Question

Objective: The objective of this report is to analyse the Australian Conceptual Framework in accounting standard setting and apply the related key concepts to contemporary business practices. Your discussion should be aligned with the Conceptual Framework for Financial Reporting and relevant AASBs to support your analysis.

Part A

Samsung Ltd. signed a 5-year contract to supply its electronic products to Harvey Norman Ltd. for $300 million. The contract was completed and signed by both companies on the last day of financial year, 30 June 2020. The Samsung Ltd. received an upfront payment of only $60 million from Harvey Norman Ltd. on that day. It decided to recognise ‘revenue’ of $60 million for the financial year 2019/2020. Discuss fully how Samsung Ltd should account for the contract amount, justifying your answer by reference to relevant definition and recognition criteria of relevant accounting standards. You are required to answer the following two questions:

1) Discuss in your opinion whether it is correct for Samsung Ltd. to recognise ‘revenue’ of $300 million for the financial year 2019/2020 or not. You should justify your comments by using references to the Conceptual Framework for Financial Reporting or other relevant AASBs. 2) Explain how Samsung Ltd. should record $60 million in the accounts for the financial year 2019/2020. You should refer to the Conceptual Framework for Financial Reporting or other relevant AASBs to support your explanation.

Part B

In this report, you are also required to select a 2019/2020 annual report of an Australian company listed in the ASX (Australian Stock Exchange). You should provide your comments on the following questions:

3) Identify the component of comprehensive income for the selected company.

4) Determine the measurement of each component (up to three components) with reference to the Conceptual Framework for Financial Reporting or other other relevant AASBs within certain business environments.

5) In your opinion, provide recommendations to the CFO regarding methods that the chosen company can adopt to improve financial performance in the current business environment.

The report should demonstrate effective communication, logical presentation and integrated evaluation.

This is the report from company finance. can you give the idea how to write this questions answer please

Answer 1

answer PART A

1) As per AASB 15, the recognition of revenue for the transfer of goods or services, at a value that reflects the consideration to which the entity expects to be entitled, in return for meeting performance obligations.

To achieve these requirements, this standard establishes a five stage model fror entities to follow-

1. identify the contract with the customer
2. identify the performance obligations in the contract
3. determine the transaction price
4. allocate the transaction price to the performance obligations.
5. recognising revenue when (or as) the performance obligations are satisfied.

as per above AASB Samsung Ltd. shall not recognise ‘revenue’ of $300 million for the financial year 2019/2020, revenue shall be recognised as the performance obligation is satisfied

2) samsung ltd. should record $60 million in the accounts for the financial year 2019/2020. as deferred revenue liability.