Professional Advice For Providing Information Gathering And Communication Strategies

Issue 1

Thanku you so much for the email. I am glas that the company has been listed as a public company and I am writing this email for t he issues you have pointed .I am working on the issues you have raised and conscripted replies for the questions

A large number of  customers buy products on wholesale basis for selling the products on outlets  and the shopkeepers give credit facilities to them. The main motive of the people is to provide the products to any many people as they can . As a result  retail customers and supplying wholesale distributors  the shopkeeper also entered  into arrangements with number of cafes, motels and knickknacks style shops that sell Australian made products. They have this system of staffs who visits the customer on monthly basis and asks them if they want to return any products and in return the staffs sold them some new products. They are then billed for the matters sold by them and recompense is made within a month after the date of the bill. Presently they record the sales entry on receiving of the money from all sorts of customers as they think it’s easy and more convincing way  As soon the cash is received the sale entry is made and cash entry is made simultaneously  . The new director that has been appointed on the Board thought that this method is incorrect and should be changed.  Income includes only the gross arrivals of financial benefits conventional and receivable by the individual on its own account. AASB 118 deals with revenue recognition (IFRS, 2017)As soon as the company makes sales it needs to credit the sales account and any cash or cheque received needs to increase the cash or bank balance. If the good are sold on credit then the corresponding entry  will be the trade receivables. The company is correct in their method. Income is documented when it is possibility that future financial benefits will drift to the individual and these welfares can be restrained dependably. Any risk reward is transferred to the buyer ,so at that point of time sales can be recognised. Revenue is documented when distribution is done and money is received by the wholesaler or its manager or agent. Income from such sales is documented when the properties are transported. Any risk ,reward or ownership have passes then income can be easily recognised (Revenue, 2017)

Issue 2

Jonny Appleton the manufacturing engineer calculated and then manufactured an item of machinery which empowers us to dry the new produce used in  the marinating plant much more effectively. The plant was manufactured in the house itself  the only cost was the additional material cost which will be incurred that will be required to purchase the machine  and it was around $80000. Its effectiveness was so much that it that it cut the industrial time by about 2 hours per batch tat. The manager wants to show us at fair value and want to recognize it as sales income. He contemplates this is reasonable as he has been requested by two other productions “Granny’s Jam” and “Martha’s Pies” if they are concerned in engineering a similar mechanism for them and is now in the procedure of doing so. It would actually upsurge the goodwill of the company too, and needs us to show this asset in the statement of accounts for the year conclusion 30 June 2017. According to AASB 116 property plant and equipment the company cannot recognize it as sales revenue. (Federal register, 2017)The actual cost incurred should be recognized and properly depreciation needs to allocated on it. WE can easily treat it as asset and show in the balance sheet and accordingly depreciation can be calculated on that

While calculating the allowance for doubtful debts the clerk  did a huge mistake in calculation and did a huge error. In the spreadsheet he instead of calculating 2 percent of sales revenue as provision for doubtful debts , he just made .02 percent of doubtful debts. The sales was $2.5 million the last year and $2.9 million projected for the existing year. This is actually prior period errors or omission. Not uncommonly, a willpower is made that beforehand issued monetary statements comprise an error. In simple words the “error” is characteristically an accidental misstatement in the monetary statements of any amounts or revelations. As such, an mistake alteration also is obviously different from a modification in secretarial estimate Prior period items should be disclosed in the financial statements. They are incomes or expenses which arise in the current period  as a result of any omission in the preparation of the financial statements  of one or more periods. AASB 108 Accounting policies, changes in Accounting Estimates and Errors states that Any error of previous period can easily be discovered in the current time or period. The nature and the  amount of the items that relates to the prior period should be easily disclosed and in the profit and loss statement in such a  manner that their income n the compressive statement can easily be identified. Errors can happen due to any mathematical mistakes, any omission of the facts  any  misreading of the facts. Prior period items are generally included for the determination of the profit or any losses concerned for that period Generally it is seen that the prior period items are change in accounting estimate

$3,500,000 x 2% = $70,000

Amount stated as per 30 June 2015

$3,500,000 x 0.02% = $700

Error Size ($700 ÷ $70,000) = 1%

Materality depending on the revenue sales = $3,500,000 x 5% = $175,000

• We see that is error is insignificant , only proper disclosures need to be made
• Any error of previous period can easily be discovered in the current time or period. The nature and the  amount of the items that relates to the prior period should be easily disclosed and in the profit and loss statement. Using the leadership in FASB ASC 250, an mistake in monetary statements of a previous period discovered following to the delivery of the monetary declarations wants to be described as an adjustment that is prior period through reaffirmation of previous-period financial declarations. Monetary declarations of each separate prior period wants to be accustomed to reflect the improvement of the period-specific belongings of the mistake in the statements.The secretarial supplies pertains to error alterations are significant for reportage entities, bookkeepers and examiners to comprehend. Outside the secretarial supplies, bookkeepers and examiners the individuals , corporates also  need to obey with connected supplies in the auditing, review and gathering standards (Maxwell, 2017)

References

Maxwell (2017).Accounting errors [online] Available at: https://www.mlrpc.com/articles/how-to-deal-with-accounting-error-corrections/ [Accessed  9^th April. 2017]

PDF (2017)Prior periods[online] Available at: https://www.icaiknowledgegateway.org/littledms/folder1/as-5-net-profit-or-loss-for-the-period-prior-period-items-and-changes-in-accounting-policies.pdf [Accessed  9^th April. 2017]

ACCA (2017).Prior period[online] Available at: https://www.accaglobal.com/content/dam/ACCA_Global/Technical/finrep/Technical%20Factsheet%20188%20-%20Prior%20year%20adjustments%20.pdf [Accessed  9^th April. 2017]

Federal register (2017).AASB 116- Property plant and equipment. [online] Available at: https://www.legislation.gov.au/Details/F2005B00678 [Accessed  9^th April. 2017]

Compiled AASB(2017).AASB 116- Property plant and equipment. [online] Available at: https://www.aasb.gov.au/admin/file/content102/c3/AASB116_07-04_ERDRjun10_07-09.pdf [Accessed  9^th April. 2017].

Revenue (2017).Revenue recognition [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_%20COMPapr07_07-07.pdf [Accessed  9^th April. 2017]

IFRS (2017).Revenue recognition [online] Available at: https://www.ifrs.org/Current-Projects/IASB-Projects/Revenue-Recognition/Pages/Revenue-Recognition.aspx [Accessed  9^th April. 2017]