country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Application Of Accounting Standards Provide

tag 0 Download6 Pages / 1,485 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss About The Application Of Accounting Standards Provide?

 

Answer:

Introducation

The accounting treatment that the management of the Pewter Ltd. is intending to provide in the preparation and presentation would not give a true and fair view of the financial position of the company. Therefore the importance of accounting standards must be looked in and compliance for the same is required to be followed by the company otherwise it would lead to preparation misleading financial statements. Following are the accounting treatments to be given by the company so as to achieve true picture of company’s financial position.

Accounting for Deferred Tax Assets and the Deferred Tax Liabilities is undertaken to properly recognise the current and the deferred tax in the financial statements of the company. The said accounting is the requirement of AASB 112 issued by the Australian accounting standard board and is needed to be complied by all the listed entities of Australia (Australian Government, 2012). Application of this accounting standard in the preparation and presentation of financial statements is important for the entities to follow the basic rules of accounting such as accrual concept and matching concept. Moreover, proper accounting of DTA & DTL also enables a company to present a true and view of its financial position as it ensures the recognition of the corresponding tax effects of all the transactions during a particular year (Guenther, 2011). Deferred Tax Assets and Deferred Tax Liabilities are created in the financial statements to provide for the values that are the results of differences in the rules of accounting as prescribed in the accounting standards and the rules framed and followed by the tax authorities. As the taxes are required to be paid on the taxable profits calculated as per the tax laws but in the preparation of books of accounts generally accepted accounting principles are followed, there arises the differences in the tax liability under both the frameworks. These differences are primarily classified as the timing and the permanent differences. In creation of DTA & DTL, only the timing differences are to be considered as permanent differences do not make any difference in book profits and the taxable profits of any following years (Serocki & Callaghan, 2012).

DTAs are the prepaid taxes as they represent the anticipated reduction in the taxes in subsequent periods as a result of payment of higher taxes in the current year following the tax rules (Tran, 2015).  However, DTL represents anticipated increase in the tax liability in future periods as a result of lesser tax payments made under the tax rules (Branson, 2012). These differences are required to be recognised in the financial statements using the matching concept which prescribes the recognition of the expenses in that particular year in which the income is reported. To report the income in the books of accounts, use of accrual concept is necessary as it recognises income only in the year in which they are actually earned and not in the year of cash receipts for the same. The accrual concept also applies on the expenditures. If the company does not account for DTL it will result in negligence of the accrual concept as the expenses that have been actually incurred in the year are not provided for in the financial statements of that year (Harrington, Smith & Trippeer, 2012). Non-recognition of DTA DTL will amount to negligence of matching concept as the related tax expenses of the significant transactions will remain unrecognised in the year leading to increase in tax liability in the future periods. Moreover if the tax expenses and the tax savings of the company are not recognised adequately this will mislead the readers of financial statements as they would not depict the correct picture of company’s tax obligations.

In the current case application of AASB 18 named as ‘’REVENUE’’ has to be taken into account while recognising the revenues generated from the sale of products of the company by various retailers (Australian Government, 2010). As per the accounting standard issued by the Australian accounting standard board for the recognition of revenues in the books of accounts, the revenue from the sales and the services must be recognised as and when there is a no uncertainty about the collection of revenue from the operations. In case of sales of goods revenue is recognised in the books of account when it meets the certain criteria which are as follows:

  • When the seller has transferred all the material risks and the rewards relating to the goods and title in goods is also transferred to the buyers.
  • When the revenue from the sale is easily and reliably measurable.
  • When there is a certainty about the inflow of the future economic benefits from the sale transactions.
  • The cost that have been incurred or is going to be incurred in relation to the transactions of sale is identifiable certainly.

If all the above mentioned conditions are fulfilled the company must recognise the revenue from its sales operations (Caylor, 2010). But if any of the condition specified above is not fulfilled the entity should not account for the revenue as it will lead to overstatement of revenues without their being actually accrued. The concept of prudence is also to be applied while recognition of revenue as it prescribes that the income must be recognised only when it is realised.

