The fundamental objective of wesfarmers (Annual, 2015) is to provide acceptable level of satisfaction to the shareholder. However, the main objectives of this essay are more controversial; because, equity is examined more on assets and liability. Because, Allen and Carletti (2008) implies that in the issue of liquidation, claiming preference always given to the creditors, because of priority reasons. When all the debts are paid off, then generally the owner will have his own shares and therefore, liability become part of equity. Interestingly, owner made claimed on assets that is characterized through equity balances. According to IASB and AASB standards, it is true that fair value method is definitely followed, however not always same in
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This financial statement contains different items like issued capital, retained earnings, reserve and reserved shares in equity section. Financial position of wesfarmers focus on the contribution made by shareholders and profit retained by the organisation. Wesfarmers follows IAS 37 for the information with the calculations for the company reserves in the financial statement. Reserve surplus can also use for incentives. The aim of retained earnings is to adjust any expense which will be effective for the organisation (Mittal,1992). Retained earnings focus on adjusting certain amount of profit and loss by which the percentage is measured in wesfarmers so that total profitability can be increased. Therefore, various approaches apply to assets and liabilities which results different equity balances. There are different factors which influence the approaches and they are changes in accounting standards and framework, valuation of current assets, measurement of certain assets and liabilities at historical cost. The difference between assets and liabilities is equity, which has direct impact onto the equity’s recognition criteria. This financial report is a general purpose report which has been prepared as per the necessity of the corporation act 2001. It has been made on historical cost basis …show more content…
Discuss the problems of measurement in the context of the present AASB / IASB standards and framework using your selected annual report to provide examples?
The requirement for a framework is to minimise the risk of measurement. According to the double entry system, equity is calculated as assets minus liabilities. In the classification of financial element, it is important they measured with accuracy and profitability. The problems of measurement are historical cost, which is based on the value which is paid in the past. In the classification of assets and liabilities by IASB and IAS are measured by fair value method which is accepted by accounting standard. But as per the conceptual framework IASB/AASB there is no single approach to degree assets and liabilities. Further complicating matters is an individual organisation use cost model for some classes of property, plant and equipment and the revaluation method for the other
This financial statement contains different items like issued capital, retained earnings, reserve and reserved shares in equity section. Financial position of wesfarmers focus on the contribution made by shareholders and profit retained by the organisation. Wesfarmers follows IAS 37 for the information with the calculations for the company reserves in the financial statement. Reserve surplus can also use for incentives. The aim of retained earnings is to adjust any expense which will be effective for the organisation (Mittal,1992). Retained earnings focus on adjusting certain amount of profit and loss by which the percentage is measured in wesfarmers so that total profitability can be increased. Therefore, various approaches apply to assets and liabilities which results different equity balances. There are different factors which influence the approaches and they are changes in accounting standards and framework, valuation of current assets, measurement of certain assets and liabilities at historical cost. The difference between assets and liabilities is equity, which has direct impact onto the equity’s recognition criteria. This financial report is a general purpose report which has been prepared as per the necessity of the corporation act 2001. It has been made on historical cost basis …show more content…
Discuss the problems of measurement in the context of the present AASB / IASB standards and framework using your selected annual report to provide examples?
The requirement for a framework is to minimise the risk of measurement. According to the double entry system, equity is calculated as assets minus liabilities. In the classification of financial element, it is important they measured with accuracy and profitability. The problems of measurement are historical cost, which is based on the value which is paid in the past. In the classification of assets and liabilities by IASB and IAS are measured by fair value method which is accepted by accounting standard. But as per the conceptual framework IASB/AASB there is no single approach to degree assets and liabilities. Further complicating matters is an individual organisation use cost model for some classes of property, plant and equipment and the revaluation method for the other