Monday, December 9, 2019

Dissonance Cognitive On Future Investment -Myassignmenthelp.Com

Question: Discuss About The Dissonance Cognitive On Future Investment? Answer: Introducation There has been an observation that one of the essential principles stresses on the fact that there is no demand for assets which have increased level of valuation in the financial report. Therefore, this requires various other ideas and concepts related to the values in accordance which the value that is undertaken by the asset can be differentiated in order to observe if there are any additional left. AASB 136 has their Paragraph 1 explaining the fact that asset impairment explains the processes that have been implemented by each and every organization in order to make sure that the assets are being treated at their correct amounts, which does not cross the extent of the amount which can be recoverable (Aasb.gov.au. 2018). This paragraph even explains that in scenarios when the assets are carried forward over the value that has been recoverable, and then the amount that is recovered by selling the assets is lesser than the carried amount of the assets. The assets in such circumstanc es can be regarded to be impaired and the standard of AASB needs the organizations to understand the losses gained from the impairment that is inclusive of the impairment loss time and that of the declarations which are vital (Rennekamp, Rupar and Seybert 2014). In case of an asset, which has their carrying value higher than the value that is recoverable, then the process impairment loss takes place (Ballas, Panagiotou and Tzovas 2015). This is found to be of an increased value of the fair value of the assets minus the cost of selling and the amount that is under exploitation. Therefore, by taking suggestion of AASB 136, Paragraph 59, if the value of the asset that is recovered is lower than the carrying amount of the same, then the carrying amount requires to be curtailed in accordance to the asset value. This sort of curtailing is known as the impairment loss (Lobo et al. 2017). The mechanism of computing the impairment loss may be variable by looking at the information that whether the asset is maintained at the extent of cost or even follows the model of revaluation. In the same paragraph, the impairment losses requires to be realized immediately excepting situations when the undertaking of the asset is being made at a value which can be revaluated and is in compliance to some other standards (Detzen, Wersborg and Zlch 2015). These accounting standards are helpful in explaining the revolution framework as it has been done in AASB 116. Hence, the loss of impairment which is associated any asset that has been re-valued is needed to be regarded as a fall in the revaluation in accordance to the various other standards. The two processes by taking help of which the asset impairment can occur are the cost framework and the revaluation framework (Penner, Kreuze and Langsam 2016). In accordance to AASB 136 Paragraph 61, in scenarios of the cost framework, when there has been a recording of the asset that has been impaired with respect to cost, the loss incurred requires to be identified without any postponements with respect to profits and losses. This explicitly explains that the loss is needed to be identified as a cost in the disclosure report for the company that is under consideration. Paragraph 60 of AASB 136, when the model of revaluation is considered then in case the impairment is undertaken in cases of plant and machinery and even in equipment at the re-valued amount, the losses in the impartment requires to be posted similar to the fall in the revaluation (Dvo?k and Poutnk 2017). For the intention of replication, the loss of impairment on the assets that have been re-valued is required to be realized in the income statement in the initial phase in order to ascertain that it does not go over amount that is surplus for the same asset. The target can be accomplished by taking help of debiting the leftover additional account, which thereby can be applicable to the assets that is inclusive of the liability of tax which is by nature deferred previous to any sorts of balance loss is regarded as a cost for the income statement. It can take place that in certain previous cases the previously documented value of recoverable for the amount of the asset goes over the carrying value of the same asset. As cited by Paragraph 110 of the AASB 136, the organization requires observing for some symbols of whether the loss of impairment earlier from any assets excluding of goodwill became non-existent or had a fall in the value. Paragraph 111 of AASB 136 explains that there is a requirement for numerous internal and external symbols for the reversal of the impairment losses (Aasb.gov.au. 2018). The symbols are inclusive of the substantial rise in the market value of the assets, decline in the total interest rate in the economy and the market, potentials for favourable applications for the firm changes that are positive in nature with respect to the asset utilisation and symbols indicating enhanced performance of the same economic definitions, opposing to the speculations. The two kinds of framework namely the cost framework and the revaluation framework have the ability of undertaking the reversal of the impairment loss. During the time when the cost model is considered, the reversal cannot be observed to raise the carrying value of the assets during the value depreciation of the same asset (Brenner, VJeancola and Watkins 2015). In this respect, it requires to be taken into consideration that the asset that is concerned is associated to the process of real depreciation. In such scenario, loss of impairment of the asset can be achieved in the form of earnings in the income statement of the company that has been considered as cited in Paragraph 119 of AASB 136. In case of the process of revaluation, if the loss of impairment is considered to be expenditure and is treated in the income statement, then the reversal can be undertaken by crediting the amount of earnings. (Aasb.gov.au. 2018) Therefore, during the coming time periods, there is a requirement for the adjustments with respect to depreciation for the allocation of the carrying value minus the residual amount in a proficient and systematic way for the remaining effective future life period. Reference List Aasb.gov.au. 2018. Australian Accounting Standards Board (AASB) - Home. [online] Available at: https://www.aasb.gov.au/ [Accessed 23 Jan. 2018]. Ballas, A., Panagiotou, V. and Tzovas, C., 2015. Accounting Choices for Tangible Assets: A Study of Greek Firms.SPOUDAI-Journal of Economics and Business,64(4), pp.18-38. Brenner, V.C., Jeancola, M.M. and Watkins, A.L., 2015. Using mini-cases to develop AICPA core competencies. InAdvances in Accounting Education: Teaching and Curriculum Innovations(pp. 21-44). Emerald Group Publishing Limited. Detzen, D., Wersborg, T.S.G. and Zlch, H., 2015. Bleak Weather for Sun-Shine AG: A Case Study of Impairment of Assets.Issues in Accounting Education,30(2), pp.18-39. Dvo?k, M. and Poutnk, L., 2017. The Comparative Analysis of CAS and IPSAS Requirements on Tangible Fixed Assets. InNew Trends in Finance and Accounting(pp. 497-510). Springer, Cham. Lobo, G.J., Paugam, L., Zhang, D. and Casta, J.F., 2017. The effect of joint auditor pair composition on audit quality: Evidence from impairment tests.Contemporary Accounting Research,34(1), pp.118-153. Penner, J.W., Kreuze, J.G. and Langsam, S.A., 2016. INSTRUCTORS'NOTES: IMPAIRMENT ANALYSIS: COMPARISON OF IMPAIRMENT OF LONG-LIVED ASSETS BETWEEN US GAAP AND IFRS.Academy of Educational Leadership Journal,22(2), p.90. Rennekamp, K., Rupar, K.K. and Seybert, N., 2014. Impaired judgment: The effects of asset impairment reversibility and cognitive dissonance on future investment.The Accounting Review,90(2), pp.739-759.

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