Virgin Australia Group Case Study

The report’s analysis on various items seeks to identify whether the company provides enough information for the investors and if they are in line with the requirements of Australian Accounting Standards Board (AASB). One of the items under analysis is the Intangible assets. The report identifies its composition, method of recognition and how they are measured and amortized. The other item under examination is the comprehensive income. The report captures its components and how income and expenses are presented and recorded. …………………………………………5 Components…………………………………………………………………………………. 5 Income and expenses presented separately…………………………………………………. 5 Items recorded against equity………………………………………………………………. 6 Sufficient information…………………………………………. 6 Business combinations……………………………………………………………………………6 Method used…………………………………………………………………………………6 Recognition, presentation and measurement…………………………………………………7 Recognition and measurement of goodwill…………………………………………………. 2 (see appendix 1). Its composition includes the following; 1. The goodwill. The company explains goodwill as the future economic benefits obtained by assets which were acquired during business combinations but they cannot be individually or separately indentified.

The goodwill has an indefinite useful life. The company’s intangible assets are in line with these requirements. Also, AASB 138 states that the internally generated goodwill is not recognized as an asset (p. The company’s goodwill was acquired during business combinations. b. The recognition 1. AASB 138, p. 81 confirms that intangible assets should be carried at cost less accumulated amortisation and impairment loss. According to AASB 136, p 104, impairment loss is recognized when the recoverable amount is less than the carrying amount. The company’s goodwill is initially measured at cost plus any previous interest held. Afterwards, it is measured at cost less impairment loss. The company provides sufficient information to the investors because it outlined its intangible assets, gave their value or worth in the business, how they are measured, recognized, and amortized or impaired.

It also provided information on how the value of intangible asset varied from the previous accounting period. For instance, the company’s financial report on page 21 states that the Intangible assets increased by $26. 5 million due to $56. 8 million of additions less $30. 97, the amount and nature of the items (income or expense) which are material should be disclosed differently. Materiality is determined by the nature and size of the item. They include the amount of equity shareholders, the balance of retained earnings (accumulated profit or loss), and the reconciliation of the carrying amount of contributed equity and reserves. In the company’s financial statements, the share of net profit of equity-accounted investee and the loss attributed to owners of the company and the non-controlling interest should be disclosed differently because it shows the amount of equity shareholders.

The earnings per share (basic and diluted) should not be shown because it uses the balance of retained earnings to come up with the EPS. This gives additional information to the investors on the firm’s profitable activities and how profits or losses are shared in the company. BUSINESS COMBINATIONS: a. The method used The method which was used for business combination is the acquisition method. According to AASB 3 p. 5, the acquisition method requires the identification of the acquirer, acquisition date, recognizing and measuring assets, liabilities and non-controlling interest. 18 identifies that the acquirer shall measure acquired assets and liabilities at their acquisition-date fair value. This is in line with the company’s notes to the consolidated financial statement. However, this cannot be identified because there are no records of the company’s business combination and the report states that it did not complete any acquisition during the financial year (Virgin Australia Annual Report 2016/1017”, p.