PART A
Qualitative Characteristics not satisfied with the adoption of IFRS
In accordance with the quotation made by each individual, Following are the qualitative characteristics which have not been satisfied with the adoption of IFRS in the current reporting practices:
1.Understandability – It is one of the enhancing qualitative characteristics so as to differentiate between the more useful information and less useful information. It states that the financial statements containing the financial information of the company shall be presented in such a manner that even the user from the non financial background can understand the figures reported in the financial statements as to how the same has been valued and that too in accordance with the accounting standards and the accounting policies as applicable to the company. The non presence of this feature has been observed from the quote given by Terry Bown, the finance director of the Wesfarmers Limited.
2.Faithful Representation – This feature states that the financial statements shall be presented in the manner as it is required. It further has three aspects – completeness, neutrality and the free from error. The feature which has been found as absent as per the quotation given by Chief Financial of Common Wealth Bank is the neutrality and the free from error. The above two distinct features states that the financial statements shall not be manipulated in any manner so as to influence the decision of the users of the financial statements and secondly the financial statements shall represent the true and fair view of the financial position and financial performance of the company (Beest, 2012).
In this manner, two distinct features have been identified as the absent in the current reporting practices as per the quote of the individuals.
These views are not consistent with the conceptual framework of accounting and reporting in the sense that the IFRS has ensured the presence of all the qualitative features of the financial reporting. It has been decided only because ensuring to have the uniform practices across the globe.
PART B
In case of each and every company, strict regulation shall be specified so as to make the company liable and accountable for any act done by them. For this the specific regulation shall be made which shall be applicable for each and every company. Under the following three parts it has been discussed as to how the government has made the decision that no regulation shall be introduced.
a). Public Interest Theory – In general words, the theory which takes into account the welfare of the people referred to as the public interest theory. In other words, the theory entails that the regulatory bodies shall allocate the resources which are scarce in nature to the individuals and the society in the good and defined manner. In accordance with the public interest theory, the regulation made by the government is treated as the way so as to overcome the demerits which are raised from the imperfect competition, unbalanced market operation, missing markets and results of the market which are undesirable. But it has been criticized on the ground that the theory will fail in case where the monopoly in the market exists or the market has been failed. In such circumstance the regulation also does not prevail to ensure the allocation of the resources in the defined manner.
b). Capture Theory – The capture theory states that the regulations are made and manipulated in the interest of the persons who are affected by the regulations. It further states that in case if any regulation is made in the interest of the public for the industries the after sometime it automatically starts benefiting the others who has been the major sufferers of that regulation. Therefore, in this manner, the government has taken the decision as to no specific regulation shall be introduced.
c). Economic Interest Group Theory of Regulation – This theory states that the formulation of the regulation depends upon the demand and supply. Here the supply refers to the government and the demand side is related to the groups which have the interest. It states that the representative groups are involved in the preparation of the policies. It will affect the other groups operating in the different or similar industries (Hertog, 2012)
Because of the above factors, the government has decided not to introduce the specific regulation.
PART C
Faithful representation is referred to as the qualitative feature of the financial reporting which entails that the financial statements shall presented in the manner as it is required. For the Faithful representation in the financial statements of the company, the non-allowance of revaluing the current assets of the company from the cost value to the fair value will be considered. It is because the valuing of the noncurrent assets on account of the fair value will not represent the actual position of the company due to which the one pillar of faithful representation as neutral will be affected.
Charging of impairment to the statement of the profit and loss and the assets ensures the relevance. It is because of the fact that due to impairment the users of the financial statements will have the true and fair value of the noncurrent assets and thus will help them in taking the refined and meaningful decision.
PART D
a). One of the major motive to not to adopt the revaluation model is that in case the ,market fluctuates then the revaluation so made in the value of the noncurrent assets will vary and may lead to the collapse of the company to certain extent (Seng, 2015).
b). If the firm does not revalue the assets, the asset will be measured on the cost model and hence will be represented on the basis of the historical costs. For the decision making function which includes either to replace the asset or not or any other related function, the historical cost so booked will not be considered and it will become irrelevant (Christensen, 2012).
c). Yes, it will affect the wealth of the shareholders in the sense that the net asset value per share will decrease and which in turn will lead to the minimization of the wealth of the shareholders.
Beest, F.V., (2012) , “Quality of Financial Reporting: measuring qualitative characteristics”, Accounting review, 205(4), 22-26
Christensen H, (2012), “ Does Fair Value Accounting for the Non financial assets pass the market test”, Journal of Booth School of Business, 45(2), 8-22.
Hertog J, (2012), “General Theories of Regulation”, Journal of Economic Literature, 111(2), 142-149
Seng D, (2015), “Managerial Incentives behind the Fixed Asset Revaluations : Evidence from New Zealand Firm”, Department of Business : Working papers, 3(5), 44-67
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download