BUSN7005 Contemporary Issues In Accounting

Introduction:

This document will consist a research on a public software company name Xero Limited which has its base in New Zealand and is marked in Australian Securities Exchange. The company proposes cloud based software that deals with accounts and offers stage to small and also average-sized business (Schaltegger and Burritt, 2017). This company has bureaus in 180 different countries such as United Kingdom, Canada, Asia, Australia, South Africa and New Zealand. This statement consisting of three weighty features: Firstly the outlook of Xero limited on the assessment of the abstract agendas. Secondly, based on various financial characteristics as specified in the theoretical framework the research is based on the qualitative appearances of Xero Limited.

Objectives of General Purpose Financial Reporting:

The Xero Limited Company must shadow certain commands that are specified by the“Australian Accounting Standards Board (AASB)”. The commands are narrated briefly as follows:

Objective 1:

The present financial presentation and location which will help the stockholders and other correlated operators will be reveal by the business association. It is required to reveal all evidencesabout their economiccapitals that include charges, properties and others of these organisations for this purpose. All essentialdataabout its organisational capitals are mentioned in the balance sheet statement in agreement with the latest annual report of Xero Limited (Hoque, 2018). To increase the vision of the existing financial condition of the organisation the evidences of the organisations are important for the stockholders and for the other correlated operators (Fiolleau and Kaplan 2017).

Table 1- balance sheet statement of Xero Limited for 2016-17

Source- xero.com

Objective 2:

To assist the stockholders as well as the correlated users it is stated by the conceptual framework of AASB that all the commercial organisations should reveal the material desired by shaping their complete economicpresentation (Moore 2017).By releasing all infoaccompanying with revenue expenses, income and profit has enlarged the obligation of the organisations.

Table 2: income statement of Xero Limited for 2017

(Source: xero.com)

Objective 3:

As the share of the theoretical agenda, the modification in financial presentation and cash location in their financial declarations are appreciative by all the Australian articles. After evaluating the annual report of Xero limited it is viewed that in demand to modify in financial presentationsby issuing the declaration of changes in equity and cash flow report all the compulsory evidence has freed (Brierley and Gwilliam, 2017).

Table 3: statement of changes in equity of Xero Limited for 2017

(Source: xero.com)

Table 4: statement of cash flow of Xero Limited in 2017

(Sources: xero.com)

Grounded on the assessment mentioned in the chart extensive suggestions of the Xero Limited has been revealed.  The main moto is the contribution of the investors in researching the actual financial situation and its performance in harmony with the aims of the theoretical context (Fiske, 2018).

Recognition criteria:

The Business organisations should conduct appropriate acknowledgement of some important financial aspects which should consists of revenues, assets, equity, expenses and liabilities (Danver, 2015). The Xero Limited should be stand by the theoretical agenda of AASB while realising the financial aspects. These are declared as follows:

Assets:

Xero Limited is required to obey the norms of “AASB 116 Property, Plant and Equipment” under “Section 334 of the Corporations Act 2001” as mentioned in the theoretical aspect of AASB for liberating its plant, equipment’s and belongings. By gathering depreciation of costs and also by deducting impairment losses the Xero Limited realises its equipment, plant and property in its balance sheet statement. Straight line is used for figuring hoarded devaluation. “AASB 102 Inventories” is required in disclosing either in net realisable value or cost, whichever is loweror also for the realisation of inventories (Lafond et al., 2016).

Table 5: statement of property, plant and equipment of Xero Limited for 2017

“AASB 138 Intangible Assets” is required for the realisation of insubstantial business property and it measures its impalpable properties cost should be followed by Xero Limited.

Liability:

Any business organisation should comply “AASB 132 Presentation of Financial Instruments” to realise interest oaths is the important guiding attitude of AASB. An organisation realises its interest-bearing financial tools at academic worth in its annual report (Gunarathne and Lee, 2015). In kin to functioning leases Xero Limited needs to imitate AASB 16 Leases to realise leases. Xero Limited needs to follow the strategies as in “AASB 137 Provisions, Contingent Liabilities and Contingent Assets” to realise provisions. Any past event can lead to constructive and legal obligation for the organisation (Henderson, et al., 2015).

