Advanced Financial Accounting

Advanced Financial Accounting

Introduction

The international standards of financial reporting issue of impairment of regulatory standards (IAS) 36, Impairment of Assets, describes how to detect impairment and approach to the reflection of asset impairment accounting and reporting standards. On the principles of the fair value less costs to sell and value in use, as well as the accounting for impairment of certain assets and cash-generating unit means it will be on. For example, the cost of acquisition and operation were greater income from the asset were less than originally budgeted. Submitting a list of features is not exhaustive. Its role is to continue to own list of proposed standards and to identify situations in which the carrying value of assets may be greater than its recoverable amount, it makes sense to refer to the economic substance of impairment.

The consequences of the above situations are to reduce the future cash flows from the assets than originally expected. Thus, the decline in the economy of the country (region), as a rule, characterized by falling purchasing power, which may result in substantially reduced sales volumes and prices of goods (works, services), which the company manufactures using its assets. Damage to property does not allow people to get those revenues from the production and sale of products that would be obtained in the operation undamaged property or create additional costs for the company to restore normal operating parameters of the asset. Selling price of damaged assets will also be less than the sale price of similar intact. Thus, any situation that leads to a decrease in future cash flows from the asset is an indication of potential impairment and requires testing for impairment in accordance with IAS 36. Therefore, all the issues related to Financial Accounting will be discussed in detail.

Discussion

The preparation of consolidated financial statements is of practical interest of accountants and financial professionals in many cases the presence in the operating business of several companies, and sometimes several entities at the level of physical persons. Current standards of accounting and financial reporting often involve a wide departure from the principle of consolidation exclusively legal entities. Thus, the existing accounting standards are actually based on a legal relationship, i.e., legally isolated enterprises, companies, in general, the legal entity of the economic content doing business at both corporate and individuals. Indeed, manipulation of entities simplifies the identification of risks and the benefits of activity as the very formation of legal entities legally provides for the separation of powers, fixing responsibility and rights to legal entities (Watts, 2003, 221).

At the same time, the economic substance of a transaction on business involves, in particular for small and medium businesses, operations at the level of both legal entities and individuals. How can that be? Indeed, the views of beneficiaries extend business "over" the legal boundaries, and apply to the "business" in his understanding, corresponding, for example, the definition of the International Financial Reporting: Business - an integrated set of activities and assets, whose implementation ...