accounting

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Financial Reporting of Assets

Currently there has been diversity in the financial reporting standards in regard to the capital value of an organization , and the respective net assets portrayed in its financial documents . Due to the nature of the reporting implications to the shareholders , managers have been faced with the problem of whether to use comprehensive reporting styles of its assets or the use of less comprehensive reporting styles . Due to the varying nature of the implications of these reports styles , various

organizations have used various methods of reporting their assets to their stockholders (Smith , 2005 ) This has been in the view of the various outstanding consequences that may be hitherto led by the kind of the financial reports provided for the shareholders . Such reporting diversity between the capitalized value of the entity and the annual financial reports of the net assets is however captured by the concept of financial transparency in reports and the related aspect of earning management for the entity in the view of the shareholders (Riper , 1994

However , for the Australia Accounting Standards Board (AASB 138 stringent guidelines and elsewhere fountain insights have been documented for the possible identification or even the measurement of all aspects of intangible assets of an organization . For the AASB , it highlights the use of complex methods of accounting valuations , which would otherwise bring more clarity to the user of these reports including the shareholders (Hunton , Libby , Mazza , 2006

Despite the legal requirement of the detailed accounting reporting by the AASB on both the capital reports and net assets , the organizations however shows a great diversity in such requirements . To these organizations , they have employed the use of less comprehensive /simple reporting methods of their net assets to the shareholders . However , this is in the view of the earning management implications that the shareholders would get from such reports . Indeed , in all aspects of accounting , a comprehensive report is a requirement of ensuring the validity and the accuracy states that should never be compromised (George , 2003 )To the AASB 138 , this forms the traditional (former understanding of the result implication of comprehensive business reports . To the AASB , the view of using comprehensive reports is seen as a contributor towards better report implications to the shareholders in term of earning management . As a management concept therefore earning management is a detailed synopsis that seeks to explain the financial and management accuracy and authenticity on the assets of the organization as owned by the shareholders (Ryan , Wanna , 2001 , Terrell 2006

To the AASB 138 , its view is that , due to the current state of highly voluminous business undertakings , highly transparent business reports on both capital and net assets will increase the outlook in the management of the business assets by the management for the shareholders . However in the current nature of business view , comprehensive reports on net assets would be mere ambiguities to the shareholders in their understanding of earning management scale of the organization by the managers...