StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Financial Characteristics of Entity - Assignment Example

Cite this document
Summary
The paper "Financial Characteristics of Entity" is a perfect example of a finance and accounting assignment. Universally useful external monetary reports give data about a specific reporting entity. For instance, those reports give data about the entity's monetary assets (ie its benefits), cases to those assets (ie its liabilities and value), and the impacts of exchanges and different occasions and conditions that change an entity's assets…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.1% of users find it useful

Extract of sample "Financial Characteristics of Entity"

Running Head: FINANCIAL ACCOUNTING ASSIGNMENT Financial Accounting Assignment Name of Student Name of Course Course Instructor Date Financial Accounting Assignment Part A Question 1-A Universally useful external monetary reports give data about a specific reporting entity. For instance, those reports give data about the entity's monetary assets (ie its benefits), cases to those assets (ie its liabilities and value), and the impacts of exchanges and different occasions and conditions that change an entity's assets and the cases to them. As it were, it is simply the entity that is the subject of budgetary reporting, not its proprietors or others having an enthusiasm for the entity[PSA16]. Subsequently, a qualification can be drawn between the subject of broadly useful outer monetary reports and the clients of those reports, (for example, speculators and creditors).In its most broad sense, the term reporting entity is utilized to allude to the particular entity that is the subject of a specific arrangement of budgetary reports[IAS08]. A reporting entity is an encompassed range of business action important to existing and potential value speculators, banks and different lenders. It incorporates, yet is not constrained to, business exercises that are organized as legal substances. Cases incorporate a sole proprietorship, enterprise, put stock in, partnership, affiliation and a gathering of substances[AAS16]. Question 1-B Some of the characteristics which define a firm as a reporting entity and whether Large Mart is a reporting entity or not are discussed below[AAS16]: Distinguishing proof of Whether Dependent Users Exist For the reasons for this Statement, the ID of an entity as a reporting entity is connected to the data needs of clients of general reason money related reports. In many examples, it will be promptly obvious whether, in connection to an entity, there exist clients who are reliant on broadly useful money related reports as a reason for making also, assessing asset assignment choices[ASI15]. Separation of administration or management from economic interests The more prominent the spread of possession/participation and the more noteworthy the degree of the partition amongst administration and proprietors/individuals or, on the other hand others with an economic enthusiasm for the entity, the more probable it is that there will exist clients subject to universally useful monetary reports as a reason for making and assessing asset designation choices[ASI15]. Economic or political significance/impact Economic or political significance/impact alludes to the capacity of an entity to have a huge effect on the welfare of outside gatherings. The more prominent the economic or political significance of an entity, the more probable it is that there will exist clients subject to general reason money related reports as a reason for making and assessing asset assignment choices[PSA16]. Reporting entities recognized on the premise of this component are probably going to incorporate associations which appreciate prevailing positions in business sectors and those which are worried with adjusting the interests of huge groups, for instance, manager/representative affiliations and open part entities which have administrative forces. Financial Characteristics of Entity Such financial features that ought to be considered include the size (for instance, estimation of offers or resources, or number of workers or clients) or obligation of an entity. On account of non-business entities specifically, the measure of assets gave or designated by governments or different gatherings to the exercises led by the entities ought to be considered. The bigger the size or the more prominent the obligation or assets designated, the more probable it is that there will exist clients subject to universally useful money related reports as a reason for settling on and assessing asset allotment choices[AAS16]. Question 2-A The special requirements that the CFO of Large Mart should be aware of when accounting for the transactions and events being a reporting entity are listed below: The limit of the reporting entity ought to be controlled by the extent of its control. For this reason, first direct control and, furthermore, coordinate in addition to aberrant control should be taken into account when recording transactions[KPM15]. Budgetary records must be independently kept up for each economic entity. Economic entities incorporate organizations, governments, school areas, houses of worship, and other social associations. In spite of the fact that bookkeeping data from a wide range of entities might be joined for money related reporting purposes, each economic event must be related with and recorded by a particular entity[ASI15]. Furthermore, business records must exclude the individual resources or liabilities of the proprietors. An economic entity's bookkeeping records should incorporate just quantifiable transactions. Certain economic events that influence an organization, for example, employing another CEO or presenting another item, can't be effortlessly measured in money related units and, subsequently, don't show up in the organization's bookkeeping records[AAS16]. The expenses of working together are recorded in an indistinguishable period from the income they help to create. Resources are recorded at cost, which levels with the esteem traded at the season of their obtaining[KPM15]. Budgetary and financial statements are set up under the supposition that the organization will stay in business uncertainly. Accountants must utilize their judgment to record transactions that require estimation. The quantity of years that hardware will stay beneficial and the part of records receivable that will never be paid are cases of things that require estimation[IAS08]. Accountants take after the materiality principle, which expresses that the necessities of any bookkeeping principle might be overlooked when there is no impact on the clients of monetary data[KPM15]. Question 2-B If Large Mart is characterized as a reporting entity, then the company would be more limited and restricted in its accounting procedures. For instance, the managers would have to record certain transactions by estimating the amounts and thus management will have to make use of their judgment. The entity would then have to conduct audit to verify its financial statements and enhance the credibility of its reporting process[IAS16]. Secondly, certain rules such as recording as the assets at historical cost can create problems for the management. For Example, recording an asset at cost and then failing to account for the change in the price level of the assets can distort the information provided by the financial statements of the entity[AAS16]. Therefore, it is evident that being a reporting entity, Large Mart would be highly restricted and limited in its accounting procedures. Part B 1). The depreciation of the microscope and high performance computer and the journal entries would be as follows: Microscope: 150000/6 *(1/12) = $ 2083.3 Microscope Depreciation Expense – 2083.3 Debit Accumulated Depreciation – 2093.3 Credit Computer: 50000/2 *(1/12) = $ 6250 Computer Depreciation Expense – 6250 Debit Accumulated Depreciation – 6250 Credit 2). The net book value of microscope at 1 June 201x would be: 150000-2083.3 = $ 147916 Microscope Cost (147916.7 + 32083.3 – 2083.3) 177916.7 Debit Accumulated Depreciation 2083.3 Debit Revaluation Reserve 180000 Credit 3). The net book value of computer at 1 June 201x would be: 50000-6250 = $ 147916 Revaluation Reserve 20000 Debit Computer Cost (43750 -23750 – 6250) 13750 Credit Accumulated Depreciation 6250 Credit References PSA16: , (PSASB, 2016), IAS08: , (IASB, 2008), AAS16: , (AASB, 2016), ASI15: , (ASIC, 2015), KPM15: , (KPMG, 2015), IAS16: , (IASPlus, 2016), Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Financial Characteristics of Entity Assignment Example | Topics and Well Written Essays - 1000 words, n.d.)
Financial Characteristics of Entity Assignment Example | Topics and Well Written Essays - 1000 words. https://studentshare.org/finance-accounting/2075518-intermediate-financial-accounting
(Financial Characteristics of Entity Assignment Example | Topics and Well Written Essays - 1000 Words)
Financial Characteristics of Entity Assignment Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/finance-accounting/2075518-intermediate-financial-accounting.
“Financial Characteristics of Entity Assignment Example | Topics and Well Written Essays - 1000 Words”. https://studentshare.org/finance-accounting/2075518-intermediate-financial-accounting.
  • Cited: 0 times