In the present case the company has agreed to recognise the revenue from the sales at the start of the quarter which would not lead to acceptable accounting treatment of revenue as the criteria that are above mentioned are not fulfilled at the beginning of the relevant quarter. As at the stage where goods are merely shipped to the retailers, the risk and the rewards from the products are not transferred to the ultimate buyers (Horngren, et al., 2012). Moreover, the decision of not recording the fees separately that is being paid to the retailers for displaying the products of company in their stores just because it is the cost of business is incorrect.  The fees must be charged to revenue account separately it will give the better presentation of financial statements of the company. The cost of conducting the business is a materialistic item which needs to be provided for separately in the books of accounts so as to make it clearly understandable to the users of financial statements about the quantum of costs incurred in generating the revenues from a particular operation. Moreover, as per the matching concept the company must recognise separately the fees paid to the retailers as the expense at the time of recognising the revenues from the sales operations so that the financial statements depicts the true picture of the sales operations of company(Deegan, 2012).

 

Conclusion:

It can be easily concluded from the above research that the compliance of Australian accounting standards while preparing the books of accounts will provide the accuracy and clarity in preparation and presentation of financial statements. Also, the true adherence to the accounting standards will enable the company to avoid the regulatory interventions from various authorities. It is highly recommended to the management of the company to consider the importance accrual and matching concept while accounting for the taxes. Therefore creation of deferred tax assets and deferred tax liabilities in a must for the company so as to avoid incorrect accounting treatment for tax obligations. At the same time the company must avoid recognising the revenue from sales at the stage of mere shipment as it will lead to violation of prescribed accounting standard in relation to this matter.

 

References

Australian Government, 2010. Revenue: AASB 118, available at https://www.aasb.gov.au/admin/file/content105/c9/AASB112_07-04_COMPsep11_07-12.pdf (viewed on 11th September, 2017)

Australian Government, 2012. Income tax: AASB 112, available at https://www.aasb.gov.au/admin/file/content105/c9/AASB112_07-04_COMPsep11_07-12.pdf (viewed on 11th September, 2017)

Branson, C.C., 2012. Reportable tax positions: A recent innovation by the ATO. Taxation in Australia, 46(7), p.296.

Caylor, M.L., 2010. Strategic revenue recognition to achieve earnings benchmarks. Journal of Accounting and Public Policy, 29(1), pp.82-95.                

Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia.

Guenther, D., 2011. What do we learn from large book-tax differences. University of Oregon, Working paper.

Harrington, C., Smith, W. and Trippeer, D., 2012. Deferred tax assets and liabilities: tax benefits, obligations and corporate debt policy. Journal of Finance and Accountancy, 11, p.1.

Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D. and Tan, R., 2012. Financial accounting. Pearson Higher Education AU.

Serocki, J.S. and Callaghan, J.H., 2012. Increased understanding of accounting for income taxes through effective tax rate calculations and reconciliations. The Accounting Educators' Journal, 21(1).

Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in Australia?. Browser Download This Paper.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Application Of Accounting Standards Provide. Retrieved from https://myassignmenthelp.com/free-samples/application-of-accounting-standards-provide.

"Application Of Accounting Standards Provide." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/application-of-accounting-standards-provide.

My Assignment Help (2018) Application Of Accounting Standards Provide [Online]. Available from: https://myassignmenthelp.com/free-samples/application-of-accounting-standards-provide
[Accessed 06 July 2020].

My Assignment Help. 'Application Of Accounting Standards Provide' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/application-of-accounting-standards-provide> accessed 06 July 2020.

My Assignment Help. Application Of Accounting Standards Provide [Internet]. My Assignment Help. 2018 [cited 06 July 2020]. Available from: https://myassignmenthelp.com/free-samples/application-of-accounting-standards-provide.


