Reference no: EM132894951 , Length: word count:2000

HI6025 Accounting Theory and Current Issues - Holmes Institute

Assessment - Conceptual and critical evaluation of theories

Students are required to conduct research and analysis of a theoretical financial reporting issue and present their findings in a written report.
Students will have to do research on relevant literature and demonstrate understanding and critical evaluation of key disclosure issues relating to the application of specific accounting standards. Additionally, they will demonstrate understanding and critical evaluation of the Australian financial reporting environment and its current regulatory framework and recommend future directions to the Australian financial reporting
regulators.

Part A

Assignment Specifications

The corporate disclosure practice will help all the stakeholders to understand and measure business operation. Annual financial statement and particularly income statement is one of the most important ones. However, a company's reported profits will be impacted by different factors, including when particular transactions and events are recognised and how such transactions and events are measured.

Requirement:
1) Using earning management concept, discuss why the timing of recognising events that impact income, revenue or profit or expenses are important for managers?

"Maximum 1000 words."

Part B

ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providing a bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage which the accounting results may be based on subunit or divisional performance.

"A well-informed labour market will motivate management to work to maximise the value of its firm. Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed' manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)

Requirement:

1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan (Accounting-based) was put in place in ABC Ltd?
2) Explain whether the board of directors could be motivated to try to inflate reported profits.
3) Use the opportunistic perspective of PAT to explain the potential for managers to manipulate corporate disclosure.

"Maximum 2000 words."

Assignment Structure:

Assignment Cover page clearly stating your name(s) and student number(s) Group's Assignment Task Allocation table (except for Solo group members) Table of Content
Body of the assignment with appropriate section headings
List of references

Attachment:- Conceptual and critical evaluation of theories.rar