Assignment attached below Essay Example
Each question 50-60 words.
a) Intangible Assets
Given the importance of intangibles to the organisation, do you agree with the restrictive approach to recognising intangibles?
. It can be said that value relevance of most intangible assets have been blown out of proportion due to a prior lack to ensure its reliability within their imminent modelling. (Jifri and Citron 134)Yes. I agree because, without the restrictions, the relevance of accounting information is directly influenced by its reliability
b) Intangible Assets
If many intangibles are excluded, does this potentially reduce the relevance of the financial reports? How would an investor read around this?
. (Jifri and Citron 135-137)No, exclusion of intangible assets does not affect relevance of financial reports in any way since; relevance is only affected by reliability of information. In fact, in the case where less reliable accounting information related to intangible assets is allowed for purposes of disclosure, it cannot reduce value relevance of financial information that is reported by organisations but rather it could reduce its value
Foreign Currency TransactionsC)
Critically evaluate the practice of determining the firm’s functional currency in relation to faithful representation and relevance (two of the conceptual framework qualitative characteristics).
as well as reflecting on the guidance presented in the Conceptual Framework. In particular, consider paragraph 9, 10, and 12 of AASB 121., In your answer, consider the implications of AASB 121
In determining a firm’s functional currency, it should be noted that the currency should relate to the primary economic environment in place for which it generally operates. The environment is associated with where an entity is able to generate and expend cash resources.
In the event that the determination of functional currency is not straightforward, then a firm’s management is allowed to use its judgment to establish it in a way that depicts faithful representation relevance to the existing economic effects of the immediate transactions, events and situations.
Jifri, K. A and Citron, D , “The Value-Relevance of Financial Statement Recognition versus Note Disclosure: Evidence from Goodwill Accounting European”, European
Accounting Review,18,1:(2009), 123–140.
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