a ) The bank unveiled a program to undertake community concerns so that it would be seen in a more positive visible radiation. Because Bankss offer services which are so indispensable ( supplying an chance to work clients ) . they deal with high degrees of clients and by and large do big net incomes. Besides. involvement rates of course fluctuate between high and low degrees ( controlled by the authorities to pull off rising prices – non the single Bankss ) . For these grounds they have developed a by and large bad repute with the populace ( exacerbated by Credit Union advertizements etc ) . By doing this voluntary revelation to the populace. ANZ is seeking to “win over” clients by demoing their concerns for the community. This is an illustration of Positive Accounting Theory ( PAT ) – a theory which attempts to explicate and foretell how groups in an administration ( eg. direction. proprietors. creditors ; stakeholders ) will interact with one another. In this instance. ANZ has made a voluntary societal revelation to the populace ( ie. its clients ) in order to “soften the blow” of the political costs which are frequently imposed on Bankss.
Because the bulk of the vote populace are besides clients of one of the large four Bankss in Australia ( Commonwealth. NAB. ANZ & A ; Westpac ) . external political costs are frequently imposed on the banking industry. Because Bankss make such big net incomes. they are seen as “villains” by the public – supplying a large mark for politicians to take at. PAT predicts that authoritiess will move in a manner to delight the vote populace so that they will remain in power. This article draws peculiar mention to the fact that it is an “election year” – this means that politicians make peculiar attempts to do certain that they are seen as conveying the “big bad banks” into line.
degree Celsiuss )
Yes. I believe that community concern would non be as great if the bank was non so profitable. Because Bankss are so profitable. clients ( many with mortgages. loans etc that are a major fiscal load in their lives ) wonder why the Bankss don’t pass more of these net incomes onto them by cut downing fees or involvement rates ( many clients don’t understand the economic branchings of Bankss altering involvement rates & A ; fault the Bankss for high involvement rates ) . If Bankss were non so profitable. so they would hold a legitimate ground ( in the eyes of clients ) for non cut downing fees to ease the load on clients. However. the Bankss would reason that their chief precedence is the stockholders – therefore they must move in a manner which pleases them Internet Explorer. by maximizing net incomes.
vitamin D )
Yes. it is possible that community concerns about net incomes made by the Bankss might actuate the Bankss to follow accounting policies that cut down their reported net incomes. The political cost hypothesis of PAT provinces that houses subject to political examination will follow accounting methods that cut down reported income. However. the Bankss can non supply one set of studies to the community and another to investors. It is my belief that because the chief precedence of Bankss are the stockholders. Bankss will seek and describe every bit high a net income figure as possible to promote investors and drive up the portion monetary value. If one of the Bankss lags behind the others in footings of net income. they will lose stockholders as they act to acquire the best possible return on their investing.
A flag would be classified as an intangible plus as it is a non-monetary plus without physical substance. Under the new accounting criterion ( adopted from international accounting criterions ) AASB 138 “Intangible Assets” . internally generated intangible assets can non be recognised in the balance sheet. whether they are identifiable or non. The company has developed the flag. therefore it can non be classified as an plus in the balance sheet ( and therefore it can’t be revalued ) . However. if the company was to be purchased. a knowing purchaser would factor the masthead’s value into consideration. The purchaser would be able to recognize the purchased flag in their balance sheet as an intangible plus ( at cost ) .
A publication rubric is a dissociable intangible plus. Because the company has purchased the publication rubric from an external party it can be recognised in the balance sheet at cost ( $ 1. 2 million ) . If there is an active market for this plus so it may be revalued to its just value. It is likely that there would be an active market for a really successful book ( direction has already estimated that they could have around $ 1. 5 million if they “put it on the market” ) . Besides the company purchased the publication rubric as a separate plus when another company went into settlement. Because the marketer was being liquidated. it is likely that the publication rubric was undervalued when sold ; therefore a reappraisal to just value would be necessary.
DR – Publishing Title $ 300. 000
CR – Revaluation Reserve $ 300. 000
degree Celsiuss )
A franchise as a dissociable intangible plus ( Internet Explorer. the licence to run a franchise ) . The company purchased the franchise for $ 100. 000. There is an active market for this plus. There is even a current market monetary value for this plus ( $ 200. 000 ) . Therefore this plus can be revalued to fair value.
DR – Franchise $ 100. 000
CR – Revaluation Reserve $ 100. 000
vitamin D )
Under AASB 138 development outgo can be deferred when the undermentioned standard is met:
– The undertaking is likely to continue & amp ; take to a salable or useable plus.
– Development outgo can be measured faithfully.
– It is likely that future economic benefits will ensue.
The company already has deferred development costs of $ 520. 000. Therefore it can be assumed ( if the comptrollers are making their occupations decently ) that the development meets the standard. However. this sum can merely be carried frontward ; it can non be revalued to its “estimated recoverable amount” . Some of the money spent to bring forth the estimated recoverable sum of the undertaking of $ 860. 000 would hold already been expensed in the research stage. when it was unknown if future economic benefits would happen ( or even be likely ) .