Can Taxable Income Be Estimated Financial -Myassignmenthelp.Com

Question: Discuss About The Can Taxable Income Be Estimated Financial? Answer: Introducation Magenta and Associates have the idea of sustainably preserving and giving their customers with accurate, authentic and quality answers to the issues encountered by their customers. As an answer to the mail forwarded by you, this mail is being written in order to give you all the correct and authentic answers for the problems encountered by your organization in accordance to the treatments related to accounting and their disclosures that is to be provided. We are optimistic that these problems will be resolved by applying the solutions that will be recommended. The incorporation of the treatment of accounting is huge as the financial reports are utilised by the creditors, investors and the shareholders[1]. The implication of the suitable and authentic treatments of accounting is put forth in the standards are essential as by sticking on to the effective accounting treatments, the financial reports of the organization will be able to address the fair and true aspect of the financial performance and scenario of the company. The primary intention of implementing these transformations is to pursue the needs as provided in the various paragraphs of AASB 137. According to the AASB 137 guidelines, the explanation of the word provision and contingent liability has been addressed in a lucid manner. In order to have an understanding the application and treatment of these entities the explanation provided in the standards of accounting is addressed thereafter[2]. In accordance to the AASB 137 guidelines, a provision is a sort of a liability in which the amount and the timing is hesitant. The contingent liability is even addressed in the AASB 137 accounting standard. The explanation of the contingent liability is the accountability that may take place in the future course of time because of the previous incidents of the entity and their presence is reliant in the occurrence and the non-occurrence of the vague future programmes that may not be in control totally of the management. The factors due to which the current accountabilities generating out of the previous events has not been preserved and there are vague possibilities of the resource ou tflow that will embody the economic benefits that can arise due to the obligation settlement[3]. Furthermore, the amount cannot be estimated reliably by depending on the information that is available. The precise and authentic incorporation and the treatments of the accounts for the items have been explained while addressing the concerns. Pending court case The primary concern faced by your organization is associated with the claim that is filed against the firm by their rivals for the infringements of the patents. It is primary worried about the declaration requirement and the accounting treatments for the claims that have been done by the rival companies. $87 million is the amount that has been claimed by the rival companies as a financial compensation against the company. A date for the hearing for the same has been given on 31st July 2017 and there has been a projection that there 30% probability that the organization can be judged guilty and therefore would have to pay out the entire amount of compensation. There have been other assumptions with respect to the current scenario. There is a possibility of 60% that the firm would have to pay $50 million and on the other hand there is 40% possibility that the firm would have to pay a sum of $30 million. The financial reports have been granted already and there is no present accountabil ity that has been generated from the previous events. This infringes the criteria of recognition for a provision that has put forth in AASB 137[4]. Therefore, no provisions require be preserving and maintaining in the financial reports. According to the paragraph 86 of AASB 137, a contingent liability needs to be recorded unless the chance of the resource outflow that embodies the economic opportunities becomes very remote. In the current scenario, the payment chances and the outflow is not distant and therefore the organization has to explain the probability of losing the case due to the contingent liability that is seen in the notes to the accounts of the financial reports[5]. Suitable accounting treatment for the sale treaty According to the information to the problems, the organization has undertaken a sale of the tools on 12th December and 31st December appropriately. There has been an inclusion of a maintenance clause in the contract with respect to which the organization has to provide services for the maintenance for the tools for the coming twelve months from the delivery date failing to which the client is to receive refund of 15% from the firm. According to our recommendation, the following treatments should be undertaken by the operations. The firm needs to record in the sales book of the accounts on the agreement date itself due to the lack of the uncertainty over the good delivery and the payment that is to be received for the same. Therefore the organization should identify the sale to be on 12th December 2017. A provision has to be made in accordance to the maintenance that has to be undertaken as it is a current responsibility for the organization that has aroused from the previous events b y debiting the maintenance account and thereby crediting the provision for the maintenance account[6]. The maintenance account will be treated in the balance sheet of the firm. A contingent liability has to be recorded in accordance to the amount of refund in the notes of the accounts of the financial reports of the firm as the value is reliant on the non-occurrence and occurrence of any unknown future events like the service quality that is given by the organization to their clients in the future course of time[7]. We would like to address the significance of the accounting treatment recommended by us for the organization. By pursuing to these accounting treatments, the organization will be able to make sure that it has been able to sustain the dependability of the data as replicated in the financial reports of the organization. Furthermore to the recommendation towards the solution provided for the problems faced by the organization, we have even made an effort to give out a reliable and clear justification about the reasons for such transformations advised by us. The standards that have been put forward by the Australian law, especially AASB 137 has been addressed to generate the explanation of the terms and the acceptable accounting treatment for the one that has been discussed above. We are hopeful that with the help of this letter we have been competent enough to generate a value and worth for your organization. We are looking forward eagerly towards serving and assisting you again. Reference AASB, Compiled AASB Standard. "Business Combinations."Disclosure66 (2014): 77. AASB, Compiled AASB Standard. "Investment Property." (2015). Adhariani, Desi, Nick Sciulli, and Robert Clift. "Quantitative Optimisation Model, Results and Discussion."Financial Management and Corporate Governance from the Feminist Ethics of Care Perspective. Springer International Publishing, 2017. 209-284. Arqawi, Bayan M., William J. Bertin, and Laurie Prather. "The impact of product warranties on the capital structure of Australian firms."Australian Journal of Management39.2 (2014): 207-225. Hudson, Matthew. "No setting off unfair preferences."Australian Restructuring Insolvency Turnaround Association Journal28.3 (2016): 34. Lum, Pei-Jia. "The public identification of tax aggression: An exploratory and value relevance study." (2014). Overland, Juliette. "Corporate Social Responsibility Reporting and Directors Duties: The Australian Experience."Corporate Social Responsibility in the Global Business World. Springer Berlin Heidelberg, 2014. 135-152. Richardson, Grant, et al. "Women on the board of directors and corporate tax aggressiveness in Australia: An empirical analysis."Accounting Research Journal29.3 (2016): 313-331. Ritchie, Mike. "What is air worth? Appropriately pricing landfills."Waste+ Water Management Australia42.2 (2015): 46. Tran, Alfred. "Can taxable income be estimated from financial reports of listed companies in Australia?."Browser Download This Paper(2015).