Issue In Financial Reporting Essay Example | Topics and Well Written Essays - 1500 words

Issue In Financial Reporting - Essay Example In accordance to the general purpose of financial reporting, financial reports are used to provide the users with information about the reporting entity. The report that will be submitted by the Management Committee of RVCC will serve as a tool for the users for their evaluation since they are supported, given grants, and funded by some other entities (like that of Commonwealth Government and Queensland State Government). The financial reports well serve also transparencies for everybody to inform where all the money goes. If RVCCC will be able to submit the financial reports to their users, it will give the users ideas if the funds allocation or resources allocation they gave are efficient. In other words, this will gain the trust as well for RVCCC from their supporters and funding entity (Review of Business, 2005). The reports will also monitor the cash flows and will also serve as bases to their expenses. It is also well stated in the Definition of Reporting Entity (2001), that all they are entities like them are required to submit financial reports especially to public sectors that helps them, like that of the commonwealth Government and Queensland State Government. ... 2: For each of the following independent cases, discuss whether you believe the items mentioned would meet the definition and recognition criteria for the various elements as mentioned in the 'Framework for the Preparation and Presentation of Financial Statements (ie the AASB Framework). (Ensure that you provide reasons to support your answers in each case and state clearly any assumptions you have made in preparing your answers.): (a) Tate Retailers Ltd operates a chain of retail stores that specialize in the sale of rugby league products. Due to an economy-wide downturn, the company has decided to reduce staffing levels by offering voluntary redundancy packages to 200 of its employees. After agreement was reached with the unions, letters were sent to all employees shortly before the end of the reporting period inviting applications for the package. A response was required within 30 days, which was after the end of the reporting period. The company's board of directors estimates that the redundancies will cost the company $2 million. The financial controller of the company, Bob Johnson, is considering whether to record a provision for redundancies to account for the future redundancy payments to staff. Would this account satisfy the liability definition criteria in the AASB Framework Would this transaction meet the recognition criteria for liabilities according to the AASB Framework (Normally you would not con sider the recognition criteria if the definition for liabilities was not met. However, for the purposes of this assignment you should address the recognition criteria regardless of whether or not you determine that the definition criteria have been satisfied.) - This account shall satisfy the liability definition criteria in the ASBB Framework. Their employees