HI6025 Conceptual And Critical Evaluation Of Theories Assessment Answer

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Question :

Assessment Details and Submission Guidelines
TrimesterT1 2021
Unit CodeHI6025
Unit TitleAccounting Theory and Current Issues
Assessment TypeGroup Assignment
Assessment TitleConceptual and critical evaluation of theories
Purpose of the assessment (with ULO Mapping)
This is a group assignment. Students are required to conduct research and analysis of a theoretical financial reporting issue and present their findings in a written report.
Students will have to do research on relevant literature and demonstrate understanding and critical evaluation of key disclosure issues relating to the application of specific accounting standards. Additionally, they will demonstrate understanding and critical evaluation of the Australian financial reporting environment and its current regulatory framework and recommend future directions to  the Australian financial reporting
regulators. (ULO 1, 2, 4, 7).
Weight40 % of the total assessments
Total Marks40
Word limit3,000 words ± 500 words
Submission Guidelines
All work must be submitted on Blackboard by the due date, along with a completed Assignment Cover Page.
The assignment must be in MS Word format, with no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
Reference sources must be cited in the text of the report and listed appropriately at the end in a reference list using Harvard referencing style. Adapted Harvard Referencing
Holmes has now implemented a revised Harvard approach to referencing:
1. Reference sources in assignments are limited to sources that provide full-text access to the source's content for lecturers and markers.

2. The Reference list should be located on a separate page at the end of the essay and titled: References.

3. It should include the details of all the in-text citations, arranged A-Z alphabetically by author surname. In addition, it MUST include a hyperlink to the full text of the cited reference source.

  1. All assignments will require additional in-text reference details, which will consist of the surname of the author/authors or name of the authoring body, year of publication, page number of content, the paragraph where the content can be found.

Non - Adherence to Referencing Guidelines Where students do not follow the above guidelines:
  1. Students who submit assignments that do not comply with the guidelines may be required to resubmit their assignments or incur penalties for inadequate referencing.
  2. Late penalties will apply per day after a student or group has been notified of resubmission requirements.
  3. Students whose citations are identified as fictitious will be reported for academic misconduct.

Part A

Assignment Specifications

The corporate disclosure practice will help all the stakeholders to understand and measure business operation. Annual financial statement and particularly income statement is one of the most important ones. However, a company's reported profits will be impacted by different factors, including when particular transactions and events are recognised and how such transactions and events are measured.


1) Using earning management concept, discuss why the timing of recognising events that impact income, revenue or profit or expenses are important for managers?

"Maximum 1000 words."

Part B

ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providing a bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage which the accounting results may be based on subunit or divisional performance.

"A well-informed labour market will motivate management to work to maximise the value of its firm. Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed' manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)


  1. Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan (Accounting-based) was put in place in ABC Ltd?
  2. Explain whether the board of directors could be motivated to try to inflate reported profits.
  3. Use the opportunistic perspective of PAT to explain the potential for managers to manipulate corporate disclosure.
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Answer :

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