Understanding Australian Accounting Standards 3E - Loftus - SMch18_sm_loftus

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1、SolutionManualtoaccompanyUnderstandingAustralianAccountingStandardsSolutionsManualtoaccompanyUnderstandingAustralianAccountingStandardsByJaniceLoftus,KenLeo,RuthPicker,VictoriaWiseandKerryClarkPreparedbyRuthPickerJohnWiley&SonsAustralia,Ltd201318.15©J

2、ohnWileyandSonsAustralia,Ltd2013SolutionManualtoaccompanyUnderstandingAustralianAccountingStandardsChapter18-AgricultureDiscussionquestions1.WhydoyouthinkIAS41wasacontroversialstandardwhenitwasissued?IAS41wasacontroversialstandardwhenitwasfirstissued,

3、mainlybecauseoftherequirementtomeasureassetsrelatedtobiologicalactivityatfairvalue,withmovementsinfairvaluetoberecognisedinthestatementofcomprehensiveincomeasgainsorlosses.Therequirementtomeasurebiologicalassetsposesproblemsinthatitcanbedifficulttodet

4、erminereliablefairvaluesforsomebiologicalassetssuchasimmaturetrees.Therecanalsobevaluationproblemsindistinguishingbetweenprocessingafterharvestofbiologicalassets,andbiologicaltransformation.Thekeypointscanbesummarisedasfollows:·Requirementtomeasurebio

5、logicalassetsatfairvaluethroughIncomeStatement·Difficultyindeterminingreliablefairvaluesforsomebiologicalassets·Difficultydistinguishingbetweenprocessingafterharvestandbiologicaltransformation2.Explainwhytheconceptof“control”isproblematicwhenapplyingt

6、herecognitioncriteriaofAASB141.Theconceptofcontrolcanbeproblematicintheagriculturalindustrywhereleasesormanagementagreementsareinvolved.Thisoccursbecausethedefinitionof‘agriculturalactivity’inAASB141dealswiththe‘management’byanentityofthebiologicaltra

7、nsformationofbiologicalassets,thusitispossibletoconfusemanagementwithcontrol.ThedefinitionsprovidedinAASB141describe‘management’asthefacilitationofbiologicaltransformationbyenhancingtheconditionsnecessaryfortheprocesstotakeplace.Somekeypointstonoteint

8、heunderstandingofcontrolincludethat:·Controlisakeyconditioninthedefinitionofanasset·ControlisnotdefinedconsistentlyinIFRS·ControlmayormaynotbelinkedtorisksandrewardsofownershipThescopeofAASB141refersto“agriculturalactivity”whichreferstothemana