Changes to Contributions and Leasing Standards - Free Samples

Question: Discuss about the Changes to Contributions and Leasing Standards. Answer: Introduction: This is to inform that this particular letter of advice has been prepared in order to present the management of Getswift Limited with the required information in regards to the particular way in which the new revenue standard that has been adopted by the company will affect its revenue recognition system. In order to understand the particular way in which the management of the firm will be impacted by the change in the revenue recognition standards, the essential operations that are carried out by the firm must be understood. This means that the essential operations carried out by the corporate entity should be clarified at first (Kominos and Cameron 2017). The firm deals in the management of the operations in relation to the delivery processes that form an essential portion of business for any kind of firm. The alerts in regards to the tracking of the deliveries has also been one of the services facilitated by the firm. Getswift Limited also engages in the providence of the essential services like the saving the money and time of the client corporate entity by easing the business operations. Thus, it can be concluded that the business entity of Getswift Limited provides the required services for the purpose of simplifying the particular business procedure. It should be noted here tha t the annual report of the company specifies that the financial statements of the company have been prepared on the basis of the Corporations Act 2001 and the Australian Accounting Standards Board (Holland 2016). The change in the accounting standard in regards to AASB 15 can be summarized as the particular standard that refers to the five step model. The essentialities of the model refers to the recognition of revenue at the time when the control of the goods and services is transferred to another company. The first step of the model refers to the identification of the contract. The second step of the model leads to the identification of the performance obligations. The third step leads to the determination of the transaction price and the final steps of the model facilitates the recognition of the revenue component of the firm. It must be noted here that the implications of this particular standard can be pervasive but the new revenue standard might present the organization utilizing it, with opportunities The change in the revenue recognition system that has been undertaken by the particular accounting firm is that the AASB 15 has replaced the accounting standard of AASB 118 Revenue and AA SB 111 Construction Contracts (Holland 2016). The new accounting standard has resulted in the establishment of a new revenue recognition model. The new revenue recognition model of the firm also focuses on the variable pricing degree, arrangements of the multiple elements, returning rights and other related processes (Jones 2017). The impact of the adoption of AASB 15 on Gateswift Limited can be listed down as follows: There will be changes in the timing and amount of revenue that will have to be recognized More disclosures will be required in the financial report of the corporate entity The key performance indicators and the ratios that indicate the financial performance of the company might as well change The third party investors of the company should also be educated in regards to the changes that are pending in the current revenue profile of the corporate entity (Joubert and Garvie, Parle 2016). Transmittal email This electronic mail has been prepared for the purpose of transmission among the employees and other stakeholders of the organization in regards to the changes that the particular firm will face in regards to the adoption of the new accounting standard of AASB15. The report that has been prepared in this regards has further explained the phenomenon. It has been further explained in the report that the adoption of the new revenue standard will affect the firm in the particular way of changing the amount and the timing of the revenue in regards to its recognition. Moreover, the ratios and the key performance indicators of the company might change as well due to the change in the revenue recognition standards of the company. The providence of disclosure in the annual report of the company will also increase due to the change in the revenue recognition system of the company. Thus, it can be concluded that the adoption of AASB will affect Gateswift Limited in a positive manner. References AASB CA. Business Combinations. Disclosure. 2014 Jun 4;66:77. AASB CA. Financial Instruments. Project Summary. 2014. Holland D. Simplifying income recognition for not-for-profit entities. Governance Directions. 2016 Dec;68(11):666. Jones D. Tax and accounting income-Worlds apart?. Taxation in Australia. 2017 Jul;52(1):14. Joubert M, Garvie L, Parle G. Implications of the New Accounting Standard for Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance Sheet. Journal of New Business Ideas and Trends. 2017;15(2):1-1. Dakis GS. Upcoming changes to contributions and leasing standards. Governance Directions. 2016 Mar;68(2):99. Komninos J, Cameron RB. 2017 IMPACTS OF REVENUE RECOGNITION CHANGES IN THE CONSTRUCTION INDUSTRY.