Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan to suppress the information about the lawsuit that has been filed towards the company His argument was captured as below. "For a newly listed company, this kind of disclosure is damaging to the company and should be hidden. Besides, the chances for AAB to win the case was relatively high". Director X AAB also acquired a new subsidiary, Antanah Bhd (AB). This new subsidiary just operated for one year, and since then, AB outsourced the company's account. Thus, for consolidation purpose, the great challenges for AAB after taking over AB are to scrutinize the accounting method used and to adjust the subsidiary company's year-end to make it similar to AAB's accounting year-end which is on 31 December. However, the account of AB has to be closed first as the company's year-end is approaching, which is on 31 October. 1. How will the prudence concept help to explain the lawsuit issue? 2. Why the accounting year-end of parent and subsidiary companies should be matched? Explain based on any appropriate concept of the qualitative characteristic of accounting information Aira Asia Bhd (AAB) is principally engaged in the cultivation of oil palm, civil engineering, construction works, and property development. AAB just recently listed on the main board of Bursa Malaysia. As a public listed company, AAB should strictly follow the requirements of presenting the accounting information. The accountant of AAB, Mr. Adhnan should decide on the accounting information that should be presented in its financial statement. For example, should AAB provide information on how much costs to acquire its assets, or how much the assets are currently worth? Should AAB combine all the activities and show as one segment, or should it report all the activities as a separate segment? Mr Adhnan also in a state of agitation on the requested by one of the executive directors. He asked Mr Adhnan to suppress the information about the lawsuit that has been filed towards the company His argument was captured as below. "For a newly listed company, this kind of disclosure is damaging to the company and should be hidden. Besides, the chances for AAB to win the case was relatively high". Director X AAB also acquired a new subsidiary, Antanah Bhd (AB). This new subsidiary just operated for one year, and since then, AB outsourced the company's account. Thus, for consolidation purpose, the great challenges for AAB after taking over AB are to scrutinize the accounting method used and to adjust the subsidiary company's year-end to make it similar to AAB's accounting year-end which is on 31 December. However, the account of AB has to be closed first as the company's year-end is approaching, which is on 31 October. 1. How will the prudence concept help to explain the lawsuit issue? 2. Why the accounting year-end of parent and subsidiary companies should be matched? Explain based on any appropriate concept of the qualitative characteristic of accounting information
