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1.27 How do accounting exam bank standards assist large companies?

The Corporations Act stipulates that large companies must apply accounting standards in preparing their financial reports. The accounting standards assist with consistency in financial reporting and ensuring the users of financial reports (e.g. investors, consumers, employees, regulatory bodies) will have the necessary relevant and faithfully representative information to assist them in their decision making. Without accounting standards, there would be no comparability in financial accounting – firms would produce an income statement with differing amounts of information. Some firms would report large number of intangible expenditure and others would report minimal amounts or none at all. A lack of consistency would make it impossible to compare one firm against another.

1.28 What is an IFRS exam bank and how does it impact on standard setting in Australia?

Australia adopted Australian equivalents to International Financial Reporting Standards, (IFRS), from 1 January 2005. The adoption of IFRS helps ensure compliance with internationally agreed principles, standards and codes of best practice. The adoption of IFRS also reduces the amount of standard setting in Australia by the Australian Accounting Standards Board, (AASB), which allows the AASB to focus on providing expert advice on some of the International exam bank Accounting Standards Board future projects and interpreting issues arising out of the adoption of IFRS.

1.29 What other accounting standard setters exist in the rest of the world?

Other standard setters include: the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB), Singapore Accounting Standards Council (SASC), and the Accounting Standards Board of Japan (ASBJ).

1.30   Australian Accounting Standards

There are at least 50 Australian Accounting Standards question bank download. Go to the AASB website at www.aasb.gov.au and choose one. (Hint: Go to ‘Quick Links’ and select ‘Table of Standards’.) One of the recent accounting standards is the standard on fair value measurement. Briefly describe the meaning of ‘fair value’ accounting. What is the purpose of this standard?

AASB 13 Fair Value is a recent accounting standard issued by the AASB. Fair value is a market-based measurement. For some assets and liabilities, observable market transactions or market information might be available. The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions.

The purpose of the standard is to define fair value and set out a single standard for measuring fair value and the required disclosures in the notes arising out of applying fair values to assets and liabilities for question bank download.

1.31   AASB and standard setting

The AASB, as part of its work program, offers comment on documents such as proposed agenda decisions, exposure drafts, draft exposure drafts, invitations to comment and discussion papers. Go to the ‘Work in progress page of the AASB website at www.aasb.com.au and choose ‘Pending’. One of the topics listed relates to the exposure draft – ED 242 Leases. Summarise the main changes to this proposed standard.

The main changes of ED 242 Leases relate to the classification of operating and question bank download finance leases. The following table summarises the current situation and the proposed changes.

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