CHECK THESE SAMPLES OF Financial Characteristics of Entity

Why Are Business Networks So Important in the Chinese Economy

2003) The development of such an entity in China may be attributed to the familial ties of Chinese which are very close in nature and establishing connections is nothing new amongst blood relatives (Krug, 2003).... Instead of only assessing the financial aspect of the business, involving the firm into the society can also be beneficial especially in new businesses where penetration of the market is being conducted and competing with the already established businesses in terms of finances is very difficult....
7 Pages (1750 words) Case Study

Australian Accounting Standards Board Framework

These users are considered stakeholders because their reliance to the reported financial information by the business entity will have a great impact to the decision they will be making.... Decision making is a critical process to be made by the entity and its stakeholders because this process can either make or break the entire chain as a whole.... The financial reports made by the reporting entity should have the attributes of understandability, reliability, relevance and comparability....
10 Pages (2500 words) Essay

Financial Management for Merseyside Fire and Rescue Authority

characteristics of the FRS 3.... nbsp;Financial management seeks to provide an entity's executive authority with raw data on the entity's financial position as well as its cash flows and financial risks.... nbsp;Financial management seeks to provide an entity's executive authority with raw data on the entity's financial position as well as its cash flows and financial risks.... Towards effecting sufficient financial management techniques, it is important to identify the basic operations of an entity and the distinctive risks that the entity faces....
10 Pages (2500 words) Case Study

Requirement for Special Purpose Vehicle Project Financing of a Large Complex Infrastructure Project

Special Purpose Vehicle (SPV) is a legal entity established to facilitate a transaction (Sarkar and Singh, 2010).... SPV is also referred to as a bankruptcy-remote entity whose activities are limited to the acquisition and financing of specific assets.... Special Purpose Vehicle (SPV) is a legal entity established to facilitate a transaction (Sarkar and Singh, 2010).... SPV is also referred to as a bankruptcy-remote entity whose activities are limited to the acquisition and financing of specific assets (Srivastava and Kumar, 2010)....
9 Pages (2250 words) Coursework

Accounting Standards and Theory

These elements are the important building blocks that form the financial statements and are represented in words and numbers and stand for certain entity resources and claims to those resources.... According to the FASB concepts statements, assets are defined as probable future economic benefits resulting from or controlled by a particular entity as a result of past transactions or events.... Assets are also able to obtain control of transactions or other events giving rise to the rights of the entity and benefits that have resulted....
5 Pages (1250 words) Assignment

AASB 13 Fair Value Measurements

… IntroductionInternational conceptual framework treats reliability and relevance as the main characteristics of accounting information where useful decisions are made from.... The joint project by Financial Accounting Standards boards (FASB) and IntroductionInternational conceptual framework treats reliability and relevance as the main characteristics of accounting information where useful decisions are made from.... It starts with objectives that identify the accounting aims and purpose, then the qualitative characteristics that make accounting inflation useful, and finally, the constraints of financial reporting....
8 Pages (2000 words) Essay

Leases and Liabilities

In accordance with the authors, the following characteristics can be used to evaluate if a lease is a financial or operating lease.... (2010), the financial lease is a lease in which the owner (lessor) permits the user (lessee) to pay rent and use an asset for a greater period of its economic life.... Furthermore, in the financial lease, the lessee is entitled to both depreciation and interest since the lease is considered as a loan, while in operating lease, payment of lease is considered as an expense therefore claims on depreciation cannot be made....
6 Pages (1500 words) Assignment

International Public Sector Accounting Standards Board

According to IPSAB, income refers to the savings and consumption opportunity that is gained by an entity over a given period of time, and it is normally expressed in monetary terms.... The board fully recognises the important benefits of achieving comparable and consistent financial information in various sectors of the economy and it is the belief of IPSASB that the IPSASs play an instrumental role in the provision of the right conditions for the realisation of the benefits....
9 Pages (2250 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us