Advanced Financial Accounting: Financial Reporting & Market Analysis

This report delves into advanced financial accounting, focusing on critical aspects such as financial reporting, cost models, and the qualitative characteristics of financial reporting as per the conceptual framework. It explores the influence of market forces and capital markets on economic factors, including government regulations and Corporate Social Responsibility (CSR). The report analyzes corporate financial statements, emphasizing shareholder value and asset management in the modern economic landscape. It discusses the objectives of financial accounting and reporting, including presenting financial performance, assessing stewardship, and contributing to financial competence. Furthermore, it examines public interest theory, capture theory, and the economic group theory in relation to financial regulation. The report also addresses the significance of verifiability, objectivity, and realistic depiction in financial accounting theory, along with the motivations and effects of directors' decisions regarding property revaluation, providing a comprehensive overview of advanced financial accounting principles and practices. Desklib provides a platform to access this document along with numerous past papers and solved assignments for students.

Advanced Financial Accounting 1
ADVANCED FINANCIAL ACCOUNTING
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Advanced Financial Accounting 2
ADVANCED FINANCIAL ACCOUNTING
Introduction
The paper focuses on significant issues that revolve around financial reporting, Cost
model, qualitative characteristics of financial reporting as per the conceptual framework. There is
also a need to look into Corporate Social Responsibility. The critical aspect of the major in depth
is based on the market forces or the capital market. This market is the economic factors that drive
or affects the price, demand for and availability of products, prices or commodities. These
perspectives are analyzed on the view of government regulation on economic perception steadily
associated in the direction of the economic wellbeing as per Corporate Social Responsibility.
Corporate financial statements are the records of the company financial activities. The
shareholder values in properties have the aspects to be looked at as far as assets are concerned. In
the modern day, economic landscape financial reporting is essential in aiding a company giving
records of the commercial activity with all the money records, expenditure savings and the
money being directed to the company and adds value this also helps the international investors
have an easy time in making decisions.
Assessment Task Part A
Qualitative characteristics of financial reporting Conceptual Framework
The continued investment growth led to reconsideration in a range of the dictatorial
system, and the expansion of globally germane principles and code put into practice. Noteworthy
positive traits of many businesses, real estate values are an essential part of the economic
information incorporated in yearly intelligence (McNeil, Frey and Embrechts 2015). The
introduction of valuation has seen many principles that improved management of the banking
industries across the world. The global community in their pursuit for same authoritarian

Advanced Financial Accounting 3
processes has much settlement, and it is of significant magnitude for morals not only to be
entirely responsive of the changes in dictatorial to be familiar with their revolutionize tasks,
largely if other entities expected to depend on their valuations (Libby 2017).
The objectives of financial accounting and reporting
a) One of the objectives of the financial accounting is to present in relation to the cover
articles of the financial performance and situation that is functional to a large collection of users
for assessing the stewardship of the articles administration and for building cost-effective
decisions.
b) The financial accounting statement objectives are said to offer relevant information
concerning the productivity and the physical location of a corporation to those it has investment
affiliation with.
c) also the financial accounting objectives is to be accountable to use its acquired
resources to develop prosperity, improve the living standards and keep the environment clean
and safe.
d) To strengthen accountability by reducing the knowledge gap among the providers of
resources and the people to whom they entrusted their money.
e) To provide primarily to those users with inadequate influence, capacity or possessions
to acquire information and who rely on financial statement as their prime foundation of
knowledge regarding the business financial activities
f) Financial accounting can also be used to focus mainly on the information need of
both current and probable investors the major group of users current and probable investors
require information on the reporting units economic routine and economic situation that is

Advanced Financial Accounting 4
constructive to them in evaluating the units capability to produce income and in knowing the
business financial compliance.
g) Contributes to financial competence by serving investors in the direction of
recognizing opportunities and risks globally, hence civilizing investment allotment. For many
businesses the applications of particular accounting, language resolve inferior cost of assets and
reduce global coverage costs.
g) useful financial reporting recognize the types of information that are expected to be
mainly practical to users in making decisions about the reporting unit on the base of information
in its economic statement.
h) An enterprise financial testimonial is practical at the time it is applicable and
represents loyalty what it supposes to stand for. Economic information is enhanced if it is as well
appropriate for the base, confirmable by the user, and comprehensible to all.
Assessment Task Part B
(a) Public Interest Theory
The initial faction of these theories comes from the knowledge of complete information,
ideal enforcement, and giving regulators tools to protect the users. According to public interest
theory the directive of a company or new financial actors behave to the endorsement of the
public. Public interest theory is capable to advance be described as the unsurpassed probable
allotment of limited capital in support of personality along with communal supplies and services
in the public. According to economies in the western countries, the allocation of partial wealth is
to a major degree synchronized through the market instrument. In speculation, it can be
confirmed to facilitate in confident situation the share of wealth by the marketplace instrument is

