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Part A:
As an economic concept, depreciation is a significant process in the calculation and determination of national income which refers to the reduction in the value of fixed or capital assets in accounting, as by use, damage, weathering, or obsolescence. In essence, the depreciation is a kind of cost. But this fee is not paid in the accrual period of real money funds. The costs belong to the long-term expenditure which has already occurred. The depreciation is necessary no matter from the perspective of the principle of accrual or the principle of matching revenues and expenses.
Depreciation is the continuous use in the consumption of the value of the assets, which transfers the cost by using the depreciation gradually. It is viewed as a measure of the fall in value of a fixed asset through its use in production, time and the technological as well as the market changes (Jone Lane, 1997, p.180).
As far as I am concerned, not all the collections are assets and such collections cannot typically meet the recognition criteria specified in accounting pronouncements for assets. Collections refer to a group of objects or works to be seen, studied or kept together, or a line of products produced for a specific season which is developed by some designers, etc. while in the field of accounting, assets refer to accounting the property and claims against debtors that a business enterprise can apply to discharge its liability. In fact, not all the collections are valuable and suitable to the recognition criteria in accounting pronouncements for assets. Therefore, sometimes, it is appropriate for the federal government to remove the ability of the institutions to claim the depreciation on their collections for government funding purposes. The Essay is provided by UK Assignment http://www.ukassignment.org
The above story does cast some serious doubts on the appropriateness and relevance of placing monetary valuations on the collections of not-for profit public arts institutions in Australia for financial reporting purposes.
When the collections are more likely to appreciate in value, we should look at the ethical dimensions of charging a collections depreciation expense to the accounts. As to the library that contains collections in politics, history, communication studies, it is sensible to enjoy it from the ethical aspect, for some of the collections are of great cultural and moral significance, for example, the national museum.
In a word, some people hold the opinion that the fixed assets should be capitalized in the balance sheet and allocated periodically to the revenue and expenditure statement as expenditure, while some people think that depreciation is not proper for nonprofit organizations which is based on the replacement accounting concept. The replacement concept of accounting tells that no depreciation charges should be paid while the old asset is being used, and the old one is replaced by the new one, the depreciation should be recognized in the financial statements.
References
Jone Lane, & Roger Willett. (1997). Depreciation need not be arbitrary. Accounting and Business Research, 27(3), pp.179-194.
Part B:
We all know that assets refer to the entities over which ownership rights are enforced by institutional units individually or collectively, and the economic benefits can be derived by their owners by holding or using them over a period of time. It consists of the financial assets and non-financial assets. The liabilities refer to the opposite of the financial assets.
As the cultural icons, the original Eureka Fag was the battle flag which was used at the Eureka Stockade. It was related to a gold miners’ revolt in Ballarat. Now it is considered as an object of state heritage which has great influence on the Victorian Heritage Register.
The Eureka Flag is the symbol of Australian democracy which has become part of the collection at the Ballarat Fine Art Gallery. And it is also the symbol of nationality for the reason that it is related to the rebellion by groups on both sides of the political spectrum. Australians regard the Eureka Flag as the representative of the efforts of the gold miners who want to free themselves from what the see.
As to the heritage assets, they are very important to a country. It improves the resource productivity to a country by using or reusing of the heritage assets. Cultural heritage sites form a non-renewable asset that is threatened by natural disasters (Laidlaw, 2007).
Although some of the heritage assets may have no market value, but they are unique in the world and have specific significance, therefore, they should be cherished very much, for example, the Eureka Flag and the historic monument. The Essay is provided by UK Assignment http://www.ukassignment.org
In regard to asset, it refers to accounting the property and claims against debtors that a business enterprise can apply to discharge its liability. Some of the heritage asserts are so precious that it should be given the liability. Maybe the international accounting standards board may run the credit risk in liability measurement, however, sometimes it is worth to do this.
The nature of the heritage assets is related to the economic benefits as well as the historical and cultural significance. As far as we know that the heritage assets, such as the Eureka Flag and the historic monument, are considered to be the sustainable tourism which is of great importance. The arts and culture protection is a matter that concerns the development of the national culture. It’s an essential issue which is related to the protection of human civilization and its meaning to life. Only by striving to develop the economy, maintain and develop their national characteristics, can a nation be strong in the world.
References
Laidlaw. (2007). Protecting cultural assets from bushfires: a question of comprehensive planning. Disasters, 32（1），pp.66-81.
Part C：
4. Positive Accounting Theory
As we all know that positive accounting theory is considered as one of the most innovative as well as ‘controversial’ (Watts& Zimmerman, 1990, p.131) theories in accounting since the mid-1970s. It seeks to ‘explain why accounting is what it is, why accountants do what they do, and what effects these phenomena have on people and resource utilization’ (Jensen, 1976, p.13).
The word ‘positive’ was put after the work of Watts and Zimmerman (1978) which was called Accounting Review and aimed to provide the beginnings of a positive theory of accounting. The objective of accounting theory is to explain as well as predict the practice of accounting. The essence of it is to explain and predict behavior in contrast to the normative theory which is prescriptive. The Essay is provided by UK Assignment http://www.ukassignment.org
As to the accounting theory, it was predominantly normative before the beginning of the works on positive accounting theory in the mid-1970s. It focuses on the policy prescriptions for management as well as the public policy which are answered with a series of positive theories, and it is different from positive accounting theory. Firstly, the purpose of positive accounting theory is to explain and predict the accounting practice (Watts and Zimmerman, 1986, p.2). However, the normative accounting theory prescribes what the empirical world should be like. Secondly, the positive accounting theory differentiates from the traditional normative theories by emphasizing the importance of prediction and explanation. Thirdly, the normative theory is based on the empirical or positive evidence, while positive accounting theory has the purpose to explain the reasons that financial statements take their current form.
