Describe about the Accounting Theory and Current Issues for Pertaining Scenario.
The current study elucidates on accounting theories and current issues pertaining to recent scenario. Case study is presented for the company named as Bio-Sustainable Feeds Limited (Weil, Schipper and Francis 2013). This particular company is an Australian Bio-research Business Corporations and get listed in ASX (Australian Stock Exchange). Bio-Sustainable Feeds Limited believes in conducting research and development activities in order to utilize bacteria for fish production. Bio-Sustainable Feeds Limited undertakes business operations and spends money for research and development. It involves bringing sustainability of aqua culture for more than 2 decades. The current segment illustrates on concept for understanding nature of entire community. This explains characteristics by implementing appropriate research actions for the company named as Bio-Sustainable Feeds Limited (Warren, Reeve and Duchac 2013).
Bio-Sustainable Feeds Limited is an Australian based bio-research firm that majorly focus on identifying issues at preliminary phases. In this particular phase, research and development is necessary for Bio-Sustainable Feeds Limited (Reimers 2014). Concepts should be unique in nature so that it can concentrate of implementation of given accounting theories. Further, it is important to understand the fact that concepts like fair market value relate with patents references. It gives rise to certain assumptions as well as financial estimations that needs proper attention as far as possible (Porter, Simon. and Hatherly 2014). It requires defining the accounting procedures for recording transactions in relation with associated research and development activities for the company, Bio-Sustainable Feeds Limited. It requires complete understanding on the validation of financial statement in relation with patents as portrayed by bioresearch firm named as Bio-Sustainable Feeds Limited (Needles, Powers and Crosson 2013).
There are certain accounting principles and process of accounting required for conducting research and development in successful way. This particular concept is issued by “Institute of Chartered Accountants” and “Australian Society of Accountants”. This particular attributes aims in bringing innovative change within the nature and degree of validation in the entire business community (Munteanu and Berechet 2014). It is necessary to take into consideration activities like undertaking research actions for sustainable aqua culture feeds. It can be assumed that conducting research and development helps Business Corporation attainment of future goals and objectives. AASB 13 states nature and features on given research and development activities on conglomerate for the bio-research firms like Bio-Sustainable Feeds Limited. AASB 1011 explains calculation for the process cost accruals in alignment with estimation of research and development (Jiang and Penman 2013). Assessing performance is important for the bio-research firms named as Bio-Sustainable Feeds Limited.
AASB 138 reveals the fact regarding obligations for explaining facts on research and development activities for future analysis purpose (Horngren, et al. 2013). These accounting standard aims at regulating for the total amount of expenses in alignment with research activities on specified time. Expenditures are mainly incurred after considering the given accounting standard for analysis in the near future. AAS 13 explains the assumptions made for market research in establishing existence for enabling maximum capacity. It is important to consider the fact that at the initiation stages, there is diverse market condition attributes relating with industrial production. Rules and procedures need to be followed for bringing process development activities that aligns with accurate development attributes. It helps at the time of conducting research for the bio-research firm named as Bio-Sustainable Feeds Limited. It illustrates major features depending upon cost acquisition in case of future deferral activities. In according to the Accounting Standard (AASB 13), it explains major characteristics for researching purpose in the most appropriate way. It need to be classified into two types of research namely basic research and applied research. Research and Development team of Bio-Sustainable Feeds Limited should take into consideration both the types of research depending upon the nature and requirements (Eilifsen et al. 2013).
Basic Research reveals the aspects on original examination for referring keeping the augmentation process possessing required knowledge. Applied Research reveals the fact regarding investigation attributes in viewing at the resolution process for diverse practical concerns with proper justification (Edwards et al. 2012). Bio-Sustainable Feeds Limited should make used of both the types of research namely applied research and basic research. It initiates working for future research on bringing alignment of operations with required aspects of knowledge. It is necessary to give close attention to the various issues faced by Bio-Sustainable Feeds Limited in the initial stages of research and development activities.
