BUSN7050 Corporate Accounting
Corporate Accounting
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BUSN7050
Corporate Accounting
Course details
• This course covers:
– the characteristics of the Australian accounting
environment and its financial reporting requirements for
companies
– accounting for non-current assets (revaluation, impairment)
and intangible assets
– accounting for income tax
– accounting for foreign currency
– accounting for financial instrument
– accounting for leases
– accounting for provision and contingent liabilities
– a comprehensive coverage of consolidation issues
– accounting for owners’ equity (share capital and
reserves)
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Learning outcomes
• Outcome 1: An understanding of the regulatory
environment in which the companies are formed and
operate in Australia.
• Outcome 2: A solid foundation in accounting and
reporting requirements of the Corporations Act and
relevant Australian Accounting Standards Board
(AASB) accounting standards.
• Outcome 3: A comprehensive understanding of the
advanced issues in accounting for assets, liabilities
and owner’s equity.
• Outcome 4: The ability to account for a range of
advanced financial accounting issues.
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Learning outcomes
• Outcome 5: An understanding of the accounting
requirements for a corporate group and familiarity with
the theory underlying the methods used to account for
inter-company investments.
• Outcome 6: The ability to prepare consolidated accounts
for a corporate group.
• Outcome 7: The ability to analyse complex issues, to
formulate well-reasoned and coherent arguments and to
reach well considered conclusions.
Prescribed Textbook
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Loftus, J., Leo, K., Boys, N., Daniliuc, S., Luke, B., Ang, H. and
Byrnes, K., 2022. Financial Reporting, 4th ed, Wiley.
Purchase options:
Purchase direct from Wiley:
• Textbook + Interactive E-Text Code
• Wiley special offer
Wiley, has launched Wiley Business Now – giving students access to all Wiley’s
Business E-text titles for a low-cost monthly subscription
For Semester 1 only they are offering access to the required E-text for this course
(+more!) for only one payment of $6.95, for the whole semester!
You’ll also have access to practice questions, quizzes, video content to help understand
complex themes and you can highlight, bookmark, make notes, and generate automatic
citations.
Subscribe here, or find out more!
7Course administration
• Students taking this course are expected to commit at least
10 hours a week to completing the work.
• This will include:
– 2 hours a week: lecture
– 1 hour a week: tutorial
– 7 hours a week: private study
• Course delivery
– Live and Echo360: available on&after scheduled lecture time
– Live in-person and online tutorial: no recording. You must
attend your enrolled tutorial.
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8Assessment
Tutorial preparation needs to show serious attempts at ALL the questions. Attempts
at less than 60% questions will get 0 mark. Attempts at more than 80% questions
can get 0.5 mark.
Tutorial attendance will be recorded. 1 mark, 0.5 mark and 0 mark will be allocated.
The mid-semester and final examinations are compulsory and not redeemable.
You do not have to obtain 50% or more for one single assessment element but must
obtain 50% or more as total final mark to be eligible for a pass grade in the course.
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Assessment
items
Description and detail of
the assignment
Due date %
Tutorial
participation
and
preparation
Students are required to attend their
assigned tutorial each week;
Tutorial preparation to be submitted
on Turnitin by 09:00 on Wednesday
Every week from week 2
onwards (deadline)
5
5
Mid Semester
Examination
Covering material from
Lectures 1-5 inclusive
Week 6 or 7 40
Final
Examination
Covering material from
Weeks 6-12 inclusive
Final exam period 50
9Tutorials
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• All of the tutorial questions provided on Wattle are to be
attempted prior to attending the tutorials.
• Your preparation will gain you credits!!
• Your participation will gain you credits and
confidence!!
• The tutorial questions will be available after each lecture
• The solutions to the questions will be made
available on Wattle from 17:00 on each Thursday
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Lecture 1
Accounting regulation, the conceptual
framework and revenue recognition
Readings: Chapters 1 and 16 from the prescribed textbook
Sub-topics:
• The nature of a company
• Forming a company
• Types of companies
• Key sources of accounting regulation
• Main bodies of accounting regulation
• Australian accounting standards
• International Accounting Standards Board
• Conceptual framework
• Revenue recognition
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1. The nature of a company
• A company is a legal entity:
– incorporated via registration by Australian Securities
and Investments Commission (ASIC)
– subject to requirements of Corporations Act 2001.
