Presentation of Financial Statements - Accounting Standard in Business Practices - Essay Writing Assignment Help

Assignment Task :

Objective and Content:  

The purpose of this essay is to provide an understanding of concepts and principles in business  accounting. You also need to support your explanation based on the Australian Conceptual  Framework for the presentation of financial statements or other relevant documents such as  GAAP (General Accepted Accounting Principles). Furthermore, you should be able to identify  the implementation of accounting standard in business practices.  

You are finalising the 2020 annual report of Forester Ltd, a company involved in the mining,  refining and retail distribution of petroleum products. As part of financial review, you are  aware of the following events that have arisen during the financial year ending on 30 June  2020.  

On 30 June 2020 an oil tanker owned by the company sank in the rough seas off the coast of  Western Australia. The tanker was fully laden and has caused an oil spill stretching for 160 km  along the coastline of Western Australia. The tanker was included in the 2019 financial  statements at a carrying amount of $25 million. The oil that the tanker was transporting had  a carrying amount of $4.5 million.  

An initial evaluation of the cost of the clean-up operation is estimated at $16 million. There is  also a strong possibility that the local oyster, lobster farmers and fishery industry will be  impacted. The farmers will take an action against the company for the loss of oysters and  lobsters, fishes and related damage to the local farms. The risk management team of the  company has assessed that the possible costs of litigation could reach $59 million.  

You are required to review the information given above and comment on any reporting  necessary to be included in the annual report.   

In this essay, you should answer the following questions:  

1) Provide your analysis regarding the recording of the tanker and the oil in the 2020  annual report. Explain. 

2) Assume the local council or the government didn’t release any environmental  regulations or guidelines, discuss whether/how the company should include the clean up costs and related litigation in the 2020 annual report. 

3) If there are environmental legislations in place, whether your answers for part 2) will  be different? 

4) Choose a company listed on the Australian Stock Exchange (ASX), assess whether the  chosen company includes environmental issues in the annual report? In your opinion,  from the perspective of the investors and securities market, discuss how the investors  or securities markets will react to the disclosure of such information.

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