Thursday, December 12, 2019

Country Analysis Of International Financial -Myassignmenthelp.Com

Question: Discuss About The Country Analysis Of International Financial? Answer: Introducation This report has an objective to focus on the assumption and impairment criteria employed in the behalf of M2 Telecommunications Group Limited in order to conduct asset based impairment tests. This report has an intention of assorting the impairment testing processes along with associated subjectivity within the process. For explain these processes, the companys yearly report for the year ended 30th June, 2015 was taken into account for it did not provide the yearly report after the mentioned period (Banker, Basu and Byzalov 2016). The company is renowned as an Australian retailer and wholesaler of offering telecommunication services, insurance, power and gas products. The firm has two business segments that includes the wholesale along with the consumer segment. M2 Telecommunications Group Limited has more than 3000 employees all round New Zealand, Australia and Philippines and is now aligned with Vocus Communications after 5th February 2016 (Bianchi 2017). Moreover, an asset is said to be impaired that has a decreased market value in comparison to its carrying value. The assets those are deemed to be impaired are tangible assets such as plant, property and equipment as well as goodwill that is an intangible asset (Bond, Govendir and Wells 2016). After carrying out adjustments with the impaired asset based carrying amount, loss is mentioned within the firms income statement. While writing off an impairment, the asset can have decreased carrying cost as certain adjustments might be carried out as a part of loss and this can result in asset value decrease (Bryan 2017). Considering the annual report of M2 Telecommunications Group Limited in 2015, the testing of impairment for different asset classes has been carried out. Intangible assets as well as goodwill that is not being amortized rather than the fact that there are tested within the circumstances or events this indicates that the assets that can be impaired along with the fact that financial statements that is recorded within the financial statements within cost subtracted from an impaired accumulated loss (Contractor, Yang and Gaur 2016). Certain assets include property, plant and equipment along with trade receivables that is tested for impairment in a situation where there is an indication regarding an assets carrying amount that is not that recoverable. M2 Telecommunications Group Limited initiated a two-step technique for testing of impairment. The first step is focused on fair value contrasting associated with repotting unit along with carrying value including the goodwill. In a situation where carrying value of operating unit remains high in contrast to the fair value, the second step is associated with testing of impairment test must be conducted in order to make sure impairment loss amount presence (Detzen, Wersborg and Zlch 2015). The second step is linked with implied fair value related with the reporting unit in accounting to the that units carrying amount. In a situation where, implied fair value is decreased in comparison to the carrying amount, charge of impairment charge remained within an amount related with that excess along with that realized loss might not go beyond the assets carrying amount. The company made certain the following impairment costs over the time ended on 30th June 2015: Intangible assets along with goodwill: Over the time, the company elaborated an overall impairment of $71,323,000 ($105,207,000 - $33,884,000), among which $30,033,000 was explained other than software, $33,461,000 remained explained other than consumer contracts $7,829,000 and the record is made against IRU, in case goodwill and brands that is not linked with impairment (Hellman, Andersson, and Frberg 2016). Trade receivables: Over the year 2015, the firm considered recording an impairment loss allowance of $17,487,000 in 2015, in the year 2015 that was recorded to be $18,740,000 in 2014. M2 Telecommunications Group Limited was associated in carrying out some anticipations and suppositions as it was concerned about future. The outcomes from accounting anticipations through definition might be identifiable as per associated actual results. Certain assumptions and anticipations pose likely risks that can result in material misstatements within assets carrying value for the coming fiscal year. This is explained by means of accounts notes in which these judgement kinds are required (Hill and Taylor 2017). Because of regular poor situations and market downturn, analysis regarding the recoverable amount regarding intangible assets and goodwill for the cash generating units is conducted relied on value-in-use calculations. In addition to same, these calculation facilitates in cash flow anticipations use dependent on financial forecast that is developed by the management over the previous five years. In value for use calculations, certain anticipations are carried out: Discount rates Growth rates through implementation of extrapolate cash flows other than the estimated period EBITDA/ Sales margin Based on IAS 36 Impairment of Assets, this has been gathered that it is specific IFRS standard as this requires certain subjective