Financial Accounting Essay: AASB Standards and Inventory Valuation

This essay delves into the financial accounting practices of Shaver Shop, a retailer in Australia, examining its inventory management and valuation methods in accordance with the Australian Accounting Standards Board (AASB). The essay analyzes the application of AASB 101 (Presentation of Financial Statements) and AASB 102 (Inventories), assessing how the company classifies and values its inventory, including the use of the weighted average cost method and the determination of net realisable value. It explores the company's inventory system, the advantages of its chosen methods, and the impact of different costing approaches on its financial statements. Furthermore, it examines how the company addresses slow-moving inventory and the role of auditors in assessing the carrying value of inventory, highlighting the critical accounting judgments involved in financial reporting. The essay emphasizes the importance of AASB standards in ensuring accurate and transparent financial reporting, providing a detailed analysis of Shaver Shop's practices in this context.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author Note:

1FINANCIAL ACCOUNTING
Introduction
Shaver Shop is the retailer in Australia, the company is specialized in those products
that are needed for unisex personal grooming. The company aims to be the leading retailer in
the market in hair removal products. The expected to have 100 stores all across Australia
including New Zealand in the end of year 2016. The company runs its online store for selling
its goods. The price of the product is too modest depending upon the varieties of products.
The information that is available about the company including the record of healthy path
under the single section of grooming that grants permission for converting it by dealers.
Shaver Shop practicalities products on or after primary manufacturers who ascertain to create
practical and progressive provides to give a chance to purchaser’s needs together with
necessities in the hair exclusion along with separate preservation formation groups. The
Corporation’s vital creation variability comprises masculine, feminine hair prohibiting crops
such as electrical razors, wet trim stuffs, along with trimmers, shears. Complementary to its
vital formation diversity, Shaver Shop vending many crops in a crossways the spoken looking
after, hair care, acupressure, air accomplishment, as well as loveliness groups. The general of
Shaver Shop’s clienteles are female, acquiring for collected themselves including others.

2FINANCIAL ACCOUNTING
Discussion
According to para 60, AASB 101 a corporation is bound to account their components
of balance sheet according to the dissimilar arrangements in the report. The chosen company,
Shaver Shop has classified its items properly and it is according to the criteria as per the
standard.
As per AASB 102, Shaver Shop Group, the valuation of inventory is done at lower
cost that also include Net realisable value. The inventory cost includes the purchase cost of
inventory, the shipping cost and procurement of inventory cost is added to it. The cost of
inventory is owned on every individual item of inventory (Alam et al. 2014).
The acquisition value of inventory is held after excluding all reductions, refunds and
other tax rebates imposed on the inventory. The cost of marketing is subtracted from the last
assess value of the inventory goods. The retailing price during the course of daily transaction
of goods is same as Net realisable value. The valuation method of inventory is done on the
basis of weighted average cost as per AASB 102.
According to para 34 and 35 of AASB 102, the inventories those are recognised as an
expenditures in that particular time as and when they are being wholesaled. The WDV is
being predictable as expenditures in that time during them transpire.
The expanse of inventories that is actually acknowledged as an expenditure on the
completion of the monetary year on the end date 30.06.2017 stood $83,095,092. The amount
was recognized as the price of goods being sold. There was a separate provision being
maintained for slow moving inventories by the Group. The provision amounted to $594,352
on the end of the financial year. Under cost of goods sold the capability of slow moving stock
is also identified.

3FINANCIAL ACCOUNTING
According to AASB 101, the notes to account for the respective accounts shall be
prepared so that the assessment of critical accounting to realise the recoverable amount of
inventory is being determined. The Group has identified the amount of provision for the slow
moving inventory. The determination of provision is based on the either the previous
involvements or on the decision of selling rate of different items of the inventory. As there is
a possibilities of such type of conclusion or the prospect might verify in an inappropriate
manner. The Group in the near future would expose to conceivable extra inventory write-
downs or write to reverses (Aasb.gov.au. 2019).
The carrying value of the inventory is being discussed under the Key Audit Matters.
The auditors found suspicious in framing their opinion on the carrying value of the inventory.
0n 30.06.2017 the balance sheet showed inventory value to be $29.1 million. The balance for
obsolete inventory amounted to $594000. The valuation is important as it helps in
determining the ability of income from past information include the order to regulate the
measurements regarding sale and the expectable forthcoming transaction value in
accumulation to related charges. The auditors stated that they had focused on the matter. The
choice including the valuation complicated in defining the NRV of inventory. This had
shown considerable impact on the fiscal statement.
The auditor acknowledged that the procedure followed in auditing the carrying value
of inventory is responsible in providing the true and fair view. The auditor specified in the
Key Audit Matter that they monitored the testing method to confirm all the stabilities of
inventory is existence comprised for manipulative requirements. A performance chequered
upon the practises that is practical in the previous year to calculate the facility (Pradignac et
al. 2013).

4FINANCIAL ACCOUNTING
Measuring the Group’s previous competence to make estimates by challenging a
example of products encompassed in the preceding year inventory facility, including
connecting the measured recoverable amount to the existing uncultured border established on
persons products operated in the financial year, in addition to since the authorisation rate.
Testing of the exact correctness of the capability control (Investors.shavershop.com.au. 2019)
Measuring whether the capability for record was acceptable by gaging: - the gross restrictions
acquainted by the Group; above and beyond - the inventory gross revenue ratio in addition to
mature, desirable a decision to the preceding year

5FINANCIAL ACCOUNTING
Conclusion
From the above essay it is but understandable that the new organisation in home-
based for recording of substantial to appropriate operatives decided the proposal of AASB
standards including conceptual framework seem acceptable and is also shadowed to by the
corporation particular for the scrutiny. The documenting of inventory and its management as
per AASB is being extra stress on the essay.

6FINANCIAL ACCOUNTING
Reference
Aasb.gov.au. (2019). [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-15.pdf [Accessed 06Feb.
2019].
Pradignac, M., Ambolet, P. and Pioger, A., Amadeus SAS, 2013. System and Method for
Improving Dynamic Availability Computation. U.S. Patent Application 13/291,218.
Alam, M., Olivier, A., Paquette, A., Dupras, J., Revéret, J.P. and Messier, C., 2014. A general
framework for the quantification and valuation of ecosystem services of tree-based
intercropping systems. Agroforestry systems, 88(4), pp.679-691.
Nagaraju, D., Rao, A.R. and Narayanan, S., 2015. Optimal lot sizing and inventory decisions
in a centralised and decentralised two echelon inventory system with price dependent
demand. International Journal of Logistics Systems and Management, 20(1), pp.1-23.
Investors.shavershop.com.au. (2019). Retrieved 30 January 2019, from
http://investors.shavershop.com.au/FormBuilder/_Resource/_module/wFMSjMp880CoIT0S
Qz1Qsw/docs/reports/2017_annual_report.pdf