University Report: Christchurch Ltd's Investment Evaluation Memorandum

This memorandum, addressed to the shareholders of Christchurch Ltd, evaluates the company's potential investments in Greymouth Ltd, Wellington Ltd, Nelson Ltd, and Hastings Ltd, in accordance with Australian Accounting Standards (AASB). The memorandum highlights the requirements of AASB guidelines, including those related to investments and financial statement presentation. It details the rationale behind each investment decision, such as the purchase of shares and assets, and explains how these transactions will be recorded and reported. The document also discusses the benefits of these investments, including potential competitive advantages and expansion opportunities. Furthermore, it references specific accounting standards like AASB and IFRS 15, and emphasizes the importance of understanding these standards for all stakeholders. The memorandum concludes by urging the use of Australian Accounting Standards to ensure equity in all transactions. The second part of the memorandum focuses on specific accounting standards of interest to the author and how they will be used in their future career. The memorandum provides a comprehensive overview of the financial implications and strategic considerations driving Christchurch Ltd's investment decisions.

UNIVERSITY NAME
Student’s Name
ID
INSERT TITLE

MEMORANDUM
DATE September 7, 2018
TO Company’s shareholders
FROM David Kelly, Accountant
SUBJECT Evaluation of the future company’s investments
Introduction
Following the operationalization of Australian accounting standards guidelines, all the
shareholders are reminded to meet the requirements of the two standards stated as follows;
Accounting requirements for investments
Presentation of financial statement which was issued in December 2017 and operated January
2018 and First-time adoption of Australian Accounting Standards which was issued in December
2017 and operated in January 2018, (Hanif, 2013).
Christchurch Ltd is a large Australian retail company currently evaluation of investments that
could be made in the near future. The company intends to transact services from the following
companies; to purchase 10% of the issued shares of Greymouth Ltd as a long-term investment,
purchase 40% of the issued shares of Wellington Ltd as a long-term investment, purchase assets
and liabilities of the Nelson Ltd for cash, and finally to purchase 80% of issued shares of
Hastings Ltd as a long-term investment, (Driscoll, 2008).
The Australian Accounting Standards Board (AASB) has developed and maintained standards of
financial reporting applicable to all the entities in both public and private sectors that
Christchurch is also operating under.
The company will purchase the 10% of the issued shares of Greymouth Ltd as a long term
investment. The Greymouth Ltd has been successful for the past five years which has led the
Christchurch Ltd to decide to purchase the issued shares from the same company, (Mironiuc,
Carp, Chersan & Robu, 2012).

The purchase of 40% of issued shares of Wellington Ltd will profit the company in the near
future. The company under the AASB accounting standards will keep journals on the services
done such as purchases of shares, sales, credit notes, transfers, checks, and deposits all these will
be recorded in the system to avoid future confusion. The records will enable the company to
trace the retained earnings, net income through the Trial Balance and Opening Balance. The
share purchases will be tracked in a double-entry bookkeeping system.
There will be so many benefits if the company obtaining the issued shares. The method and the
reason which company is using for the investment has determined the method of financial
reporting that the company has finally chosen.
The company will also purchase the assets and liabilities of the Nelson Ltd for cash. The
development of new digital technology that is patented by the Nelson Ltd will give the
Christchurch Company a competitive advantage over the other companies if it purchases it,
(Njaala, 2015). Sometimes, the purchase accounting investments increases the amount of
investment non-cash expenses for company in future. These requirements will enable the
company to trace and record any substantial losses.
The Christchurch Company will explain how the impact of purchases in the notes that will
accompany the financial statements so that all the shareholders will understand how acquisitions
will result into profits, (Puspitaningtyas, 2017).
The Christchurch Company will also purchase the 80% of the shares from Hastings Ltd. This
long term investment will benefit the company in that the Hastings Ltd has a number of valuable
customer contracts and also the access of the Hasting Ltd retail outlets would outlets plans of the
Christchurch proposed plans for expansion.
The AASB under the IFRS 15 will steer the company into establishing principles that will be
applied to report very important information to all the shareholders about the nature, timing,
amount and any uncertain revenue and cash flow which will arise from the Hastings’ customer
contracts. The objective of doing this will be to give the annual reporting of the investment.
The company will ensure that the contract has been approved by all the parties involved in the
contract and the company will ensure that all the promises made to the customers are fulfilled