interpretation along with that this might be implemented with respect to the managerial requirements. In addition, it did not facilitate creative accounting restriction. It has been recognized that financial statements of M2 Telecommunications Group Limited that has considerable subjectivity that is associated in case the management time carried out the impairment test process (Kuo and Lee 2017). This is due to the fact that a companys management can be exploited at the discretion through carrying out goodwill impairment test opportunistically. This might be validated by allocation of goodwill to all cash generating units along with computation of recoverable amount while there is a lack of active prices for goodwill that with discretion subject (Watts and Zuo 2016). After a detailed analysis, this has been gathered that certain difficult or confessing aspect related to impairment is associated with the impairment indication. Despite of the fact that indications are based on external as well as internal factors in alignment with the assets impairment, the regularity of conducting such tests for goodwill along with some tangible assets totally base on the management discretion (Linnenluecke et al. 2015). Due to these factors there is high chance that the management might carry out an opportunistic test in case there occurs any change in the value. It has been evident that impairment loss acts as a variation among an assets recoverable amount of certain asset along with an assets carrying amount. The recoverable asset is high among the value of fair asset disposal cost along with value-in-use. Fair value is explained by means of the asset within the active market or sales agreement within which asset trading is conducted or presence of important information in amount disclosure at which the company might consider asset sales (Lubbe, Modack and Watson 2014). On the other hand, the value in use might be deemed as present value of the upcoming cash inflows that is ascertained to be gathered from a CGU or asset based on IAS 36. IFRS 13 accounting standard, fair value is explained by means of the below points: Within active market there is an asset value within the asset trading that is carried out Sales agreement Existence of better information in amount disclosure in which the companies that might result in asset sales Due to the same, fair value is deemed as selling price that is taken into account on the behalf of both the seller and the purchaser through recognizing that all these parties are involved within the free transactions. Several investments attained fair value that is explained on the behalf of the market within which security trading is conducted. In addition, fair value indicates a companys liabilities and assets value in the occasion of financial statements of the subsidiary company that is consolidated with a major company (, 2018). For example, in case of a companys stock that is trading within an exchange, the players within market offers a bid by asking price of that share. In such case, the investors consider selling of stocks to the market leader in a bidding price while acquiring shares from any market player within ask price. Considering same this might be referred that exchange can be a highly reliable method of making sure consideration of shares fair value. More than 50% of the companies employing US GAAP or IFRS re impacted as there are some accounting changes. As per the status, the companies within US GAAP or IFRS have leased commitments and assets around $3.3 million, among which 85% are mentioned within financial position as these are considered as a form of operating leases (Sellhorn and Stier 2017). For compensating the same, all the investors generally encompass the estimation that is inaccurate, incomparable along with inconsistence. Due to this, it is gathered that certain previous accounting standard did not succeed for indicating economic actuality. In account to the previous accounting standards, most of the firms has indicated that more than 85% of leases consideration to the amount within operating leases along with that it never depicted that is explained within the financial situation statement. Even if the operating leases that was not mentioned in the annual report and there is gradual generation of real liabilities. For this reason, while the financial crisis certain important retail companies turned out to be loss as they could not deal with the new economic reality in a prompt manner (Sinclair and Keller 2014). Along with that, the companies have considerable fraction of commitments regarding long term operating leases and their annual reports was being gradually lean. Therefore, the lease liabilities of companies within off balance sheet arrangements has been more than 66 times in comparison to debt values within the statement of balance sheet. Prior system of accounting that considers lease might result in comparability loss (Cheng, Peterson and Sherrill 2017). The aviation sector records most of its leases as a part of operating lease and such record is not maintained within financial position statement. Therefore, an airline company associated with leasing all the airline fleet is not the same as its competitors acquiring all the fleets and the financial obligations in two types of these aviation companies are not the same. This