Financialisation and Conceptual Framework System

Question: Discuss about the Financialisation and Conceptual Framework System. Answer: Introduction: The report has a basis of determining the application of the standards under AASB i.e. in respect to the standards AASB 101, 116, 136 and 138 for the two companies provided in the requirement. The companies selected are National Australian Bank and Telstra. The National Australian bank (NAB) limited stands in the fourth position among the largest financial institutions of Australia, which has a nature of being limited by shares and having incorporation and abode in Australia (Nab.com.au, 2017). On the Australian securities exchange, the shares of national Australian bank have a public trading. The other company Telstra is one among the most leading telecommunication sectors and industry. It has also a leading position in the Technology Company (Telstra.com.au, 2017). It comes under the international rising businesses and offers a sense of connectivity towards its customers and the country Australia. Application of AASB 101: The AASB 101 considers the foundation of the preparation and presentation of general purpose of the financial statements for the comparison with the monetary reports of the company. The comparison is between the previous periods and the economic reports of other corporation. The financial reports on the general purpose for the National Australian bank have a preparation as per the requirements present under the sections of the Corporation act 2001. It is also prepared as per the conditions and requisites of the accounting standards that are issued under the AASB standards. On the other hand, Telstra the telecommunication leader follows the obligations laid down under the AASB standards. The standards have a compliance with the Corporation Act 2001. Telstra also has a compliance with the standards related to the international financial reporting alongside with the periodicals and publications available under the IASB. In comparison to the preparation of the financial reports of Telstra, the reports and the statements of NAB are arranged based on the concept of the historical cost principle and it has a customization by the use of the fair value measurement as authorized under the integral and the applicable standards of accounting. Even though, the financial information of Telstra is also prepared under the method and standards of historical cost nevertheless; there are certain class of financial statements, which is recognized under the system of fair value (Mission et al., 2014). Telstra also utilises the terms in determination of the income statement for the EBIDTA for the reflection of their profit before the consideration of the impact of the net cost of finance, depreciation, income taxes and amortisation. On the other hand, NAB takes up the recognition of the gains and losses from the foreign exchange arising out of their agreement from the dealings at the end of the book-keeping year is translated at the end of year, exchange rates in the come statements. The standard considers the property, plant and equipment. In case of NAB the estimation and record is carried on at cost after the deduction of the collected or accumulation of the depreciation and types of the impairment losses. The companys property, plant and equipment are depreciated using the method of straight line depreciation that is based on the useful lives of the assets. The land and building are frequently calculated under the fair value method and the revaluation procedure has a basis on the three year cycle rolling stages to demonstrate their accurate principles. The land and buildings valuations are carried out on the basis of the open market signifying the price, which would be arriving at the time of the sale of the asset. The recently attained possessions such as equipments are valued at the given cost, which is equal to the fair value (Laing Perrin, 2014). In comparison with NAB, the company Telstra capitalizes the property plant and equipment under the financial lease and the same is performed during the origination of the term of the lease at a value lower than the asset. On the contrary, the property plant and equipment that have been capitalised are depreciated. The depreciation is carried out on the basis of the straight-line method that takes into consideration the useful life of the assets. Telstra does the reporting of the property plant and equipment in its income or revenue statement on top of the terms of lease of shorter periods or the predictable useful life of the possessions (Zhang Andrew, 2014). The standard has the purpose of setting down the treatment of the accounting that considers the assets of an intangible nature. The standard provides treatment that is particularly not dealt with in any other standards. The intangible assets of the National Australia Bank takes account of the goodwill that takes place throughout the period of acquisition of an organization and replicates the amount of surplus. The same consist of the cumulative actual value of the purchase considerations along with the amount of some non-controlling interest of a corporation in excess of the actual worth of the recognisable and realizable value of the net assets throughout the date of the acquisition of the assets. The Intangible assets such as the software of the computers and other intangible assets have identification at the given cost and after the deduction of the amortization and losses on impairment (Russell, 2015). As compared with NAB, the administration and management of Telstra has an obligation of determination of the appropriate fair value of intangible assets obtained during the processes of the business. The above considers the evaluation of the period and figure of future cash flow produced on the usage of the assets. The intangible assets of Telstra have an estimation that is based on the current anticipation by the consideration of the rate of expansion costs of operating and expected useful life of the property. The intangible assets like the inventories of Telstra have a valuation at the lower cost and on the values that have a net realisation (Macve, 2015). The principle of the impairment of asset is the unfolding of the procedure that has an application on the entity to obtain a surety that the assets are carried on, not in any furtherance to the amount recoverable. At the National Australian Bank, the assets that have an indefinite useful life cannot be subjected to the amortisation as they have an annual impairment test, each time a signal for impairment is present. At NAB, the assets subjected to amortisation, has to be reviewed for impairment every time there is an established situation that there might be no recovery of the losses incurred. The losses are recognized for the amount where the recoverable amount is surpassed by the carrying amount of an asset (Bond et al., 2015). On the other hand, Telstra for the rationale of impairment takes into recognition the smallest asset group that constructs the cash inflows from the assets forming part of the other class of the assets. The assessment of the impairment symbolize the recoverable sum of an asset that is elevated than the fair value after the deduction of the disposal costs next to its value in use (Weil et al., 2013). The standard of impairment for the company NAB reflects that the carrying amount may not have a recovery in the near future. Telstra has a consideration that the impairment must be done for the smallest amount of assets in the group. Therefore, the report has relatively analysed a variety of accounting standards in comparison to the National Australian Bank and Telstra. The International financial reporting standard that is issued by the international accounting standard board is measured as one of the utmost value accounting standards. It helps in defending the shareholders and investors by making certain an effective and proficient formation of the capital in the contemporary world of the global business. It is observed as incentive to the international inventors in view of the fact that it provides them the conveniences of judging the financial figures of businesses. The same is irrespective