Company Accounting Assessment: IFRS, AASB, and Asset Valuation

This document is a comprehensive solution to a company accounting assignment, addressing key concepts related to IFRS 13 and AASB 13. The assignment explores fair value measurement of assets and liabilities, emphasizing the importance of market participant considerations. It delves into the d...Read More

Running head: Company Accounting
Company Accounting
Name of the Student
Name of the University
Author Note

1
Company Accounting
Table of Contents
Answer to Question No 1...........................................................................................................3
1A)..........................................................................................................................................3
1B)..........................................................................................................................................3
1C)..........................................................................................................................................4
Answer to Question No 2...........................................................................................................4
Answer to Question No 3...........................................................................................................5
3A)..........................................................................................................................................5
3B)..........................................................................................................................................5
3C)..........................................................................................................................................5
Reference and Bibliography.......................................................................................................6

2
Company Accounting
Answer to Question No 1
1A)
IFRS 13 shows the rules and regulation which the company have to follow in regards
of fair valuation of asset and liability of the company, each company have to show the user
information in regard of asset so it should disclose the information in company financial
statement and IFRS show the proper detail of showing disclosure need in company financial
statement. Fair value of asset and liability should be recorded by the company so that it can
know the real value of company business (Aasb.gov.au. 2019). If the company is able to
show its balance sheet value in market value than it will easy for the shareholder to take
decision in regards of investment and other necessary details for the company. As per IFRS it
states that while valuation of asset and liability is done, the company should consider all the
item and other factor which can affect the value of asset and liability of company
(Aasb.gov.au. 2019). Company should also take into consideration the opinion and price of
market participant as this will help company to get more accurate information in regards of
fair valuation of asset and liability.
1B)
Market participant should be considered by the company will calculating the fair
value of asset and liability of the company as this provision is shown in AASB 22. Asset
should have the effect of expected cash flow and discounting rate as this will give proper
valuation to the asset of the company. Company should also take into consideration of risk
which is associated with the valuation of asset and liability of company. The assumption and
rational behaviour of market participant should also be considered by the company so that it
can able to get proper details about the fair market value of asset and liability of business.

3
Company Accounting
1C)
AASB 13 and IFRS 13 state that company should value the asset and liability in
regards of its market value. Market value show the real value of company financial statement,
so if the company not able to get the real value of asset than it should take value of some
related asset and should value on the same. It can happen that the company is not able to get
any information than with the professional help it should take proper assumption and should
able to give the details in disclosure of company financial statement. Company should take
the assumption price of different market participant so that it can able to get an idea about the
fair value of asset and liability.
Answer to Question No 2
Property Plant and Equipment is an asset of company and each should be depreciated
by using different method of depreciation. Company should use Historical cost and no other
method in order to depreciate the asset as it should not be using replacement cost or realizable
cost of method (AASB 13: Appendix A). As pe expenses are concern company should not
take that into consideration as this will increase the value of the asset so it should be consider
will the valuation of asset is concern so it can help company to have proper valuation of asset.
Asset can be valued by two model cost and fair model. Each model has some
advantages and disadvantages and as per the company managers is concern, they usually go
for cost model rather than fair model. In cost model it can able to take the sunk cost
associated with the asset where as in fair model it does not take into consideration the concept
of sunk cost (Dezzani, Biancone & Busso 2014) Fair model takes into consideration the time
value associated with the asset so it affects company profit, it is as company able to see the
change in practical business. Managers also prefer cost model as it have less complexity
compare to fair model so this help the company to provide more accurate information to
company financial user.

4
Company Accounting
Answer to Question No 3
3A)
Each company carries impairment test in company financial statement and to carry the
test it has to check the difference of cash inflow and cash outflow of any object of the
company. The cash inflow and outflow also able to show the details of company Cash
Generating Unit of business (Paugam & Ramond 2015). Company cash generating unit is
independent and does not get affect by any means of the transaction. The company will not
able to get cash generating unit of a single asset in the company. In regards of the cost of
impairment of asset company should compare fair value of asset and recoverable of asset so it
can know the cost easily in company business. As per future cash flow is consider company
should take help from forecasting and financial budget and able to get proper detail of
upcoming cash flow in company business.
3B)
The independency of cash flow is known by the company with the help of Cash
Generating Unit. In the case study it can see that company each diver had a specific route so
it will be easy for the company to know the cash generating unit of each route. Company
should consider the bus, the route and the driver so it will able to get proper cash generating
unit of the company.
3C)
Company will able to know details of cash generating unit for each rout but it is not
possible for the company to know the cash generating unit for each bus unit in the business.

5
Company Accounting
Reference and Bibliography
Aasb.gov.au. (2019). Retrieved 1 August 2019, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB13_08-15.pdf
AASB, C. A. S. (2015). Investment property.
Australian Accounting Standards Board. (2015). AASB 13: Fair Value
Measurement. Melbourne: Author.
Dezzani, F., Biancone, P., & Busso, D. (2014). Ias/Ifrs (pp. 1-2855). Gruppo Wolters Kluver
Italia srl-IPSOA.
Guthrie, J., & Pang, T. T. (2013). Disclosure of Goodwill Impairment under AASB 136 from
2005–2010. Australian Accounting Review, 23(3), 216-231.
IFRS 13 — Fair Value Measurement. (2019). Iasplus.com. Retrieved 1 August 2019, from
https://www.iasplus.com/en/standards/ifrs/ifrs13
Palea, V., & Maino, R. (2013). Private equity fair value measurement: a critical perspective
on IFRS 13. Australian Accounting Review, 23(3), 264-278.
Paugam, L., & Ramond, O. (2015). Effect of impairment‐testing disclosures on the cost of
equity capital. Journal of Business Finance & Accounting, 42(5-6), 583-618.