Reclassification of Gains and Losses †Free Samples to Students

Question: Discuss about the Reclassification of Gains and Losses. Answer: Introduction: The investment company performance is an outcome of the income that is earned on investment that is made. This changes the investments fair value while they are in hold (Barth, Nobes and Tarca 2015). The companys information that are to be checked are as follows: 1) The Dividend and Interest earned in the current year. 2) Information about risk in the portfolio 3) Turnover of the portfolio and related transaction costs such as Commission. 4) The change in the fair value of investment as compared to the similar investment companies in the market 5) The securities fair value that the investment company holds 6) The change in the value of the share during an year An item of a business meets its definition under the conceptual framework if the economic benefits of the same are met which are associated with the item in the future can be measured with reliability(Macve 2015). The Conceptual Framework states that in the income statement the recognition of the income takes place when increase in future economic benefits related to an increase in the asset or decrease of a liability takes place and cannot be measured. Increase in the fair value of the investment shares does represent the increase of asset. For an investment company this important component represents the performance (Dong, Ryan and Zhang 2014). IAS 36 impairment of assets takes care of the with the policies that an entity can apply to ensure that the assets are to be recognized at their recoverable amounts. The asset would represent in such a way the amount is to be recovered through the sale of the asset (Macve 2015). In that case, the asset is denoted as impaired and the standard IAS 36 recognizes it as an impairment loss. It also mentioned when a business shall change an impairment loss and the disclosures that are prescribed in the case given the issue is that the Australian company adopts the standards that would not represent fairly in this would be beneficial if the company does not adopt the policy and avoid the case (Dong, Ryan and Zhang 2014). The informations regarding the assets of the company are valuable.In the mentioned situation the details of the non-current assets in the company has been destroyed that includes all the details of the depreciation as well. As per the board of directors, the issue is due to the virus in the computer. The boards of directors of the business are facing a problem regarding the solution of the loss of all records of the assets (Barth, Nobes and Tarca 2015). The only advice that is to be given is that the management shall keep a backup of all the records including the details of the depreciation to avoid such situation. The loss that has been occurred cannot be recovered but can be avoided thereon. There is no need to change the accounting policy or disclosure procedure. References Barth, M.E., Nobes, C. and Tarca, A., 2015. Conceptual framework for financial reporting: an introduction to the special issue by the guest editors. Dong, M., Ryan, S. and Zhang, X.J., 2014. Preserving amortized costs within a fair-value-accounting framework: Reclassification of gains and losses on available-for-sale securities upon realization.Review of Accounting Studies,19(1), pp.242-280. Macve, R., 2015.A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge. Magnan, M., Menini, A. and Parbonetti, A., 2015. Fair value accounting: information or confusion for financial markets?.Review of Accounting Studies,20(1), pp.559-591.