Tuesday, March 17, 2020

Accounting Strategies Essay

Accounting Strategies Essay Accounting Strategies Essay 4.Accounting strategy employed by management& incentives 4.1Accounting strategy employed by management Amcor’s management seems to be incented to take a long-term view, and to implement the corporate strategies in acquisition and innovations. Hence, appropriate accounting strategies would be employed by management. There are two examples to support our assertion. 4.1.1 Acquisition & Goodwill (AASB 3) Under the permission of AASB, the consolidated entity can renew the fair value of net assets acquired and goodwill in one year from acquisition date. In order to reflect new information of fair value at acquisition date, the Amcor’s management employs this accounting policy. For example, the fair value of net identifiable assets acquired from Aperio Group, which was acquired on 11 May 2012, on 30 June 2012 has been declined $17.2million to $118million at 30 June 2013. As a result, goodwill has been increased $20.5million to $122.9million from this acquisition activity at 30 June 2013. 4.1.2 Innovation & Development (AASB 138) Amcor Group’s objective is building innovation to drive growth, which the innovation is related to recognition of research & development expense. The Group does follow by AASB, Which recognized of expenditure about research as a cost, which the amount is $68.1million and $65.6million for FY12 and FY13 respectively. However, capitalized development expenditure, which the adjusted amount is $13.2million and $4.8million, at 30 June 2012 and 2013 respectively. In addition, Amcor amortized the development cost on a straight-line based over the period of time during which the pattern of future benefit is uncertain, instead of other amortized methods. Therefore, the amortized charge for development is $0.1million per year. 4.2 Management’s incentives behind its choices of accounting