Thursday, December 12, 2019
Accounting and Governance A2 Milk Company
Question: Describe about the Accounting and Governance for A2 Milk Company. Answer: The selected Company, in this case, is A2 Milk Company. This paper intends to examine whether this Company has complied with AASB 102 regarding inventory reporting. It will also uncover whether there is any potential gap between the current practice of A2 Milk and accounting standard requirements. The examination will be based various requirements including definition, measurement, cost of inventories, cost formulas, net realizable value, recognitions as an expense, and disclosures of inventories (Siegel and Borgia 2012). Under disclosure requirement as reflected in paragraph (36-39 of AASB 102), the company is in compliance with the standard. A2 Milk Company has ensured that the carrying of inventories is recognized as an expense during the trading period as reflected in the annual report 2014-15. The company has recognized the amount of write-down of inventories as a reduction in the amount of the inventories acknowledged as an expense in the trading period (Income and Sheet 2012). The company is also in compliance with AASB 102 paragraph (34-35) which deals with recognition of inventory as an expense. The carrying amount of sold stock has been acknowledged as an expense in the trading period related to the proceeds from sale recognition. The reversals of the write-down to take-home achievable values recognition has been shown in the report as a decrease in the value of stock as an expenditure in the reversal period. The company is also in compliance with AASB 102 (paragraph) by writing down inventories to net realizable value on an item by item framework. The company has also adhered to AASB 102 (cost formulas, paragraph 23-27) by determining the cost of inventories using FIFO formula. The FIFO formula has been maintained for every stock with related nature and usage to the company (Ahmed and Alam 2012). The firm has also complied with AASB s definition of inventories as outlined in AABB 102 paragraph 6-Aus8.2 by including fair value, inventories, not-for-profit entity and net realizable value in the definition. The measurement requirement has also been adhered to as outlined in the measurement of inventories, paragraph 9-Aus9.2) by measuring the inventories at the lesser of cost and net attainable worth. References Ahmed, K. and Alam, M., 2012. The effect of IFRS adoption on the financial reports of local government entities. Australasian Accounting, Business and Finance Journal, 6(3), pp.109-120. Income, C. and Sheet, C.B., 2012. Financial statements. Siegel, P.H. and Borgia, C., 2012. The measurement and recognition of intangible assets. Journal of Business and Public Affairs, 1(1).