Assignment - You work as the chief financial accountant for an airline company, Aero Buz Ltd (AB Ltd), which owns and controls a fleet of airplanes. The company has investments in a range of other companies. AB Ltd has appointed a new CEO, Andrew Smith. Andrew has extensive experience as an engineer as well as a manager.
Andrew calls for a meeting with you and mentions that he has compared the financial statements of AB Ltd with those published by Qantas and has concerns about the extent to which AB Ltd's financial reports faithfully represent the financial situation of the company.
Andrew recommends:
Question
AB Ltd should disclose the value of its goodwill. Andrew explains to you that AB Ltd has some goodwill and wants you to estimate its value using the fair value method; and
Andrew requires you to prepare a report explaining why the financial statements of AB Ltd have so far not been prepared as per his recommendation. He tells you that he wants your response in the form of a report which will be distributed to all senior management of AB Ltd.
Allocate around 450-550 words to the point made by Andrew and about 300 words to justify your final standpoint. To support your arguments, you have to use:
- Authoritative, relevant references,
- Relevant accounting standards, and
- The AASB Framework.
You must make reference to relevant paragraphs of the Accounting standards, AASB Framework and other sources of material to help support your argument. When referencing both the Accounting Standards and the AASB Framework, include the relevant paragraph number (eg. AASB 101, para 137(a) of AASB Framework, para 3).
Note: Your audience (the CEO) are not accountants. Prepare your report accordingly, that is, do not just quote large sections of standards, as managers won't read them!
Word limit 750-850 - (450-550) + 300 words.