Analysis of Financial and Management Accounting Issues Report

This report delves into the realm of financial and management accounting, addressing critical issues such as revaluation, impairment losses, and depreciation. It examines the implications of revaluation models, highlighting how they impact asset valuation and financial reporting. The report explores the nuances of depreciation, its impact on profit calculations, and the importance of accurate disclosures. It also analyzes the implications of changes in accounting practices, particularly concerning goodwill and asset valuation in partnership scenarios. Furthermore, it emphasizes the role of independent auditors in ensuring the materiality of accounting information. The report provides a detailed analysis of these issues and their consequences, offering valuable insights for students and professionals in the field of accounting and finance.

Running head: FINANCIAL AND MANAGEMENT ACCOUNTING
Financial and Management Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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FINANCIAL AND MANAGEMENT ACCOUNTING
Answer to Part B
Subject: Re Accounting Issues: Year Ending 30 June 2018
From:
Sent: 11 September 2018
To: Margaret Montana
From:
Dear Margaret,
I am highly obliged that you provided me the opportunity to highlight the various types
of the accounting issues in the firm. I would like to state that in general revaluation is considered
as an adjustment which is used to record the purchasing the fixed asset and usually recorded at
the cost price. It is also probable that the market value of the assets will be changing overtime
and the business will be able to choose where it wants to continue measuring the assets using the
revaluation model or historical-cost basis with the use of revelation model in which the financial
records reflect the updated market value of the assets. In addition to this, the revaluation model
allows downwards and upward adjustments which results in appreciation or decrease in the asset
value on the other hand the impairment of losses will only allow downward adjustments.
It needs to also understood that the revaluation provides the business with the option to
show the carrying cost of the fixed asset as per the revalued amount. Subsequently the
revaluation pertaining to the fair value of the assets less the accumulated depreciation is treated
under the accumulated impairment losses. As per this approach the companies are able to take
the various types of the initiatives which are able to include the carrying amount not affecting the
materiality or the fair value in the reporting period.

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FINANCIAL AND MANAGEMENT ACCOUNTING
It needs to be also seen that any event related to loss in the inventory is considered under
the category of expense. In addition to this, the impairment loss can appear on the I/S as per
COGS or Gross profit. In cases of the larger write downs it needs to be discerned of the
impairment comes under operating expenses.
The change pertaining to the depreciation is required for reallocation of the costs of the
tangible assets pertaining to the tax purposes and accounting. It is also essential in allocation of
the depreciation expense for the cost. The changes related to the impairment in accounts will be
conducive in depicting the permanent reduction for the value in the asset of a company which is
normally discerned as a fixed asset. The testing of impairment is essential in terms of the
depictions of the various types of the consideration which is seen to be related to the situation
when the book value of the assets surpasses cash flow benefits.
The disclosures amortization is required for the declaration of depreciation. In addition to
this, it needs to be assured that disclosures associated to the impairment needs to be taken into
account by disclosure on the recoverable amount of the fixed asset. The impairment normally is
seen to exist among the fair value of the asset below the carrying amount. The disclosures related
to the revaluation needs to be related to the various concepts such as capital goods which owned
by of the business.
The reporting on the performance without upsetting the managers needs to be based on
the several types of the considerations which are associated to initiating the changes by
compliance to relevant rulings of the accounting standards. The independent auditor’s
responsibility is also seen with prime importance of considering the materiality issues considered
in the evaluation of the accounts.

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FINANCIAL AND MANAGEMENT ACCOUNTING
As per the aforementioned changes for the new management accountant there will major
implication on the profit for the calculation for the depreciation. The large amount of the
depreciation considered for the maintenance of their machines. Since there is a high amount of
depreciation charged on the machines, the useful lives of the machines will be considered to be
decreasing in nature. This situation will be unfavorable for a business. However, the only benefit
pertaining to the high amount of depreciation will be having a positive effect while preparation
of the tax. This amount of depreciation will be treated as an expense and deducted from the
taxable income. Despite of this advantage the cons of high depreciation are more than the pros.
Some of the other issues for the revaluation will be depicted with the depreciations and
appreciations will also lead to revaluation of the assets and liabilities. Due to this it important to
revalue the accounts pertaining to debiting or crediting of the profit sharing ratio. In case of
event of loss there may be considerable amount decrease of the value of the assets. The company
will need to Transfer the Profit or loss associated to the revaluation account. Some of the
different types of the other consideration for the disclosures amortization is required for the
declaration of depreciation. In case there is an increase in the overall depreciation of the
machinery.
Some of the other problems identified with the increasing revenue of the company needs
to be decided as per the allocation of the depreciation expense for the cost. The changes related
to the impairment in accounts will be conducive in depicting the permanent reduction for the
value in the asset of a company which is normally discerned as a fixed asset. It is also important
for the company test the impairment as per the assessment of the various types of the
consideration which is seen to be related to the situation when the book value of the assets
surpasses cash flow benefits.

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FINANCIAL AND MANAGEMENT ACCOUNTING
The impact on the new changes pertaining to the partnership needs to be discerned as per
the creating a separate recognition for the goodwill for the firm and depreciate the associated
stock of the business. In some of the other situations it may be seen that the revaluation of the
accounts may be revealed in the new accounts of the business. In such a situation the company
needs to be consider the various types of the actions which will be able to show the relevant
changes in the revaluation account. In order to address this issue, the company needs to look
forward to restore the assets and liabilities as per original values. Firstly, the company Revalue
the debited or the credit value by transferring the balance of the old partner’s capital account in
their respective old profit sharing ratio. Some of the important note which are to be considered
by the companies are seen with ensuring that the profit and loss in the second sections is
transferred to the partner’s capital account.
These are seen to be inclusive of the various types of the factors which are related to the
associated depicted of the profit of loss. In addition to this, certain changes in the capital account
needs to be duly reflected in the memorandum revaluation account. In course of making the
revaluation changes the company needs to ensure that only the values concerned with the assets
and liabilities other than cash are considered for the alterations. It needs to be also depicted that
the company should revalue assets as per the actual useful life of the assets. The revaluation of
the fixed assets should be considered with the fair value of the market as per the IFRS which will
consider revaluation of the assets as per the cost and revaluation model. In case the company
decided to follow the cost model the fixed assets are to be carried at historical cost less the
accumulated depreciation.

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FINANCIAL AND MANAGEMENT ACCOUNTING
With Regards
Name:
Graduate accountant, Montana and Associates
696 George Street,
Brisbane, QLD 4000

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FINANCIAL AND MANAGEMENT ACCOUNTING
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