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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.
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).
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.
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 07, 2020 HA3011


Abr Writing answered on May 12 2020
146 Votes
HA 3011 Advanced Financial Accounting
Table of Contents
Assessment Task Part A    3
Assessment Task Part B    5
a.    Public Interest Theory    5
.    Capture Theory    5
c.    Economic Interest Group Theory of regulation    5
Assessment Task Part C    6
Assessment Task Part D    7
a)    What might motivate the directors to not reassess the value of the equipment property and plant?    7
)    What are some of the effects the decision not to reassess the value might have on the financial statements of the company?    7
c)    Whether the decision of not revaluing the assets affects adversely the shareholders wealth?    8
References    9
y, R., 2017. Accounting and human information processing. In The Routledge Companion to Behavioural Accounting Research (pp. 42-54). Routledge.    9
Assessment Task Part A
The qualitative characteristics of financial reporting Comparability, Verifiability and Timeliness do not appear to be satisfied by the cu
ent reporting practices pursuant to the IFRS. According to these three qualitative characteristic of the financial reporting, the information can only be useful for the reporting entity when it is utilized with due care and responsibility.
· Comparability: According to this characteristic, information about an organization of reporting is useful when only it can be comparable with a similar kind of detail and information about the other organizations and with having the same and similar information and details about the similar organization for another date or another period of time (Li
y, 2017). The characteristic “Comparability” enables the user of the report to recognize, identify and understand the similarities in, and the differences among all the items.
· Verifiability: According to this characteristic, it assists to give surety to the users that the details and the information showcases the phenomenon of economics faithfully for which it claim and contends to showcase. According to this, the diverse independent and knowledgeable observers could reach the unanimous consent, although not necessarily the whole and entire agreement, about that particular true and realistic depiction.
· Timeliness: Timeliness basically means that the details and the information are present to the makers of the decision in time to be able of affecting and manipulating their decisions (Kotler, 2015).
Yes, the views are consistent with the view that the financial reports of the company satisfy the core and central objectives of the financial reporting according to the conceptual framework.
The Framework, which identifies the principal instructions of users of an entity’s standard purpose financial statements, states that the goal of financial statements is to offer the records approximately the financial role, overall performance, and adjustments in financial function of an entity that is useful to a huge variety of users in making financial decisions and selections; and to expose the results of manager’s stewardship (Baldwin, et. al., 2012).
The Framework specifies the features that make economic information useful; particularly, understandability, relevance, reliability, and comparison. It also defines the basic elements of financial statements (assets, liabilities, equity, profits, and expenses) and discusses the standards for spotting and measuring them.
The Framework's purpose is to assist the IASB in developing and revising IFRSs which can be primarily based on steady principles, to assist preparers to develop constant accounting rules for areas that are not blanketed via a trendy or wherein there may be a choice of accounting policy, and to help all parties to understand and interpret IFRS.
inside the absence of a general or an Interpretation that mainly applies to a transaction, management have to use its judgment in developing and making use of an accounting coverage that outcomes in facts this is relevant and dependable. In making that judgment, IAS 8.11 requires the management to recall the definitions, popularity standards, and dimension ideas for property, liabilities, earnings, and prices within the Framework. This elevation of the significance of the Framework was introduced within the 2003 revisions to the IAS...

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