Part A
Telstra is one of the leading companies in Australia that provides telecommunications and media related services to its consumers. There are various types of business areas that the company has ventured into lately. It has the highest market share in Australia in relation to the telecommunication sector. The business is now foraying in other countries also (Minnis & Sutherland 2017). The annual report of the company has been downloaded and analyzed to comment on certain points related to accounting and its treatment. Extracts from the same are attached hereunder-
In case of accounting the weekly or the yearly data that is provided by the company, is measured in terms of its monetary validity. It is stated that the accounting measurements are often derived from hypothetical assumptions and not from proper observation and real time measurement(Laursen & Thorlund 2016). However, it is not true, a and it does matter in case of accountancy that all the data that is provided must have certain documents in their supports. All the figures that we see on the financial statements are backed off with proper disclosures and details and are not based on any hypothetical assumptions. Like in the extract attached below, each of the items that are there in the income statement of the company have been properly measured and then stated and there are proper disclosures that have been provided for each of the same. Even depreciation of the assets has been calculated on monetary terms based on the specific accounting standards (Given 2016).
In Accounting, it does not matter whether the standard rules of mathematics are violated or not. The Accounting rules contain basic mathematical function that is addition and subtraction and there are no proper rules that the accountants need to follow in respect of the same. The accounting language has its own rules and regulations , that are based on the specific accounting standards that have been developed and thus whether the basic accounting assumption that is related to mathematical standard rules are followed or not does not matter(Burke & Clark 2016). As per the rule of mathematics, addition should be done before subtraction but no such rule is followed in Accountancy. It depends on the nature of the expense or income and than they are, accordingly added or subtracted. Like in the given extract, we see that the net finance cost expenses are first deducted and then the profit from discontinued operations is added. Hence, we see that accounting has its own language that it follows (Guragai et al. 2017).
Part B
Depreciation refers to a fall in the value of the assets that is used by the company by its continues wear or tear. There are specific methods by which depreciations can be calculated and is then written off over the life of asset. Depreciation is not a tangible change that can be seen, it is just an estimation of the fact that because the asset is being used there will be a deduction in the carrying amount of the same and the same is reflected in the financial statements(Guragai et al. 2017). The companies to show the true state of the financial assets and to calculate the correct amount of profit or loss when the company sells the asset do it. In the given extract, the depreciation policy of the company is stated below, and the various assumptions that is made by the same (Han, Subrahmanyam & Zhou 2017).
Income represents monetary gains that a company receives in lieu of certain goods and services. It is not true that the income that is derived by the accounting processes does not represents any such surplus on increment in surplus of the company, because all the income that the company books in its financial statements are accrued in that period and that it is supported by proper assumptions and documentation(Fay & Negangard 2017). Even prepaid income is an income for the company, but the company will book only that income in its financial statements that is related to the period for which the accounts are made. However, it does not mean that it presents such income that is not really earned or in which there is no surplus. Extracts of income earned by the company is given below (Prasad & Chand 2017).
It is said that the financial statements that are prepared are made on a certain date but that does not represent what is happening in the real world. However it does not matter, the financial statements that are prepared by the companies show the true state of affairs of the business on that specific date taking into account all the relevant disclosures and very assumptions that they make is stated. Hence, it is useful to the investors of the company. An extract from the annual report of the company is given below to show the same(Sweeting 2017).
In accounting it doesn’t matter that different accounting rules and regulations have been stated by the company law and the various bodies that forms such accounting regulations that gives these companies to form their accounts differently. Because the essence of accounting is same behind each of these regulations. And lately the accounting bodies are trying to have a uniform accounting rules and standards for all the companies around the world, so that there is same basis of accounting. Every company states the basis on which they are forming their financial statements. Just in the case of Telstra, the accounts are prepared on the basis of the guidelines that have been stated by the IFRS(Given 2016).
Part C
1)Accounting can be described as the process of measuring, recording and analyzing financial transactions that occurs in day to day life of a business or any person and helps in making a analysis of the same to understand the financial position of that entity or person. It can be divided into various streams nowadays like financial accounting, tax accounting, external accounting etc. Various institutions have laid down basic rules and regulations to be followed in case of accountancy. Specific standards known accounting standards have been made to help the accountants and auditors in taking important decision related to the financial accounts and its management. It will not be wrong to say that accounting has become a more rule-based tradition where people who are managing the accounts are more focused on compliance with these rules than maintain the basic essence of accounting. However, the other side of the picture is that these rules are framed to show the true sense of the financial transaction taking into consideration all the small points that may affect the overall financial aspect of a transaction and giving a solution for the same (Dichev 2017). So even if the accounts are following these rules to analyze the record the financial transactions and provide the true state of the financial statements so that the true sense of the business is reflected and that might help the investors to take important decisions. As stated by Dr Brian, that there has been a vast array of accounting standards and basis that has changed the face of accounting and has made It a more of a rule based compliance method is not hundred percent accurate. Because the main idea that persists behind the formation of these rules is to keep the essence of accounting intact, and based on the same important standards are formed (Chiapello 2017).
