Accounting Treatment Economic Business Benefits

Question: Describe about the Accounting Treatment for Economic Business Benefits. Answer: 1) The liability and its definition are helpful for deciding the accounting treatment of the given situation. As per the conceptual framework, a liability is the current obligation of an entity, which has arises from the past events. The settlement of a liability, which has expected from the result to an outflow from the entity of resources that incorporate the economic benefits. In this case, the pedestrian has the past event and injury that fallen. The current obligations had based on the chances of a payment. Thus, the suitable accounting includes recognition of the liability for the payment. The recognition of an expense had also done. The fall in expense in the economic benefit during an accounting period in the form of assets depletion as well as the outflows or incurrence of liability. At that time, in pedestrian time the expenses arise and had injured due to the risen in liability (Course Hero Inc, 2016). Guarantor for an employees loan The definition of liability is the current obligation, legal obligation, and guarantor contract. Past events that sign the contract of the guarantor and settlement regarding the outflow of the economic benefits and the payment of the guarantee. The chances of fails recognition criterion, as the Queensland are required to pay on guarantee. Thus, the discloser of a note for the guarantee has warranted. Employee is default on his loan The definition of a liability as per mentioned above are required. The requirements of an recognized criteria are meet in order for the chances of the outflow of an economic benefits and the amount of settlement are measured reliably and at last the liability are recognized. In addition, it requires meeting the definition of an expense and the criteria of recognition (Course Hero Inc, 2016). Receipt of 500 shares in Queensland, trading at $2 each, as a gift from a client. The shares receipt satisfied the definition of assets Shows the future sales or dividend stream Control by company and provide benefits by selling or received a dividends. Past events. They also satisfied the criteria for recognizing the assets i.e. the chances of the sales and dividend stream; the value of a share that can measure reliably. The shares also satisfied the definition of an income and criteria for recognition. C) Panoramic view of caf It does not satisfy the definition as the company is not able to control the unexpected flow from the view and the company cannot neglect the regulation by others to the view. The criteria for the recognition are irrelevant because there are no assets for the recognition (Course Hero Inc, 2016). 2) The board should not accept the proposal of the director. As the company adopt the revaluation model regarding measuring the machinery. In revaluation model, it determines the market value of fixed assets. In case of revaluation of fixed assets, the value of assets has recorded for the adjustments to the market value. The past value of an assets, which has recorded in the books has not fixed, as there is a fluctuation in the market value of an assets. Sometimes, the market value become high or low. For the establishment of most proper accounting information for the value of assets, the revaluation has done. The revaluation of the assets has done as per the fair value and from that fair value any depreciation and accumulated impairment losses. In revaluation model, the machinery or any fixed assets carried out their amount, which has revalued and that provides the fair value of an asset. The requirement of revaluation has made along with the proper regularity for ensuring that the carried amount provides the fair value for the measurement. The speed in the revaluation has based on the changes in the fair value of assets. In case of the difference between the value of revalued assets and carried value, then it is required other revaluation (Accounting Explained, 2013). 3) It will account for the AASB 138 by satisfying the following condition: The expenditure of an item of intangible has recognized by an expense at the time of incurred only when: The part, which has formed on the cost of an intangible asset and that satisfied the criteria of recognition. The item, which has acquired from the combination of business and does not, recognized as the intangibles assets. In this case, at the date of acquisition, it makes the part for the amount recognized as goodwill. In some cases, the expenditure that incurs in order to provide the benefits of future economic to the company, but there is no acquisition of any intangibles assets or other assets and no creation for the recognition. In case of supply of goods, the company recognized that expenditure as an expense when there is a right for the access of those goods. In case for supplying the services, the company should recognized that expenditure, when the services had received by the company. The company must have the rights for the goods when they own the goods. Likely, the company has also the right for access goods, which has constructed by the supplier as per the terms of the contract of a supply and the company can make demand for their delivery of payment for return. Services receive in case of a performance of supplier as per the contract for delivering the services to the company instead the company uses them for delivering the other services. The recognition of prepayment has done by the company as an asset in case of the payments for products has created in advance that the company will get the right to access those goods. Likewise, the company does not include the prepayment assets for recognition in case of the payment of an asset has made in advance for receiving the other services. The expenditure, which has incurred on the intangibles assets that has recognized at the starting period as an expense but would not recognized as a part of a cost of an intangible assets at the later period (AASB 138, 2009). 4) The bird Ltd should recognized the legal damages as a liability as per the criteria of AASB accounting standard. Firstly, the company must know that the definition of a liability as per the AASB Accounting Standard. Liabilities is the sacrifices regarding the future economic benefit, which the company is currently obliged for making the other entity, which is the resultant from the past transactions or any other events. Essential characteristics of liabilities The appearance of a liability at law gives the clear view that indicates the appearance of the liability for the purpose of the financial reporting. The legal liabilities, which are suitable for the legal liability, are restricted for the definition of a liability. The liabilities definition recognized the important characteristics of liabilities but does not fulfill the condition as per the qualification of recognition. The important characteristics of a liability are present in the obligation as a responsibility or duty of the company for acting or performing in a specific way. The obligation implied about the involvement of different unique parties, which is the company and the external party of the company. However, the same party cannot be both receipt as well as the party for which the duty has performed. It is not compulsory for recognizing the party for owing the obligation for the purpose of the existence of current obligation. The current obligation refers to the transactions or any event related to the past, which arises obligation and are not yet satisfied. The party that are refers to the current obligations are owned in a different way from the party, which is going to receive goods and services for satisfying the obligations. Criteria for the recognition of liability The recognition of a liability has only done in the statement of financial position when: There is the chances that the sacrifice regarding the future economic benefits are required; and The measurement regarding the amount of a liability had done reliably (SAC 4, n.d). References Course Hero Inc.(2016). The panoramic view of the coast from your cafe. Retrieved on 8 octuber 2016 from https://www.coursehero.com/file/p1rjbfp/d-The-panoramic-view-of-the-coast-from-your-caf%C3%A9s-windows-which-you-are/ Course Hero Inc.(2016).also meets the expense definition and recognition. Retrieved on 8 octuber 2016 from https://www.coursehero.com/file/pj6bvr/Also-meets-the-expense-definition-and-recognition-criteria-Definition-1/ Course Hero Inc.(2016). The definition of can help decide the accounting treatment. Retreieved on 8 octuber 2016 from https://www.coursehero.com/file/p6gfoma/a-The-definition-of-liability-can-help-decide-the-accounting-treatment-of-the/ Accounting Explained.(2013). Revaluation of fixed assets. Retrieved on 8 octuber 2016 from https://accountingexplained.com/financial/non-current-assets/revaluation-of-fixed-assets AASB 138.(2009). Compiled AASB Standard intangible assets. Retrieved on 8 octuber 2016 from https://www.aasb.gov.au/admin/file/content105/c9/AASB138_07-04_COMPjun09_07-09.pdf SAC 4(n.d). definition and recognition of the elements of financial statements. Retrieved on 8 octuber 2016 from https://www.aasb.gov.au/admin/file/content102/c3/SAC4_3-95.pdf AASB 138.(2015). Intangibles assets. Retrieved on 8 octuber 2016 from https://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-15_COMPoct15_01-18.pdf