Reference no: EM132637911

Question - Research undertaken in the country of Acirfa (the country) has revealed the following:

1. The country's people place considerable importance on their rights to have an input into the manner the country is governed. As such, the country has a federal system with a federal government which is responsible for governing the country as a whole and there are also state and territory governments and local councils. Elections for the federal government are held every three years while for state, territory governments and local councils elections are held every four years.

2. The country's federal government provides generous foreign aid to impoverished countries and reacts quickly to natural disasters in countries in close proximity by providing generous and effective disaster relief support.

3. The country's culture is characterised by strong emphasis on equalitarianism and egalitarianism. The importance placed by the country's people on the principles of equalitarianism and egalitarianism is reflected in the norms such as the insistence on a "fair go" for everyone, contemporary social policies of multiculturalism, and the tradition of "cutting down tall poppies".

4. The major political parties in the country believe in a free market economy and the country has signed free trade agreements with numerous countries. Additionally, the country has a well-developed economy (ranked 23rd in the world) which earns substantial revenue from exports such as iron ore, natural gas, coal, gold, and agricultural products. In 2017 the country's exports amounted to $388 billion while imports amounted to $376.2 billion. In 2017 the country's gross domestic product amounted to $1.390 trillion (13th in the world) while gross domestic product per capita amounted to $56,135 (18th in the world).

5. The country's legal system comprises a hybrid of statues such as for example the Income Tax Assessment Act (1936) and (1997), the Corporations Act (2001), and the application of court judgments. For example, in the Income Tax Assessment Act, terms contained in specific sections of the Act such as "incurred", "capital nature" and "repair" are applied by reference to court judgments.

6. The country's Income Tax Assessment Act (1936) and (1997) (the Act) and the accounting standards are often but not entirely aligned. For example, the Act does not allow an allowable deduction for provision for annual leave and long service leave expense, but only provides for an allowable deduction for payments actually made in respect of annual leave and long service leave. A further example of a difference between the Act and accounting standards is the Act allowing a choice of valuing closing inventory namely cost, replacement cost which may exceed cost and or market value which may exceed cost. In contrast, the accounting standard on inventory requires inventory to be valued at the lower of cost and net realisable value.

7. The country's people place considerable importance upon encouraging women to run for federal, state and territory governments and local councils. Additionally, there is a strong drive to increase the number of women on the boards of publicly listed companies. The latest percentage of women on the top 200 company boards is 26.7% (28 February 2018). The percentage of women on boards of the top 200 listed companies and the proportion of women comprising new appointments increased significantly from a low base of 8.3 percent in 2009.

8. Historically, the country's people have had a relatively relaxed attitude regarding the future. However, following the Global Financial Crisis, slow growth in wages and the accumulation of record housing debt, the people have become more cautious in managing their financial affairs and have become more inclined to restrict their spending on retail goods. This has had a negative effect on retail sales which are currently growing at historically low rates.

Required - Describe the accounting values model developed by Gray (1988) that would be expected to prevail in the country. Justify your answer for each accounting value.