Financial Accounting Strategic Project Management Report for West Ltd

This report provides a comprehensive analysis of the financial accounting practices of West Ltd, focusing on the application of Australian Accounting Standards (AAS) to improve financial reporting and strengthen the company's financial position. The report emphasizes the importance of classifying both tangible and intangible assets, particularly the valuation of intangible assets like goodwill. It discusses the implications of AASB 138, highlighting the need for proper asset classification for tax valuation and financial statement presentation. The report includes an analysis of the company's balance sheet and income statement, providing calculations for total assets, non-current assets, and gross profit. It also examines the accounting treatment of intangible assets, including goodwill, and provides recommendations for improving the company's financial reporting processes, such as considering organizational culture and effective communication. The report concludes with a summary of key findings and emphasizes the importance of adhering to accounting standards for accurate financial reporting and decision-making.

Running head: Financial Accounting
Financial Accounting
Name of the Student-
Name of the University-
Author’s note-

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Executive Summary
The main objective of this report is to understand the various principles and standards as
mentioned by the Australian Accounting Standards that can help the boards of the West Ltd
Company for better financial reporting process and acquiring a better financial position. The
study is proceeded by the importance of the classification of financial tangible and non- tangible
assets. It is found that the company needs to focus more on the valuation of intangible assets like
goodwill of the company for adding an economic value to the company.

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Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Conclusion.......................................................................................................................................8
References......................................................................................................................................10

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Introduction
Accounting is the important process of recording the daily transactions of a business. It is the
methodical process of recording, organizing and summarizing the transactions of business entity
to understand the financial performance of an entity. It is very important to understand the
respective accounting standards as per mentioned in the Australian accounting standards, to
understand the various principles, rules and regulations for doing the correct accounting
procedure. Australian accounting standards has derived certain principles and procedure for
maintaining and developing the accounting process in the business entities. The paper has
discussed on the importance of classifications of the different types of assets that may be tangible
or intangible assets for the West Ltd Company. Further discussion is based on the reliability
related to cost accounting. It has discussed on the valuation of assets in terms of allocating the
cost for the assets in different operations of the West limited Company. The intense of this report
is to provide an advice to the board of West Ltd Company related to accounting system and
understanding the importance of Australian Accounting Standards and advising the board
member or the chairman of the West Ltd Company related to the reporting process.
Discussion
Implications according to Australian accounting standards
West Ltd is required to prepare financial statements as per Corporations Act. AASB 138
is applicable for the company in case of its intangible assets. West Ltd for its own business will

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be required to prepare financial statements for its business and it would become require
important for the company to know about implications behind the assets classification. It
becomes very vital to classify intangible assets as well as its tangible assets for tax valuation
purpose (Adamyk 2017). In the financial statements, it is important to include classification of
intangible assets that would provide with important value for West ltd business.
There shall be proper use of AASB 138 as a Government body that would regulate
accounting standards by making provisions as per requirements for this company that it should
follow. AASB should be developing certain standards as well as interpretations required for
transactions accounting as well as for events that would be affecting the firm’s business for its
financial statements. Information that would present through financial statements would be as
per accounting standards that would assure about transparency for its own business. Further
AASB 138 would be allowing evaluating as well as taking very vital decisions for the above
proposal given in the case. According to the scenario, it can be instructed as per this case that
AASB 138 should be considered for the above proposal made with respect to West Ltd.’s
intangible assets. In case for an asset to be identified, the asset of this company must be
separated through its business or must take place through legal authorities (Agasisti et.2015).
Company’s intangible assets should be in the form of non-monetary that cannot be valued, fixed,
or determined through monetary terms. There should be no asset, which is physical for
classifying as intangible.
West Ltd should be able to have power over its assets in order to obtain for economic
advantage over future. There can also be important and very vital factor for consideration of
economic benefits in future of its assets. West Ltd should further determine that whether its
assets are resulting from the flow of its future economic benefits over its assets. It should further

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be able to measure the benefits over its future for its assets for reliability. Future economic
advantage would be including product selling of brands and saving extra costs incurred from the
business.
According to AASB 138 West Ltd.’s should measure all its assets through their own cost.
As per the standard, assets of this company shall recognize as intangible as per specific factor of
these accounting standards. Assets can be measurable through either of cost or through model of
revaluation. AASB 138 would be requiring for disclosure of some information for West Ltd
assets by making difference within intangibles assets with help of its internal generation.
As per this accounting standard, if not measured accurately or have disclosed the
information about its assets in the financial statements properly they might may expense instead
of being capitalized. The will further affect profit as well as tax for the company. Classification
of proper assets will help to make value for West Ltd business in future with the given proposal.
Intangible assets should be classified as such that those can be well included in the financial
statements. Further, that would increase in value and significance of the business as well. AASB
138 would be setting out with essential considerations for determination of assets classification
accurately for the company.
Analysis
The following example report will help the board for accounting the annual report.
The balance sheet
(For the year end 30th June 2020)

