Af 210 – Financial Accounting
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University of the South PacificFaculty of Business and EconomicsSchool of Accounting and FinanceAF210 – Financial AccountingASSIGNMENT COVER SHEET ID NumberFirst NameLast NameTutorTutorial Day/ Time1.S11119895ArtiChandMr. Tevita VeitunaThursday 9-11 am2.S11119601Kajal PatelMr. Tevita VeitunaThursday 9-11 am3.S11121356KarishmaPatelMr. Tevita VeitunaThursday 9-11 amQuestion 1In accordance with the IASB conceptual framework (2010), general purpose financial reporting’s objective is to “provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity”. The decisions relating to the financial statement include buying, selling and giving or settling loans and other means of credit.  Based on this objective, the benefits to the Fiji Rugby Union (FRU) for including the Sevens players in its balance sheet would be that it will be able to attract more potential investors due to FRU’s increased and favourable net worth. As stated by Marilena Roxana Zuca (2015, p.460-468), investors often check the profitability of potential businesses and prefer to work with profitable firms. Moreover, users of financial statements will be benefited in the sense that they have a competitive advantage when well renown players are included in the financial statements where the potential investors would want to sponsor these players and include them in commercial advertisements to advertise their products which attracts and increases their customers and making people believe that it would be worth to buy such a product if the famous players are advertising it. For instance, Dove Men+Care range sponsored Welsh Rugby Union to showcase the qualities of skincare and a large performance of their products ensuring that the brand is revealed to the increasing viewers of television both globally and locally (Thomas & James, 2014, p. 304-321).

(No. of words: 245)Question 2An item is recognized as an intangible asset when it meets the definition and recognition criteria of assets. The definition criteria of assets has 3 components; identifiability, control and future economic benefit. IAS 38 follows that an asset is said to be recognisable when it can be separated from the entity either individually or with a related contract to be sold, traded, transferred or licensed (IASPlus, 2014). To add, assets are also identifiable regardless of whether the contractual or other legal rights are separable or transferable from the entity and other rights and obligations. Furthermore, pursuant to IAS 38 future economic benefits is gained by an entity from the underlying resource when it can control the asset and limit the benefits to other users.In this scenario, the players in the FRU, meet the definition criteria of an intangible asset. This is because:The players can be either transferred at a cost from one team to the other after the contract has expired or re-sign a new contract with the same team. Hence, establishing identifiability. FRU has control over the players as the signed contract between the players and FRU forbids the players to play for any other team; thus establishing control. Future economic benefits from the players is deemed to flow into FRU if the players win a tournament or world cup and the prize money from it will be retained by the FRU. Moreover, the recognition criteria is met when  expected future economic benefits that relate to an asset is likely to flow to the entity and  is reliable to measure the cost of the asset (Deegan, 2012, p.67). Notwithstanding that the players meet the definition criteria, it can be said that the players do not satisfy the recognition criteria. This is because, the probability of the future economic benefits flowing in to the entity cannot be determined. For instance, a player when bought into the team may be playing really well and thus economic benefits will flow into the entity in the form of prize money. However, this same player may not play well in the future due to getting old; hence indicating that economic benefits may not flow into the entity. Nonetheless, the cost of the players can be reliably measured in the form of the contract value assigned to the player when the player is bought into the team. In light of the above, FRU cannot recognise the players on the balance sheet as it only satisfies the definition  criteria but not the recognition criteria under IAS 38.                                               (No. of words: 423)Question 3 Part AIn order for FRU to recognize the contracted Sevens players on its Balance Sheet, the FRU must determine the amount at which the players must be recorded on its Balance Sheet. According to Martin & Johan (2014), the cost of the acquisition is used to capitalize the contracts, therefore cost of the acquisition is the amount at which players should be recorded on the balance sheet because that is the price at which the players are bought when the players sign their respective contracts with the team under particular terms and conditions.

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Sevens Players And Well Renown Players. (June 20, 2021). Retrieved from https://www.freeessays.education/sevens-players-and-well-renown-players-essay/