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HA 3011 Advanced Financial AccountingAssessment item 2 — AssignmentDue date: 11.59 pm Friday Week 10Weighting: 20%Assessment Task Part A XXXXXXXXXXMarks)In an article entitled ‘Unwieldy rules useless...

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HA 3011 Advanced Financial AccountingAssessment item 2 — AssignmentDue date: 11.59 pm Friday Week 10Weighting: 20%Assessment Task Part A XXXXXXXXXXMarks)In an article entitled ‘Unwieldy rules useless for investors’ that appeared in the Australian Financial Review on 6 February 2012 (by Agnes King), the following extract appeared. Read the extract and then answer the question that follows.
Millions of dollars have been spent adopting international financial reporting standards to help investors make like-for-like comparisons between companies in global capital markets. But CFOs say they are useless and have driven financial disclosures to unmanageable levels. The criticism comes as the United States, the world’s largest capital market, decides whether to retire its domestic accounting standard (US GAAP) and adopt IFRS.
“In seven years I never got one question from fund managers or investment analysts about IFRS adjustments,” former AXA head of finance Geoff Roberts said. “Investors...rely on investor reports and management briefings to understand companies’ numbers.”
If analysts did delve into IFRS accounts, they would most probably misinterpret them, according to Wesfarmers finance director Terry Bowen. “Once you get into the notes you have to be technically trained. If you’re not, lot of it could be misleading,” Mr Bowen said.
Commonwealth Bank chief financial officer David Craig said IFRS numbers were disregarded by investors because they could actually obscure an institution’s true position.
You are required to explain which qualitative characteristics of financial reporting, as per the conceptual framework, do not, in the opinion of the above quoted individuals, appear to be satisfied by current reporting practices pursuant to IFRS. Also, you are required to consider whether the views are consistent with the view that corporate financial reports satisfy the central objective of financial reporting as identified in the Conceptual Framework.

Assessment Task Part B XXXXXXXXXXMarks)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).
Required:You are required to explain the decision of the government that no specific regulation be introduced from the perspective of:
(a)Public Interest Theory(b)Capture Theory(c)Economic Interest Group Theory of regulation

Assessment Task Part C XXXXXXXXXXMarks)The US Financial Accounting Standards Board does not allow revaluation of non-current assets to fair value, but it does make it compulsory to account for the impairment costs associated with non-current assets as per FASB Statement No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets.
Required:What implications do you think these rules have for the relevance and representational faithfulness of US corporate financial statements?
Assessment Task Part D XXXXXXXXXXMarks)Many organisations elect not to measure their property, plant and equipment at fair value, but rather, prefer to use the ‘cost model’. This will provide lower total assets and lower measures, such as net asset backing per share.
You are required to answer the following questions:
(a)What might motivate directors not to revalue the property, plant and equipment?
(b)What are some of the effects the decision not to revalue might have on the firm’s financial statements?
(c)Would the decision not to revalue adversely affect the wealth of the shareholders?

Answered Same Day May 18, 2020 HA3011


Akansha answered on May 24 2020
140 Votes
Running Head: Advanced Financial Accounting
Monetary Accounting    1
Relevance    2
Faithful representation    2
Comparability    2
Verifiability    2
Understandability    2
References:    6
Assessment Task Part A
Monetary Accounting
A monetary reporting groundwork of a company helps the managers of the company to prepare the monetary statement. Not only IFRS can be revised with the assistance of monetary reporting groundwork but it also describes the methods for preparing the monetary statements of the company. The bookkeeping conceptions and assessments which re not provides in the bookkeeping standard can also be developed with the help of financial reporting framework.
Now and again, the personal assessment of the manager is required to create their own bookkeeping policies for preparing the company’s monetary reports. This case happens when the company does not have the monetary reporting groundwork or when apt bookkeeping standards are unavailable.
The monetary statements have various kinds of users but the managers of the company are the prime consumers of these monetary statements. The responsibility of the precise preparation of the monetary statements lies on the shoulders of the managers of the company. The prime consumers of the company create prospective goals for the entity for which they need the monetary statements. These users have to maintain the effectiveness and efficiency of the activities of the entity while also ensuring efficient utilization of the available resources.
The financial reports prepared according to the monetary reporting groundwork does not provide full information to the users which can affect the decision making process. Therefore IFRS believes that these reports should not be the basis for making decisions as these reports and not adaptable (Eddey, 2014). Different market regulators use the monetary reports which are prepared according to the monetary reporting groundwork, in the viewpoint of IFRS’s framework.
The monetary reports as per the monetary reporting groundwork are used by the suppliers and investors of the business which helps them to take appropriate decisions based on their past judgments for the further growth and profitability of the business.
Monetary reporting helps the company to identify the various kind of information by using its subjective features which can be quite helpful for making the decisions regarding the functioning of the company. The monetary statements for the normal purpose of the entity are made according to the directions and demand of the qualitative feature of monetary reporting.
Relevance- The users should get authentic information about the activities and functioning of the entity. This is the main reason why relevant monetary reports are prepared in the company. The information given through the monetary reports should be highly apt and relevant as it can affect the decision making process of the company.
Faithful representation-The relevancy of the monetary reports is not only important but faithful representation of these reports to all the users of the company is also important. The managers of the company should get the full information about the working of the company along with freedom. To make accurate and right decisions for the organization, the information provided to the users should be faithfully represented and should have relevancy.
Comparability- If a company can compare its figures with the previous year’s values or with the values of the competitive companies of the same business, the information provided by the monetary reports becomes more ingenious. The figures of the previous year and the cu
ent year can be compared which can help to recognize the similar mistakes. The monetary statements can become more reliable in the view of the managers if the information provided can be compared (Bircan & Hauner & Prati, 2013). Information which can be compared makes it easy for the management to make decisions for the future.
Verifiability- To make right decisions for the company the monetary reports require verification which can be performed by the auditing panel of the entity. The monetary reports are examined by the auditing panel of...

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