Running Head: CONQUEST MINING COMPANY 1
CONQUEST MINING COMPANY 12
Conquest Mining Company
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Abstract
This paper seeks to bring clear understanding of various concepts of accounting. It will cover the application of those various concepts indicating how they are helpful and how accounting contribute towards the performance of a company or organization. Australian exchange Security Company by the name Conquest Mining Company has been chosen to refer and show how accounting is applied to those various organizations. In addition the paper will be addressing the problems of measurement which are manifested in this company and how the conceptual framework in the context of AISB/AASB has been applied to improve the efficiency of the company. The annual report for this company has been used to refer to all these various accounting concepts, this is because in most cases accounting analysis are well elaborated with financial and management data being comprehensively indicated. In addition the paper will highlight where the company has impaired the assets in regard to the conventions and concepts of accounting. The research paper will also provide the recommendations for the relevance of using various processes in making estimations. All these explanations will be based on the annual report for the year 2015 belonging to Conquest Mining Company of Australia.
Introduction
In every company or organization, accounting plays a big role in telling the progress for the organization’s activities. A company is supposed to have annual report at the end of every financial year to assess the performance for the ending year. Conquest Mining Company is one of companies in Australia which are involved in exchange securities. In its financial year which ended in 2015, there is a report which has been presented to capture or account for all what was covered in that year. It is from this accounting when one will be able to understand where changes are needed and if the company is making loss or profits. The shareholders for this company will need to know how far the company has gone and if there is much expected from the company in the future (Needles et al, 2012). Accounting helps to realize and reveal some unethical issues in management of an organization, for instance, cases of frauds and corruption. In situations where loss is made, then shareholders may decide to close the company or sell it to another firm which has the capability to run it efficiently.
Accounting concepts
There various concepts of accounting which are applied on the daily basis in every business, however there are two major accounting concepts which exist. The two major concepts are money measurement concepts and business entity. In each concept there is different way on how it is applied, however sometimes the concepts intermingle in order to bring the sense (Albrecht et al, 2007).
Business entity concept, it is a concept which mainly involves the separation of the business and the owner of the firm. In the report for the year 2015, conquest mining company, the founder who the owner of the company has separated himself from the company. In all operations for this company remain to be independent and do not interfere with the operations for the owners of this company. Otherwise the golden stakeholders for this company depend on their share; meanwhile if they give funds to support the company, then it has to be repaid without delay (Ward, 2012). In other words it is a liability to the company. However, this accounting concepts is being violated, this is because a small loss of A$83 million being reported, is associated the chief founder evolutionminingcom (refer page 18 of the annual report).
. This clearly indicates the chief founder has failed to respect this account concept.
Money measurement is another concept; in this case we only consider those records involving transactions in terms of monetary value. According to the annual report for Conquest mining company, all payments have been and sales have been compiled and presented as single sum. In all those transactions which involve properties have been turned to appear in terms of money in the financial statements and loss and profit account (Ward, 2012). All properties including capital, infrastructures building and other related assets which are owned by the company have been given in terms of money but not in their particular forms as it appears in the annual report. The finance executive officer indicates clearly in the report that, the total assets of the evolution mining company has increased by 5% which amounted to a$675billion, compared to the report in the previous financial year which did not capture the assets owned by the company in the western part of Australia evolutionminingcom (page 32 of the annual report).
Going concern concept, it is where accounting is based under assumption that there is a going concern for the entity and not a gone concern. This gives hope to the shareholders and the concerned parties that the business is going to last for long time. Therefore, they can keep on increasing the level of investment without fear (Burritt & Schaltegger, 2010). In the annual report for Conquest Company, they have made investments to only those fixed assets and the depreciation of the assets is reflected in the loss and profit account. In this case there is assumption that the profit earned will be used by the relevant assets. In some situation the going concern concept do not apply especially when the company is undergoing very chronic financial crisis and is expected to collapse in meantime. However in the case of this company, the production summary has captured all the cost and the returns which give a balance of a$777.5 million which is also balancing on the side of liability and asset evolutionminingcom (page 18 of the annual report).