signifies that there is a great lack of level playing field within the aviation companies. With emergence of a n innovative standard, all the leases might be recorded in asset form and such leases might record them as a part of liability. Accordingly, it is anticipated that addressing such issue is possible. Any alterations within the accounting standard is likely to pose an impact on more than half of listed companies and they are deemed to be renowned with every companies. The cause behind this in that certain alterations can result in a lot of controversies long with this might lead in warning impacts in alignment with negative economic impacts along with expenses associated with variations within the system (Chang and Yen 2015). Moreover, certain alterations can have increased impacts of commercial purposes. For instance, variations in banking covenants long with contractual contracts linked with a firm annual report that includes profit targets to arrange payment of bonus to employees or gearing ratio can be required in attaining revisions before emergence of an innovative standard. Conversely, all the business departments require attaining a viewpoint regarding changes Impact that considers accounting information technology, human resource, finance along with investor relations dep artment with asset procurement (Visvanathan 2017). All these factors can lead to popularity. These are the factors that causes negative impact on popularity of new accounting standards. With support to the new accounting standard, it is also gathered that most of the firms are considered to be operating leases as a part of off-balance sheet aspects (Carvalho, Rodrigues and Ferreira 2016). For this reason, the investors along with financial statement users could not attain an increased insight regarding the companys financial condition. This does not facilitate them to contrast leasing of the companys assets the purchasing assets of the firms. Conversely, this innovative standard is anticipated to develop IFRS 16 along with that it is estimated that this might greatly offset the expenses that can lead to highly informed decisions associated with investment. His might be indicated that within lease devoid of purchase decision in better manner as a fraction of the management (Su and Wells 2015). References: Banker, R.D., Basu, S. and Byzalov, D., 2016. Implications of Impairment Decisions and Assets' Cash-Flow Horizons for Conservatism Research.The Accounting Review,92(2), pp.41-67. Bianchi, P., 2017.The economic importance of intangible assets. Routledge. Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136.Accounting Finance,56(1), pp.259-288. Bryan, L.E., 2017. Goodwill and Other Intangible Assets: An Exploratory Study into the Effectiveness of the Accounting Standards Codification (thesis). Carvalho, C., Rodrigues, A.M. and Ferreira, C., 2016. The Recognition of Goodwill and Other Intangible Assets in Business CombinationsThe Portuguese Case.Australian Accounting Review,26(1), pp.4-20. Chang, M.L. and Yen, T.Y., 2015. Does Reversal of Asset Impairment Loss Matter? Evidence from China.International Research Journal of Applied Finance,6(4), pp.197-222. Cheng, Y., Peterson, D. and Sherrill, K., 2017. Admitting mistakes pays: the long term impact of goodwill impairment write-offs on stock prices.Journal of Economics and Finance,41(2), pp.311-329. Contractor, F., Yang, Y. and Gaur, A.S., 2016. Firm-specific intangible assets and subsidiary profitability: The moderating role of distance, ownership strategy and subsidiary experience.Journal of World Business,51(6), pp.950-964. Detzen, D., Wersborg, T.S.G. and Zlch, H., 2015. Bleak Weather for Sun-Shine AG: A Case Study of Impairment of Assets.Issues in Accounting Education,30(2), pp.18-39. Hellman, N., Andersson, P. and Frberg, E., 2016. The impact of IFRS goodwill reporting on financial analysts' equity valuation judgements: some experimental evidence.Accounting Finance,56(1), pp.113-157. Hill, M.S. and Taylor, G.K., 2017. Contract Maturity and Uncapitalized Assets. Kuo, N.T. and Lee, C.F., 2017. Investor legal protection, capitalized development costs, and audit fees: A cross?country analysis.Journal of International Financial Management Accounting. Linnenluecke, M.K., Birt, J., Lyon, J. and Sidhu, B.K., 2015. Planetary boundaries: implications for asset impairment.Accounting Finance,55(4), pp.911-929. Lubbe, I., Modack, G. and Watson, A., 2014. Financial Accounting GAAP Principles.OUP Catalogue., 2018.[online] Available at: [Accessed 9 Jan. 2018]. Sellhorn, T. and Stier, C., 2017. Fair Value Measurement for Long-Lived Operating Assets: Research Evidence. Sinclair, R.N. and Keller, K.L., 2014. A case for brands as assets: Acquired and internally developed.Journal of Brand Management,21(4), pp.286-302. Su, W.H. and Wells, P., 2015. The association of identifiable intangible assets acquired and recognised in business acquisitions with postacquisition firm performance.Accounting Finance,55(4), pp.1171-1199. Visvanathan, G., 2017. Intangible assets on the balance sheet and audit fees.International Journal of Disclosure and Governance,14(3), pp.241-250. Watts, R.L. and Zuo, L., 2016. Understanding practice and institutions: A historical perspective.Accounting Horizons,30(3), pp.409-423.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.