The critiques of positive accounting theory don’t seek to assess the scientific validity of positive accounting theory but rather to study the work of Amaduzzi in order to find the likely signs of an early development of concepts which are related to the positive accounting theory.
As for the criticisms of positive theories, they are mainly about the accounting choice and the validity. Thinker, Christenson, Whittington, Demski, Williams and Raffournier have made some critiques of the positive accounting theory which are very influential in the accounting area.
In regard to the agency theory, it was originally proposed by Jensen and Meckling in 1976. This theory was later developed into a theory of contracting theory.
Agency theory addresses the implications of contractual relationships that arise when one party (principal) delegates work to another (agent) to perform that work. While the contracting theory assumes that the company is formed by a series of contracts, including the contractual relationship between the capital providers (shareholders and creditors, etc.) and capital of the operator (the manager), enterprise and the lenders, businesses and customers, employees and enterprises, etc.
There are many different types of the agency costs, including the costs that the firm incurs trying to prevent the self-serving behavior of the manager, and the costs to the firm and its shareholders when such behavior is not prevented, etc. For example, the manager consumes resources that could be invested back into the firm or distributed to the shareholders, or the manager invests firm resources which can not satisfy the personal ambitions at the expense of shareholder value.
The hypothesis of market efficiency is one of the bases in modern financial theory because of its theoretical advantages and implications for the investing. A market is efficient if prices are fully reflecting all available information (Fama, 1970).
The efficient market theory comes in three forms, that is, weak form efficiency, semi-strong form efficiency as well as strong form efficiency. The weak form efficiency makes the hypothesis that the price of a stock is at least substantially independent of past price performance. While the semi-strong form efficiency claims that it is the current price which reflects the public knowledge completely. And the strong form efficiency holds the opinion that the price of a stock can reflect the public information and private information.The Essay is provided by UK Assignment http://www.ukassignment.org
References
Christenson, C. (1983). The methodology of positive accounting .The Accounting Review, 58(1), pp.1-22.
Demski, J. (1988). Positive accounting theory: a review. Accounting, Organizations and Society, 13(6), pp.623-629.
E. Fama. (1970). Efficient capital markets Ⅱ. Journal of Finance, 26(5), pp.1557-1617.
Jensen, M. (1976). Reflections on the State of Accounting Research and the Regulation of Accounting in: Stanford Lectures in Accounting 1976, pp.11-19.
Tinker, T., Merino, B., & Neimark, N. (1982). The normative origin of positive theories: ideology and accounting thought. Accounting, Organizations and Society, 7(2), pp.167-200.
Watts, R. & Zimmerman, J. (1978). Towards a positive theory of the determination of accounting standards. The Accounting Review, 53(1), pp. 112-134.
Watts, R. & Zimmerman, J. (1990). Positive Accounting Theory.
Whittington, G. (1987). Positive accounting: a review article. Accounting and Business Research, pp.131-156.
Williams, P. (1989). The logic of positive accounting research. Accounting, Organizations and Society, 14(5/6), pp. 455-468.
Part D: professionalism and accounting rules
I believe that the accounting practice has degenerated into a ritual of rule compliance. It emphasizes the compliance with the processing rules, but do not correspond with the commercial phenomenon which is essential for us to make the reliable guides for the financial statements.
Professor Brain West, the professor of Ballarat University who has been awarded one of the most prestigious awards in the world for the accounting research argues that the accounting has degenerated into a ritual of compliance with the accounting standards as well as the corresponding rules.
As to the accounting practice, it consists of the discourse of accounting researchers that is nearly unrelated to the improving of the technical quality of the financial statements. Technical accounting rules have exerted the dominating influence on the accounting practice. It is mainly learning the ritual of rule compliance. Then, the accounting practice has degenerated into a ritual of rule compliance.
The emphasis in accounting education is simply about the mastery of rule-book techniques. It is not desirable for the reason that the discourse of accounting researchers is not related to the improving of the technical quality of financial statements. What’s more, knowing the rule-book techniques is not the same as knowing how to provide a professional service to the public, and it doesn’t assure the service to the public(Staubus,2004, p.144). The essential credence features in accounting education relate to the nature of our institutional setting, its temptations as well as pressures.
The accounting education is preoccupied with the accounting rule-making and rule-compliance. It elevates the rule-compliance to the apex of accounting which is common in the accounting practice, discourse and education. The Essay is provided by UK Assignment http://www.ukassignment.org
Technical accounting rules now exert a dominating influence on the practice of accounting. A substantial and increasing part of what should be applied by the preparers and auditors of financial statements includes the detailed guidance which is described as rules appropriately.
The accounting procedure refers to an accounting method developed by an individual or organization in order to do with the routine accounting tasks. The accounting and its procedures have lost touch with commercial reality as well as its ability to provide relevant and reliable information for the requirements of current day decision making. The accounting rules and its procedures haven’t produced the serviceable financial information and expertise in interpreting and applying those rules which does not substantiate a cognitive authority of the kind expected of a professional occupation (West, 2003, p.8).
There are many requirements of current day decision making. It consists of the relevant information, reliable information, etc. In order to make a good decision, we should understand the decision itself fully, and think about the availability of the properly focused information to support the decision. What’s more, we need some good techniques to help us to make good decision and deal with the problems that we will meet. However, the accounting and its procedures cannot deal with all the problems in making all good choices because the rules of accounting haven’t generated the suitable financial information.
References
West, B. (2003). Professionalism and Accounting Rules, p.8.
George J. Staubus. (2004). On Brian P. West’s Professionalism and Accounting Rules. Abacus, 40(2), pp.139-156.
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