Fairfax Media: Evaluating Accounting Practices Against AASB & IASB

This report provides an in-depth analysis of Fairfax Media Limited's adherence to the conceptual frameworks of the Australian Accounting Standards Board (AASB) and the International Accounting Standards Board (IASB). It examines whether the company satisfies the rules and regulations set forth by these frameworks, focusing on the objectives of the conceptual framework, recognition criteria for financial elements such as assets, liabilities, equity, revenue, and expenses, and the fundamental and enhancing qualitative characteristics of financial information. The report assesses how Fairfax Media applies fair value accounting, depreciation methods, and impairment considerations in accordance with AASB standards like AASB 116, AASB 138, AASB 9, and AASB 102. It concludes that Fairfax Media generally complies with the objectives and criteria of the AASB and IASB frameworks in its financial reporting practices.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
This aim of this report is to analyse the extent of satisfying the rules and regulations of
conceptual framework of AASB and IASB by Fairfax Media Limited. The first part of the
report examines the objectives of conceptual framework. The second part of the report analyses
the recognition criteria of various financial elements. The third part of the report analyses the
fundamental and enhancing qualitative characteristics of financial information.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Conceptual Framework Objectives..................................................................................................3
Recognition Criteria.........................................................................................................................8
Fundamental Qualitative Characteristics.......................................................................................12
Enhancing Qualitative Characteristics...........................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
In the twenty-first century, business organizations all over the world face different kinds
if complex issues and Accounting Issues are considered as one of the major problems among all
of them. It is the obligation on the business organizations to prepare and present their financial
statements accordance with the required accounting rules and regulations. Non-compliance with
these rules and regulations poses accounting and financial reporting related threats for the
companies. The same problems can be seen for the Australian companies. In order to avoid these
assorting issues, both International Accounting Standard Board (IASB) and Australian
Accounting Standard Board (AASB) has developed conceptual framework for financial reporting
(aasb.gov.au 2018). It is highly required for the business entities of Australia to follow the rules
and regulations of conceptual framework. This report takes an honest attempt to analyse the
extent of satisfying the rules and regulations of conceptual framework of AASB and IASB. For
the purpose of this report, Fairfax Media Limited is taken into consideration as the company is
listed among the top 100 companies in Australian Stock Exchange (ASX) (fairfaxmedia.com.au
2018).
Conceptual Framework Objectives
The above discussion states that the business entities of Australia are required to comply
with the rules and regulations of accounting conceptual framework. In this context, it need to be
mentioned that there are three major objectives of the conceptual framework of IASB and
Fairfax Media Limited is required to prepare their financial reports after considering these
objectives.

4CONTEMPORARY ISSUES IN ACCOUNTING
The first objective of conceptual framework is to express the true financial position of
the business entities with the help of financial reporting. The financial position of the companies
can be recognized from the statement of financial position or balance sheet (aasb.gov.au 2018).
The latest annual report of Fairfax Media Limited includes the statement of financial position
that reflects the current financial position or standing of the company. Moreover, the company
provides various notes to the financial items in this statement for greater understandably.

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: fairfaxmedia.com.au 2018)
The second objective of conceptual framework is to convey the financial performance of
the business entities by providing relevant financial information (aasb.gov.au 2018). The users of
financial information can know the performance of the companies by observing the income
statement along with the notes related to them. In the latest annual report of Fairfax Media
Limited, the presence of consolidated income statement can be seen that convey the financial
performance of the company. It can be seen in bellow:
(Source: fairfaxmedia.com.au 2018)
The third objective of conceptual framework is to show changes in financial position of
the business entities. In this objective, the main financial statements are statement of change in

6CONTEMPORARY ISSUES IN ACCOUNTING
equity and statement of cash flows (aasb.gov.au 2018). The latest annual report of Fairfax Media
Limited shows the presence of the statements of change in equity and cash flows along with their
notes. It can be found in below:
(Source: fairfaxmedia.com.au 2018)

7CONTEMPORARY ISSUES IN ACCOUNTING
(Source: fairfaxmedia.com.au 2018)
Thus, from the above discussion, it can be seen that Fairfax Media Limited always
considers the objectives of conceptual framework for the purpose of financial reporting. In
addition, the company prepares and presents their financial statements as per the requirements of
Corporation Act 2001, Australian Accounting Standard and the alternative pronouncements of
AASB. Apart from this, Fairfax Media Limited also complies with the standards and regulations
of International Financial Reporting Standards (IFRS) and IASB. In the presence of all of these
compliances, it has become surer that the company follows the objectives of conceptual
framework (fairfaxmedia.com.au 2018).

8CONTEMPORARY ISSUES IN ACCOUNTING
Recognition Criteria
The above discussion shows the major objectives of conceptual framework. Apart from
these objectives, Fairfax Media Limited must flow the provided criteria for the recognition of
major financial elements; they are assets, liabilities, equity, revenue and expenses. According to
the conceptual framework of IASB and AASB, Fairfax Media Limited needs to consider three
dimensions while recognizing the major elements. First, Fairfax Media Limited needs to consider
all relevant information about the assets and liabilities along with income, expenses and change
in equity at the time of recognition (aasb.gov.au 2018). Second, the management of Fairfax
Media Limited also needs to consider the aspects of faithful representation of assets and
liabilities and other aspects (aasb.gov.au 2018). Third, the company also needs to consider
important financial information for cost and benefits. In order to consider all these aspects,
Fairfax Media Limited should follow the standards of AASB for the recognition of these crucial
financial elements (aasb.gov.au 2018).
Asset: Fairfax Media Limited follows fair value accounting for the recognition of their asset as it
provides relevance to the financial information. For the recognition of property, plant and
equipment (PPE), the company considers cost value less accumulated depreciation and
accumulated impairment loss. Depreciation is charged on straight-line basis. Thus, the company
follows AASB 116 Property, Plant and Equipment under section 334 of the Corporations Act
2001 (aasb.gov.au 2018).

9CONTEMPORARY ISSUES IN ACCOUNTING
(Source: fairfaxmedia.com.au 2018)
In case of intangible assets, Goodwill is recognized in cost of the acquisitions value on
the fair value. Radio license is not subject to impairment. Software, database and websites are
subject to impairment. The company complies with the principles of AASB 138 Intangible
Assets and IAS 38 Intangible Assets (aasb.gov.au 2018).

10CONTEMPORARY ISSUES IN ACCOUNTING
(Source: fairfaxmedia.com.au 2018)
In Fairfax Media Limited, fair value accounting is used for the recognition of trade
receivables as per AASB 9 Financial Instruments; lower cost and net realizable value is used for
the recognition of inventories as per AASB 102 Inventories (aasb.gov.au 2018).
(Source: fairfaxmedia.com.au 2018)

11CONTEMPORARY ISSUES IN ACCOUNTING
(Source: fairfaxmedia.com.au 2018)
Liability: For the recognition of the trade creditors, Fairfax Media Limited considers the cost
value based on the fair value accounting as per the standards of AASB 9 Financial Instruments
(aasb.gov.au 2018). In case of the recognition of interest bearing liabilities, the company
considers amortized costs based on fair value recognition.
(Source: fairfaxmedia.com.au 2018)
Equity: Fairfax Media Limited classifies their ordinary shares as equity. The attribution of
incremental costs is directly done to the issue of shares and they are recognized as equity as per
AASB 1004 Contributions (aasb.gov.au 2018).
(Source: fairfaxmedia.com.au 2018)