Reporting Standards International Financial -Myassignmenthelp.Com

Question: Discuss About The Reporting Standards International Financial? Answer: Introducation We are indeed glad in hearing from you and we would like to thank you regarding the e-mail that you have sent to us. We are happy that you have reached to us and we are of the view that we will provide the best solutions that are available so that it can help you in taking the decisions in a better manner. Like every time, we will always try to provide you with the best solutions regarding the problems that are present in accounting along with the issues that you have described within the contents of your mail and the recommendations that will be provided to you will be in accordance with the Corporation Act 2001, AASB and its interpretations will be according to the issues of accounting that are presented by IFRS. You must be aware of the fact that contingent liabilities are the ones that may have potential losses that can take place in the future may be due to the non-occurrence or the occurrence of a specific event or due to the result of a specific outcome as well. Many examples can be cited with respect to contingent liabilities such as the inquiries regarding some organizational failure, which is still pending, claims that legal in nature and the warranties that are present in each products that are purchased by the customers[1]. The liabilities that can be termed as contingent needs to be shown in the financial statements of the company and the amount that has been estimated by the company so that it can be recorded in the annual sheet. This estimated amount can help the company to prevent the situation that may arise for them in the near future, as a certain amount has been kept separate by them. According to AASB 137, Para 123, these liabilities can be recognized along with the primary responsibility and the probable causes for the outflow of the resources so that the economy of the company can be benefitted and can be settled under these responsibilities. According to Para 29, it can be seen that jointly and severally the liability of the company is that they have to treat these responsibilities under the broad heading of contingent liability. These liabilities have to be developed primarily, as it cannot be expected by the company to happen certainly during the financial year. Therefore, the analysis of these liabilities has to be continuous so that the outflow of the resource can be determined, which will help in benefitting the economy of the company. On the other hand, the provision that is present within the company has to be recognized so that the recent constructive and legal responsibilities, which may arise from the past events, can be estimated in a proper manner and the right amount can be kept for it. The main objective for the provision is that it h as to be adjusted with the balance of the current year in an accurate manner, which will help in taking up the cost that belongs to the particular year and the status of finances that has been estimated can be accounted within that particular period. Therefore the use of provision within the company is not any form of saving, which it may seem like in the first glance. It can be recognized generally that it comes under the balance sheet under the heading of income statement and is placed in the bracket of expenses. Moreover, the main difference between provision and contingent liabilities is that provisions are taken up in the financial statements and the liabilities that can be termed as contingent are taken up under the heading liabilities and is recorded as a note in the financial statements for the company[2]. Moreover, if the probable liability is high and is expected to be around 60 percent to 90 percent, then it has to be shown under the heading provisions within the financial statement that has been drawn for the company. However, if the rate of liability is more than five percent and less than 60 percent, then it has to be recorded as notes in the financial statements and if the percentage is below five then the company cannot choose to take up any action about it. Therefore in compliance with the AASB 137 in the Provisions, Contingent Liabilities and Contingent Assets, the first issue that has been mentioned in the email. We can provide a suggestion that the intangible assets needs to be present in the balance sheet, which will lead to the necessary amortization and its recognition can also be done. In this case, it can be seen that the company has an asset worth $800,000 that is according to 30th June 2018, which has been identified as per the valuation made by the directors. This states that the company needs to change its policy with the present happenings so that the accounting can be recognized with the cost that can be developed through an internal basis. Moreover, the intangible assets has to have a life, which will help in its amortization within the period for which it was being used. Thus, this amount can be realized with the amortization purpose and has to be reported at the cost of $800,000, which can be applied with the residual v alue of the assets. With respect to the second case, it can be seen that Beachlife Ltd had undergone a sales contract with Goodsports Ltd on 1st December 2017 with an amount of $180,000 based on which the payment was made on 30th December 2017. None the less, the equipment was delivered by the company on 10th December 2017. According to the sales contract, Goodsports Ltd provided a factor of maintenance for the equipment for the first year after the purchase has been done by the company regarding the product. The maintenance amount that was fixed for the company was at a value of $7,500. However, Goodsports Ltd was not satisfied with the maintenance work that was provided by the company and was entitled for a refund of an amount of 15 percent of the price that they paid, which totals to $90,000 * 15 percent that is $13,500. Therefore, in the current scene it can be seen that Beachlife Ltd has to show an amount of $90,000 recorded as sales under the heading of income for the sale of the equipment, as the y got the amount within the year that is 31st December 2017[3]. Moreover, the responsible amount of $7,500, which was as maintenance has to be placed under contingent liability within the balance sheet and in the statement of income it has to be recorded under the heading of provision for the estimated amount. Additionally, the amount of $13,500 has to be shown as notes in the financial statement of the company under the broad heading of contingent liability, as this type of liability is not probable in nature. In case you face any doubt regarding the suggestions that has been provided to you, please feel free to contact us either by calling or sending a issue of uncertainty through e-mail. Reference List Gamper, Catherine, et al. "Managing disaster-related contingent liabilities." (2017). Hendrickson, Joshua R. "Contingent liability, capital requirements, and financial reform."Cato J.34 (2014): 129. Picker, Ruth, et al.Applying international financial reporting standards. John Wiley Sons, 2016. [1] Gamper, Catherine, et al. "Managing disaster-related contingent liabilities." (2017). [2] Hendrickson, Joshua R. "Contingent liability, capital requirements, and financial reform."Cato J.34 (2014): 129. [3] Picker, Ruth, et al.Applying international financial reporting standards. John Wiley Sons, 2016.