Jack Roth is the Financial Controller at Fischer Enterprises Limited $($Fischer Enterprises$).$

In May $2024,$ Jack became aware of impairment indications relating to land and buildings owned by Fischer

Enterprises. An independent valuer has provided a measurement of the asset$$s recoverable amount in June $2024,$

which would result in an impairment loss of $$1\mathrm{.}2$ million being recognised. property valuation as she feels no impairment write down will be necessary. She said that, if property prices are still low

after a few months, there will be more justification for recognising an impairment loss in the year ended $30$ June $2025.$

Jack Roth is a Chartered Accountant.

 

Required

Identify and explain two $(2)$ key fundamental principles of the International Code of Ethics for Professional

Accountants at risk for Jack Roth if he does not recognise the impairment loss in the year ended $30$ June $2024$

financial statements.

Senior management of the company will share in a cash bonus, provided a $$2$ million profit after tax is achieved for the

year ended $30$ June $2024.$ Jack is not entitled to this cash bonus as he is not considered senior management.

Recognising the $$1\mathrm{.}2$ million impairment loss would prevent the $$2$ million profit after tax being achieved.

Jack knows that senior management are determined for the target profit to be achieved for the year ended $30$ June

$2024$ as no cash bonus was paid last year due to Fischer Enterprises not achieving that year$$s target profit.

It is now $18$ June $2024.$ Jack has discussed the impairment issue with the Chief Financial Officer, who said to Jack that

property prices frequently fluctuate. She recommended that it would be better to wait a few months to get an updated.

Answer rating: 100% (QA)

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