Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

Microsoft Word - Assignment ACCG8142 S2 2020.docx ACCG8142 research assignment – due 29 September 2020 Indications of impairment...

1 answer below »
Microsoft Word - Assignment ACCG8142 S2 2020.docx
ACCG8142 research assignment – due 29 September 2020 
Indications of impairment 
The Covid‐19 pandemic is affecting the economic prospects of businesses, significantly. 
Economies have shrunk globally as borders close and trade declines. Economies that rely 
upon  international  trade have  gone  into  recession. Most other  economies have been 
pushed  into  recession  globally,  from  reduced  domestic  demand  caused  by  elevated 
Businesses that rely upon international suppliers or international customers have stalled. 
Businesses  that  rely  upon  domestic  demand  have  stalled  as  communities  are  locked 
down. Governments are supporting businesses and consumers  in  the short‐term, with 
liquidity payments. 
The World Trade Organisation predicts that the global trade will shrink 33% before the 
end of the pandemic. 
Select a publicly listed company from the list at appendix 2. Obtain written approval from 
the lecturer if you wish to select another company. 
Analyse the  latest financial and annual report of the company selected, to  identify the 
specific, economic risks to which that company is exposed. 
Presume that the risk outlook illustrated in appendix 1 will emerge and that there are no 
indicators that a return to economic growth is likely in the medium term.  
Forecast financial effects on the company’s revenues, expenditures and on the values of 
assets and liabilities, consequent to the risk outlook.  
Write a 2,500‐word report that includes: 
1. An explanation of the sources of impairment risk specific to the company selected. 
2. Analysis and discussion of the forecast financial effects on the company selected, from 
the  global  and  local  recessions.  State  all  assumptions  in  detail  and  state  the 
accounting policies adopted in your analysis. 
3. A  discussion  on whether  the  impairments  identified  and  forecasts made  in  your 
analysis affect the capacity of your company to report as a going concern. 
This assignment contributes 25% of your assessment and is marked out of 35.  Marks are 
awarded  for  both  format  and  content.  Appropriate  referencing  is  required.  Refer  to 
accounting standards as relevant. See appendix 3 for a marking grid used to assess this 
Reports must be uploaded into iLearn in either Word or PDF format.   
Appendix 1 – outlook of economic risk 
Level of 
severity Macro Economic Conditions
9 Severe global depression over 2 years
8 Widespread business failures cascade through 
economies, collapsing asset prices
7 A flood of business insolvencies, with capital 
markets closing
6 Economies remain closed globally, with liquidity 
drying up and recessions deepening
5 Global production stalls, with inputs blocked and 
global demand for output collapsing
4 A sustained fall in consumer and business 
sentiments, with widespread economic recessions
3 Governments pump liquidity into economies 
through payments to consumers and businesses
2 Sovereign borders close, disrupting labour and 
other inputs. Unemployment surges.
1 Uncontrolled, global transmission of Covid‐19 
causes volatile global capital markets
0 Business as usual ‐ Fe
uary 2020
August 2020
June 2021
Appendix 2 – list of companies 
Air New Zealand Hilton
Cathay Pacific Hyatt
Delta Airline IHG PLC
International Airlines Group Ma
Japan Airlines Wyndham Hotels
Qantas OIL & GAS
Singapore Airline BP Group
Australia Pacific Airports Corporation Royal Dutch Shell
Sydney Airport Limited Sinopec
Carnival Corporation PLC Flight Centre travel Group Ltd
Genting HK Helloworld Travel Ltd
Norwegian Cruise Line Webjet Ltd
Royal Cari
Harvey Norman Holdings Ltd
Myer Holdings Ltd
Appendix 3 – marking guide 
Introduction  2 
Clarity of discussion and format  3 
Conclusion  2 
CONTENT – clear explanations, analysis & discussion are required   
Explanation of the sources of impairment risk to the company selected  8 
Analysis and discussion of the forecast financial effects (impairment)  14 
Discussion of the capacity to report as a going concern.  5 
Appropriate referencing  1 
Total  35
Answered Same Day Aug 24, 2021 ACCG8142 Macquaire University