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Calculations
1. Total assets= Total (Current assets + non-current assets)
= 8650+ 6440
= $15,090 million
2. Total non-current assets= net property, plant & equipment+ patent and copyright+ other
long term assets+ goodwill
= 3400+20+ 3000+20
=$6440 million

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Income statement of the company
For the year end 30th June 2020
Calculation
Gross profit= Total Revenue- Cost of goods sold
=8,000-200
= $7800million
Gain as per AASB 138 in case of business combination of West Ltd cost of its intangible
assets shall be as per its fair value at the date of its purchase. The intangible asset’s fair value
shall be reflecting as expectations are pertaining to the participants of the market at the date of its

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acquisition related to West Ltd profits as per the expectation of future economic benefits with
respect to its asset. As per Accounting standard company’s asset should be inseparable and
should be an identified asset. Such asset should be recognized very separately from goodwill.
Certain cases shall include expenses for being incurred in order to generate economic advantage
over assets. Expenses of such kind will be as a contribution for its generation of goodwill as
mentioned in the case. Goodwill that will be internally generated will not be recognized to be as
asset as due to not being considered to be as identifiable resource controlled by this business
company that can measured through cost with reliability.
There shall be considerations related to difference in between of fair value of the
company as well as with the amount being carried for identification of its net assets that should
affect the fair value of the company’s assets. There should also be certain considerations with
respect to internally generated of company’s intangible assets. There should be proper
identification of assets to be identified that would be generating with the future economic
advantage.
There should be proper determination for reliability with respect to cost. AASB 138
should include cost of the intangible assets for West Ltd as well. The intangible asset’s costs
shall include all attributable costs that is required for creating, producing and preparing the asset
for being capable of operating in the way as per intention of the management of this company.
At last, there shall be measurement as well as recognition of the assets of West Ltd to be
included in the financial statement for profit. West Ltd, as per the accounting standard should use
cost model prepared for cost valuation; if the company is accounted with this model then all

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other assets of this company shall be regarded as per the same rule. Similar kind of model must
be used until it is found to be innovative for the brands of products aligned to the assets.
As soon as recognition is prepared, there should be cost that shall consider less of any
kind of amortization accumulated for its assets as well as also any kind of impairment losses
through sales of brands. The intangible assets of the firm shall be considered as per revalued
amount considering its fair value at the revaluation date deduction of any kind of amortization
that is accumulated. For revaluation purpose as per this Accounting Standard, West Ltd should
consider the assets fair value to get measured through the reference as per the market that
becomes active. Revaluation made should be in regular at each period of reporting being the
amount to carry of its assets that does not differ from its fair value.
As per Australian Accounting Standard, there should be proper disclosure in terms of its
financial statements. According to the provisions of AASB 138, there can be inclusion of
calculation of cost of intangible assets for the business in detail analysis, which must be
accurately present in financial statements for future making profit. There should be identified
proper reason behind why such cost model has been used and why the value of present is not
taken into consideration.
Further the stakeholders of this company can have detailed information about records of
assets that are required to get recorded in the financial statements and should also be accounted
as per books of account for West Ltd. Identification of economic advantage as well as capital
profit should be made (Andon et al.2015). That would further help to analyze appropriately about
return on total assets, as it will be based on fair records of cost of assets that are intangible in the
books of accounts of the company. Hence, AASB 138 shall be considered as accounting standard

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with its proper rules and regulations to determine fair value of assets and for measuring accurate
records in financial statements. Proper model of cost is required to make good comparative
analysis of assets that are need to record on the periodical basis for West Ltd related to its
business.
Recommendation
The company need to consider the organizational cultures in terms of norms, and values
among the internal business environment to progress the standards of the reporting process.
There needs to be effective communication in the hierarchy levels and the disclosure of accurate
information for flexibility in the accounting system (Bamber and McMeeking 2016). The
company needs to be benefited by the production process from the sale of the products,
maintaining the costs related to the operations for maintaining the economic benefits of the
entity. West Ltd Company needs to predict the future cash flows as a result of transactions. This
will maintain the internal and external cash flows of the business. The company needs to do a
research for innovation and new evaluation of the findings. They can predict the alternatives in
accounting process for getting the knowledge. The company can use various amortization
methods for determining the depreciation value of the intangible assets (Bond, Govendir and
Wells2016)
. These methods includes the straight-line method, diminishing value method and the unit
production method. Choosing an appropriate amortization method will help in limiting the risks
associated with the intangible assets. Thus, these are the requirements that the boards of the West
Ltd Company needs to follow for better financial reporting.