General Purpose Financial Reporting and Conceptual Framework Report

This business research report examines general purpose financial reporting and the conceptual framework. It begins by outlining the basic objectives of general purpose financial reporting and the conceptual framework of accounting. The report then investigates the financial statements of Wesfarmers Limited, an Australian listed entity, focusing on Property, Plant, and Equipment (PPE). The analysis assesses the company's compliance with the requirements of general purpose financial reporting and the conceptual framework, including disclosure requirements and fulfillment of qualitative features like faithful representation and understandability. The research concludes by evaluating how the company's PPE disclosures meet the objectives of financial reporting, emphasizing the importance of providing meaningful information to users. The report references key standards and guidelines from AASB and other sources.

GENERAL PURPOSE FINANCIAL REPORTING AND
CONCEPTUAL FRAMEWORK
Student Name: Student
ID:
9/25/2017

EXECUTIVE SUMMARY
This is the business research report with title General purpose financial reporting and the
conceptual framework. The report consists of two main aims. The first main aim of the report is
to understand the basic objectives of the general purpose financial reporting and the conceptual
framework of accounting. The second major aim is to conduct the research of the financial
statement of any company which is registered in Australia and is listed entity in regard to the
Property Plant and Equipment. It is done to ascertain whether the company is complying with all
the requirements of the general purpose financial reporting and the conceptual framework. With
these two basic aims, the research has been conducted and divided into different headings.

Contents
EXECUTIVE SUMMARY.........................................................................................................................2
INTRODUCTION.......................................................................................................................................4
PART (a) FINANCIAL REPORTING........................................................................................................4
PART (b) DISCLOSURE REQUIREMENTS – PPE..................................................................................5
PART (c) DISCLOSURE FULFILLMENTS – PPE...................................................................................7
PART (d) PPE MEETING OBJECTIVES OF FINANCIAL REPORTING...............................................7
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................8

INTRODUCTION
The financial statements of the company are very important for the success of the organization. It
is because it represents the state of affairs of the company as on date and the financial
performance that the company has earned during the year. If the financial statements are not
prepared in an efficient manner then the company will have the bad reputation in the market. For
the purpose of this report – the company Wesfarmers Limited has been selected. Through this
report, the importance of having the framework of accounting has been discussed. At first the
report has followed the general purpose financial reporting and the conceptual framework of
accounting has been discussed and after that the major head of the company’s noncurrent assets
– Property Plant and Equipment have been mentioned. This major head has been discussed with
regard to the compliance with the principles of the conceptual; framework of accounting and the
rules of the general purpose financial reporting and then it has been critically analyzed whether
the disclosure made by the company is in compliance with the objectives of general purpose
financial reporting. The business research has then ended up with the appropriate conclusion.
PART (a) FINANCIAL REPORTING
As per Statement of Concepts number 2 on objectives of general purpose financial reporting, the
general purpose financial report is defined as the financial report which has been prepared for the
users of the financial statements who were unable to emphasize on the preparation of report in
accordance with their needs. These users includes the customers to whom the goods and services
has been sold, the suppliers from whom the goods and services has been purchased, etc. (AASB,
2001).
The conceptual framework of accounting is the structure within which the accounting is
performed and the financial statements are prepared. The framework so structured is on the basis
of the accounting concepts, rules and procedures laid down by the standard setting bodies like

AASB, IASB, etc. It is main purpose is to have the financial statements in accordance with the
standards which are universally applicable like International Financial Reporting Standards.
As per the Statement of Concepts number 8 on the Conceptual Framework – OB1, the general
purpose financial reports plays as a platform for the conceptual framework of accounting. This
acting as the platform is counted as the basic objective of the general purpose financial reports.
The objectives of the general purpose financial statements has been listed in paragraph number
OB 1 to OB 21 in the statement of concepts number 8 on the conceptual framework. The second
objective of general purpose financial report is the provision of the financial information of the
entity which is mentioned as the reporting one to the users of the financial statements which can
take the decision on the basis of the analysis done. The users include the creditors, debtors,
financial institutions, etc. The decision is related to the buying of goods, selling of goods,
purchasing the shares of the company or sanctioning the loan to the company, etc.
The other objective is to make the reasonable assessment of the future cash inflows that the
company will be able to generate. This is because the investors and creditors both current and
potential wants to know about the resources from where the company will generate its resources
and the claims if any have the company from others and the how far the management of the
company will be able to manage the resources and how far they can have the maximum use out
of it.
Apart from the objectives, the paragraph number QC1 to QC 39 contains the qualitative features
of the conceptual framework of accounting. As per paragraph number QC 4, the qualitative
features of the financial information is the relevant and faithful representation. These features are
also termed as the fundamental qualitative features (AASB, 2010). These features are for if the
financial information to be useful. The usefulness of the same is increased when the users think
that now it is comparable, understandable and one can easily verify the same and the last is
financial information is timely provided.

