Financial Reporting Developments Report

This report outlines significant changes and developments in the financial reporting environment from May to August 2017. It covers updates from various accounting standards boards, including IFRS 13, IAS 16, and AASB interpretations. The report emphasizes the importance of compliance with international financial reporting standards and highlights the ongoing convergence efforts between IASB and FASB. Additionally, it includes a detailed statement of financial position for Winter Limited, showcasing current and non-current assets, liabilities, and equity, along with notes that provide further clarification on financial items.

Question 1
Changes and developments in the financial reporting environment
(1 May 2017 to 4 August 2017)
Issue of report by ESMA in regard to application of IFRS 13
The report issued by this authority provides the procedure for application of the fair value
measurement in regard to IFRS 13. The review had given stress on various areas such as
disclosures at the fair value, account units, market activity levels, adjustment in regard to
valuation of the derivatives. (Deloitte, 2017)
Amendments proposed by IASB in regard to IAS 16
As per this amendment, the amount that is received by way of selling items which are being
produced by way of bringing asset to particular location will be prohibited for any kind of
deduction from the value and cost of plant, equipment and property. (Deloitte, 2017)
Issue of AASB interpretation 23 in regard to uncertainty over income tax treatments
As per this interpretation, entity will be eligible to recognize the Current Tax Asset, Current Tax
Liability, Deferred Tax Asset or the Deferred Tax Liability in relation to requirements of AASB
112 for the uncertain tax treatments and this interpretation will be applied in regard to annual
periods of reporting that will start on or after 1 January 2019. (AASB, 2017)
Financial accounting standard board updates
The accounting standard board had issued updates in regard to topic 260 that is earning per
share, topic 480 which provides in regard to the liabilities from equity and topic 815 that is
derivatives and hedging. (FASB, 2017)

Issuance of insurance contracts IFRS 17
This IFRS 17 requires that insurance liabilities in the business will be measured at current value
of fulfillment. This will help in making uniform presentation of the insurance contracts. The
IFRS 17 will be applicable on the reporting periods that will begin from January 1, 2021.
(Deloitte, 2017)
Aligning of FRC 102 with IFRS
Financial reporting council had given a decision that FRS 102 will be used with IFRS 9, 15 and
IFRS 16. (Deloitte, 2017)
Updation to ASX listing rules
The Updation had been done in regard to Guidance note 15 in regard to calculation of the initial
listing fee in relation to entities that are engaged in demerger or the spinning off. Thus it will
help in providing the first entry list for ASX. (ASX, 2017)
Progress of IASB and FASB in relation of convergence program
The IASB and FASB are working continuously towards their work in relation to their joint work
in regard to improvement in the International Financial reporting standards and US generally
accepted accounting principles hence they are working towards their convergence program.
(FASB, 2011)
Surveillance program of financial reporting of ASIC
The surveillance program had been made in order to improve the quality and productivity of
financial reporting. The program requires that the entire annual and the interim reports are being
made in accordance with the respective accounting standards that apply on various companies.
The accounts are randomly selected for the purpose of review. The Company’s accounts are
being reviewed in order to determine that they are in compliance with the corporation act. Thus

remedial action is also taken by ASIC where the actions undertaken by the company are not
appropriate. (ASIC, 2017)

References:
Deloitte, 2017, “ESMA Issues Report on the Application of IFRS 13”; Available at:
https://www.iasplus.com/en/news/2017/07/esma-ifrs-13-report
Deloitte, 2017, “IASB Publishes proposed amendments to IAS 16 regarding proceeds before
intended use”; Available at: https://www.iasplus.com/en/news/2017/06/ias-16-proceeds
Australian Accounting Standards Board, 2017, “Uncertainty over Income Tax Treatment”;
Available at: http://www.aasb.gov.au/admin/file/content105/c9/INT23_07-17.pdf
Financial Accounting Standards Board, 2017, “Accounting Standards Updates – Effective
Dates”; Available at:
http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1218220137102
Deloitte, 2017, “New and Revised Pronouncements as at 31st March, 2017”; Available at:
https://www.iasplus.com/en/othernews/new-and-revised/march-2017
Deloitte, 2017, “FRC Defers decision on keeping FRS 102 aligned with IFRSs”; Available at:
https://www.iasplus.com/en/news/2017/06/uk-frs-102
ASX, 2017, “Listed @ASX, Compliance updates 18 July, 2017, Update no. 06/17”; Available at:
http://www.asx.com.au/resources/newsletters/listed_at_asx/listed-at-asx-
20170718_0617.html
Financial Accounting Standards Board, 2011, “IASB and FASB Report Substantial Progress
towards completion of convergence program”; Available at:
http://fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB/FASBContent_
C/NewsPage&cid=1176158460171
Australian Securities & Investments Commission, 2017, “ASICs Financial Reporting
Surveillance Program”; Available at: http://asic.gov.au/regulatory-resources/financial-

reporting-and-audit/directors-and-financial-reporting/asics-financial-reporting-
surveillance-program/

Question 2
Statement of financial position of Winter limited for the year ended 30 June 2017
Particulars Amount
Current assets
Cash at bank 18200
Cash management account 150000
Receivables (1) 130600
inventory (2) 312900
Total current assets 625300
Non-current assets
Investment property 614000
Loan receivable 60000
Property, plant and equipment (3) 1647900
Goodwill 68300
Total non-current assets 2390200
Total assets 3015500
Liabilities
Current liabilities
Accounts payable 75800
Allowance for doubtful debts 14600
Current tax liability 33500
Accrued wages payable 8200
Interest payable 8300
Dividend payable 45000

Provisions (4) 32000
Total current liabilities 217400
Non-current liabilities
Provisions (5) 48000
Debentures 600000
Bank loan 500000
Total non-current liabilities 1148000
Total liabilities 1365400
Total Equity (6) 1650100
Total equity and liabilities 3015500
As per the provisions of AASB 101, the statement of financial position should include clear
bifurcation in regard to the current assets and non-current assets, current liabilities, non-current
liabilities and thee equity. As per the provisions of AASB 101, the financial statements should be
presented in a manner that they present the fair position of the company and the financial
statements are in compliance with the international reporting financial standards. The provision
of AASB 101 requires that assets and liabilities are to be recorded in order of their liquidity in
the statement of financial position. Thus the above assets are recorded in accordance with the
level of liquidity. (AASB, 20xx)
Notes to the financial statements
Particulars Amount
1. Receivables
Accounts receivable 123900

Interest receivable 6700
Total receivables 130600
2. Inventory
Inventory 212400
Raw materials 100500
Total inventory 312900
3. Property, plant and equipment
Land 1100000
Plant and equipment less accumulated
depreciation
547900
Total property, plant and equipment 1647900
4. Provisions (current)
Provision for annual leave 19000
Provision for long service leave 8000
Provision for warranty 5000
Total 32000
5. Provisions (non-current)
Provision for annual leave 17000
Provision for long service leave 19000
Provision for warranty 12000
Total 48000
6. Equity and reserves
Share capital 500000

General reserve 276800
Retained earnings 873300
Total 1650100
The minimum line items are being disclosed as per the requirement in the statement of financial
position and the sub classifications are being given in the notes to the financial statements. The
notes to financial statements may also include information in regard to the classes of share
capital and the nature and the object of each reserve which is being given under the head of
equity in the financial position. The sub classifications have been clearly shown in the notes to
the financial statements. The statement of financial position gives the position of the company at
the end of the specific reporting period. The statement of financial position had clearly been
given in accordance with the provisions of AASB and IFRS and other conceptual framework.
(AASB, 2015)