Advanced Financial Accounting 5
most favorable (Arrow 1985). Since these circumstances perform regularly to relate in
performance, the capital allocation is most favorable appearance a notional viewpoint as well as
a pursuit for ways of civilizing the capital share.
(b) Capture Theory
The capture theory indicates that systems can be altered favor necessities of individual
users by them. It also indicates that a set system only cares for the a few concerns of the industry
worries. The capture assumption evidently explains the major intentions of scheming policy.
Those to use these policies are the ones involved in the making of the policy. Thus there is
sufficient demonstration of the lawmakers as well as the welfare groups because the policies are
captured from their requirements. The assumption does not present a major difference from the
public interest theory.
(c) The economic group
This policy indicates that systems are set of regulations obsessed by forces of demand
supply. The administration as the provider while the concerned groups as the demand, the
assumption that policy is formed by the business and that the objectives of policy are to create
reward for the business concerned. The assumption is that the business is to create the policy to
be adopted in the marketplace which benefits the government and the other users. The business
set the policy for the profit of its users, it also conduct these policy and there are no outside
implicated. Administrations expect the users in the business to contribute in resolution building
relating to financial matters that have an effect on the business activities. It state that the
legislative body concerned in the administration judgment creation must exist in smaller number
so as to trim down the administration expenditure. This hypothesis indicates that producers can
manage their group more enthusiastically than clients. The economic group suggest that it’s

Advanced Financial Accounting 6
much easy to regulate producers more than consumers this in turn explains the existence of
regulators consisting only the producers and in small number.
Assessment Task Part C
We identified traditional notions of verifiability and objectivity as antecedents of
reliability in early discourses on financial accounting theory. These concepts were evolutionarily
connected to bookkeeping activities that were shown in the accounting policies statements of the
occurrence of independence, translated as deal-based accounting by obtainable proof. thus ideas
of verifiability, in addition, presented an immediate relation to auditing intended to minimize the
partisanship in the research of financial records.
The understanding of accounting during the in the early hour's ideas slowly altered. In the
1960s, independence was extracted starting from proof-based explanation to additional
compromise by special observers. following, the consent of the assessment effectiveness point of
reference is the hub on deal decisions by resources allocators, the thought urbanized by
academics led to the endorsement of the notion of significance and theoretically summarized the
relation consequence accredited in the direction of consideration of independence.
The declaration of financial accounting theory the US theoretical structure available in
the 1980s, consistency was introduced because a collection expression consisting both the
conventional practitioner's suggestion comes to life in the notion of verifiability and the more
current intellectual concept of accurate depiction. The thought of realistic depiction was formed
in the ordinary skill and was in use by accounting academics in the 1970s largely to give a reason
for the growing exercise of present value quantitative in financial bookkeeping.
The current values were treated to portray an enterprise financial authenticity from the
viewpoint of assessment effectiveness. The introduction of steadfastness as a concession amid

Advanced Financial Accounting 7
conventional and more current idea served the principle of giving the financial accounting
statement board the chance to shift from a society of past expenditure-base bookkeeping.
In deliberations of principles regulators, the feature of realistic depiction was frequently
deserted due to its week points. Consistency was typically in work by nonbelievers of current
value accounting, associating consistency with the current significance of verifiability, this also
highlighted that the theoretical reform surrounding the opening of consistency in the theoretical
structure principally took a position at the conceptual point of rational policy making, whereas
authentic accounting reforms were barely tempered with.
The increasing significance of fair value accounting in the global economic exposure
principles and the US widely adopted accounting ideology from the 1990s led by the boards to
reorganize the notion of consistency. The shared structure adjustment gave the international
accounting statement boards and financial accounting statement board the opportunity to
substitute consistency with accurate depiction an idea which forced less theoretical confines to
fair value accounting.
Assessment Task Part D
(a ) What might motivate directors not to revalue the property, plant, and equipment?
Cost Model
The fixed assets, on the one hand, fixed assets symbolize the businesses security, hence
small percentage on fixed to total assets might inspire the executive to make public the
marketplace of the fixed assets and advance borrowing competence ( Barlev et al., 2007).

Advanced Financial Accounting 8
(b)What are some of the effects the decision not to revalue might have on the firm’s
financial statements?
A business that is widely owned by shareholders and the general public has a small say it
is prone to poor performance that shows on their statement the tenure constitution of business
might influence executives bookkeeping system, the executive has a sizeable flexible influence
on the enterprise’s administration in concerning the making available of information on its
routine.
c) Would the decision not to revalue adversely affect the wealth of the shareholders?
The decision not to evaluate will influence the prosperity of the shareholder since the
income marketplace account is determined by the duration of an asset stay at the location. If the
financial statements specified on the accessible assets be capable of estimating the cost of the
assets properly, afterward present a call for the stakeholders to think about the justification cost.
The main concern still lies on the legality of the resources marketplace of the economic
statements. The manifestation of the costs of the assets be still available to the community,
afterward, it will have small, poor effects as still, the stakeholders will have the original
information this makes the public more relevant at this stage in that the option available will
incorporate.

Advanced Financial Accounting 9
References
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of BusinessFinance and Accounting,
Zimmer.I, Cotter (1995) Asset revaluation and assessment of borrowing capacity
Walker, Lopes (2012) Asset revaluations, future firm performance and firm-level corporate
governance arrangements: New evidence from Brazil the British Accounting Review
Prices and Non-Market-Based Value Estimates, Journal of Accounting Research.
Begley, J. (1990), Debt Covenants and Accounting Choice, Journal of Accounting and
Economics.
Black E.L., K.F. Sellers T.S. Manly (1998), Earnings Management Using Asset Sales: An
International Study of Countries Allowing Noncurrent Asset Revaluation, Journal of Business
Finance and Accounting.
Whittred,G. and Chan,Y(1992)“Asset revaluation and mitigation of under-investment.