Master of Professional Accounting

Question: Discuss about the Master of Professional Accounting. Answer: Introduction: In the essay presented here, measurement of property, plant and equipment of the tow selected ASX listed companies has been discussed. Rio Tinto limited and BHP Billiton Limited are the two companies selected for the analysis of the measurement of PPE either at fair value model and cost basis. Fair model is used for remeasuring the assets at fair value. Fair value is the amount received from transferring of the liability and from selling of assets at the measurement date and between the parties to transactions (Level et al., 2014). There is a loss in recognition if there is a deterioration in amount of non-current assets. Discussion: Some of the factors considered by companies while revaluating their assets using fair value model are as follows: Financial portfolio of assets- An organization needs to be updated immediately before the assets are being categorized for sale in the event of revaluating the assets at the fair value. When the assets are categorized for sale, in such case cost of sales are treated in the income statement (Edwards, 2013). Audit fees- there are greater cost involved in revaluation of assets. The auditors are required to discuss in detail the revalued figures and this consumes greater amount of time. Judgment of appraisers forms the basis of revaluation of assets. For the manipulation of net profit of companies, higher-level authorities relies on using fair value of accounting. When revaluating the plant, property and equipment, the anticipated accumulated depreciation should be subtracted from the revalued amount at the date of revaluation (Hambrick et al., 2014). Asymmetry information and needs of foreign stakeholders- The organizations listed on Australian exchange have made diversification in the business of oversees financial market. It is mainly due to the restricted size of stock market in Australia. Therefore, organizations involved in international business are required to deliver information to both domestic and global investors. Financial strength of such organization should be improved by minimization of asymmetrical information. For accomplishment of objective, managers are required to conduct an upward revaluation of the objective (Kaplan Atkinson, 2015). Features of firms- the political cost is associated with the size of the firm and the intervention of legislation affects the opportunity costs. In relation to existing wealth in the forms of non-current assets, it can be seen that visibility of firm is greatest. This would draw the attention of the representatives in organization at higher level of profit. In this regard, management of big sized organization would minimize the return of equity and assets by applying the revaluation in upward way. When management intends to reduce the political costs, it is required to minimize the capital gain from the sale value of assets (Braun et al., 2013). The two ASX listed companies that measures their property, plant and equipment with both cost and fair value are BHP Billiton Limited and Rio tinto Limited. BHP Billiton Limited: All the assets of the BHP Billiton are initially recognized at fair value of consideration. The value is at the net of transaction costs and they are subsequently carried forward at amortized cost or fair value. Property, plant and equipment of BHP Billiton Limited is recorded at cost less impairment charges and accumulated depreciation. Such assets are acquired at cost that is the fair value of consideration. It also comprise of direct costs that is involved in bringing the assets to location and necessary condition for operation (Hoyle et al., 2015). Estimate future cost relation to rehabilitation and closure of facility is also involved in such costs. The appropriateness of continuing to carry forward costs in relation to PPE is also determined. Such costs are carried forward to the extent so that it is possible to recover the capitalized costs by successfully exploiting the area of interest. Recoverable amount of PPE is determined by making an estimate regarding the present value s of future cash flows (Bhpbilliton.com, 2017). Rio Tinto Limited: Plant, property and equipment (PPE) of Rio Tinto limited is stated at cost as defined by IAS 16 and the value is recorded less of accumulated impairment losses and accumulated depreciation. Restoration cost associated with the assets and estimated close down are included in the cost of PPE (Brown, 2014). The management capitalizes some of the cost that are incurred while commissioning of the new assets. Interest on borrowing relating to developmental projects are also capitalized. Capitalization is done in such way that intends to give future economic benefit (Riotinto.com, 2017). Assets whose production are not willing to fluctuate from year to year are depreciated on short line basis. Conclusion: It can be concluded from the above discussion that there are several factors that would affect the decision of the company regarding the revaluation of assets suing the fair value model. Some of the factor are features of firms, needs of shareholder, asymmetrical information and audit fees paid for auditing of financial statements. The two-selected organization that is listed on Australian Stock exchange are BHP Billiton Limited and Rio Tinto Limited that values their plant, property and equipment based on fair value and cost basis. Such methods are mainly used by the organization to provide the external users of the financial statements with the useful and reliable information about the propertys actual value. Reference: Bhpbilliton.com. (2017). Retrieved 15 April 2017, from https://www.bhpbilliton.com/-/media/bhp/documents/investors/annual-reports/2016/bhpbillitonannualreport2016_interactive.pdf Riotinto.com. (2017). Retrieved 15 April 2017, from https://www.riotinto.com/documents/RT_2016_Annual_report.pdf Level, E. M. M., Schndube-Pirchegger, B. (2014). Accounting theory. Hambrick, D. Z., Altmann, E. M., Oswald, F. L., Meinz, E. J., Gobet, F., Campitelli, G. (2014). Accounting for expert performance: The devil is in the details.Intelligence,45, 112-114. Braun, K. W., Tietz, W. M., Harrison, W. T. (2013).Managerial accounting. Pearson. Kaplan, R. S., Atkinson, A. A. (2015).Advanced management accounting. PHI Learning. Hoyle, J. B., Schaefer, T., Doupnik, T. (2015).Advanced accounting. McGraw Hill. Brown, R. 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