Examination of the Accounting Issue on the accounting standard Financial Reporting in Hyperinflationary Economies
Significance of the Issue
The special issue on the accounting standard namely Financial Reporting in Hyperinflationary Economies has a great significance in the ground of accounting issue. There are several points to analyze regarding the issue of the accounting theory. In the words of Kurronen (2015) the accounting goodwill, the lease of the accounting, the related financial instruments, the accounting for R & D, the compensation in the execution, the accounting for the purpose of agriculture are the good examples of accounting issue. The good will in the section of accounting is to be present if the calculation regarding the purpose of accounting in the different financial statements will be very much pure and perfect. The accountant can establish the goodwill in this regard. The research and the development is one of the major parts of all types of working projects (Nandakumar, 2010). Each project should have the part named R&D. the financial statements can be developed and much working if a research analysis is made on it.
History of the Development of the Accounting Thoughts
The history of financial reporting in hyperinflationary economies exposed in November 1987. It has been effective in the date of 1st January 1990 and was reformatted in the year of 1994 (Sunder, 2009). After that it was amended for annual improvements to IFRS 2007 (Sunder, 2009). The main objective of IAS 29 is to formulate a standard for hyperinflationary economy so that It describes a characteristic that shows an economy is hyperinflationary.
The key theoretical issues of Financial reporting in hyperinflationary economics:-
· The effect of price changes over time for some political, economic, & social forces (Lin & Guo, 2013). That effect in supply & demand.
· The net income is included in the gain or loss on the monetary position but it should be disclosed separately.
· The financial statements whether it is based on historical or current cost approach it should be in terms of measuring unit. (Bank, 2012).
This all have changed over time. It should be noted that all the essential items are included in the financial statements of the organizations such as comprehensive income and other statements. As a result, the performance of the organizations can be known in comparison to other industries as well. The purchasing power is lost during the phase of inflation or economic downturn which impact on the financial performance of the organizations (Thurner & Poledna, 2013).
Most companies do not apply IAS 29 even the economy is hyperinflationary. Because the application is difficult, assets were revalued according to the legal requirements.
Impact of the Accounting Thoughts in Standards and Practice
The financial statements are under this accounting standard. The accounting thoughts are implemented on the development of the financial statements. An absolute rate can be established in this standard at the level at which the hyperinflation is deemed. When the restatement of the financial statement is taken under the judgment then the impact of it becomes very much clear to the people (Sunder, 2009). The wealth of the general population should be kept as a non-monetary asset or in the form of currency of a country the value of which is more or less stable. The price of the asset should be quoted in terms of currency. There is a loss expected in terms of purchase in credit and the financial reporting changing the financial statement looks over it. If there is an entity with the functional exchange rate of a market then the economical report of that particular entity is very much crucial in the sense that his statement can be taken as a parameter. It will be used as the measurement unit in the report. The comparative amounts can be used for the presentation of the exchange rates of the different currency (Shimada & Yang, 2011).
The application of certain procedures and the judgments under different circumstances can be effectively seen in the report of the economical report. Apart from this, the different standards which are required to be mentioned in the changes that are applied in the case of violability; These procedures of changes and the valuable judgments on this matter are consistently applied in different periods and this circumstances is more important to be taken into consideration that the other cases. In the words of Southeast Asian Economies (2010) the resulting amounts of the application of these judgment rules include some restatements of the financial statements which should be included. There is a standard which is required to be done for the purpose of the exercise of the cost index in the restatements of the economical report. All the entities prefer the report of the currency which should be done under the same economy for the purpose of using the same index number.
The visibility of the financial reporting and other financial statements users can be brought in front of the people in IAS 29 (Thurner & Poledna, 2013). The technical capacity can be built for the purpose of the implementation of the financial reporting in the economies which are facing the huge problems of hyperinflation. In our research work we have furnished the accounting topic on the core basis of international accounting standards.. The different ideas are particularly stemmed from the different parts and issue of the accounting theory and research under these special circumstances. According to Melville (2011) the IAS 29 is applied in the third world countries and it is also analyzed in this topic. The conditions of the third world countries to apply this particular IAS are specially analyzed under different differences in economic attitude. In our analysis the conceptual framework is also linked for the sake of the analysis.
Analyzing the related theories and information in this particular assignment, I can understand the clear view of the IAS 29 (Financial reporting in hyperinflationary economics). The main key learning outcomes of this project that I can understand from this assignment are: the history of IAS 29 , its restatement or development over time, and the key theoretical issues that affected purchasing power. From this assignment I have acquired skills like:
The assignment should be relevant and content oriented so that it’s easy to understand. The assignment is more valuable if it is required to think critically about the content, resources etc. Timing is everything. It teaches disciplinary methods that Lin & Guo (2013) will work best in the near future. Of course this assignment changed my view of accounting research and practice. It addresses all aspects of the accounting profession using several methods. It mainly focuses on solving problems for a client or group of clients. There are several types of accounting research established in the past years, like financial accounting research, auditing research, taxation research, governance research etc. The main contribution of accounting research to accounting practices includes the assessment of current accounting practices and the development of new practices.
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