Flying Kite Corporation, a publicly listed company in Australia, has recently made a decision to change...

   

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Flying Kite Corporation, a publicly listed company in Australia, has recently made a decision to change its accounting method for non-current asset depreciation from the straight-line method to the declining balance method (accelerated depreciation). This shift in accounting policy has resulted in a significant decrease in the reported depreciation expense for the current year, leading to a notable rise in the company's reported net income. The media have praised this increased profitability. Required: Drawing on the principles of Positive Accounting Theory (PAT), discuss the potential motivations behind Flying Kite Corporation's decision to change its accounting method for depreciation. Your answer should include references to the main hypotheses of PAT. (b) The traditional definition of expenses in financial accounting refers to the costs incurred in the process of generating revenue. They represent the consumption of goods or services and can come in various forms, such as salaries for employees, rent for office space, utilities, depreciation on assets, and cost of goods sold, among others. Moreover, expenses are matched with revenues as per the matching principle, which states that expenses should be recognized in the same accounting period as the revenues they help generate. Required: Considering the evolving expectations of modern stakeholders, discuss the implications of this definition of expenses in capturing a company's social and environmental commitments and costs under the traditional financial accounting framework. Flying Kite Corporation, a publicly listed company in Australia, has recently made a decision to change its accounting method for non-current asset depreciation from the straight-line method to the declining balance method (accelerated depreciation). This shift in accounting policy has resulted in a significant decrease in the reported depreciation expense for the current year, leading to a notable rise in the company's reported net income. The media have praised this increased profitability. Required: Drawing on the principles of Positive Accounting Theory (PAT), discuss the potential motivations behind Flying Kite Corporation's decision to change its accounting method for depreciation. Your answer should include references to the main hypotheses of PAT. (b) The traditional definition of expenses in financial accounting refers to the costs incurred in the process of generating revenue. They represent the consumption of goods or services and can come in various forms, such as salaries for employees, rent for office space, utilities, depreciation on assets, and cost of goods sold, among others. Moreover, expenses are matched with revenues as per the matching principle, which states that expenses should be recognized in the same accounting period as the revenues they help generate. Required: Considering the evolving expectations of modern stakeholders, discuss the implications of this definition of expenses in capturing a company's social and environmental commitments and costs under the traditional financial accounting framework.

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a The decision by Flying Kite Corporation to change its accounting method for noncurrent asset depreciation from the straightline method to the declining balance method can be analyzed using Positive ... View the full answer