There is a cost concept which has to be based on the concept of going concern. In this concept the booking is done on the value of the asset based on the cost but not on the value for the market. From the annual report for this company, they have reduced the value for the assets which provide depreciate to the assets while ignoring the market value for the identified property. This concept will help to avoid all sorts of manipulation while taking into the account net value realizable in the market (Needles et al, 2012).
Dual aspect concept explains on the double entry in completing the financial transactions (Kieso et al, 2010). This means the side of debit must equalize the credit side, therefore a stock which has been bought will add benefits and at the same time the benefit has to be paid. In the financial statement in the annual report for mining company, there are two sides; one part for credit and the other part include the credit. The both sides have been equalized. In other words the value for the stock will increase in terms of credit while the liability increases in terms of credit.
Accounting period concept, in a business unit to ascertain the financial position there must be defined period of time with systemic interval. Mostly accounting is done at the end of every financial year. The purpose of this is to take alternative measures to improve the performance for the following year. In reference to the Conquest mining company, there are corrective measures for the year 2016 to avoid repetition of the same mistakes made in the year 2016. Matching concept, in this part the business must ensure revenues match the expenditures of a particular firm in that specified period of time (Burritt & Schaltegger, 2010). This concept is well reflected in the profit and loss account. Accrual concept, as indicated in other accounting concepts, the revenue obtained for a particular period is considered to be specifically for that year, thereafter any additional payment made for the following year is taken as accrual and it is treated as revenue for that period (Needles et al, 2012). The revenue and the expenditure figures have well captures in the financial year statements evolutionminingcom (refer page 32 of the annual report).
Problem Measurement in the present AASB/IASB standards and contextual framework
The measurement of the present value technique in the Conquest Mining Company is important since it helps in the provision of the mathematical structure with the aim of valuing the any expected cash flows in the future (Burritt & Schaltegger, 2010).. It also takes into account that attendant risks and the value time for money. It should be noted that the assets of the different bases of measurement normally plays a role in the in cooperation of the Conquest Mining Company’s value concepts presently. The value of market measurement has the main objective as been the measurement of the assets and the liabilities which can be fully interchanged under the circumstances of the ensuring a competitive conditions in the market (Lamb et al, 2015). It also helps the company in the prediction and reflection of its future market expectations.
This will be based on the timing, amounts and also the uncertainty in the forthcoming cash flows in the company which will be discounted in relation to the returns in the market rates mainly for the sake of commensurate risks. The entity-specific measurement is an objective which is mainly focused on the entity reporting expectations and which at times may differ significantly when compared to the implied market prices (Birt et al, 2013). The measurements normally differ with the price expectations of similar assets and liabilities in the market. In this context, it is clear that the external financial reports and the objectives of value measurement hold an important quality which normally helps in making them relevant in the initial liabilities and asset recognition. An important element to note in the case of the Conquest Mining Company is that it mainly specializes in the mining of gold and it is on this basis that it serves the competitive market forces and attracts much customers and hence making its operations a more profitable (Cortese et al, 2009).. Through this, it ensures that there is the reflection to all the available information regarding the measurement of the operation dates and time. The markets for the assets and the liabilities are well defined and they clearly exist. This helps in ensuring that the expected changes can very easily be known on the basis of the measurement dates which have been put in place (Lamb et al, 2015). Future economic benefits of this company are mainly attached to the assets which are owned by the company. These assets may be utilize in a number of ways such as been used singly or in a combination with some other assets with the aim of the production of the expected goods and services which are sold by the company. They can also be exchanged simply for the provision of other assets and sometimes used in the settlement of the liabilities in the company. Many of the assets, such as the equipment, property and plant normally have the physical form but it is necessary to understand that the physical form is not necessarily essential for the presence of assets and therefore, this means that the copyrights and patents are also company’s assets in cases where the future benefits in economy are expected to become entities (Burritt & Schaltegger, 2010). Most of the properties at the same time are mainly associated with the legal rights such as the ownership rights. Existence of an asset is not linked to its ownership and therefore, this means that any asset which is held for the purpose of leasing in this company remains to be an asset as long as there is entity control which its benefits are expected to surge basically out of the property.
