Tuesday, May 5, 2020

Financial Management of Corporate Governance - MyAssignmenthelp.com

Question: Discuss about the Financial Management of Corporate Governance. Answer: 718 Geelong Street, Melbourne, VIC 3000 15 January 2018 Christopher Sampson Managing Director, Beachlife Ltd Level 7, 927 William Street, Brisbane QLD-4000 Dear Christopher Sampson Relevant email was transmitted on 13 November 2017, which indicated the problems faced by Beachlife Limited in forming their annual report. The email sent to Magenta and Associates mainly addressed the accounting issues faced by the management of Beachlife Limited. Nevertheless, in response to the email the following letter is being outlined, which directs all the relevant problems and accounting issues faced by the organization. The measures and standards needed for comprehending the accounting issues adequately discussed in the letter, which could allow the board to correctly prepare its financial report. On behalf of Magenta and Associates I wholeheartedly thank you for providing us with an opportunity to help with your accounting issues. Rest assured the measures and adjustment that is needed for nullifying the accounting issue are adequately depicted in the letter. Furthermore, adequate references and sources are provided with the advice that is given for contemplating the accou nting issue. Beachlife Limited is a public limited company, who needs to follow all the relevant AASB standard and regulations laid in Corporation Act 2001. The clauses and sections need to be maintained by the organization while preparing the annual report, as it might help in depicting their actual financial position. Regulations such as section 292, section 296, and section 334 are mainly used in drafting the annual report (Aasb.gov.au 2018). Organizations use the detected regulations to formulate their annual report according to the standard maintained by the AASB and IAS. Lastly, it could be said that the advice provided in Beachlife Limited is compliant with AASB standard, which could allow the organization to complete their annual report. The measures are provided for issues regarding the warranty expense and future loss that will be incurred by the organization. Identifying the overall measures needed to solve the accounting issue regarding infringement claim: The first accounting issue addressed in the email was regarding problems relating to patent case, where the company needs to pay compensation to the accuser. However, the problems in recording of loss that will be incurred by the company due to the infringement patent act is adequately solved. Beachlife Limited could use contingency liability in their annual report to record the overall loss, which will incur in immediate future. The measure taken with contingency liability section is mainly addressed in AASB 137 paragraph 10 (Aasb.gov.au 2018). The treatment of contingency liability mentioned under paragraph 10 addressed that any kind of loss, which will incur in future due to past actions needs to be recorded in contingency liability section. This section directly addresses the accounting issue of recording any kind of future losses incurred by the organization in future. The contingency liability section mainly comes under balance sheet section of the organization under the liabil ity section. Therefore, the board could use the contingency liability section mentioned in AASB 137 for addressing the accounting issue faced by Beachlife limited (Adhariani, Sciulli and Clift 2017). Particulars Value Probability 1st chance $ 50,000,000 60% 2nd chance $ 30,000,000 40% 3rd chance $ 87,000,000 30% The above table mainly identifies the overall probability and chance of loss occurrence from the court ruling against Beachlife limited. There are 3 probabilities with different percentage, where the company could incur loss. The highest probability is 60%, where the company will incur loss of $ 50,000,000, which needs to be listed in the contingency liability section. The other probability is also an option, where the company could incur different amounts of loss. However, the highest chance of probability occurrence needs to be taken into consideration, as there is highest likelihood the loss, which might incur by the organisation (Ball, Tyler and Wells 2015). In addition, the contingency liability section of Beachlife limited should include $ 50,000,000 for the probable loss, which might incur from infringement patent case. Consequently, the board of Beachlife limited could utilise the information related to AASB 137 paragraph 10 for addressing their accounting issue. This could eventually help in formulating the correct annual report, which represents actual financial position of the organisation. For any further queries on contingency liability section and related standard please feel free to