Corporate Advances Accounting and Reporting

Question: Discuss about the Corporate Advances Accounting and Reporting. Answer: Introduction: In accounting, entries consisting of the for-profit as well as non-profit company include several types of assets. Such assets can be segmented in several sections and they can either be generated by or employed for everydays operational conducts of the organizations that are deemed current assets. Fixed assets are deemed to be the ones those can be employed for over many financial years. Other than the fixed and the current assets, ample organizations include several intellectual properties that include copyright assets, trademarks and many more (Fernandes et al. 2016). This also includes assets that have emerged from the acquisition of numerous organizations or from the popularity among the consumers along with brand and goodwill. Such assets can be directly employed for gaining more revenue that also facilitates the organizations to enhance the companys profit or revenue. Numerous assets those does not seem physical and are impossible to be gauged in units are considered as intang ible assets. Such assets are maintained in the books of the organization as per the sum append in order to purchase certain assets. Conversely, it has been noticed that along with the time that real value of the assets starts to decrease considerably. The accounting companies employs impairment at the time the real value along with decreased amount is presented along with impairment A/c. certain loss for this decrease in the asset value is deemed as impairment loss. The asset value alterations based on several factors and there exists certain common aspects those are applicable in numerous assets, however, certain factors results in decreasing the value of certain particular assets (Olante 2013). Vales of the tools, equipments and machineries rely on its uses and manufacturing capability. The more such assets are employed for the production the more it is likely that its upcoming production capability might decrease. However, because of the emergence of modern equipments and machineries, several older equipments and machineries decreases its high market value along with turning out to be obsolete. The land value gradually increases with time. It can also decrease because of the transformation of the locality importance, emergence of new cities, over population and changes in the public or political centers and so on. The patent rights along with the trademarks tend to decrease value after emergence of modern technology or alterations in consumer choices. Goodwill serves as additional value that is falsified while any organizational acquisition. At the time the value of the acquired assets reduces, the goodwill value in purchasing such assets also decreases considerably. In the recent era, the organizations need to signify the financial reports as per the stakeholder needs. Several stakeholders encompass distinct interest types in the organization. They evaluate the fiscal reports from numerous point-of-views. The accounting standards board along with the government signifies huge importance on the shareholders interest (Andrews 2012). For this reason, they desire that the organizations financial reports particularly of the listed organizations must represent fair and accurate values of liabilities and assets. An organization might have acquired expensive machinery before five years. In the recent era, the machinerys market value has turned out to be half of its areal cost because of emergence of modern machineries at low prices. Moreover, if an organization presents the cost price of certain machinery in financial report then it can indicate all assts at over-valued prices ad for this reason this cannot be able to reflect the organizations true and fair value. The stakeholders those are interested in valuation of assets of organization for investment that can consider it to be an efficient investment option. If the organizations does not indicate the assets fair value and for this reason the shareholders can take faulty decisions relied on over-valued financial statements. For gaining the stakeholders interest, the accounting standards boards has presented the impairment concept. The accounting standard and the government have offered clear instruction for asset impairment along with generating financial statements after introducing several accounting standards and government policies (Avallone and Quagli 2015). The impairment takes place at the time the assets carrying amount is increased than its recoverable amount. Carrying amount is recorded in the assts books of accounts. It can be explained as the assets regarding the amount of accounting. Such amount explains the asset cost that has been purchased and the asset value and depreciating it in consideration to suitable depreciation techniques. There are two types of recoverable amounts and an organization can select the asset fair value to be as recoverable amount after reducing the required expenses that is anticipated to be experienced by an asset. Another recoverable amount can be the value of assets. Value can be explained as the net cash flow that is anticipated to be collected from asset in upcoming years. If the two values are present in accordance to IAS 36, it is effective in choosing higher among the two values (Rennekamp et al. 2014). Considering IAS 36, impairment loss can be measured through reducing the asset recoverable amount from the asset-carrying amount. Impairment less is debited in accordance to the respective asset for reducing the asset book value and maintains the asset accounting amount has decreased value. Such impairment loss is adjusted with the P/L account along with income statement at the year-end and this is depicted as non-operating loss within income statement. If the organization sustains Revaluation Surplus A/c then the Impairment Loss A/c can be credited with Revaluation Surplus A/c, which directly decreases the overall shareholder equity amount. For an asset group that is generally considered as Cash Generating Units that encompass the goodwill generated from such assets acquisition, the impairment loss is not adjusted accordingly. It was gathered that the overall value of the CGU units requires being impaired and in such scenario, the impairment loss can be calculated as the aforementioned method (Komissarov et al. 2014). Moreover, it was adjusted along with the Goodwill A/c. If certain balance is left after adjusting with the goodwill, then the balance amount is aligned with CGU assets relied on the asset book value. References: Andrews, R.C., 2012.Impairment of assets: an empirical investigation(Doctoral dissertation, University of Hull). Avallone, F. and Quagli, A., 2015. Insight into the variables used to manage the goodwill impairment test under IAS 36.Advances in Accounting,31(1), pp.107-114. Chen, W., Shroff, P.K. and Zhang, I., 2014. Fair value accounting: consequences of booking market-driven goodwill impairment.29(2), pp.243-254. Fernandes, J.S.A., Gonalves, C., Guerreiro, C. and Pereira, L.N., 2016. Impairment losses: causes and impacts.Revista Brasileira de Gesto de Negcios,18(60), p.305. Huian, M., 2013. Stakeholders participation in the development of the new accounting rules regarding the impairment of financial assets.Business Management Dynamics,2(9), pp.23-35. Komissarov, S., Kastantin, J.T. and Rick, K., 2014. Impairment of Long-Lived Assets: A Comparison under the ASC and IFRS.The CPA Journal,84(5), p.28. Olante, M.E., 2013. Overpaid acquisitions and goodwill impairment lossesEvidence from the US.Advances in Accounting,29(2), pp.243-254. Rennekamp, K., Rupar, K.K. and Seybert, N., 2014. Impaired judgment: The effects of asset impairment reversibility and cognitive dissonance on future investment.The Accounting Review,90(2), pp.739-759.