Finally it is clear that there is a connection mainly between the generating assets and the incurring expenditure though it is not always necessary that they should coincide. Therefore, in cases where an entity ends up incurring expenditure, it then means that there is provision of evidence that the future benefits economically may be sought out but this is not always a conclusive confirmation that any item which fits the definition of an asset can then be obtained (Lamb et al, 2015).
Relevance and Representational Measurement Comments
So as to ensure that the set objectives of the company are met, the financial report needs to be prepared on the basis of accrued accounting. On this ground, the impacts of the transactions and any other events are mainly recognized on the basis of the occurrence of the recorded accounts which are clearly explained in the reports of the activities of the financial progress in the company (Burritt & Schaltegger, 2010). This financial reports which are prepared, not only inform the users on the progress of the company, but also on the transactions which have already taken place in the past and also provision of usage of cash in the future based on the set obligations. Through this as well, information about the past transactions can be clearly utilize in the making of future economic decisions. The preparation of the financial reports for the company will always be prepared on the basis of the entities and only concerns the operations which will take place in the foreseeable future.
It is important to commend that the information which is provided by the financial report is basically understandable by the users and consumers of the company products. On this basis therefore, the consumers and users of the information are assumed to possess the necessary reasonable business knowledge, accounting and with willingness to investigate the given information with the acceptable diligence (Lamb et al, 2015). Information on the complex matters needs to be included in relevance to the decision making of the economy and the users in this case need not to be excluded in the even if it may seem difficult for them to understand the provided information (Birt et al, 2013). Still to ensure that the given information is relevant for the purpose of decision-making among the users, it should be of the best quality as it will influence the decisions of the users and hence affecting the past, the present and the future events which corrects the past evaluations.
The confirmatory and predictive roles of the information are mainly interrelated for example, information about structure of assets and the levels which are necessary for the purpose of ensuring that the users are in a position to clearly take the advantage of the opportunities in the company as well as the ability of recovering on the adverse situations which may take place (Birt et al, 2013). The information on the financial performance and the past performances are regularly used on the basis of prediction of future financial performance and position and any other matters which the company users finds necessary for the purpose of company advancement evolutionminingcom. The ability of the of the company to predict its financial reports is enhanced and hence this ensures that the directly interested users in the wages and dividends are in a position to get them without problems as well as the security movements all fall within the stipulated due time.
Information relevance is mainly influenced by the material nature whereby in certain cases the nature of the information in itself is always sufficient for to determine how relevant the company will be in the economy (Schultz et al, 2013). Finally, it should be, noted that information is always a material in cases where there are omissions and misstatements which are known to influence the decisions about the economy by the users and which is based on the financial reporting if the company. For reliability, the information must in itself represent faithfully all the transactions and any other events which may purport to be representing or is reasonably expected to be representing the company’s financial reports (Cortese et al, 2009). This means that the financial reports should report clearly the balance sheet in a faithful manner and that all the transactions are a representation of the recognition criteria.
Conclusion
The Conquest Mining Company is indeed a growing company which has recently changed its name from the Evolution Mining Company and mainly deals with the mining of gold. The company is faced with various problems of measurement which have so far been identified with the help of the AASB/IASB standards and the conceptual frameworks which have helped it to eradicate these problems as it can be seen in the 2015 annual report. The conceptual concepts for the company have also been clearly defined in the paper as well as a clear provision of the necessary commends. These commends are geared towards ensuring that the company is in a position of turning its way round and make the necessary tremendous changes required for the purpose of ensuring that the company attracts a greater pool of profits as well as advancement in its operations of work. Faithfulness is therefore the way towards ensuring that the company gets to the necessary developmental heights.
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