Financial Accounting Theory Semester XXXXXXXXXXAssignmentInstructions This is an individual...

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Financial Accounting Theory Semester XXXXXXXXXXAssignmentInstructions   	This is an individual assignment 	The assignment is to be submitted on the Moodle in Turnitin 	The Due date is 16/04/2017 by 23:55 pm  	The weight of the assignment is 10%  	The assignment is out of 50 Marks  Answer the following questions Q1:Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the ‘capacity to adapt’. What is the capacity to adapt and how is it determined? (10 Marks)Q2: In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, ‘market forces’ would be relied upon to encourage companies to do the ‘right thing’ (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations ‘products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the ‘right thing’ even in the absence of legislation).You are required to explain the decision of the government that no specific regulation be introduced from the perspective of:(a)public interest theory (5 Marks)(b)capture theory (5 Marks)(c)economic interest group theory of regulation (5 Marks)
	
Document Preview: BAC21 Financial Accounting Theory Semester XXXXXXXXXXAssignment				InstructionsThis is an individual assignmentThe assignment is to be submitted on the Moodle in TurnitinThe Due date is 16/04/2017 by 23:55 pm The weight of the assignment is 10%  The assignment is out of 50 MarksAnswer the following questions Q1:Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the ‘capacity to adapt’. What is the capacity to adapt and how is it determined?                                                                       XXXXXXXXXX10 Marks)Q2: In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, ‘market forces’ would be relied upon to encourage companies to do the ‘right thing’ (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations ‘products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the ‘right thing’ even in the absence of legislation).You are required to explain the decision of the government that no specific regulation be introduced from the perspective of:(a)public interest theory  (5 Marks)(b)capture theory  (5 Marks)(c)economic interest group theory of regulation (5 Marks)Credit card profit soars but ANZ feels no guiltAnthony HughesThe Sydney Morning Herald, 27 April 2001, p. 3ANZ denied yesterday it was overcharging customers after reporting a 71 per cent increase in credit card profits.The bank, which only...

David · Accepted Answer

FINANCIAL ACCOUNTING 
Question 1 
There are several normative theories in accounting which are rooted in different underlying 
principles. One of these theories is the Continuously Contemporary Accounting or CoCoA. 
This is an accounting theory which is based on ascertaining the exit prices of the outstanding 
liabilities and the assets in hand. Additionally, it highlights that the financial statements of 
any given firm must be indicative of the firm’s capacity to adapt. The capacity to adapt is a 
measure which is related to the central idea that cash may be generated through liquidation of 
the assets at hand. This capacity was determined based on the underlying liquidity of the 
company’s assets. Thus, a company having more assets that are readily convertible into cash, 
thus, the capacity to adapt of such a company would be considered higher in comparison with 
other entity that has a higher amount of illiquid assets (Deegan, 2014). 
The net result of the application of this concept was that any illiquid asset was excluded from 
the ability or capacity of the company to adapt of changing business scenarios or 
circumstances. Also, the capacity to adapt may be measured by indicators such as profit for 
the given period which would be computed by taking into consideration the alternation in the 
exit prices of the company’s assets.  Further, the overall adaptive capital associated with a 
given firm would essentially be equal to the difference between the exit value of the various 
assets and those of the outstanding liabilities on the balance sheet. In this process, any selling 
charges which may be incurred would also be reflected in the computation of the adaptive 
capacity. The higher the adaptive capital, the higher would be the firm’s capacity to adapt in 
wake of volatile circumstances (Deegan, 2014).
Question 2 
FINANCIAL ACCOUNTING 
a) In accordance with the public interest theory, the government tends to provide for 
increment regulation when there is a strong demand for the same from the public. Such a 
regulation initiated by the government is not intended to serve the interests of a particular 
section but rather aim to serve the societal interest in a collective manner. The key reason 
for bringing in the regulation is the assumption that markets if left unregulated could 
potentially lead to inefficiency and hence the same could be avoided with regulations 
(Arnold, 2010). 
In the given case,

Financial Accounting Theory Semester XXXXXXXXXXAssignment Instructions This is an individual assignment The assignment is to be submitted on the Moodle in Turnitin The Due date is 16/04/2017 by 23:55...

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