Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the...

Question

Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the ‘capacity to adapt’. What is the capacity to adapt and how is it determined?
(10 Marks)

Q2: In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, ‘market forces’ would be relied upon to encourage companies to do the ‘right thing’ (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations ‘products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the ‘right thing’ even in the absence of legislation).
You are required to explain the decision of the government that no specific regulation be introduced from the perspective of:
(a)public interest theory
(5 Marks)

(b)capture theory
(5 Marks)

(c)economic interest group theory of regulation
(5 Marks)

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BAC21 Financial Accounting Theory Semester 1 2017 Assignment Instructions This is an individual assignment The assignment is to be submitted on the Moodle in Turnitin The Due date is 16/04/2017 by 23:55 pm The weight of the assignment is 10% The assignment is out of 50 Marks Answer the following questions Q1:Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the ‘capacity to adapt’. What is the capacity to adapt and how is it determined? (10 Marks) Q2: In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, ‘market forces’ would be relied upon to encourage companies to do the ‘right thing’ (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations ‘products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the ‘right thing’ even in the absence of legislation). You are required to explain the decision of the government that no specific regulation be introduced from the perspective of: (a)public interest theory (5 Marks) (b)capture theory (5 Marks) (c)economic interest group theory of regulation (5 Marks) Credit card profit soars but ANZ feels no guilt Anthony Hughes The Sydney Morning Herald, 27 April 2001, p. 3 ANZ denied yesterday it was overcharging customers after reporting a 71 per cent increase in credit card profits. The bank, which only...

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David · Accepted Answer

FINANCIAL ACCOUNTING 
Question 1 
A particular normative accounting theory is Continuously Contemporary Accounting or 
CoCoA. The focus of this accounting theory is to determine the exit prices related to the 
various assets and liabilities at hand. Also, it advocates that firm’s financial statements 
provide the indication about the capacity of the firm to adapt. The adaptation capacity for a 
firm is closely dependent on the liquid assets that the firm possesses that could be readily 
converted into cash. As a result, this implies that higher the assets the company has which are 
cash convertible, higher would be the adaptation capacity in relation to another firm which 
has a lower value of liquid assets (Deegan, 2014). 
As a result of the emphasis on liquid assets, there is exclusion of illiquid assets as these do 
not contribute to the adaptability power of the company.  Further, this capacity is also 
highlighted by other parameters particularly profits that may be determined by computing the 
changes in asset exit prices. However, the total adaptive capital for a firm will be computed 
by the difference of the exit value corresponding to assets and the liabilities. Any charges that 
may be incurred in the selling also tend to reflect in the adaptive capacity computation. The 
implications of a higher adaptive capital would be apparent in higher adjustment capacity for 
the firm in a volatile environment (Deegan, 2014).
Question 2 
a) As per the public interest theory, incremental regulation is undertaken by the government 
in response from the public with regards to the same. This move is directed at serving the 
collective societal interest and not aimed to serve any sectional interest. The underlying 
FINANCIAL ACCOUNTING 
need for regulation stems from the fact that sole reliance on market forces tends to result 
in inefficiency and thus regulations are required to avoid this (Arnold, 2010). 
Based on the given case facts, the decision by the government not to bring in extra 
regulations on bank implies that the people at the current moment do not desire the same.

Chambers' theory of accounting, Continuously Contemporary Accounting, relies on the notion of the ‘capacity to adapt’. What is the capacity to adapt and how is it determined? (10 Marks) Q2: In 2006...

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