Positive Accounting Theory

960 Words Nov 21st, 2006 4 Pages
a) The bank unveiled a plan to tackle community concerns so that it would be seen in a more positive light. Because banks offer services which are so essential (providing an opportunity to exploit customers), they deal with high levels of customers and generally make large profits. Also, interest rates naturally fluctuate between high and low levels (controlled by the government to manage inflation - not the individual banks). For these reasons they have developed a generally bad reputation with the public (exacerbated by Credit Union advertisements etc). By making this voluntary disclosure to the public, ANZ is trying to "win over" customers by showing their concerns for the community. This is an example of Positive Accounting Theory …show more content…
If there is an active market for this asset then it may be revalued to its fair value. It is likely that there would be an active market for a very successful book (management has already estimated that they could receive around $1.5 million if they "put it on the market"). Also the company purchased the publishing title as a separate asset when another company went into liquidation. Because the seller was being liquidated, it is likely that the publishing title was undervalued when sold; therefore a revaluation to fair value would be necessary.

DR - Publishing Title $300,000

CR - Revaluation Reserve $300,000


A franchise as a separable intangible asset (ie. the license to operate a franchise). The company purchased the franchise for $100,000. There is an active market for this asset. There is even a current market price for this asset ($200,000). Therefore this asset can be revalued to fair value.

DR - Franchise $100,000

CR - Revaluation Reserve$100,000


Under AASB 138 development expenditure can be deferred when the following criterion is met:

- The project is likely to proceed & lead to a saleable or usable asset.

- Development expenditure can be measured reliably.

- It is probable that future economic benefits will result.

The company already has deferred development costs of $520,000. Therefore it can be assumed (if the
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