conceptual Framework is an effectual mechanism that can assist the entire
Board of the business in augmenting financial standards founded on specific principles,
notions and themes. In addition to this it can also be mentioned herein that individuals
responsible for preparation of general purpose financial reports can design effectual and at
the same time dependable strategies of accounting. On the other hand, financial standards can
assist in improving the entire procedure of adoption of a definite accounting scheme
(Henderson et al. 2015).
Essentially, review of financial pronouncements of the firm shows compliance with the
directives of Conceptual Framework of Australian Accounting Standards Board. As such, this
helps in gaining thorough understanding regarding intentions of financial declaration,
qualitative exclusivity that in turn establishes efficacy of financial statements. Nonetheless,
there are several components of financial declarations that can assist different users to use the
acquired information to frame decisions concerning buying, selling otherwise holding on
equity, diverse debt instruments in addition to settlement of loans or credit. Hence, this is the
way in which financial statement satisfies the requirements along with the objectives of
specific financial directives. Ryan et al. (2014) suggest that there are numerous items of
financial pronouncements namely assets and liabilities (taking in both current and non
current). Therefore, users of financial information of the business concern can learn about

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capabilities as well as financial resources of the firm. Also, the users can analyse prospects of
the business concern in the future from statements on future flow of cash. Again, this too aids
in the process of reviewing effectiveness of management of the firm in discharging their
duties.
Scrutiny regarding recognition criteria
Analysing financial reports of the firm Carsales.com
Analysis of financial assertions mainly comprises of appraisal of consolidated financial
declarations of the firm Carsales.com that indicates towards general purpose financial reports
(GPFR). General purpose financial reports of the business concern consideration are
developed and presented as per regulations stated under Australian Accounting Standard
Board as well as Corporation Act of the year 2001. Besides this, corporation is also seen to
financial information rules of International Accounting Standards Board together with the
International Financial Reporting Standards.
Revenue:
Revenue is enumerated at the fair value of the deliberation received or receivable of the
corporation (Deegan 2013). Revenue of the firm Carsales.com registered to be AUD
344010000 during the year 2016. Amounts of revenue that is disclosed are essentially net of
returns, diverse allowances for trade as well as amounts acquired on behalf of diverse third
parties. Revenue can also be enumerated reliably (Cordery and Sinclair 2016). In case when
services are not delivered but the Group is obliged to deliver the services in the upcoming
period, recognition of revenue is deferred.

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Assets
Analysis of financial statement of the firm Carsales.com reveals that assets of the business
concern are represented in Australian dollars that happens to be the functional currency.
Fundamentally, analysis of asset stated in financial pronouncements reveals that assets can be
hereby categorised as particularly held for sale (Deegan 2013). In itself held for sale is
calculated at the lower value of cost identified in comparison in terms of fair values after
proper deduction of cost for sales. Analysis of financial report reveals the fact that fair value
of the business concern's assets (planned) is presented at current value. Worth of Asset of the
firm Carsales.com during the year 2016 is recorded to be AUD 545774000.
Liabilities
Liabilities of the business concern Carsales.com, as mentioned in the financial statement
stands at AUD 285404000. In itself balance sheet presents liabilities that can be used for
funding different operations of the business concern. Analysis of financial statement reflects
the fact that liability is reflected in terms of historical cost consequently valued in terms of
the operational currency that is in this case Australian dollar. Adding to this it can be said that
defined liability of the business concern is enumerated at the fair value (Deegan 2013). In this
case fair value of particular liabilities is taken into consideration only after subtraction of
current value of specific defined benefit necessity.
Equity
Study of the balance sheet statement of the corporation Carsales.com helps in identifying the
fact that equity possessed by corporation's shareholders stands at AUD 2603 70 000.
According to the annual financial statements business concern, derivatives stated in the report
are necessarily presented at fair value by utilising earnings as well as expense of the
corporation. Therefore it can be here by stated that the Corporation appropriately utilizes

7CONTEMPORARY ISSUES IN ACCOUNTING
diverse models for calculating derivatives that subsequently scheme of enumeration at fair
value (Ferguson et al. 2014).
Inventory
The financial condition as well as financial health of the Corporation can be analysed from
inventory. Inventory as stated in the financial statement of Carsales.com stands at AUD
1112000. Inventory recorded in the financial statement shows decrease in the year 2016 as
compared to the previous year 2015. This decrease in inventory can reflect of competence of
the corporation to take hold of and deal with inventory in an improved manner. . This can
help in controlling the level of inventory of the firm and might perhaps competitive edge of
the firm (Gelmini et al. 2015).
Accounts receivable, provision for bad debts and provision for doubtful debt
According to the annual consolidated statement of the corporation Carsales.com accounts
receivables is registered to be AUD 44722000. Receivables as mentioned in the financial
statement include current as well as noncurrent receivables. Statement shows increase in
account receivables during the year 2016. Analysis of the pecuniary statement can help in the
process of analysing increase in receivables. It can be seen that receivables are in general
registered at fair values and calculated at amortised cost rising interest method after
subtraction of firm's outlays for impairments. Especially this is an optimal structure for
specifically capital that can help in lessening the level of debt and increasing liquidity
(Goodwin et al. 2016). This can show the way to increase in return.
Appraisal of financial statements regarding relevance and faithful representation
As rightly put forward by Harris and Roach (2013), features of effective pecuniary
information includes relevance along with faithful representation specific information