Nishtha answered on Sep 07 2021
114 Votes
Table of Contents
Introduction    3
1. Source of Risk to the Company    3
2. Financial Effects on Qantas Airlines from Global and Local Recessions    4
Assumptions    5
Accounting Policies    6
3. Critical Review of Identified Impairment and Forecast Analysis    7
Conclusion    9
References    10
Qantas is known as the world’s leading long-haul airways founded in Queensland in 1920, becoming the world's second-oldest airlines. Today, with nearly 35,000 staff, the airways provide flight services through a network of 173 destinations in 42 countries worldwide. Qantas provides a wide a
ay of goods and services like luxury
and, Qantas and Jetstar, a low cost
and. Qantas
eak in on domestic and international flights.
Qantas provides first, business, luxury economy and economic class in terms of international flights, which passengers enjoy various cabin, dining and amenity collection facilities as they pay. The coronavirus disease out
eak has forced Australia’s flagship airline, Qantas, to announce perhaps the worst financial performance for a century – a loss of $3 billion – despite massive tourism and travel destruction.
1. Source of Risk to the Company
Qantas faces many wo
ies on the market that the company as losing cash while most of its aircraft remains grounded. The company has confirmed that it remains a problem and its chief executive, Alan Joyce, has taken a dig at a struggling competitor Virgin Australia by announcing that Qantas will be "the only Australian airline capable of flying long distances after the crisis." The aviation industry is in free fall as travel restrictions cause a substantial decline in traffic volumes and rapid-time revenues.
The airlines that incorporate air cargo within their "available seat miles" (or kilometres) the business strategy could benefit marginally if supply chains and consumer demands return. As stated by Shibata (2020), during the crisis, airlines, which support the growth of the e-commerce sector, which actually generate cargo profit during the crisis. Ca
iers from around world have flight cancellations and planned for their first zero-dollar revenue days in aviation history and the resulting pause in cash inflows in response to the crisis and social distancing. Most airlines including Qantas have enough short-term liquidity to withstand the next three months, considering the unexpected revenue drop.
Some airlines have gone bankrupt but policymakers are also standing in and offering financial help to keep airlines afloat. However, the picture over the long term expresses concern. Qantas Airlines will not resume normal operational activities and demand levels until 2022 at the earliest and whenever they do; COVID-19 will change forever in a world. That means 2020 will be a fine balance as Qantas Airlines concu
ently attempt to stabilise their company while getting ready for rehabilitation in demand. The major financial risks of Qantas Airlines include rate of interest, exchange risk of cu
ency and fuel-price risk.
The first source of risk is the geopolitical and economic instability, the second source of risk is management of the supply chain, third is domestic and international competition of Qantas Airlines. Ability to perform key contracts is the next source of risk as multimillion-dollar deals and strict timelines have large backlogs. Inability to execute on major initiatives will result in substantial negative consequences for both financial results and
and value. Cu
ency exchange rate fluctuations are final type of risk confronting the aviation sector. Indicate that a large number of airlines as Qantas Airlines operate globally, a significant proportion of their income streams are earned in a wide range of exchange rates, leaving them prone to cu
ency exchange rate fluctuations.
2. Financial Effects on Qantas Airlines from Global and Local Recessions
Australian border is to stay closed, for visitors at least, until July of 2021. Even with the reopening of that boundary, company expects the number of international flights in 2021-22 to be mostly half of what they have been before the coronavirus pandemic and just up to 2-thirds the cu
ent accounting year. As mentioned by Borio, Drehmann and Xia (2018), recessions are times of particular economic decline and economic performance metrics such as income inequality, unemployment and Budget deficit.
Because of tightening credit conditions, sluggish demand and general fear and confusion, recessions have an effect on all types of businesses, large and small. A tightening of credit conditions appears to be one of the first effects recessions have on companies. Interest rates may initially rise early in the recession, then fall as the financial flood gates opened, but market-lending standards tend to be tighter throughout the recession and lenders are more selective of the risks they are willing to take on at any rate. Qantas Airlines faces difficulties in repaying their debt, most of which are reliant on the continuing operations being financed.
Consumer bonds relative to the growth of the market has successively reached higher peaks of record decade after decade leading to the very last several financial crises. As decreasing revenues appear on its quarterly earnings report, stock price...

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here