Exporters Ltd is a listed ASX company whose principle business activity is exporting locally manufactured cereals. Recently Exporters Ltd employed you as financial accountant and assigned you to the 30 June 2021 Financial Statements Working Party. This role requires you to review selected Exporters Ltd press releases, identify financial reporting implications and consider the impact of related professional judgments. The Financial Statement Working Party has provided the following extract from an Exporters Ltd press release. Press Release Issue Date: 1 August 2020 Due to COVID-19, prevailing economic conditions in 2020 and the related long-term impact on the company’s exports to international trading partner countries, Exporters Ltd expects to recognize a material non cash impairment loss for its international distribution licenses during the year ended 30 June 2021.

REQUIRED:

Your Part A and Part B responses are to be presented in a short answer format

Part A 

Explain how the events and conditions described in this press release will affect information and individual balances presented in the Exporters Ltd current year’s
statements of:
(a) financial performance; and
(b) financial position.
Your explanation must also consider one (1) subsequent implication for a financial statement user group that is supported by an explanatory example.

Part B 

(a) Discuss one (1) financial reporting professional judgment resulting from the events and conditions described in this press release that could be required when preparing Exporters Ltd future years’ financial statements; and
(b) Identify guiding technical reference(s) from applicable Australian accounting standard(s) and describe how these could assist financial statement preparers when making the professional judgment included in your Part B (a) response.

6 Your Part C response is to be presented in an essay format

Part C 

“Complex professional judgments significantly influence the accounting treatment of all events and conditions in entities’ financial statements.”

Discuss this statement. Your persuasive response should include:
• an introduction;
• one (1) for argument point that supports complex professional judgments significantly influence the accounting treatment of all events and conditions in entities’ financial statements;
• one (1) alternative argument point that considers a different factor which also influences the accounting treatment of events and conditions in entities’ financial statements; and
• as a conclusion, your final opinion about the statement with an appropriate reason(s).

Both argument points are to accompanied by supporting examples developed from your Part A and Part B responses, evidence and/or academic reference(s)*#.

*Supporting examples from your Part A and Part B responses must explain in detail how and why it supports the argument point.