Intermediate Accounting: ACC Intermediate Report Paper

ACC intermediate Assign Report
Intermediate Accounting
Name
Institution
Date
Executive Summary
Reporting entities in Australia need to prepare financial reports in accordance with the conceptual framework, where there are fundamental and qualitative characteristics. Qantas is a national carrier in Australia, and recorded, the property, plant and equipment in accordance with AASB 116, adapted from the international financial reporting standards IAS 16. The financial report was prepared to represent relevance and faithful representation. Additionally, the calculation of the carrying, amount, impairment losses and depreciation was recorded to increase full disclosure. There is a need to take into account impairment testing for assets that are similar to avoid distorting the fair value of the property, plant and equipment assets.
Introduction
The conceptual framework focuses on the purpose of financial reporting, and then the qualitative characteristics, which make financial information useful. In Australia, AASB 116 is similar to IAS 16, and provides guidelines to record the property, plant and equipment (PPE). Reporting entities use AASB 116 when recording the property, plant, and equipment assets in financial records. The standards focus on requirements to record revaluations, impairments, depreciation charges and determining the carry cost of the assets. This report highlights the general purpose and qualitative characteristics of the Conceptual Frame work as well Qantas disclosures on PPE as per AASB 116.
A] Objective of general purpose financial reporting and Qualitative characteristics
The objective of the OB1-OB21 of the Conceptual Framework for Financial Reporting is to form the basis of financial reporting, and other work objectives flow from this (IASB, 2010, pp. 9- 13). Additionally, the objective of the Conceptual Reporting is to facilitate financial reporting, where users, then use the financial information to investors and creditors as they make decisions. Stakeholders need to understand the financial situation of a reporting entity, making decisions based on financial reports that present a true and fair view. The financial reports allow the reporting entity to provide information that is useful to stakeholders who need to measure the value of the reporting entity.
The fundamental qualitative characteristics of useful financial information are relevance, and faithful representations. Reporting entities apply the qualitative characteristics to ensure there is comparability, verifiability, timeliness and understandability (IASB, 2010, pp- 21). Relevance in financial reporting is associated with having confirmatory and predictive value that users can make decisions based on that information. Financial information is material if its omission or misstatement would influence decisions, while faithful representation is information that is complete, neutral and has no errors (IASB, 2010).
B] Disclosures on PPE as per AASB 116 of Qantas Airways Limited
The main issues Accounting Standard AASB 116 are the determination of the carrying amount, depreciation charges of the carrying amounts as well as the impairment losses (AASB, 2016, p. 73). Fewer errors in financial reporting indic...