Accounting Basis Of Accounting - 2849 Words

Crystal Ziemer Professor Valenzuela ACCT 465 CASE 2 A. Basis of Accounting Both require an accrual accounting method and use historical cost basis for their accounting but IFRS allows revaluation to fair value in certain cases which is prohibited in GAAP. There was sufficient information provided to determine that conversion is required. He will have to figure out which accounting principles to use that are in accordance with IFRS. B. Cash and Cash Equivalents Under IFRS bank overdrafts can be included in cash and cash equivalents, this is not permitted under GAAP. Chris would have to find out if the bank overdrafts are ‘’repayable on demand that form an integral part of an entity’s cash management.’’ If they do then they would be under†¦show more content†¦The amount of any reversal of any write-down of inventories, rising from an increase in net realizable value, shall be recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.’’ Also required for IAS2.36 would be the disclosure of; †¢ carrying amount of any inventories carried at fair value less costs to sell †¢ amount of any write-down of inventories recognized as an expense in the period †¢ amount of any reversal of a write-down to NRV and the circumstances that led to such reversal †¢ carrying amount of inventories pledged as security for liabilities †¢ cost of inventories recognized as expense (cost of goods sold) D. Property, Plant, and Equipment The company is currently using a cost method for property plant and equipment which can be moved over to IFRS without needing any conversion, or they could change to the revaluation model. Since revaluation is allowed under IFRS the company could choose to use this model. However, Chris would need to find this value at the date of revaluation less subsequent depreciation and impairment, provided that fair value can be measured reliably. He would also need toShow MoreRelatedAccounting And Accrual Basis Of Accounting Essay983 Words   |  4 Pages1) Business owners are given a choice between using the cash basis of accounting and the accrual basis of accounting. a) Which of the two methods do you believe a business would choose? Depends on what kind of benefit the business owners are looking for. b) Why? If owners are looking for more accurate revenue and expense, accrual basis should be applied. However, if the owner is looking for less work by cutting down the time to make adjusting entries and want to know more accurate viewRead MoreAccrual Basis Of Accounting Over Cash Basis1534 Words   |  7 PagesThere has been a significant debate focusing on costs and benefits of adopting accrual basis of accounting over cash basis of accounting. This paper illustrates the concepts of accrual basis of accounting, highlights the benefits of accrual basis of accounting posed by its advocates and also briefly discusses the disadvantages of adopting accrual basis accounting. The paper also briefly discusses the recent accounting scandal of Tesco Plc. which showed that profits of the company were overestimated byRead MoreAccrual Basis Accounting Essay example786 Words   |  4 PagesAccrual Basis Accounting Accrual accounting is a system of accounting that is based on the accrual principal accounting. This principal requires revenue to be recognized and recorded when earned. Expenses are to be recorded when they occur. The accrual basis of accounting is used by most companies. Very small businesses and individuals use cash basis accounting. The major distinction between the accrual and the cash basis of accounting is when revenue and expenses are recognized. When theRead MoreAccounting and Finance: Essay on Accrual Basis1097 Words   |  5 PagesAC300:Financial Accounting I - Compulsory essay due 15th November Discuss the advantages and disadvantages of financial statements prepared on an accrual basis The financial statement is a financial document used to indicate the financial position of a business at a particular moment in time. A business’s financial position can be analysed into three main areas: Profitability, liquidity and stewardships. The statement is prepared at the end of each financial year using accounting basis. 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This paper explores cash basis, accrual, and hybridRead MoreInternational Accounting Standards Board s Preferred Measurement Basis For Financial Reporting1933 Words   |  8 PagesIntroduction International Accounting Standards Committee (IASC, 2003) define an asset as a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. In a business model assets act as inputs, either directly (plant, machinery, inventory) or indirectly (goodwill, patents, investment property) to provide products and services to the customer. As assets are expected to generate future benefits, the income generated by theseRead MoreAccounting Is The Basis Of Identifying, Collecting And Analysing Financial Funds Directly Within The Management1800 Words   |  8 Pagesexplaining the terms and the purpose of ‘accounting’ and ‘finance’. As well as this it aims to cover the main aspects of what should guide those who work in these areas. What is accounting? Accounting is the recording of financial transactions plus storing, sorting, retrieving, summarizing, and presenting the information in various reports and analyses. (Averkamp, 2012) From the research that I have conducted I have come to the idea that accounting is the basis of identifying, collecting and analysing