Essay on Advanced Issues in Accounting

Submitted By BiBi_Lin
Words: 2104
Pages: 9

CO5123
ADVANCED ISSUES IN ACCOUNTING
PEI-JU LIN (13035425)
XIANGJIN HUANG (12992351)

CO5123

Advanced Issues In Accounting

Group Essay

Intangible assets have become the vital drivers of financial performance which has urged a growing amount of managers to measure internal decision-making and control purposes by underlining existing intangible assets in the firms (Christopher,
2008). In this essay, 2 companies, including Harvey Norman Holdings Limited (HVN) and Aristocrat Leisure Limited (ALL) will be evaluated. Firstly, this essay will discuss intangible assets which are identified and compared between the presentation of 2 financial statements within HVN and ALL, and the recognition under AASB138.
Secondly, the ratios calculations in both companies will be analysed. Thirdly, the optimal approaches for intangible assets within 2 companies will be examined.
According to paragraph 54 of AASB 101 Presentation of Financial Statements, intangible assets, as a category, must be separately disclosed in a corporation’s statement of financial position (AASB101, 2012). In terms of AASB 138, intangible assets are classified as identifiable, including patents, mastheads, brands, copyrights and trademarks, or unidentifiable which mainly refers to goodwill. Nevertheless, the situations that only where there is an associated cost with intangible assets, or when it has been externally acquired, will be recognised in the financial statements
(AASB138, 2009). The first company to be stated is Harvey Norman Holdings Limited.
It is a retailing company which only engages in a small portion of intangible assets that refer to computer software, goodwill and license property (HVN, 2014).
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CO5123

Advanced Issues In Accounting

Group Essay

Compared the 2 years’ annual reports, there was an obvious increasing in the assets of license property in 2014. The license property rose sharply to $4,279,000, which was almost adding $4,000,000 more to its net book value than that of its 2013.
Conversely, computer software extended its net book value from $58,532 000 to
$73,609,000, which was approximate $15,000,000 increased. The net book value of goodwill was the only one that kept its value from 2013 to 2014 ($10,000).
Consequently, the total intangible assets of HVN in 2014 grew around $20,000 more than what it is in 2013 (see appendix 1). The other firm is Aristocrat Leisure Limited.
It is a global provider of gaming solutions as an Australia-based. The organisation is involved in the design, development and distribution of gaming content, platforms and systems. Besides, it is licensed by in exceed of 200 regulators (Google, 2015).
Therefore, a great number of intangible assets will be utilised in ALL. In accordance with the financial statements, goodwill, licences, capitalised development costs, technology and software are recognized as intangible assets in ALL. Compared to the
2 years financial reports, capitalised development costs have increased by the amount of $5909000. However, both goodwill, and technology & software have dropped down by a large amount in 2014. Hence, the total number of intangible assets have decreased by $20667000 from the year of 2013 to 2014 (ALL, 2014) (see appendix 2).
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CO5123

Advanced Issues In Accounting

Group Essay

Intangible assets are purchased as long-term assets which must be amortised over their useful lifetimes by companies. Amortisation is the periodic recognition of an expense that is reduced the purchase cost by the useful life of asset to calculate the annual amortisation expense. Once the intangible assets have been expenses, the reduction of total assets occurs. In the end of years, firms adjust the retained earnings by the net income or loss annually. Therefore, the retained earnings will be decreased in the equity section (Hearst Newspapers, 2015). The ratio calculations of return on assets, return on equity, debt to equity and debt to total assets in 2013 and
2014 will be analysed…