contact Magenta and Associates. Therefore, the board could utilise contingency liability section of AASB and increase their liability section in balance sheet by $ 50,000,000. Identifying the measures used in solving the issue regarding warranty and sale record: The second issue that is faced by the organization is problems related to warranty expenses and record of sales in the current fiscal year. The main issue is regarding listing of warranty expense in the annual report, which is needed to be provided by the company in the current fiscal year and extends to next fiscal year. Relevant provision needs to be conducted by the company to depict their actual financial position in the annual report. According to AASB 137, the expenses that will be conducted in future by the actions taken in past needs to be enlisted under contingency liability section. Moreover, under AASB 137 Paragraph 14(a), the overall expenses that needs to be conducted by the company in near future must be enlisted under contingency liability section of the balance sheet (Aasb.gov.au 2018). Furthermore, the board could utilize the measure conducted by AASB for enlisting he warranty expense that needs to be incurred by the company (Hudson 2016). The problems related to rec oding of sales in annual report also needs to be addressed, where AASB 118 paragraph 9 could be utilized. According to AASB 118 paragraph 9, companies need to recognize their sales conducted during the fiscal year in the annual report (Aasb. Gov. au 2018). The happening of sales conducted in December 2017 needs to be immortalized in the current financial year, which could assist in drafting actual financial position of Beachlife limited. The relevant revenue recognition method is mainly enlisted in AASB 118 paragraph 9, which directly help in stating the actual financial position of the organization. In addition, AASB 118 also states that credit sales are entered during the occurrence regardless of the actual payment conducted by the customer (Jones 2017). Hence, the board of Beachlife limited could enlist the sales figure of $180,000 in the revenue section under the provision of AASB 118 paragraph 9. On the other hand, the contingency liability section of the company under the provision of AASB 137 paragraph 14 (a) could allow the expenses of $15,000 as warranty expense in their yearly report. These above depicted measures for the accounting issue could eventually allow Beachlife limited to accurately develop the yearly report and portray their real financial situation. All the relevant information is divulged in the missive, which could permit the board of Beachlife limited to solve the accounting issue faced in preparing their yearly report. The standards presented by Magenta and Associates adequately comply with all the AASB standard and is accepted by accounting board. The board could utilise the information for nullifying the accounting issues and present accurate financial position in their annual report. Hence, all the accounting issues listed the email sent on 13 November 2017 is adequately addressed. I also guarantee you that any kind of further details needed by the board of Beachlife limited can be provided by Magenta and Associates. We are looking forward for future communication between our administration. Regards Lisa Magenta Manager Magenta and Associates 718 Geelong Street, Melbourne, VIC 3000 Reference: AASB, C.A.S., 2014. Business Combinations.Disclosure,66, p.77. Aasb.gov.au. (2018). [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB137_07-04_COMPoct10_01-11.pdf [Accessed 16 Jan. 2018]. Aasb.gov.au. (2018). [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_COMPoct10_01-11.pdf [Accessed 16 Jan. 2018]. Adhariani, D., Sciulli, N. and Clift, R., 2017. Quantitative Optimisation Model, Results and Discussion. InFinancial Management and Corporate Governance from the Feminist Ethics of Care Perspective(pp. 209-284). Springer International Publishing. Ball, F., Tyler, J. and Wells, P., 2015. Is audit quality impacted by auditor relationships?.Journal of Contemporary Accounting Economics,11(2), pp.166-181. Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015.Advanced accounting. McGraw Hill. Hudson, M., 2016. No setting off unfair preferences.Australian Restructuring Insolvency Turnaround Association Journal,28(3), p.34. Jones, D., 2017. Tax and accounting income-Worlds apart?.Taxation in Australia,52(1), p.14. Loyeung, A. and Matolcsy, Z., 2015. CFO's accounting talent, compensation and turnover.Accounting Finance,55(4), pp.1105-1134. Richardson, G., Richardson, G., Taylor, G., Taylor, G., Lanis, R. and Lanis, R., 2016. Women on the board of directors and corporate tax aggressiveness in Australia: An empirical analysis.Accounting Research Journal,29(3), pp.313-331.

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