Maddox Smith Staff asked 4 years ago

Australian Conceptual Framework

Objective: The objective of this essay is to understand Australian Conceptual Framework in accounting standard setting and in business practices.Assessment: The quality of this essay will be assessed based on the following four areas: • Demonstrate and identify the accounting concepts and principles applied in your topic. • Provide an example to illustrate the implementation of an accounting concept(s) or principle(s) discussed in your essay. • Use paragraphs from the Australian Conceptual Framework as a guideline to support your discussion. • Demonstrate effective communication, logical presentation and integrated evaluation.Essay Topic: In May 2016 Wesfarmers announced it would be writing down more than $2billion worth of assets, a large portion of which related to its investment in Target. Using the Australian Conceptual Framework, discuss how the value of assets should be recorded to ensure that the information provided is relevant and reliable, and explain why it was necessary for Wesfarmers to account for this write down. Compare this with Woolworth’s experience with its investment in Masters and how it was accounted for.Your discussion should include the following; a) How the investment in Target should be recorded in accordance with the Australian Conceptual Framework. Provide references to the Framework. (3 marks) b) How Wesfarmers recorded its investment in Target in the 2016 annual report. You need to identify all the relevant accounts used in the financial statements. Provide references to the Annual Report. (4 marks) c) What the impact of the asset write-down was on profitability of Wesfarmers. (2 marks) d) What the impact of the Target investment was on financial performance in 2016. Provide references to the Annual Report. (3 marks) e) How Woolworths recorded its investment in Masters in the 2016 annual report and how this impacted its profit. (3 marks)