MAA716 : Financial Accounting – Economic Consequences of Asset Revaluations – Accounting Assignment Help

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Assignment Task :

Learning Outcome (ULO)  

ULO 1:

Explain, discuss and integrate the technical and theoretical knowledge about the regulatory environment relating to Australian corporate accounting and reporting; and apply the relevant concepts to “real” situations.

 

ULO 2:

Identify, discuss, evaluate and apply the relevant accounting standards relating to definition, recognition, measurement and disclosure requirements of a reporting

entity’s assets, liabilities, equity, income and expenses.

 

ULO 3:

Apply and demonstrate the appropriate technical knowledge in analysing company accounting information and problem solving; provide justification for their decisions by making references to relevant accounting standards; and communicate them to relevant stakeholders. 

Description / Requirements

AASB 116 requires each class (a category of non-current assets having a similar nature or function) of property, plant and equipment to be measured at either cost or revaluation model (fair value).

Under the revaluation model, equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Entities may switch from fair value to cost for justifiable reasons and provided adequate disclosures are made (AASB 116).

Using no more than 2,000 words (including introduction and conclusion, but excluding references), you are required to write an essay to answer the following questions. Support your answer by citing creditable references such as newspapers and articles from practitioner (professional) journals and scholarly journal articles.

Questions:

1) What are the pros and cons of choosing fair value method? Provide at least three for each pros and cons and explain in detail. 

2) Name two types of companies that are more likely to choose to revalue non-current assets. Why? Provide examples. 

3) Discuss any managerial discretions available to the firms when revaluing/devaluing noncurrent assets?  

4) What are the economic consequences of asset revaluations?  

 

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