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regarding the finances of the business unit. Henderson et al. (2015) suggests that relevance
indicates towards financial information that helps in understanding variances in different
economic decisions. Appraisal of financial information in the annual report of the firm
Carsales.com helps in understanding variances present different economic decisions. In itself
this has a predictive value and confirmatory value. In addition to this, faithful representation
various economic happenings presented in numerical terms or literature.
Analytical evaluation of qualitative enhancing characteristics of financial
pronouncement
Fundamental qualitative features of pecuniary information provided in financial statement
includes relevance along with faithful representation of particular financial information.
Relevance
Rankin et al. (2012) suggests that relevance of specifically pecuniary information can aid in
presenting specific various money-making decisions of users in case if that has particular
predictive value. Analysis of pecuniary information presented in the report can help in
analysing variances in different economic decisions. Also, the same has specific predictive
value apart from confirmatory value.
Faithful Representation
Williams (2014) says that faithful representation also assists in representing economic affairs
presented in literature as well as number. With the aim of getting effective, financial
information in itself needs to be relevant and have faithful representation. Detailed analysis of
financial assertions of the business concern Carsales.com clearly mentions about level of
confidence of consumers, various economic fundamentals of the nation Australia, specific

9CONTEMPORARY ISSUES IN ACCOUNTING
growth dimensions, specific information on trading partners along with impact of global
forces on the business.
Analysis of enhancing qualitative features of financial declaration
As rightly put forward by Yong et al. (2016), enhancing qualitative features refer to
comparability, timeliness, verifiability as well as understandability.
Comparability:
Cordery and Sinclair (2016) suggests that comparability indicates towards definite
information regarding a reporting unit that can inevitably aid users in the process of detection
and realization of existent similarities along with dissimilarities among different items
accounting. Ryan et al. (2014) mention that critical analysis of various functions and business
operations helps in carrying out comparative review of financial information and assessment
of the global operating environment. In itself, definite figures presented for diverse metrics
that is to say operating margin of firm, growth rate of firm’s revenue and worldwide capacity
among many others considered for diverse period of time can assist in comparability of
information.
Verifiability:
As recommended by Cordery and Sinclair (2016), verifiability assists users in understanding
the fact that information reflects faithfully certain economic occurrence that it asserts to
represent. Also, financial information of the Carsales.com Limited certainly sticks to the rules
mentioned under Corporation Act of the year (2001) together with listing convention
stipulated under the exchange that is the Australian Stock Exchange. Essentially, the financial
declarations presented by the firm also reflect that the management has undertaken specific
policies of arranging and thereafter presenting different disclosures (Carey et al. 2014). This

10CONTEMPORARY ISSUES IN ACCOUNTING
in consequence is said to assist various investors of the said business concern under
consideration to critically appraise financial health of the firm. Particularly, firms presenting
continuous disclosures in their annual pronouncements can help in the procedure of
enhancing the level of confidence among the investors by maintaining clarity and
transparency, dependability as well as degree of integrity of operations of the business entity
and that of the financial pronouncements of the corporation (Henderson et al. 2015.)
Timeliness
This factor refers to the available information that has the need to be accessed by different
decision makers for arriving at their decisions.
Understandability
Analysis of financial declarations assists in the process of reflecting notes to pecuniary
statements along with accounting policies (Bond et al. 2016). This too can enhance
understandability of information. The entire procedure of preparation along with arrangement
of financial declarations of the business concern follow specific conceptual framework under
conceptual framework of Australian Accounting Standard Board. Conformation to various
standards as well as guiding principles can thus help in analysing; exerting efforts for
avoiding intentional misstatements and certifying stability of pecuniary information presented
in the reports (Ao 2015).
Conclusion
In the end it can be said that the above study aids in analysing diverse financial items centred
in pecuniary reports of the company Carsales.com along with different notions of accounting
measurements. Additionally the study at hand also assists in comprehending particular issues
linked to analysis of financial information with reference to the regulations of AASB. Also,

11CONTEMPORARY ISSUES IN ACCOUNTING
current study aids in acquiring deep understanding as regards nature of association between
measurements along with provision of different decisions.

12CONTEMPORARY ISSUES IN ACCOUNTING
References
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November 2014 (p. 467). CRC Press.
Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by
Australian firms and whether they were impacted by AASB 136. Accounting &
Finance, 56(1), pp.259-288.
Carey, P., Potter, B. and Tanewski, G., 2014. Application of the reporting entity concept in
Australia. Abacus, 50(4), pp.460-489.
Cordery, C.J. and Sinclair, R., 2016. Decision-Usefulness and Stewardship As Conceptual
Framework Objectives: Continuing Challenges.
Cordery, C.J. and Sinclair, R., 2016. Decision-Usefulness and Stewardship As Conceptual
Framework Objectives: Continuing Challenges.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Ferguson, A., Pündrich, G. and Raftery, A., 2014. Auditor industry specialization, service
bundling, and partner effects in a mining-dominated city. Auditing: A Journal of Practice &
Theory, 33(3), pp.153-180.
Gelmini, L., Bavagnoli, F., Comoli, M. and Riva, P., 2015. Waiting for Materiality in the
Context of Integrated Reporting: Theoretical Challenges and Preliminary Empirical Findings.