Theory and Current Issues in Accounting Assignment-
Learning Objective-
- Evaluate different accounting theories and their implications for policy choices by managers;
- Synthesize the complex elements of the Conceptual Framework and apply to accounting activities
- Apply knowledge to identify strategies to meet accounting issues and problems in new situation
In addition, by answering the assignment's question, the students will learn many things, including the following:
1. To work as an individual and think critically to answer the question.
2. How to prepare a written Report (An essay)
3. To understand and know the elements of the financial statements as defined in the conceptual framework of IFRS as well as understand the measurements techniques under different accounting standards.
The Question
Describe and analyse the different ways that the five elements of financial elements, as defined in the International FRS conceptual framework, can be measured by listed companies. You are not constrained in this analysis to any one country or set of national accounting standards. Of course, Australia is under International Financial Reporting Standards but your research could identify examples of companies operating under U.S. GAAP, Chinese National Accounting Standards or some other regulations/guidelines that illustrate what you want to discuss. In completing this assignment, you are required to:
a. Quote examples of measurement methodologies from company annual reports.
b. Clearly reference your sources.
c. In explaining how a company has measured an element, explain how the measurement method provided decision-useful information and what you understand decision-useful information to be.
d. Provide a critical analysis of the techniques the selected company has used and why a technique deployed may be more useful or practical than another method.
As an example, two (2) techniques have been appended that show how bond liabilities and interest expense are reported and measured in Australia and the USA. The first technique is called The Effective Interest Method and the other is called the Straight Line Method. The Effective Interest Method is permitted under both IFRS and US GAAP. The Straight Line method is only permitted under US GAAP. If you were writing on example on bond liabilities, you could research these different techniques and whether one provides more decision useful information than the other. Or you may conclude that neither technique is very satisfactory and the bond liability should be reported in the balance sheet at market value because if the company wanted to redeem the debt by buying back the securities in the open market it would have to pay fair value (and that would be based on a current trading price for the bond).