of their location place and position (Deegan, 2013). The International financial reporting standard is a set of standards on accounting that is based on the main beliefs in a sense that there cannot be an establishment of the broader rules along with the dictation of the particular dealing. Meeting the IFRS has internationally led to the attainment of energy, as the capital market has turned to be globalised in nature. The harmonising of the accounting standards worldwide will lead to lucidity in the book-keeping information for administrators. It will also smooth the progress of enhanced running of the business operations globally (Beattie, 2014). Critical analysis of having a single set of global accounting standards: With the augmentation of the international financial reporting standards, a great number of discussions have taken place. The discussions are on the future junction of the generally accepted accounting principles and the international IFRS standards. It also lays down an emphasis on the effects of the standards on the big multinational organisations. Having knowledge about containing a suitable single set of global accounting standards for the smaller businesses can assist in improved thoughtfulness of the proposed alteration that affects the evaluation and reporting of the financial data of possible or prospective investments by the shareholders (Wang, 2014). One of the most important benefits of encompassing a single set of the international accounting standards is the enhancement and perfection in the comparison of the businesses positioned in varied countries. Currently, the standards of accounting between the countries have large differences and variations. Previous to making a contrast in the prospective investments, the shareholders and the investors must get collectively both the organisations in the direction of an identical basis of the accounting. The complications are the same for the creditors, while measuring the credit worthiness of the company (Carey et al., 2014). The variations in the accounting standard may be a sign of the two corporations appearing in an entirely different way, even though they have a related monetary nature. It is suitable for the adoption of a single set of accounting standards that may put corporations on an equivalent situation as the same enables both the small and large business owners to measure the worldwide substitutes for doing an investment and management of currency. At present, numerous trade owners do not control the essential possessions to powerfully quantify and evaluate the global and local alternatives of an investment. If the financial information were additionally correspondent subsequently it would make possible the possessors to include more of such information of associations in domicile (Brown et al., 2014). The shifting underneath the single set of international financial standards of accounting will assist towards the easing out the obstruction to the international spreading out for the businesses. In cases when the corporations desire to shift overseas in the modern age of business, it is essential for the corporation to believe the worldwide cost of fulfilment and compliance. The above situation can lead in the acceptance and implementation of completely a latest set of accounting accounts and records so as to convene to the governmental requirements in the new country (Ecker et al., 2016). In a small amount of cases the same may approximately double, the cost of accounting for the corporations. Even the superior rewards for shifting internationally for a number of small businesses may be dwarfed by the enormous expansion costs and expenditures. The study and the observation upon the point of view of policymaking, changing to a single set of international accounting standards assists in the harmonisation of the decision-making process. At the moment, the accounting standards are situated and positioned inside the structure or framework of each country under each body that has a relation to the setting of the standards, concurrently by the universal group. Implementation of a single set of standard will facilitate in the elimination and the disagreement among the nations that have a requirement to reimburse the fees of reporting that goes into the financial support of these forms of standard setting procedure. On the other case, the expenses may not generate an impact on the larger organisations of businesses (Albu et al., 2014). On the other hand, they have a tendency to have a huge impact and force on the smaller businesses. The Movement under a single set of the standards or towards a fundamental authoritative body can hel p in the reduction of these costs drastically. Conceptual framework: The theoretical or conceptual structure is looked upon as latest conception possibly numerous setters of the accounting standard have conventional purpose devoid of having in place a conceptual structure. As a consequence, the standards of accounting frequently became disorganized in character and was chiefly accountable for concerns occurring at any day that had a reactive effect rather than proactive. Inadequate recognized conceptual structures also widen the danger of the inconsistency in the standards with one another and there is barely any general purpose of organizing the financial statements. A declaration enclosing the purpose of the financial statement considers the framework certificate that can help in the increment of the toughness of the criterion setting a course of action by making certain dependability and supporting the development of probable standards (Weil et al., 2013). The conceptual structure can assist users in accepting and interpreting the information that is covered within the financial declarations. The conceptual structure helps the user in improved interpreting of the principles based on the foundation of which they are arranged. Every countrywide has a decisive factor unit for setting up have their individual set of conceptual structure that offers the fundamentals on which the accounting principles are based on. As estimated by Macve, (2015), synchronization of the conceptual frameworks must result in the formation the major fear in improving by producing a set of generally globally accepted standards. On hypothetical basis, the conceptual frame must force the progression of standards of accounting. Basically, in practical terms, the mutual, economic and political factors regularly act as a fundamental role and helps in manipulating the track offered by the standards. The prerequisite of capital markets, supervisors and the responses of public to the standards of accounting will carry on its pressure on the process of setting up the standards. Conclusion: From the discussion in the report above and the arguments presented above, the study concludes that the implementation of a single set of standard and conceptual structure is suitable and is evidently advantageous. It assists in portraying a straightforward assessment of the financial or economic reports that leads to an international financial coordination, effectiveness in the structure of cost and the reduction of expenditure. Encompassing a single set of accounting standard makes available accessibility to the resources with enhanced listing of transactions from across the borders through improved chances for investment. A single set of the generally accepted global financial standards will assist in encouraging enhanced clarity to re-examine the widespread rules for better terms of borrowing with admittance to international capital markets. The single set of standards and framework aids in the elimination of the requirement for reconciliation of data provided under the nationwid e standard of different categories. Therefore, the knowledge recommends execution of single set of global accounting standards as well as conceptual framework for companies to take advantage of the globalization effects. Reference list: Albu, C. N., Albu, N., Alexander, D. (2014). When global accounting standards meet the local contextInsights from an emerging economy.Critical Perspectives on Accounting,25(6), 489-510. Beattie, V. 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