• A company has the following attributes:
– limited liability (or no liability for mining companies)
– its own separate legal existence
– legal powers of a natural person
– right to own assets and enter contracts
– right to sue and be sued.
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What does it mean that a company has limited liability?
A. only managers are legally responsible for the debts of a
company.
B. only some shareholders are legally responsible for the
debts of a company.
C. shareholders are legally responsible for the debts of a
company only to the extent of the nominal value of their
shares.
D. shareholders are legally responsible for the debts of a
company only to the extent of the (part of the) nominal
value of their shares already paid.
In-class quiz 1.
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2. Forming of a company
• To register a company, a person lodges the
prescribed application form with ASIC.
• A certificate of registration and an Australian
Company Number (ACN) are issued.
• To deal with issues relating to directors and
members and the day-to-day management,
a company might use:
replaceable constitution
rules
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3. Types of companies
• Public companies
– minimum 1 member, no maximum number
– minimum of 3 directors
– can invite public to subscribe for securities,
but it’s not required to have a share capital
(can be limited by guarantee)
– can list on Australian Securities Exchange (ASX)
– must prepare financial statements in accordance with
the accounting standards and have them audited.
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3. Types of companies
• Proprietary (Pty) companies:
– minimum of 1 member/shareholder, maximum of 50
– minimum of 1 director residing in AU
– cannot raise funds from the public, but required to
have a share capital.
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4. Sources of accounting regulation
• The major sources of financial reporting regulation in
Australia are:
– The Corporations Act 2001
– Australian Accounting Standards
– The Conceptual Framework for Financial
Reporting (Conceptual Framework)
– ASX Listing Rules.
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5. Main bodies of accounting regulation
• The five main bodies that formulate and/or enforce
accounting regulations in Australia are:
1.The Australian Securities and Investments
Commission (ASIC).
2.The Australian Securities Exchange (ASX).
3.The Australian Accounting Standards Board (AASB).
4.The Financial Reporting Council (FRC).
5.Australian Prudential Regulation Authority (APRA)
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5.1. ASIC
• ASIC is Australia’s corporate, markets and financial
services regulator.
• ASIC undertakes financial reporting surveillance with the
purpose of improving the quality of financial reporting.
• The role of the ASIC is to enforce and regulate company
and financial services laws:
– administers and monitors implementation of
the Corporations Act and investigates and
prosecutes for breaches
– promotes confidence in the financial system
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5.1. ASIC
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The Corporations Act 2001
• The Corporations Act requires preparation of a financial
report and a Directors’ Report for each financial year for
all:
– disclosing entities
– public companies
– large proprietary companies
• In limited circumstances, some small proprietary
companies may be required to prepare a financial
report and directors’ report in directed to do so by
shareholders or the ASIC
– registered schemes
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5.1. ASIC
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The Corporations Act 2001
• Disclosing entity: With few exceptions, entities whose
securities are listed on a securities exchange are
disclosing entities.
• Public companies: Any company other than a proprietary
company.
• Large proprietary company
• Registered scheme: Registered scheme refers to a
managed investment scheme that is registered under
s.601EB of the Corporations Act.
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5.1. ASIC
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The Corporations Act 2001
• Small proprietary company (1 July 2019):
• must satisfy at least two of the following criteria:
– Consolidated revenue for financial year is < $50 million.
– Consolidated gross assets at end of financial year is < $25
million.
– Fewer than 100 employees at end of financial year.
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5.2. ASX
Australian Securities Exchange Group
• Listing rules help ensure that information is
disseminated in an efficient and timely manner.
Failure to comply may lead to removal from the Board.
• ASX Listing Rules divided into 20 chapters -
key are Chapter 3 (continuous disclosure)
and Chapter 4 (periodic disclosure).