Table 6: statement of liabilities for Xero Limited for 2017

(Source: xero.com)

Equity:

Australian organisations should adhere with the regulations of “AASB 132 Financial Instruments: Presentation” as per AASB in the recognition of equity.

Table 7: recognition of equity of Xero Limited

(Source: xero.com)

Revenue:

Australians firm should obey the rules as in “AASB 118 Revenues” as per AASB to recognise revenue in consideration rebates, values, discounts and rate of returns.

Table 8: recognition of revenue of Xero Limited

(Source: xero.com)

Expense:

For the discharge of future economic rewards it is required to identify the expenses of the theoretical agendas. Xero Limited business expenditures comprises personal expenses, net financing costs, cost of sales and others.

Table 9: recognition of expense of Xero Limited

(Source: xero.com)

Qualitative characteristics of financial reporting:

In growing the usefulness and purposes of financial information it is required to take the help of qualitative characteristics:

Fundamental qualitative characteristics:

Qualitative characteristics include two most important aspects that is relevance and faithful representation. To ensure the significance in its financial declaration Xero limited should reveal all the needy evidence for undertaking investment choices and the evidence are characterized authentically by the company as it obeys the rules mentioned IFRS, AASB, Corporation Act 2001 and IASB. This is a very important move to confirm correct and justified presentation of financial declaration (Shukla and Gupta, 2017).

Enhancing qualitative characteristics:

With the help of timeliness, comparability, understanding and verifiability the financial information quality could be improved. Xero Limited has become calm for the operators to differentiate itself with similar organisations as it has unveiled the financial data for both 2017 and 2018. For promising evidence availability Xero Limited publishes half yearly quarterly and annual reports as it promises timeliness feature (Ji, 2017). Lastly it provides all explanations that is connected with financial appendixes so that the operators understand better.

Conclusion and recommendations:

From the above report it is clear that the conceptual framework maintained and observed in the financial statement of Xero Limited is completely legit and done in a distinguished way. All the requirements under the guidelines of AASB has been fulfilled in accordance with the legal terms to help to understand the financial situation of the company to its shareholders. The company has mentioned all the objectives that should be followed under the guidance of conceptual framework of AASB. The recognition of various aspects of the company such as the assets, liabilities, equity, expenses and revenues have been discussed and disclosed in the context with the manner where the shareholders will be completely satisfied about the financial performance of the company. These data will also help the shareholders and investors to determine whether they should invest on this company or not. To understand the given statement in a better and lucid way, the fundamental and enhancing qualitative characteristics of the financial statements also have been provided in the report. Thus the company Xero Limited has provided all the required data in their financial report in accordance with the guidelines of conceptual framework of AASB.

Reference

Brierley, J.A. and Gwilliam, D., 2017. Human Resource Management Issues in Accounting and Auditing Firms: A Research Perspective: A Research Perspective. Routledge.

Danver, S.L., 2015. Native Peoples of the World: An Encylopedia of Groups, Cultures and Contemporary Issues: An Encylopedia of Groups, Cultures and Contemporary Issues. Routledge.

Fiolleau, K. and Kaplan, S.E., 2017. Recognizing ethical issues: An examination of practicing industry accountants and accounting students. Journal of Business Ethics, 142(2), pp.259-276.

Fiske, S.T., 2018. Controlling other people: The impact of power on stereotyping. In Social Cognition (pp. 101-115). Routledge.

Gunarathne, N. and Lee, K.H., 2015. Environmental Management Accounting (EMA) for environmental management and organizational change: An eco-control approach. Journal of Accounting & Organizational Change, 11(3), pp.362-383.

Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.

Hoque, Z., 2018. Methodological issues in accounting research. Spiramus Press Ltd.

Ji, X.D., 2017. Development of accounting and auditing systems in China. Routledge.

Lafond, C.A., McAleer, A.C. and Wentzel, K., 2016. Enhancing the Link between Technology and Accounting in Introductory Courses: Evidence From Students. Journal of the Academy of Business Education, 17.

Moore, A., 2017. Intellectual property and information control: philosophic foundations and contemporary issues. Routledge.

Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts and practice. Routledge.

Shukla, B. and Gupta, H., 2017. Environmental Accounting & Reporting: A Protective Shield designed by Accounting World to save & shape our environment. The Management Accountant Journal, 52(3), pp.29-35.