This question discusses on the various diverse faced by Bio-Sustainable Feeds Limited at the time of conducting the research and development activities. This particular bio-research firm engages its operations in conducting research and development activities for sustainable aqua culture feeds. Innovative ideas are required at each step in way of upgrading and discovering in case for sustainable aqua culture feeds (Craig, Smieliauskas and Amernic 2014). Research activities initiates creation of assumptions in generation of plant based feed as it fails at earliest period. It needs replication on attributes for research actions concerning plant based feed for solving problems as far as possible. It needs urgent transformation for revealing actions at definite rate of 10kg. It is for low valued fish with I kg of weight. In that, 1/3rd fish becomes dead afterwards. As opined by the environmentalists, they feel that diverse activities give rise to rendering high quality human goods. It ranges from human good to luxury fish (Cooper 2016). This is considered as the process used for viewing at the low valued fish. This attributes is used for commercial production for bio sustainable aqua culture feeds in an effective way. Risk lies within underfeeding activities starting from malnutrition given to poor people.
According to the Accounting Standard (IAS 38), it reveals the fact regarding research activities for generation of assets for Bio-Sustainable Feeds Limited. It needs proper explanation on aspects like investigation process for keeping check on failed research activities closely. It is important to consider the fact that unique knowledge helps in predicting gross benefits. It requires exceeding attributes from actions comprehension in case of acquisition costs. It should not exceed cost of acquisition based upon the given pertinent knowledge (Cohen et al. 2013). Various issues need to be recognized with the usage of Audit Risk model. This model helps in recognizing the diverse risks and further solutions faced by Bio-Sustainable Feeds Limited. Audit risk models involve major three attributes for making the calculations. These three key attributes are Inherent Risk as well as Detection Risk and Control Risk for getting correct figure of audit risk faced by Bio-Sustainable Feeds Limited. Audit risk is determined or equal to Detection risk on multiplying with detection and control risk. In this particular case study on Bio-Sustainable Feeds Limited, audit risk arrives at 0.36. This is done after multiplying with inherent risk (0.9), control risk (0.05) and detection (0.8). Evaluating risk is based on the results from audit risk model. This is treated as benchmark below 10% in case of audit process (Chychyla, Leone. and Minutti-Meza 2015). Business organization aims at contributing with attributes as pertained in audit risk for specific limits. This case initiates checking on the level of audit and potential risks faced by Bio-Sustainable Feeds Limited with acceptance levels (Edwards et al. 2012).
From the case study of Bio-Sustainable Feeds Limited, there are several actions undertaken by the company for implementation of research and development activities within specified time. There are even conditions applicable on using of accounting theories in case of solving any kind of problem feeds (Craig, Smieliauskas and Amernic 2014). Accounting principles majorly initiates and mentioned in the AAS 13 Accounting Standard. It explains the purpose for checking on actions and several associated research in case of bringing developmental activities. Some of the accounting principles brings proper course of action like implementing research actions in alignment with formulating process (Christensen, Baker and Cottrell 2014). It aims at designing attributes such as diverse feasible products as well as alternative services in the upcoming financial years. AAS 13 explains the innovative activities underlying association for bringing development of actions consisting of several process substitutes. Addition to that, there are some of the developmental procedures that enhances ways for designing and formulating innovation among Bio-Sustainable Feeds Limited. It involves pre-production samples as well as various models for future analysis purpose. This attributes initiates with formulation of using mechanism and tools in case of applying with new technological innovations. It is important to consider the fact that there are developmental activities based upon feasibility analysis in aligning for commercial production. R&D activities are used as per the given accounting standard mentioned in the fourth paragraph of AAS 13 (Edwards et al. 2012).
On critical analysis, it has been noticed that research process helps for assessing facts for bringing developmental activities for Bio-Sustainable Feeds Limited. It initiates actions that have to be assumed on behalf of definite acquisition of business attributes. Bio-Sustainable Feeds Limited has some required expectations widely dependable upon scientific calculations and gaining technical expertise at the same time. It requires arranging for developing the translational process in the given course of actions feeds (Craig, Smieliauskas and Amernic 2014). It widely depends on diverse findings using products and services for future analysis purpose.