and identify it as an obligation in the service performance. All the shareholders will be required
to be conversant with the accounting standards to know the accounting requirements guiding
these transactions.
Conclusion
The employees including the accountants have been urged to use the Australian Accounting
Standards to act their framework in all the transactions done so as to achieve equity to all the
customers and other parties that are actively involved in the Christchurch Company, (Sims &
Cullis, 2009).

Question 2 (a)
The accounting standards that the Australian Accounting Standards Board has come up with
have enabled the companies to operate smoothly with its stakeholders, shareholders and the
customers. The accounting standards which capture my interest are; Accounting Policies,
Changes in Accounting Estimates and Errors which was issued on August 2015 and became
operative January 2018. (Schwartz, Pugliese, Bateman & Vargo, 2017) this standard is applied in
selection and application of accounting policies and accounting for changes in estimation and
reflecting corrections of prior errors. It will enable me to comply with the requirements of the
AASB and IFRS standards in coming up with accounting policies. Financial Instruments:
Recognition and Measurement which became operative on January 2018. Financial Instruments
standards are good in recognition and measurements requirements for financial assets, liabilities
and buying and selling contracts, (Robb, Rohde & Green, 2014).
Question 2 (b)
Activities to undertake
1. I will work in a company that takes seriously the regulations and standards of AASB so
that I also become conversant with the same.
2. When I graduate, I will enroll for short accounting courses so that I get more knowledge
on the accounting standards.
3. I will join teams purely made of accountants so that I obtain knowledge and skills from
experienced accountants.
4. Practice will perfect my accounting skills.

References
Driscoll, L. (2008). The Summary Prospectus: the most significant change to mutual fund
disclosure since the Investment Company Act of 1940. Journal Of Investment
Compliance, 9(2), 26-34. doi: 10.1108/15285810810886153
Hanif, M. (2013). Ijarah Accounting: A Comparison of International Accounting Standard-17 &
Financial Accounting Standard-8. SSRN Electronic Journal. doi: 10.2139/ssrn.2370965
Mironiuc, M., Carp, M., Chersan, I., & Robu, I. (2012). The Evaluation of the Investment
Opportunity by Analyzing the Financial Structure Influence on Company
Value. Communications Of The IBIMA, 1-16. doi: 10.5171/2012.251411
Njaala, P. (2015). Comparative Analysis of International Public Sector Accounting Standard 23
and International Accounting Standard 20. SSRN Electronic Journal. doi:
10.2139/ssrn.2730597
Puspitaningtyas, Z. (2017). Estimating systematic risk for the best investment decisions on
manufacturing company in Indonesia. Investment Management And Financial
Innovations, 14(1), 46-54. doi: 10.21511/imfi.14(1).2017.05
Robb, D., Rohde, F., & Green, P. (2014). Standard Business Reporting in Australia: efficiency,
effectiveness, or both?. Accounting & Finance, 56(2), 509-544. doi: 10.1111/acfi.12094
Schwartz, R., Pugliese, D., Bateman, M., & Vargo, K. (2017). SEC issues final rule on
investment company liquidity risk management. Journal Of Investment Compliance, 18(1),
43-52. doi: 10.1108/joic-02-2017-0006

Sims, M., & Cullis, K. (2009). USING A PROPORTIONAL ODDS MODEL TO ANALYSE
THE FACTORS THAT INFLUENCE ACCOUNTING STANDARD SETTING
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