• Primary focus on disclosure
• Listing Rule 3.1 provides the general principle that:
– once an entity is or becomes aware of any information
concerning it that a reasonable person would expect
to have a material effect on the price or value of the
entity’s securities, the entity must immediately tell the
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5.3. Australian Prudential Regulation
Authority (APRA)
• APRA is the prudential regulator of the Australian
financial services industry.
• The aim of APRA’s supervision is to promote financial
stability by requiring institutions to manage risk prudently
so as to minimise the likelihood of financial losses to
depositors, policy holders and superannuation fund
members.
• APRA identifies the key risks taken by an entity, ensures
the risks are adequately measured, managed and
monitored, and assesses the adequacy of the entity’s
financial resources to accommodate potential losses.
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5.4. FRC
• Australian accounting standard-setting institutional
arrangements
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5.4. FRC
• Functions and powers of the FRC:
− provide broad oversight of the process for setting
accounting and auditing standards
− appoint members of the AASB
− approve and monitor the AASB’s priorities,
business plan, budget and staffing
− give the AASB directions, advice or
feedback on matters of general policy
− no power to direct AASB in the development or making
of particular standards
− no power to veto a standard formulated and
recommended by AASB.
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The role of the Financial Reporting Council is to provide
broad oversight of the process for setting standards in
Australia, including the authority to direct the AASB to
develop, amend or revoke a particular standard.
A. True
B. False
In-class quiz 2.
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5.5. AASB
• Operates from 1991, replacing the Accounting
Standards Review Board.
• Functions (under s. 227 of ASIC Act) include:
– developing a conceptual framework
– making accounting standards that have force of law under s.
334 of the Corporations Act
– formulating accounting standards for entities not governed
by the Corporations Act
– participating in and contributing to the development of a
single set of accounting standards for worldwide use.
• AASB reports to the Financial Reporting Council (FRC).
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6. International Accounting Standards Board
• IASB is an independent, privately funded accounting
standard setter.
• Overseen by the IFRS Foundation.
• Established in 2001, replacing the International
Accounting Standards Committee (IASC).
• Committed to the development of a single set of high
quality, enforceable global accounting standards.
• IASB releases IFRS following public
consultation.
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6. International Accounting Standards Board
• IASB has an IFRS Interpretations Committee:
– ‘official’ interpretative arm of the IASB
– reviews on a timely basis accounting issues that have arisen
within the context of current IFRSs and provides authoritative
guidance on those issues
– provides guidance on issues not covered in IFRSs
– provides interpretations of existing requirements within IFRSs.
• IFRS Interpretations Committee’s interpretations are
adapted by the AASB to suit the Australian
environment. (AASB 1048 Interpretation of Standards)
• Interpretations have the force of law.
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The main benefits of Australian adopting IFRS may include:
A. increasing the comparability of financial reports prepared
in different countries so that capital ultimately flows to
entities that can use it the most productively.
B. reducing the financial reporting costs for Australian
multinational companies.
C. removing barriers to international capital flows by reducing
differences in financial reporting requirements and so
increasing understanding by foreign investors of
Australian reports.
D.all of the given answers.
In-class quiz 3.
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7. Australian accounting standards
• The s 224 of the ASIC Act requires that
accounting standards developed by the
AASB to provide financial information that:
– allows users to make decisions about the
allocation of scarce resources
– helps directors discharge their financial reporting
obligations
– is relevant to assessing performance, financial
position, financing and investment
– is relevant and reliable, facilitates comparability and
is readily understandable
– reduce the cost of capital and enable Australian
entities to compete effectively overseas.
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7. Australian accounting standards
• Before making or formulating a standard,
s 231 of ASIC Act requires AASB to carry
out a cost–benefit analysis – unnecessary
when adopting an international standard.
• Once the AASB makes a standard it is approved by
Commonwealth Parliament.
• Directors are required to ensure that the company’s
financial statements comply with that standard.
What if directors believe the standards are not
appropriate?
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