Answer To: Instructions for the report This task requires you to prepare a report to evaluate and comment on...
Rithik answered on May 28 2021
MANAGERIAL ACCOUNTING
ACC00713 REPORT 2020 S1
Executive Summary
The current report deals with the discussions on the deferred tax liabilities and deferred tax assets. The report aims to analyse and evaluate the identification of the deferred tax liabilities and deferred tax assets as well as measure them. All these discussions and analyses have been done in this report in the specific context of the listed company in the Australian Stock Exchange (ASX), McDonald’s, which is an American fast food company. In this process of evaluation, continuously, the analysis has been kept in line with the Australian Accounting Standards (AASBs), which have mentioned the information with respect to deferred tax assets and deferred tax liabilities.
Table of Contents
Executive Summary 2
Introduction 4
Part A 4
1) 4
2) 5
3) 5
Part B 6
4) 6
5) 7
6) 7
Conclusion 8
Appendix: McDonald’s Annual Report 2018-19 9
References 12
Introduction
In this report, there would be a glance on the topics of managerial accounting, wherein it comprises of several terminologies, which are very significant in the recording of day-to-day transaction. It is important for the company or their uses. There is also a very important concept of Accounting Standards Boards means, all the implementation would be based on the legitimate rules and regulations. Hence, for that, it was needed to choose a company from the Australian market indices, for which McDonalds, the American fast food chain of outlets, has been chosen. After choosing the company there would be need find the proper information regarding that particular company, in this report there is also a need to talk about the company investors and their shareholder pattern and according to the relevant accounting standards.
Part A
1)
Revaluation of non-current asset is the instance, when the value of the non-current asset is revised due to acquisition of the company, or we can say that the revaluation of the non-current assets takes place when the company is going to merge or acquire by some pioneer company. At that time it recorded at cost and under the revalued amount, the noncurrent assets are being treated at fair value by implementing subsequent amount of depreciation and losses (Guia & Dantas, 2020). The reason of that why there is a need to revaluation is so much significant to calculate the value. The non-current assets of McDonalds are those, in which their value or their demand in the market is change according to the needs, only that factor is helping to create or establish their market value whether in future their market value going to rise or decline.
According to jurisdictions, after acquisition or any sort of merger the value of noncurrent asset were not fixed. It states that, when starting or establishing a new venture that time the values of non-current assets were increase in nature. It is also the reason that by the time the value of non-current asset also fluctuates, because its uses at the several ways that leads to diminishing the value of the same. In addition, it is the reason why there would be need of servicing the non-current assets (Widiatmoko & Mayangsari, 2016).
As compared to used one, because on that scenario of McDonalds, depreciation appeared so that is why it is difficult to predict the market value of non-current assets. That is the reason that it did not affect the recognition of future tax associated with that asset, because in order to find the future tax we first need to identify the precise value of the particular value. As far as non-current asset is concerned so it is difficult to set the tax slab of that particular assets as its value it is not fixed, so that is the reason, in which it is difficult to predict the tax range, which occur to not impacting the future tax associated with the asset.
2)
Revaluation of noncurrent assets will lead to deferred tax liability instead of deferred tax assets, because revaluation of a current asset states that the value of the non-current assets are not going to be the same. Hence, due to impairment losses and less accumulated depreciation appeared, so that why it is difficult to predict the future tax rates on the particular assets. Deferred tax assets mean payment of tax in the advance or overpayment of tax related to particular assets that is why it is not applicable on revaluation of non-current assets. It states that whenever the company going to execute the worthy transaction (Ladas, Negkakis & Samara, 2017).
Based on that, the transactions of Mc Donald’s are able to come in a position to pay their leftovers debt. On the other side, deferred tax liability means the company will ready to pay the taxes based on the transactions, which they make over a current period. Hence, that is why it is more impactful, because it only came into action when the transaction value is going to be precise there would not be any tentatively as far as market value is concerned. So deferred tax liability is sounder as compared...