Accounting Memo - Essay Example

Published: 2020-04-27 15:24:35
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Cost of Inventories (AASB 102, paragraphs 10-22) includes: Costs of purchase plus costs of conversion plus other costs incurred in bringing the inventories to their present location and condition. Measurement of Inventories (AASB 102, paragraphs 9-Aus9.2) states that, Inventories must be measured at the lower of cost and net realizable value. However, AASB 102, paragraphs Aus1.1-5, states that, Biological assets related to agricultural activity and agricultural produce at the point of harvest are exceptional to provisions of measurement of inventory per AASB 1-2, (Contents of Journal of Management Accounting Research Volume 25, 2013)

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Valuation of immature Sockeye salmon, according to AASB 114( Agriculture)

Valuation of biological asset: fair value- cost to sale.

SSL valuation of Immature Sockeye salmon As at 30 June 2012 age range Quantity Retail price/ kg cost to sale per kg value per kg Aggregate value

> 8 but < 12 1,000,000 kg $ 8.00 $3.00 $5.00 $5,000000

>12 but < 18 0 $10.00 $2.00 $8.00 Nil

SSL Valuation of smoked salmon assets As at 30th June 2012 Quantity Fair price/Kg Cost of sale value/kg total value

100,000 kg $26.00 $ .50 $25.50 $2,550,000

Value/kg no krill, no injection of krill based natural dye

Procution cost: NO Krill fed to Sockeye salmon, krill natural based dye is injected

age ranges Production cost/kg Retail Value cost of sale per kg Value/kg

> 8 but < 12 $ 1.00 $12.00 $3.00 $9.00

>12 but < 18 $ 2.50 $15.00 $2.00 $13.00

18> mature $ 3.00 $15.00 $2.00 $13.00

Auditors Proposal: the values will not represent the true and fair value of the firm as required by the IFRS and AASB, however it saves the company dollars of tax liability. Management has the mandate to make this choice of the policy to choose, which will not contravene the prevailing business laws per se (Stevenson, 2012).

Following the accounting policy choice model, Check if there is a clear, precise AIS provisions. In this case, the AABs 102 is equivalent of AIS102, which exempts biological assets.

Consider the alternative policies, in our case either AABS 102(Agriculture) or AIS 102 or AASB 141.

Choose the most appropriate method, which doesnt contravene the existing prevalent accounting policies. In the case at lower of fair value less cost of sale. The CEOs proposal per se. Value of value on the 10 month-old live Sockeye asset will be; (Comment: Australia's Adoption of IFRSs-A Clarification from the AASB, 2009)

References

Batsch, L. (1997). Accounting and financial policy at Schneider (1837-75). Accounting, Business & Financial History, 7(3), pp.281-294.

Briefing: The newsletter of the National Association of Non-Principals reaches ... (1999). BMJ, 319(7205), pp.3a-3a.

Carlin, T. and Finch, N. (n.d.). Advance Australia Fair: The Quality of AASB 136 Fair Value Disclosures Down Under. SSRN Electronic Journal.

Comment: Australia's Adoption of IFRSs-A Clarification from the AASB. (2009). Australian Accounting Review, 19(2), pp.153-153.

Contents of Journal of Management Accounting Research Volume 25. (2013). Management Accounting Research, 24(4), p.I.

Hunter, L., Webster, E. and Wyatt, A. (2005). Measuring Intangible Capital: A Review of Current Practice. Australian Accounting Review, 15(36), pp.4-21.

Owsen, D., Goedde, H., Kintzele, P., Pointer, M., Stephens, R., Sisaye, S., Karim, K., Fowler, M., VanZante, N., Bierstaker, J. and Reitenga, A. (2002). Book Reviews: Financial Reporting & Analysis ; Principles of Accounting ; Advanced Accounting ; Financial and Managerial Accounting ; Advanced Financial Accounting ; Cost Management: A Strategic Emphasis ; Advanced Accounting ; Financial Accounting ; Management Accounting ; Auditing and Assurance Services ; Electronic Commerce. Issues in Accounting Education, 17(3), pp.347-344.

Stevenson, K. (2012). The Changing IASB and AASB Relationship. Australian Accounting Review, 22(3), pp.239-243.

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