Corporate Accounting Assignment Help

Corporate Accounting Assignment Help

Corporate Accounting Assignment Help

Question 2

AASB 101 is an accounting standard which is applicable for the companies incorporated in Australia. Australian Accounting Standards Board is the regulatory body which is responsible for the regulation of accounting framework in Australia. It issued AASB 101 in relation to the Presentation of Financial Statements under the provisions of Section 334 of Corporation Act 2001. The basic objective behind preparing financial statements by an entity is their comparison with the financial statements of company that relate to previous years and also with financial statements of peers and other entities of similar nature belonging to same industry.

Corporate Accounting Assignment HelpAccording to this standard the financial statements of an entity include many elements such as statement of profit or loss and other comprehensive income to present the profit or loss earned during the period by the company, statement of financial position to show the financial position of company, statement of changes in equity to depict the changes which arose in the equity structure and capital of the company during the year, statement of cash flow to identify the operations which require cash inflow and the operations which require cash outflow, notes attached to the financial statements comprising disclosure of significant accounting policies adopted by the entity and explanatory information related to the items included in the statements and lastly comparative information of the items included for previous period (Peach, 2015).  These statements relate to a specific period which is generally one year. The Profit or loss statement provides the information to the users about the profit or loss calculated by deducting the expenses from the income and it also includes details about other comprehensive income apart from income from business operations. The Balance Sheet shows the position of assets and liabilities possessed by the entity at the end of the period. The Cash Flow statements comprise of three sections for the purpose of classification of cash flows in terms of operating activities, investment activities and financing activities. This standard requires that the entity presents accurate, honest and fair view of its financial performance and financial positions to its stakeholders and the users of the financial statements without any window dressing. This standard clearly defines the structure, content and elements of financial statements. It requires that the assets and liabilities are segregated into short term and long term for clear understanding. The compliance of fundamental accounting assumptions are also covered within this standard and required to be complied by the entities while preparing their accounting records. For example going concern concept for the sustainability of entity, materiality of transactions and accrual accounting to arrive at relevant profit or loss for the period. In this way this accounting standard provides an accounting framework for the companies whether private sector companies or private sector companies to present their accounting and financial information to the users of such information in a uniform manner with accuracy and fairness. However the differences arise due to differences in accounting policies and accounting estimates which are based on the judgement of management (Barker & Penman, 2016).  The financial statements of Heaven Ltd for the year ending 30 June 2016 prepared as per the guidelines of AASB 101 are as follows:

Financial Statements of Heaven Ltd as per AASB 101

Statement of Financial Position

Statement of Financial Position

As at 30 June, 2016

 

Notes

30 June 2016 $

Assets

 

 

Current

 

 

Cash and cash equivalents

 

98080.00

Trade and other recievables

 

651020.00

Inventories

 

970000.00

Prepayments

 

3400.00

Other current Assets

 

190000.00

Assets and disposal group classfied as held for sale

 

-

Current assets

 

1912500.00

Non-current

 

 

Intangible Assets

5

60000.00

Property, plant and equipment

6

3187000.00

Long term investments

 

1300000.00

Non-current assets

 

4547000.00

Total Assets

 

6459500.00

Liabilities

 

 

Current

 

 

Trade and other payables

 

790000.00

Provisions

9

10000.00

Current tax liabilities

 

160000.00

Accrued Expenses

 

8520.00

Other current liabilities

 

190000.00

Liabilities included in disposal group held for sale

 

-

Current liabilities

 

1158520.00

Non-current

 

 

Mortgage loans

 

240000.00

Pension and other employee obligations

 

400000.00

Non-current liabilities

 

640000.00

Total liabilities

 

1798520.00

Net assets

 

4660980.00

Equity

 

 

Share capital

7

4086000.00

Calls in arrears

 

-500.00

Retained earnings

 

575480.00

Total Equity

 

4660980.00

Statement of Changes in Equity

Statement of changes in Equity

For the year ended 30 June 2016

 

Share Capital $

Retained earnings $

Total Equity $

Balance at 1 July 2015

4086000

2,75,000

4361000

Calls in arrears

-500

 

-500

Profit for the period

 

5,00,480

500480

Dividend

 

-200000

-200000

Balance at 30 June 2016

4085500

575480

4660980

Notes accompanying Financial Statements

General Accounting Information

The financial statements of Heaven Ltd have been presented for the year ended 30 June 2016. The amounts included in these statements are in Australian Dollar (AUD$). These statements ae generated and presented by the company to comply with the provisions of Corporation Act 2001 and adhere to the requirements of AASB 101 which is Presentation of Financial Statements.

Accounting policies

The accounting policies adopted by the company to prepare the financial statements are same as the policies taken by the company during last year and have been consistently applied during current year also.

Accounting Estimates

While making the financial statements and accounting records various judgements and estimates are used. These are made by the management of the company in order to correctly measure the assets and liabilities and accurately recognise the different types of expenses incurred and incomes earned.

Important events and transactions

No significant event or transaction has taken place to effect its operations or risk.

Intangible Assets

 

Patent $

Gross carrying amount

 

Balance as at 1 July 2015

100000.00

Additions

-

Disposal

-

Balance as at 30 June 2016

100000.00

Amortization and impairment

 

Balance at 30 June 2016

40000.00

Carrying amount at 30 June 2016

60000.00

Property, plant and equipment

 

Buildings $

Plant and equipment$

Gross carrying amount

 

 

Balance as at 1 July 2015

1750000.00

 

Additions

-

 

Disposal

-

 

Balance as at 30 June 2016

1750000.00

1716000.00

Depreciation and impairment

 

 

Balance at 30 June 2016

207000.00

72000.00

Carrying amount at 30 June 2016

1543000.00

1644000.00

Share Capital

The company has 5,000,000 shares with a share capital of $4,086,000 and calls in arrears amounting to $500.

Dividends

During the year Heaven Ltd pad dividends amounting to $200,000 to its shareholders put of retained earnings.

Provisions

The short term provisions consist of allowance made by the company with regards to impairment of receivables.

Other disclosures

The company paid $75,000 to its auditor out of which an amount of $19,000 relates to services other than the annual audit and half-yearly review.

References

Barker, R. & Penman, S. 2016, “Moving the Conceptual Framework Forward: Accounting for Uncertainty”, Unpublished paper, Oxford University and Columbia University.

Gipper, B., Lombardi, B.J. & Skinner, D.J., 2013, “The politics of accounting standard-setting: A review of empirical research”, Australian Journal of Management, 38(3), pp.523-551.

Peach, K. 2015, “AASB 101 – Presentation of Financial Statements”, Australian Accounting Standard Board Australian Government, pp. 6-27.

Yao, D.F.T., Percy, M. & Hu, F., 2015, “Fair value accounting for non-current assets and audit fees: evidence from Australian companies”, Journal of Contemporary Accounting & Economics, 11(1), pp.31-45.