“Process of accounting research and development”
This particularly explains the process of accounting research as well as developmental activities for the bio-research company named as Bio-Sustainable Feeds Limited. AAS 13 explains the fact regarding rules and low in aligning with accounting activities. There are various accounting transactions for viewing at the cost of acquisition in applied research and development attributes feeds (Craig, Smieliauskas and Amernic 2014). There have been even certain stipulations mentioned widely cohesive with accounting standard for acquisition of cost on behalf of Bio-Sustainable Feeds Limited. Cost acquisitions depend widely for given period because of free cash flow generations for viewing at the uncertain actions. It is necessary to initiate specific cost and deferred cost for making comparisons with future costs for bringing uniformity of information. Nature and characteristics need to be explained depending widely upon the research and development actions in the upcoming financial year. Addition to that, process of accounting research and development consists of several potential advantages in case of viewing at the process for postponement of future course of actions.
“Present Value (PV) of the specific patent”
“From the cash flow during the first yearwe can calculate the present value of the patent:-
(PV of 100+PV annuity of 800) of 8%= $778,463,000”
“From the cash flow during the second year, we can enumerate the present value of the patent”:-
PV of 100 for 10 years 8%
=$671,008,000”
It is important to consider the fact that accounting standards explains the fair value calculations for treating research and developmental costs. It initiates the estimate values for treating assets and liabilities on purchase decisions made by Business Corporation. In the consolidated financial declarations, it is clearly mentioned regarding the operational aspects of Bio-Sustainable Feeds Limited. It is assumed that higher fair values reveal more initiation take by the Business Corporation in carrying out any kind of research and developmental activities. Under AASB 13, it is clearly mentioned regarding the fair values at given specific prices. It relates with sale acquisition based upon liabilities transferring activities in alignment with market participants in the upcoming financial year (Weil, Schipper and Francis 2013).
The Journal entries for the research and development expenditures are as follows
Year 2013
Dr. R&D exp 260,000,000
Cr. Cash or A/P 260,000,000
Dr. Cash or A/P $500,000,000
Cr. R&D exp. $100,000,000
Cr. Unearned grant revenue $400,000,000
Year 2014
Dr. R&D exp. 100,000,000
Cr. Cash or A/p $ 100,000,000
Dr. Unearned grant revenue 100,000,000
Cr. Research grant revenue 100,000,000
Year 2015
R&D expenses $ 100,000,000
Cr. Cash or A/p $100,000,000
Dr. Unearned grant revenue 100,000,000
Cr. Research grant revenue 100,000,000
Year 2016
R&D expenses $ 60,000,000
Cr. Cash or A/p $60,000,000
Dr. Unearned grant revenue 60,000,000
Cr. Research grant revenue 60,000,000
The above journal entries are passed in order to understand the transactions and money spend by Bio-Sustainable Feeds Limited on research and developmental activities (Jiang and Penman 2013). Under AASB 120, it is clearly mentioned regarding the compiling factors with government grants. It aims at enhancing knowledge in relation with understanding of profit or loss for given process of research actions. These types of government grants are given proper preference for viewing at the compensation attributes in the near future. It is therefore important gaining knowledge on several key actions as mentioned in AASB 101. It ensures viewing at the compensation elements as presented in the financial statement of Bio-Sustainable Feeds Limited. Journal entries are passed starting from the year 2013 to 2016. Research and development costs are debited and cash is debited amounting to $26000000 (Christensen, Baker and Cottrell 2014). It therefore reveals the fact that BSF Limited spends money for conducting research and development activities. For every year, journal entries have been passed for maintaining clarity of actions in aligning with government grants. Most of the accounting firms require calculating for the unearned revenues before taking any kind of financial auditing decisions. It is the accounting process that explains the matter for rules and regulations on the government grants that has been credited at the same. Spending money on Research and Development activities helps in gaining facts on current market condition and takes corrective actions in the upcoming financial year (Weil, Schipper and Francis 2013).
