HA3011 Advanced Financial Accounting Assignment Help

HA3011 Advanced Financial Accounting Assignment Help

Introduction

Accounting standards are the policies and the procedure that is developed by the Australian accounting standard board that helps in developing the rules and regulation in the company. The rules are applicable to the private as well as the public sectors of the company that are working and incorporated in Australia. Every company that has been working in Australia and listed or not listed on the Australian stock exchange has to follow the accounting standards that are developed in the sector and those which are applicable to the company. The standards help in building a good image and reputation of the company in front of other competitor companies. The company that is following the rules and regulations that are developed by the board helps in understanding the policies of the company. The investors also have trust in that company which is properly complying the rules and regulations.

Descriptions of Accounting Concepts

Accounting concepts refer to the rules and the regulations that are used for the purpose of recording and explanation of the transaction in the financial statements of the company. These are the use and incorporated in the public and the private sector companies and all the other amount of independent entities that are working in the Australian sector market. Accounting concepts help the investors and the other stakeholders to develop an opinion towards the company towards the process of governance. Accounting concepts help professionals to develop an understanding of the different concepts that are used in the business. It amounts to develop a good amount of knowledge in the company and the market area (Holland, 2016). The standards that are used by the BHP Billiton Limited to increase the reputation in the developed Australian market are as follows

  1. The company has maintained the standards that are for the presentation of the financial statements of the company in the proper format that is provided by the Australian board. The accounting standards developed for this purpose are the AASB 101 that helps to give the structure and content of the financial statements. 
  2. The second concept that is used by the company is the AASB 102 that is for the purpose of the accounting of the inventories. It amounts to develop the cost of the inventories and also amount to determine the revenue of the company. It also helps in determining the net realizable value for the company. It defines the accounting treatment of inventories that are in the use of the company.
  3. The company also follows the standards AASB 1031 in respect of the materiality of the transaction developed in the company. The materiality depends on the size and the nature of the business that is carried out by the company. It helps in developing and making judgments regarding the decision and the presentation of the financial statements (Joubert, et. Al., 2017).
  4. The company also develops the standards AASB 1054 for the purpose of the additional disclosure in the company. The additional disclosure includes the report of the auditor and the other nature of the service that is undertaken by the company in development of the various activities.
  5. The company also follows the principles of AASB 1039 to develop the annual reporting that is consolidated for the subsidiaries of the BHP Billiton Limited. The preparation and the presentation also amount to develop various amount of disclosures in the company.
  6. The revenue recognition concepts are also used by the company to measure the fair value of the revenue or the amount of consideration that is received by the company. Revenue also helps in developing the risk and the rewards of the company that is to be based on the method of the delivery. 
  7. The company also uses the concept of depreciation to calculate the amount of depreciation that is levied on the assets developed in the company. The amortization and the useful life of the asset also amount to calculate on this basis (Dakis, 2016).

Why changes have been incorporated in the new accounting standard for lease AASB 16?

The various changes have been incorporated in the accounting standard that is developed by the Australian board. The changes that are developed the new model of the lease in the different amount of companies on the balance sheet. It does not recognize the short-term lease and the lease on the low value of the assets developed by the company. The changes are developed and issued by the Australian board in February 2016 but it came in the action in the year 2019. This lease has developed a lot amount of changes in the Australian companies that are listed on the Australian stock exchange. The companies that are mostly affected by the changes in the lease concepts are the mining, aircraft and the other various industries of the company. The new standards have to be used by the company with the proper amount and knowledge and the guidance that is developed by the company. The standard helps in developing one or more accounting changes in the company and the companies also need to develop the various other implications before implementing this system in the organization. The company adapts this leasing system because it helps in increasing the lease liability of the company and helps to develop the various issues in the company in regards to the profitability (Chan & Ryan, 2013). 

Real estate sector may be in the possession of the various different amount of the lease and the change in the accounting standard also impact the development that is relating to the change. Some points are very much stronger than it helps in developing the company with the various issues that are going to develop the company soon but some points are not classified under the lease. The various amount of lease effect the significant entities of the company and also the recognition will not be easy and effective. The recognition and the development of the new lease system that is developed by the board affect the performance indicators of the company in a negative way. The cash flow and the earnings of the company are mostly affected by the lease that is developed newly in the organisation. The principal and the amount of interest developed by the company will also amount to be affected by the new standards developed in place of the lease. The new development in the accounting system helps in revising the lease and minimize the impacts of the assets and the liabilities of the company (Brumm & Liu, 2019).   

The new development in the standards gives the option to the company to measure the assets in respect of the liability developed in the company whereas in AASB 16 the asset should be measured in terms of the lease commencement of the company. The outstanding liability amounts to be considered by the company using the different rates of the borrowing that is developed by the company at the date of the transition. In the AASB 16 we have to develop the new project and other amounts of implementation for the company. The development of the new standards helps in early planning and preparation of the project for the company and the other amount of developments in the company. To avoid the consequences the contractual agreements need to be made in the development of the company and the other amount of methods in developing the company. These new standards also help in the tax relief developed by the company and maintaining the lease account separately by the company with the help of the developed standard (AASB, 2016). 

