Detailed Financial Statement Review: Whirl Ltd & AASB 101 Compliance

This report provides a detailed review of Whirl Ltd's financial statements, highlighting areas of non-compliance with Australian Accounting Standards (AASB). Specifically, it addresses the failure to disclose accounting policies as per AASB 101, including the measurement basis for inventory valuation. The review also points out the lack of sub-classification of minimum line items in the financial position and insufficient disclosures in the income statement regarding revenue recognition, asset de-recognition, and expense classification. Furthermore, the statement of changes in equity does not adhere to paragraph 10 of AASB, lacking clarity on total comprehensive income and retrospective application of equity elements. The cash flow statement also lacks appropriate disclosures, failing to provide information on the basis of preparation and specific accounting policies used in its calculation. The report emphasizes the need for Whirl Ltd to modify its presentation and provide appropriate disclosures in accordance with Australian accounting standards to ensure fair and ethical financial reporting. Desklib offers a range of solved assignments and past papers for students.

Running head: Review of Financial statement Whirl Ltd
Review of Financial statement Whirl Ltd
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Review of Financial statement Whirl Ltd

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Review of Financial statement Whirl Ltd
From the analysis of the books of account of the financial statement of the whirl Ltd
following conclusion has been drawn.
Failure Disclosure of the Accounting policies
As per the provision of AASB 101, It is necessary for the accounting firm to disclose the
measurement basis used in the preparation of the financial statement. For example methods
used for the valuation of inventories like historical cost, net realisable value or the current
cost. When an entity uses more than one valuation method then it is mandatory for the
company to disclose the valuation method to the user of the financial statement.
The Accountant of Whirl Ltd, has not made any disclosure to the user of the financial
statement about the basis of the measurement of the inventory, rather the accountant has
combined figure of the trade receivable and inventory, which is against the provision of the
AASB.
Disclosure of the Sub classification of Minimum line of items in the financial position.
As per AASB 101, it necessitates the entity to disclose about the additional sub-classification
of the minimum line of items either on the face of financial position or to the notes of the
books of the Account. But on reviewing the financial position of the entity, it can be seen that
the entity has not given any disclosures regarding the sub-classification of the assets and the
liability.
Disclosure in the income statement
As per the Australian accounting standard, the profit and loss account should disclose the
different line of items in the following manner.
Income earned through the revenue should be presented separately in the income statement.
The entity should records the profit or loss happened on the DE recognition of the assets at an
amortised cost.
Impairment loss should be measured in accordance with the section 5.5 of AASB.
If an entity is classifying expenses on the basis of the functionality then it is the responsibility
of the entity to disclose the nature of the expenses like depreciation costs, amortization
expenditures and employee benefit costs.
In the case of the whirl Ltd, it can be seen that the accountant of the firm has not given any
disclosures regarding the expenses, In spite they have prepared their profit and loss account
on the basis of the functionality.
Statement of changes in the equity
As per paragraph 10 of AASB, an entity should include the following line of items in the
changes in the equity statement.

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Review of Financial statement Whirl Ltd
Total comprehensive income earned by the entity for a particular period. Showing separately
the total amount attributable to the owners.
As per AASB 108 the entity should disclose the retrospective application of every parts
element of the equity.
The organization should separately disclose the component of the changes in the equity
resulting from the profit and loss recognised from the business operation, other
comprehensive income, and transaction related to the owners in their capacity, representing
specifically the changes in the ownership interest in the subsidiaries.
In the given case of whirl Ltd the accountant has not prepared the changes in the equity as per
the paragraph 10 of the AASB, the entity has not given any clear picture of the changes in the
owner equity, therefore it need to modify the presentation and provide appropriate disclosure
as per the Australian accounting standard.
Statement of the cash calculation
The provision of the AASB 107, requires any business to prepare the cash flow statement as
per the standard laid down in the Australian accounting standard. The standards provide a
cash flow presentation mechanism to the accountant of the organization which are fair and
ethical way to make it simpler to the general audience to understand the cash flow position of
the entity. These requirement are discussed as follows.
The footnotes of the financial statement should present the information about the basis of the
preparation of the cash flow statement.
These cash flow must be prepared with regards to the specific accounting policy as per
AASB paragraph 117-124.
In the given case of whirl Ltd the entity has not given any appropriate disclosure of the item
which are used in the calculation of cash.