This particular question requires gaining clear understanding on the prospectus based upon the research conducted for the bioresearch firm named as Bio-Sustainable Firms Limited. Business entity should be able to handle the future economic attributes in respect with intangible assets. It involves internal control in case of intangible assets in generating analysis with economic attributes (Christensen, Baker and Cottrell 2014). Addition to that, it enhances diverse knowledge on given intangible assets on legal authorities enforceable by law. It is necessary in having technical and marketing expertise regarding the products offered by the company for bringing change in the operations in the most appropriate way.
Researchers need to maintain confidential of information and should act ethically in carrying out the business operations in desired way (Jiang and Penman 2013). As far as intangible assets are concerned, it requires acquisition of intangible assets for the company in respect with research and development costs. In case of legal authorities, it needs special treatment for intangible assets like patents for BSF Limited. It takes into consideration business entity for skills identification as well as competing with staff members for future economic benefits generation in an overall manner. It is therefore important to consider the fact regarding the procedures and rules for any of the alternative ways for keeping check over the control activities especially for intangible assets (Weil, Schipper and Francis 2013).
Cooper (2016) states that research needs to be beneficial as it help in keeping accurate tracks on matter relating to customer expectations With the advancement of technology, this particular company under study employs bacteria feed technology used for the manufacturing process in case of bringing business sustainability in the upcoming future. Bacteria feed technology provides help at the time of manufacturing process for fish feeds extracted from wood chips involving sugarcane residual. Bio-Sustainable Feeds Limited believes in meeting the needs as well as expectations of the customers. It requires making innovative ways for generation of revenue in the near future. It requires acquisition of exclusive rights and patent rights. These are some of the techniques used and adopted by the bioresearch firms in bringing changes as far as possible. It requires acquisition of exclusive rights as well as patent rights control so that there is no misuse of information by the competitors (Zeff 2016). This will help BSF Limited sustain in the global marketplace. This particular company needs further improvement in solving the issues relating to operational aspects in the upcoming financial year (Jiang and Penman 2013).
Reference List
Christensen, T.E., Baker, R.E. and Cottrell, D.M., 2014. Advanced Financial Accounting. The McGraw-Hill Companies, Inc.
Chychyla, R., Leone, A.J. and Minutti-Meza, M., 2015. Financial Reporting Complexity and Accounting Expertise.
Cohen, J.R., Krishnamoorthy, G., Peytcheva, M. and Wright, A.M., 2013. How does the strength of the financial regulatory regime influence auditors’ judgments to constrain aggressive reporting in a principles-based versus rules-based accounting environment?. Accounting Horizons, 27(3), pp.579-601.
Cooper, S., 2016. Faculty Review of Accounting Principles: A Business Perspective.
Craig, R., Smieliauskas, W. and Amernic, J., 2014. Assessing Conformity with Generally Accepted Accounting Principles Using Expert Accounting Witness Evidence and the Conceptual Framework. Australian Accounting Review, 24(3), pp.200-206.
Edwards, J.D., Hermanson, R.H., Ivancevich, S.D. and Pearlman, S., 2013. Accounting Principles: A Business Perspective. Global Text.
Eilifsen, A., Messier, W.F., Glover, S.M. and Prawitt, D.F., 2013. Auditing and assurance services. McGraw-Hill.
Horngren, C.T., Sundem, G.L., Schatzberg, J.O. and Burgstahler, D., 2013. Introduction to management accounting. Pearson Higher Ed.
Jiang, G. and Penman, S., 2013. A fundamentalist perspective on accounting and implications for accounting research. China Journal of Accounting Research, 6(4), pp.233-245.
Munteanu, V. and Berechet, M., 2014. Paradigms of the Concepts and Principles Substantiating the Elaboration and Presentation of the Financial Reporting Situations. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(4), pp.72-78.
Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage Learning.
Porter, B., Simon, J. and Hatherly, D., 2014. Principles of external auditing. John Wiley & Sons.
Reimers, J.L., 2014. Financial Accounting: Business Process Approach. Pearson Higher Ed.
Warren, C.S., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting. Cengage Learning.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.
Zeff, S.A., 2016. Forging accounting principles in five countries: A history and an analysis of trends. Routledge.
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