Both the option either it is the old one or the new one it helps in reducing the net assets of the company and also helps in developing the borrowing rate of the company. The new lase developed by the Australian board does not affect the net asset of the company but it helps in reducing the profit of the company. This also helps the company give to receive a large amount of tax relief from the other situations of the company. The standards help in providing the relevant information that is developed in the manner of the lease and for the lease transactions of the company. The total expense developed after using the new standard that is developed for the purpose of the lease as compared to the other amount or the amount that is developed with the using of the old standard. It also impacts the financial position of the company that is the net assets and the other amount of assets and liabilities that amount to develop in the company. It may result in significant savings and the development and growth in the company in regard to the various other liabilities (Lease, 2019).

Summarise the key disclosure the company has made on its accounting for leases including on the transitional provision and effect of the transition to AASB 16 from AASB 117.

Asset under the lease results in developing the risk and rewards of the company and also the amount to capitalize the assets of the BHP Company. The lease assets of the company are treated same as that of the other assets of the company. The depreciation levying on the assets also amounts to be same and developed the accounting treatment on that basis only. The disclosure made by the company on the basis of the lease are as follows

  1. The financial lease of the company is included in the interest liability of the company that is showed in the balance sheet of the company under this heading and developed the calculation on that amount. 
  2. The interest also amounts to show the constant rate of interest over the remaining period of the time when the company is amount to bear the lease amount on the interest of the company. 
  3. The operating lease of the BHP Company are not capitalized and they are not treated as the capital expenditure of the company and also amount to include in the profit and loss statement of the company and also in the cash flow statement of the company (Potter, et. Al., 2013).
  4. The rental payments that are included in the lease amount to be charged on the straight-line basis it means same in every year. The other lease also amounts to be disclosed by the company but in the separate headings.
  5. Ongoing commitments are also disclosed by the BHP Company in the commitments that are developed by the company in the balance sheet of the company and also developed in the other amount by the company.

These are some of the disclosures that are made by the company in which the company undertakes the new amount of lease in the process of developing the lease in the financial statements of the company. Every lease of the company is different but the new standard that is developed on the lease will affect the most by the mining companies that are the BHP Company of Australia. The various amount of transitional relief is developed by the company on behalf of the lease that is particularly for the amount of lease that is developed in the company (Stevenson, 2012). Both the lessee and the lessor are available for the purpose of the exemption that is granted by the authorities only if they amount to develop the new standards that are developed by the board in Australia in relation to the accounting standards of the company. 

There is number of effects that are developed by the company using this system. The BHP Company has discovered that the company is suffering the loss in the various key performance indicators of the company. The company should also develop an effect on the tax amount. The tax amount gets decreased due to the change in the assets and the liabilities of the company that is developed for the purpose of this account of transaction of the company. The company should also receive the impact on the dividends that are developed by the company using the various amount of negativity developed in the company. To avoid the various consequences that are developed in the company using the new standards the company has given the transitional period to change this accounting from the other amount of accounting developed by the company (Xu, et. Al., 2017). 

The changes in the standards also have the positive and the negative impacts on the company and they amount to provide relief to the company. The changes help in ensuring that there is two amount of option that is available to the company that helps in reducing the tax for the company and develops the company in a positive way.

Conclusion

From the above analysis, it is clear that the BHP Company is following all amount of rules and regulations and that why it is ranked as number second among all the industries working in Australia. The accounting concepts also affect the decision of the investors of the company and there is also the difference between the actual and the estimated results of the company. The disclosure of the accounting standard of lease helps the company in giving the clarity of decisions by the company and also amount to develop the trust in the company. Disclosure helps the lease properties to develop themselves and also have the tax deduction of the impairment of the assets. Changes that are made in the provisions of lease help in reducing the burden of the company on the disclosure of the information and the other amount of things. 

References

AASB, C.A.S., 2016. Consolidated Financial Statements.

Annual report (2019). Welcome to BHP Billiton Limited. [Online]. Annual report. Available at: https://www.bhp.com/-/media/documents/investors/annual-reports/2018/bhpannualreport2018.pdf. [Accessed at: 30 September 2019]

Brumm, L. and Liu, J., 2019. New leasing accounting standard. Taxation in Australia53(8), p.449.

Chan, H.T. and Ryan, S., 2013. Challenging stereotypes: International accounting students in Australia. Journal of Modern Accounting and Auditing9(2), p.169.

Dakis, G.S., 2016. Upcoming changes to contributions and leasing standards. Governance Directions68(2), p.99.

Holland, D., 2016. Simplifying income recognition for not-for-profit entities. Governance Directions68(11), p.666.

Joubert, M., Garvie, L. and Parle, G., 2017. Implications of the New Accounting Standard for Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance Sheet. The Journal of New Business Ideas & Trends15(2), pp.1-11.

Lease (2019). A guide to AASB 16. [Online]. Lease. Available at: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/audit/deloitte-au-audit-aasb-16-guide-220916.pdf. [Accessed at: 30 September 2019]

Marşap, B. and Yanık, S., 2018. IFRS 16 Kapsamında Kiralama İşlemlerinin Finansal Raporlamaya Etkisinin İncelenmesi. Muhasebe ve Finansman Dergisi, (80).

Potter, B., Ravlic, T. and Wright, S., 2013. Developing accounting regulations that reflect public viewpoints: the Australian solution to differential reporting. Australian Accounting Review23(1), pp.18-28.

Stevenson, K.M., 2012. The changing IASB and AASB relationship. Australian Accounting Review22(3), pp.239-243.

Xu, W., Davidson, R.A. and Cheong, C.S., 2017. Converting financial statements: operating to capitalised leases. Pacific accounting review29(1), pp.34-54.