2.Accountancy is a subject that is studied by a large number of people, and many people go up to doing mastery in the same to become good accountants in the times to come. However, the argument that the main emphasis on the accounting based education complies with the specific rules and regulations is not at all corrected. The students are taught to study these rules and regulations and apply the same in their professional life and their practical work. They are also taught that along with maintaining these rules it is also important to maintain their own professional sceptics and apply their own brains while taking important decisions(Crosby & Henneberry 2016). Many a times when the accountants take decisions that are not coordinated with the accounting standards and rules, they have the privilege of making assumptions and giving proper disclosure in the notes of account. Therefore, we cannot say that the accounting education that is imparted in school and college is only based on only teaching related to compliance with specific rules and regulations. It is also very much true that these rules forms the base of accounting and the students needs to be familiar with the same, but along with it they need to understand that before taking any decisions they need to apply their own intelligence in relation to the accounts of the company. Thus the statement is not hundred percent correct nor we can say that it is false(Chariri 2017).
2.Accounting and its procedures nowadays have become a routine matter, there are specific standards and guidelines that the companies need to follow, and based on the same the accounts are taking their decisions. Therefore, it can be said that the accounting process has lost its commercial reality and its ability to provide relevant information that can help the general people in taking important decisions that are related to the company. Nowadays the accounts are putting that much efforts because any accounting report to be ethically correct will require it to be in sync with the set standards hence the accountants also takes effort for that much only and doesn’t bother to go for in depth analysis into specific matters(Maynard 2017). Thus we see that the accountancy have lost its edge and is only meant for commercial use in relation to the compliance with the specific rules and regulations that are related to the company accounts. As stated by Dr Brian, the basic essence of accounting has degenerated and is now meant only for rule compliance. The main outcome that is expected to be derived by an accounting profession is only based on the main outcomes that the accounting theories want the professional to deliver(Kew & Stredwick 2017). It is stated that the overall quality of work is inferior and is not of that high quality, the main aim of the professionals today is to present such reports that comply with the various accounting standards. It is formed so that it is legally accepted and the auditors gives a clear report that the books of the company are showing a true and fair view of the business and there are no mistakes in the accounts that are prepared by the professionals. Hence, this stand of Dr Brian is said to be correct and logical (Dichev 2017).
1)A heritage asset is an item that has contributed some value to the society in their capacity of being a historical monument, and hence are recognized as assets but some countries consider them as intangible social inheritances that have no tangible value in today’s time. The great matter of debate is whether such historical monuments are considered as financial assets or liabilities and what should be their valuation method for the financial records. If we go by definition an asset is an item or a resource that has some value for the individual or the country that owns that item and there are chances that there will be economic flow by selling those items. A Liability is a financial obligation of the company or the individual that owns it and has to be fulfilled by them in their course of business or after it. Now generally heritage assets are termed as tangible assets that have certain qualities like artistic, historical, scientific, technological etc and are maintained and held by the government primarily on account of their contribution to the overall knowledge or value to the state (Chariri 2017). They are often valued differently because they cannot be disposed of for any value or price and is not possible to reflect their value in monetary terms. They are different in the context that even if their physical condition is detoriating, their overall value may increase. There may be high cost incurred to maintain these assets and there life may be calculated as hundered of years. These are often termed as intangible assets because the holder cannot dispose them, nor a company or individual cannot physically pose them. However as per the reporting framework these heritage monuments meets with the definition of assets as they can be used in certain cases to generate flow of income for the authorities that are in charge of the same. These monuments are often tax exempt and are thus termed as assets and not as liabilities. There are always chances that money will flow in rather than go out hence as asset and not a liability for the holding company (Birt, Muthusamy & Bir 2017).
2) In the given case, it is given that the Ballarat City Council has a control over the Eureka Flag, but the same has not been included in the financial statements even though it is a heritage asset. This is because it is an intangible asset whose value cannot be defined by the determined by the company in monetary terms. The heritage assets are termed as intangible assets because there are chances that the company can earn some revenues if they use these assets but their correct value cannot be determined in monetary terms. Hence, it can be said that the stand of the company was correct. The company cannot keep these assets in its financial statements because their correct value cannot be determined. Heritage assets are those items that have certain qualities like artistic, historical, scientific, technological etc and are maintained and held by the government primarily on account of their contribution to the overall knowledge or value to the state (Alexander 2016). They are often valued differently because they cannot be disposed of for any value or price and is not possible to reflect their value in monetary terms. They are different in the context that even if their physical condition is detoriating, their value might increase. In the given case, the flag is a historical asset that ahs historical and religious sentiments attached to it and that has contributed to the society hence it is termed as an asset. In addition, the same is not reflected in the balance sheet of the company owning to their non-valuation. Therefore, the Eureka flags were not placed in the balance sheet of the Ballarat City Council, as there was high uncertainty that was associated with the carrying value of the flag and cannot be measured in terms of monetary price because of this case. Hence, due to the unique nature of the asset and the non-existence of the overall market value, it was not a part of the overall financial statement of the company (Abbott & Kantor 2017).
References
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