Accounting Financial Analysis Report IFRS Copyright

Question: Describe about the Accounting Financial Analysis Report for IFRS Copyright. Answer: A: The AASB standard consists of IFRS copyright material. The Australian Accounting Standard Boards (AASB) have been working for making of the Australian Standards and interpretations as applied by the Corporation Act 2001 for constructing financial reports (AASB 2015). It actually establishes several principles that an entity applies to create a report about the productive information to the financial users about the uncertainty of revenue, timing and nature of flow of income with the consumers. The primary goal of the above said standard is show the amount of revenue which the association earns on exchange of promised goods and services to the customers, within the amount which shows the consideration to which the entities are expected to be entitled in exchange of the products and services which they offer to their customers (Mazhambe 2014). The entity is entitled to take into consideration all the terms and conditions while applying this standard. This standard is also involved in accounting for individual contracts with the customers. There are several other places where this standard can be applied fruitfully: 1) All the entities that prepares the financial reports which isin accordance with Corporation Act. 2) Financial statements of general purpose of each otherreporting entity 3) Those financial statements that are held fir general-purpose financial statements However, there are certain exceptions to this standard as well, anentity cannot apply this standard to the customers which havelease contracts within the AASB 4 117 lease scope. This standard cannot be applied where there is non-monetary exchange in between two companies that offer the same goods or services to their consumers, as if for an example this standard is not applicable for twoflourmills that exchange their goods to meet the market demand in a different specified location on the timely basis (AASB 2015). While taking contractual decisions, the contract must be properly identified, only the contracts, which lie within the scope of this standard, are entitled to be considered for agreement in between two or more parties. The enforcement of the obligations and right in a contractual process is a matter of law (Potter and Wright 2013). Both the parties must be ready to abide by the laws set by the contract in accordance with the customary, business practices. The rights regarding the payment of terms must be properly identified. The contract also contains the commercial substance including the timing, uncertainty are expected to flow to change because of the contract. Certain contracts have no fixed duration and therefore can be modified by either of the parties at any point of time, while some contracts can be renewed automatically periodically. B: The IASB has published the AASB 15 that is AASB-revenue from contracts with the customers. The contracts with the customers would require a single source of accounting as per the AASB 15. The entities may be required to collect the revenue relatively earlier than it does in the current scenario under AASB (AASB 2015). The AASB 118 lacks the guidance on the accounting for contract modifications and there is a need to introduce some changes in the accounting policies of the entity. The existing revenue standards suffered from the deficiencies and in order to address the deficiencies the IASB has issued the AASB 15 (AASB 2015). In order to ensure that the entities in Australia would continue to obtain the benefits firm the preparation of the financial statements that are incompliance with the IFRS. The AASB 118 and 111 provided the limited guidance and such guidance was difficult to apply in the complex situation. The preparation of the financial statements would face uncertainty when it comes to apply the existing revenue contracts in the absence of comprehensive guidance and principles. This uncertainty has a detrimental impact on the revenue information provided by the business (Nobes 2012). This is because the ambiguity of the judgment when applying the standards diminishes the credibility and comparability of the revenue lines as a measure of the financial performance of the entity. The investors faced with the inadequate information when it comes to understand the revenue, judgment of the entity and the estimate made by it recognizing the revenue and this was mainly due to the disclosure requirement of AASB 111 and 118 (Gray and Kang 2014). The issuance of AASB 15 seeks to clarify the principles for recognizing the revenue so that a common revenue standard is developed for the IFRS. The IASB has chosen to modify the standard because the Australian entities would not be able to receive th e benefits from the as they would claim that the financial statements are prepared in compliance with the IFRS. Therefore, it can be concluded that the revision of the standards and the introduction of AASB 15 is to address the shortcomings of the earlier standards. C: The chosen company is Landlease and the CFO of the company would be advised on the changes and the impact, which the new standard would have on the financial statements. The introduction of the new standards would reduce the cost of the financial statements for the business operated in Australia (Carey and Tanewski 2014). The financial statements of the reporting entity would be required to assess the entity on ongoing basis and this require that the standalone selling price of the service sand goods is to be estimated and reallocating the transaction price and it would include the variable price provided by the customers with the introduction of the new standards, the companys increased cost of auditing the financial statements would depend on the extent of the change. The AASB15 has brought significant recognition to the Australian company, also has widely affected the remuneration in the construction sector (Barth 2013). It has significantly affected the pattern of revenue and profit recognition, and the bank covenants including the bonus and share based payments. An important impact under AASB 15 including the sales commissions, installation fees , contract renewal availability, services many other fields in bunch. The new standards would have impact on the cost of the financial statements users as the users would have the adjustment period which would incur the cost and this includes the cost needs to change the process of their analysis (AASB 2015). There would also be long-term reduction in the cost of education of the users of financial statements and this is applicable around the transactions and industries. Recommendations: The majority of the leasing decisions are not driven completely by the accounting objectives. However, the AASB 15, leases is likely to cause an increase in the administrative loads and will possibly create changes in the real estate policies. Accounting financial reports hence forth, it suggests that the leases should make sure that they are ready for this newly set standard. The corporation policy is likely to be effected to a great extent regarding the structure of the lease ,own versus lease and sales and leaseback as well and companies are expected to witness biggest impact from this new leasing policy Conclusion: AASB 15 has resulted in revenue allocation for the performance obligation, meaning that in the beginning of the each contract of Landlease will record revenue and overall profit that is attributed to the supply of the construction material. In comparison to the current practice, if we compare the current practice, this would result in generating more revenue on contract inception. Thereby, overall is showing that resulting in less profit or revenue over the revenue contract. Reference: AASB, C.A.S., 2015. Revenue from Contracts with Customers. Barth, M.E., 2013. Measurement in financial reporting: The need for concepts.Accounting Horizons,28(2), pp.331-352. Carey, P., Potter, B. and Tanewski, G., 2014. AASB Research Report No. Gray, S.J. And Kang, H., 2014. ACCOUNTING TRANSPARENCY AND INTERNATIONAL STANDARD SETTING.The Oxford Handbook of Economic and Institutional Transparency, p.456. Mazhambe, Z., 2014. Review of International Accounting Standards Board (IASB) Proposed New Conceptual Framework: Discussion Paper (DP/2013/1).Journal of Modern Accounting and Auditing,10(8). Nobes, C., 2012. On the Definitions of Income and Revenue in IFRS.Accounting in Europe,9(1), pp.85-94. Potter, B., Ravlic, T. and Wright, S., 2013. Developing accounting regulations that reflect public viewpoints: The Australian solution to differential reporting.Australian Accounting Review,23(1), pp.18-28. Ruhl, J.M. and Smith, O.M., 2013. The Accounting Entity, Relevance, and Faithful Representation: Linking Financial Statement Notes to the FASB and IASB Conceptual Frameworks.Issues in Accounting Education,28(4), pp.1009-1025.