ACC00145 Financial Reporting - Report On Financial Statements

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Assessment Task:

The objective of this report is to analyse the Australian Conceptual Framework in accounting standard setting and apply the related key concepts to contemporary business practices. Your discussion should be aligned with the Conceptual Framework for Financial Reporting and relevant AASBs to support your analysis.

JB Hi - Fi Ltd has assets with the following costs and fair values as at 30 June 2019:

Assets type Cost Fair value
Inventory $886,700,000 $912,000,000
Machinery $40,800,000 $46,000,000
Total $927,500,000 $958,000,000

The company decided.to measure the assets at cost and therefore disclosure the assets in the statement of financial position (balance sheet) at an amount of $927.5 million despite the fact that it could receive $958 million at the time if it sold them.

You are required to answer the following questions:

Part A

  1. Would such financial statements be true and fair if the assets were disclosed at a total of $927.5 million? (4 marks)
  2. Would such financial statements be true and fair if the assets were disclosed at a total of $958 million? (6 marks)

Part B
Assume if the assets were recorded as following as at 30 June 2019:

Assets type Cost Fair value
Inventory $886,700,000 $830,000,000
Machinery $40,800,000 $36,000,000
Total $927,500,000 $866,000,000

  1. Would such financial statements be true and fair if the assets were disclosed at a total of $866 million because inventory and machinery actually could be sold at those values? (6 marks)

Part C
During COVID 19, the value of the company’s assets declined due to the Global Lock-down. Many businesses were forced to close shops or downsize their business operation. Refer to https://www.applianceretailer.com.au/2020/04/jb-hi-fi-employees-call-for-stores-to-close- during-coronavirus/.

In this report, you are also required to select a 2018/2019 annual report of an Australian company listed in the ASX (Australian Stock Exchange). You should provide your comments on the following questions:

  1. Identify the measurement methods of Property, Plant and Equipment (PPE) that are adopted by the chosen company. Provide your explanation. (6 marks)
  2. In your opinion, provide recommendations to the CFO regarding the measurement methods of PPE adopted by the chosen company that can improve financial performance in the 2019/2020 annual report under the current business environment. (6 marks)

The report should demonstrate effective communication, logical presentation and integrated evaluation. (2 marks)

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