Financial Account Business Involvement

Question: Describe about the Financial Account for Business Involvement. Answer:: 1. Explaining the method used by Queenslander Ltd for each transaction: (a) The overall situation mainly states that Queenslander ltd is liable to pay the debt of its employee as the guarantor if he defaults. However, the situation is still in control and there is only a likely change that the employee will default. The employee has not already defaulted it is just an assumption and no concrete proof is been depicted in the situation. As per the AASB under obligation involves settlement in future sacrifice of economic benefits in paragraph 64, which only depicts that the guarantor is only liable to record loss if the borrower has already defaulted and the guarantor has settled the account (Aasb.gov.au, 2016). However, in this case, the situation is still in control and borrower has not defaulted then Queenslander ltd cannot record it in their financial statement. (b) The shares gifted by the generous customer will be treated as asset and can be listed in the assets section of the financial statement. Furthermore, the 500 shares worth $2 each will be recorded under the asset section, which could help in generating future benefits. () mentioned that asset gift is mainly used by companies to reduce their tax pay and increase their retained income. Furthermore, as per the AASB A65 paragraph the overall accumulation of financial instruments is mainly depicted in the asset side of the financial statement (Aasb.gov.au, 2016). Furthermore, Queenslander ltd can effectively add the gifted shares worth $1000 in the 30th June 2016 financial statement. (c) The panoramic views of the Sunshine Coast hinterland from the windows of the cafe are an intangible asset, which mainly helps in attracting customer to the cafe. However, this intangible asset cannot be valued in terms of money, as the company did not obtain it from monetary expenditure. As per the AASB paragraph 23 and 33 intangible assets that is been obtained from no monetary expenses cannot be recorded by the company in their financial statement (Aasb.gov.au, 2016). Furthermore, in paragraph 33 it states that the tangibility is not an asset characteristic, which could be used by companies to boost their financial statement. The panoramic view can be listed as per the goodwill, which is now valued in the financial statement. Thus, the overall impact of pragmatic view cannot be depicted in the 30th June 2016 financial statement of Queenslander ltd. 2. Depicting the viability of the proposal stated by the director: The overall proposal of the director for not conducting the depreciation on the machinery due to the increase in value is vastly wrong. In addition, depreciation has its own characteristics, which help the company to reduce tax and account for the useful life of the asset. However, the directors proposal is to not value the deprecation for the machinery and provide higher tax to the government. As per the AASB 116 from paragraph 43 to 62, the discussion on deprecation is been conducted (Aasb.gov.au, 2016). In addition, the AASB mainly states the deprecations is mainly conducted to support the usages value of the machines. Laing Perrin (2014) stated that companies to reduce the overall tax pay, which could in turn improve their retained profit, mainly use depreciation. On the other hand, Kober, Lee Ng (2013) criticises that some companies use the depreciation method to their advantage and reduce the overall dividend pat rate. In addition, companies to revalue their assets and make adequate depreciation adjustments mainly use the defined depreciation method and revelation model. Furthermore, the revelation model depicted in AASB 116 from paragraph 31 to 42 clearly states the company can revalue their assets and then charge the deprecation (Aasb.gov.au, 2016). The omission of depreciation cannot be conducted in the financial statement of Manly Ltd. In addition, the non-calculation of deprecation could decrease the overall retained profits and raise the overall tax liability of the company. Yao, Percy Hu (2013) cited that the overall fair value is reduced by the depreciation method, which in turn supports the usages conducted on machinery. AASB 116 paragraph 37 and 38 mainly defines the category of assets, whose depreciation needs to be calculated each year until the life expected asset is zero (Aasb.gov.au, 2016). In addition, the paragraph also states that the machinery needs to be valued simultaneously to identify the accurate value of the asset (Huang Vlady, 2012). Thus, it could be concluded that the proposal of the director for not considering the depreciation of the machinery is absurd. 3. Depicting the treatment of expenditure conducted by Sharks ltd under AASB 138 / IAS 38 intangible assets: There are mainly three aspects that could be derived from the scenario, firstly the intangible asset treatment, marketing expense treatment and cost of direct mailing. In addition, as per the AASB 138 from paragraph 18-67, it clearly states that any expense conducted on the intangible assets needs to be recognised as expenditure unless it forms the cost of the intangible asset (Aasb.gov.au, 2016). The overall direct mail is expenditure conducted by the company and is not adding any value to the overall intangible client list generated by the marketing department. Su, Wells (2015) stated that companies using the expenses as an intangible assets mainly reduces the overall viability of their financial statement. In addition, the mail list purchased by the company from its competitor, which is valued each year. As per the AASB 138, the intangible assets as customer list needs to be revaluated after each year for depicting the impaired loss, which could be inured (Aasb.gov.au, 2016). This revaluation is mainly helpful in depicting the exact value of the overall customer list and includes the additional benefits, which might be added from collected database. In this context, Russell (2015) mentioned that impairment of assets is mainly helpful in reducing the value of assets and depicting the future prospects that might be provided by the intangible asset. The effective use of impairment method as depicted in the AASB 138 could allow the company to portray the actual value of their intangible assets to the relative stakeholders (Aasb.gov.au, 2016). Thus, the impairment method could depict the adequate value of the customer list used by the company. Furthermore, the marketing expenditure that is been conducted by the company is mainly stated as the non-current assets and is being treated as an intangible asset. However, the overall marketing strategy of the company is not unique, which is depicted in the case. Furthermore, as per the AASB 138 paragraph 10, innovating marketing right are termed under the overall intangible asset category (Aasb.gov.au, 2016). Moreover, the company needs to depict the correct marketing expenses in their final account. In addition, the company could effectively reduce their overall profitability from $12 million to $10 million. Bond, Govendir Wells (2016) argued that some companies mainly use the identified loophole in accounting standard to boost their profitability and lure in potential investors. Depicting whether Bird Ltd should recognise the liability in 30th June 2017 financial statement: The overall case study mainly states that Bird Ltd could pay for the damages if they lose the court case. In this scenario Bird Ltd could effectively portray the depicted the losses, which is incurred under the contingency liability. Moreover, the AASB 137 paragraph 86, provision of contingency liability effectively states that companies are able are allowed to add the expenses, which might be incurred in near future (Aasb.gov.au, 2016). Moerman van (2015) stated that the use of contingency liability mainly allows companies to portray the losses which could be incurred in near future. Furthermore, the IAS 37 and AASB 137 effectively depicts the contingency liability, which might be used by companies if the losses in probable (Aasb.gov.au, 2016). Depicting the ways in which the matter could be dealt after the publishing of financial statements: The company is effectively depicted the losses, which might be incurred in the contingency liability section. This contingency liability section mainly helps the investors to detect the probable losses, which could be incurred by the company in the next few months. In addition, the company needs to portray no specific change after the loss is been incurred as in the contingency section it has been effective depicted. Furthermore, as per the AASB 137 paragraph 86 the overall contingency liability is mainly helpful in depicting the overall losses, which could be incurred in near term (Aasb.gov.au, 2016). However, if the company has not accounted for the contingency liability, then the losses incurred after the declaration of the final report will be accounted in the next financial cycle. In this context, Moerman van (2013) stated that companies with the help of effective AASB rules are able to portray their overall financial stability. 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