PART (b) DISCLOSURE REQUIREMENTS – PPE
The company that has been selected for the purpose of conducting the business research is the
Wesfarmers Limited. The company is incorporated in the country of Australia and is listed in the
recognized stock exchange of Australia. The company has mentioned the detailed note on the
property plant and equipment in the note number seven.
As per paragraph number 74 of the Australian accounting standard number 116 of the property
plant and equipment, the companies are required to disclose the following (AASB, 2010):
- The basis of measurement used for calculating the gross carrying amount of an asset
- The methods of the depreciation used
- The estimation of the useful life of the noncurrent assets.
- The amount of the carrying amount at the beginning of the year and the balance of the
accumulated depreciation and also at the end of the year.
- The reconciliation sheet containing the gross carrying amount at the beginning, additions
made to the asset, deductions made out of the asset and the net carrying amount at the end
of the period.
The note number seven of the financial statements has disclosed the following:
- The principle of recognition of the asset and the measurement of the value as the carrying
amount is the cost of an asset less the amount of the depreciation and the impairment if
any.
- The estimated useful life of assets which includes building from the life of 20years to 40
years; plant and equipment 30 years to 40 years and land is appreciated.
- The reconciliation sheet for the immediately two consecutive years containing land,
building, leasehold improvement and plant and equipments. The net carrying amount as
on 30th of June 2017 is 9440 million dollars (Company official Website, 2017).
It depicts that the company has met the disclosure requirements of the AASB 116.

PART (c) DISCLOSURE FULFILLMENTS – PPE
The disclosure made by the company in the respective note number 7 of the financial statements
satisfies the fundamental feature of faithful representation. The concept of faithful representation
lies on the three pillars namely:
- Complete
- Error Free
- Neutral
All the three pillars have different meaning. It entails that the information provided shall be
complete in all the manner, information shall not in any manner contain the errors or frauds or
mistakes or discrepancies of any kind and the last is that the information so contained shall be
neutral free which means the information so provided shall not affect the users of the financial
information in any manner and shall not be affected by any personal bias.
The enhancing qualitative feature that has been provided by the note number 7 is the
understandability. Any person or any users of the financial statements can have the
understanding of the accounting policy and the treatment adopted by the company by having the
reading of the content of note number 7.
Thus, the disclosure made by the company in the financial statements has achieved the
characteristic of the faithful representation and the understandability.
PART (d) PPE MEETING OBJECTIVES OF FINANCIAL REPORTING
The disclosures made by the company in their financial statements have achieved the objectives
as laid down by the general purpose financial reporting. The main objective is that to provide the
meaningful information to the users of the financial statements like to the creditors, investors
including the investors who want to invest in the company which is known as potential investors.
As per the note number 7 of the financial statements, the company has fully disclosed the
accounting policies in relation to the measurement and valuation and the estimates made by the
management in defining the estimated useful life of the assets. Thus, it is very clear that the

financial statements of the company have disclosed the information relating to property plant and
equipment in consonance with the objective of the general purpose financial reports.
CONCLUSION
The general purpose financial reporting and the conceptual framework of accounting play a very
key role in the financial accounting and financial reporting. To conclude the study although the
company has been able to comply with all the accounting policies and the procedures and the
principles of the accounting standards as laid down by the different standard bodies but still the
company is required to improve the quality of the financial statements in order to make the
comparison of the company easier with other companies operating in the same industry.
REFERENCES
AASB, (2001), “Objectives of General Purpose Financial Reporting”, available at
http://www.aasb.gov.au/admin/file/content102/c3/SAC2_8-90_2001V.pdf accessed on
25/09/2017.
AASB, (2010), “Conceptual Framework”, available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176157498129&acceptedDisclaimer=true accessed on 25/09/2017.
AASB, (2010), “Property Plant and Equipment” available at and
http://www.aasb.gov.au/admin/file/content102/c3/AASB116_07-04_ERDRjun10_07-09.pdf
accessed on 25/09/2017.
Company official Website, (2017), “Annual Report 2017” , available at www.wesfarmers.com.au/
Accessed on 25/09/2017.