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Financial Accounting Essay

2582 words - 11 pages

REPORT ON BUSINESS CONSEQUENCES
OF NATURAL DISASTERS FOR THE
BOARD OF DIRECTORS OF MILLEY LTD

Bachelor of Professional Accounting
Macquarie University
Sydney, Australia
2011

Submitted to the Faculty of Busines and
Economics of Macquarie University in
partial fulfilment of the requirement for
ACCG 224
April, 2011

Word Count = 1484

Table of Contents

CONTENTS page

Executive Summary

Table of Contents

Introduction

Discussion
1.Research and report on the floors in Queensland 2 Discuss ...view middle of the document...

Six aspects analysed show that managing and recording each item in accurate accounts based on AASB standards and Framework is necessary. In particular, the precise financial report presentation for the year ending 31 March 2011 will be useful to insurance assessors to complete assessment as soon as possible so that Milley Ltd can get compensation.

The research report analyses six items and concludes an ideal clarification:
• The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. If some inventories are allocated to other asset accounts, these damaged inventories recognised as an expense during the useful life of that asset.
• A uncollected accounts receivable recognised as an impairment loss. And original effective interest rate is used to measure impairment before modification of terms.
• Unfulfilled contract to supply books means that the contract is onerous. Milley Ltd's present obligation under the contract shall be recognised and measured as a provision. Any impairment loss that has occurred on assets dedicated to the contract will be taken on by Milley Ltd.
• Initial costs of replaced PP&E can be classified as assets as they derive future economic benefits to Milley Ltd. Subsequent costs are regarded as profit or loss.
• Cleaning up costs in May 2011 does not meet the definition of provision as it is a future cost and will be recoginsed as expenses in income statement next period when occurred.
• Government Assistance related to assets should be presented as deferred income or by deducting the assistance in arriving at the carrying amount of the asset. Receiving Government Assistance is a deferred credit in income statement. The compensation will be used separately of general heading or deducted related expense in the financial report. Government assistance related to income are presented as a credit separately or under a general heading in comprehensive income statement.

The six items require further investigation and accurate measurement, professional disclosure based on actual situation. Valuable recommendations will be discussed in relation to recognition, measurement and disclosure.

The report analysis conducted has limitations. Some of the limitations include:
• Limited information in the context;
• Standards analysis only presented in words, no any current economic conditions data or relevant similar examples provided to prove the evidences.

INTRODUCTION

Milley Ltd is a national book publisher in Brisbane. Recent floods and storms caused damages to the company's office and warehouse.

The report provides a overall overview of damage impact, especially economic effects on Milley Ltd. This report will introduce background of Queensland floods and analyse items of damaged inventory, collectability of accounts receivable, unfulfilled contract...

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