With a decade's experience in providing essay help, MyAssignmenthelp.com has emerged as the leading assignment writing company in Australia. We have gained our popularity not because we provide top-quality essay help, but because we understand students' needs. In order to help students, we have introduced proposal essay help, literature essay help, etc into our services. Some of our popular services include English essay help, nursing essay help, law essay help, MBA essay help and much more.

Latest Accounting Samples

ACG315 Accounting And Finance For Fluctuating Revenues And Company Size

Download : 0 | Pages : 3
  • Course Code: ACG315
  • University: University Of Bedfordshire
  • Country: United Kingdom

Answer: Task One The change of taxation rules and regulation of conventional and statute laws have always confused willing, compliant firms. Different stakeholders take part in helping the companies adapt to the new changes. The actualization of this checks and balances lower down to the firm accountant. He, therefore, deals with the confusion at a more significant level.  We, therefore, discuss the confusing issues and the role of the a...

Read More arrow Tags: Australia Homebush Management Java - Car Parking Management System University of New South Wales Humanities 

SBLC4003 Business Accounting

Download : 0 | Pages : 11
  • Course Code: SBLC4003
  • University: University Of Wales Trinity Saint David
  • Country: United Kingdom

Answer: Introduction: Every entity has to prepare the financial statements, on a regular basis, to communicate the financial results of the business operated by it. These financial statements contain the summarised information expressed in financial terms about all the transactions and events that are entered into during the course of business. All the financial information that helps the readers to assess the financial health of business of ...

Read More arrow

ACC510 Financial Statements Analysis For Contingent Assets And Contingent Liabilities

Download : 0 | Pages : 7

Answer: Introduction The issue that is presented is that the accounting statements of Billabong  International Limited should has been asked to be analyzed in order to determine the fact whether the accounting reports are prepared in compliance to the prescribed standards for the purpose of determining the reliability of the accounting statements. The financial report of the company is analyzed to discuss the important points that are me...

Read More arrow Tags: Australia Toowoomba Management Java University of New South Wales 

HA2032 Corporate And Financial Accounting 9

Download : 0 | Pages : 12

Answer: Introduction: The report is prepared to address different requirements by referring to the financial report of selected company listed on ASX. A detailed analysis of the financial statements for two consecutive financial periods have been presented. Amor limited has been chosen to critically evaluate the different aspects of the financial statements. Report demonstrate the understanding of the capital structure and different sources o...

Read More arrow Tags: Australia 5 Corporate and Financial Accounting Holmes Institute 

MAA319 Estate Planning And Insurance

Download : 0 | Pages : 15

Answer: Introduction The role of the adviser has been to provide the client with the financial advice and planning in order to gain their financial goals and objectives and enhance their wealth for the customers by exploiting their strategies that would be out of the scope of the client. The financial plan would be including your details and facts which would be helping me to formulate appropriate advises for the products which is to be sugge...

Read More arrow Tags: Australia 5 Estate Planning and Insurance Deakin university 
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,356,327

Orders

4.9/5

Overall Rating

5,080

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

184 Order Completed

96% Response Time

Arapera Billing

Masters in Management, MMgt

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

134 Order Completed

95% Response Time

Thomas Nelson

MS in Information Systems Technology with Specialization in Database Administration

New Jersey, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

203 Order Completed

97% Response Time

Richard Alpert

PhD in Psychology

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2115 Order Completed

97% Response Time

Kimberley Chen

MPA in Accounting

Singapore, Singapore

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

Thank you for submitting this order in a timely manner, the work was of quality but for the future please do tell your expert to note all the requirements in the order. This is just a minor comment

flag

User Id: 348179 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

I got good feed back from my tutor, will great mark. I will recommend to this service to others

flag

User Id: 370450 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

I would like to know which is my thesis statement and what the argument is on this essay

flag

User Id: 418392 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating

Accurate in time, excellent writing, I was stuck on that module and couldn\'t do it. Thankfully, MyAssignmentHelp exists and I gave them the task and completed the assignment on time. Thanks:)

flag

User Id: 417440 - 06 Jul 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?