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HA 3011 Advanced Financial Accounting Assessment item 2 — Assignment Due date: 11.59 pm Friday Week 10 Weighting: 20% Assessment Task Part A XXXXXXXXXX6 Marks) In an article entitled ‘Unwieldy rules...

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HA 3011 Advanced Financial Accounting
Assessment item 2 — Assignment
Due date: 11.59 pm Friday Week 10
Weighting: 20%
Assessment Task Part A XXXXXXXXXX6 Marks)
In an article entitled ‘Unwieldy rules useless for investors’ that appeared in the Australian Financial Review on 6 Fe
uary 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
iefings to understand companies’ numbers.”
If analysts did delve into IFRS accounts, they would most probably misinterpret them, according to Wesfarmers finance director Te
y 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.
Required:
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 cu
ent 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-cu
ent assets to fair value, but it does make it compulsory to account for the impairment costs associated with non-cu
ent 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.
Required
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

Solution

Akansha answered on May 21 2020
133 Votes
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Assessment Task Part A
A company's financial report can be developed with the help of financial reporting groundwork which can also assist in rectifying IFRS. The financial reporting framework also provides various methods which can be used for preparing the financial statements of the company. Through financial reporting, the concepts and estimates which are not mentioned in the bookkeeping standards can be developed.
An organisation's management can prepare their bookkeeping policies by utilising their logicality when financial statement frameworks unavailable or rigorous bookkeeping standards are absent when making the financial reports of the organization (Bassetto and Cui, 2018).
The financial statements have some users, but the primary users of the financial statements are the people who manage the organisation. These primary users mainly require the financial statements while working in an organisation. These primary users are also responsible for making these financial reports righteously. Monetary reporting is also essential for planning the prospective goals of the organisation. These primary users assure efficient utilisation of the available resources with effective working in the organisation, treading the organisation on the path of development.
IFRS presupposes that the statements prepared with the help of monetary framework cannot be adopted because these statements do not cater full information which is required for making co
ect decisions for the organisation. Keeping these statements as a basis, the users cannot build settlements (Gans and Ryall, 2016). In the viewpoint of IFRS groundwork, the financial statements which are prepared by financial reporting groundwork can be used for distinctive market modulators.
To develop the entity’s scope of the precedent and the later, the suppliers and the investors use the financial information as given by the financial reporting groundwork and settle on choices based on the appraisal they did.
Differentiated information can be identified with the help of the qualitative feature of the financial reporting. This qualitative attribute of the financial reporting can also guide and help the organisation to prepare the financial statements for standard functions.
Relevance- The precise information about the organisation's working can be given through the preparation of the financial statements. Quick and relevant information provided by the financial reports can help to change the decisions of the managers for the betterment of the company.
Faithful representation- Apt and accurate monetary statements should be presented to all the people involved with the company. The report to be faithfully represented should provide them with the complete financial information of the organisation which can assist them to make appropriate decisions for the organisation.
Comparability- Prospective decisions can be made quickly with the help of comparable information (Hahn, 2007). The information given in the monetary description is more useful when previous year's financial information can be compared with the cu
ent year's financial information or when it is comparable with the knowledge of the different organisation of the same industry. It can help the managers to pinpoint the resemblance from the precedent year information and the cu
ent working year's information. The users can trust the financial statements to be more reliable because of comparable data.
Verifiability- The financial information provided to the people associated with the entity needs verification by the auditing panel of the object for the sake of making intelligent decisions. The auditor makes the financial position of the object more transparent so it can be presented to the users of the organisation.
Understandability-The financial statements are prepared suitably so that it is easy to understand by the managers of the organisation. It is the responsibility of the management to prepare easily regular monetary reports as the prospective decisions of the entity to depend highly upon these...
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