Hello, I`m having problems to identify the two main issues in this case study of financial reporting assignment, I have uploaded the entire file but Im sending again the part which describes the situation to identify them:
Here is the background to our problem - as you know, Pewter Ltd is a leading company in the sale of frozen and canned fish produce. These products are sold under two brand names. Fish caught in southern Australian waters are sold under the brand 'Artic Fresh', which is the brand the company developed when it commenced operations and which is still used today. Fish caught in the northern oceans are sold under the brand name 'Tropical Taste', the brand developed by Fishy Tales Ltd. Pewter Ltd acquired all the assets and liabilities of Fishy Tales Ltd a number of years ago when it took over that company's operations. Pewter Ltd has always marketed itself as operating in an environmentally responsible manner, and is an advocate of sustainable fishing. The public regards it as a dolphinfriendly company as a result of its previous campaigns to ensure dolphins are not affected by tuna fishing. The marketing manager of Pewter Ltd has noted the efforts of the ship, the Steve Irwin, to disrupt and hopefully stop the efforts of Japanese whalers in the southern oceans and the publicity that this has received. He has recommended to the board of directors that Pewter Ltd strengthen its environmentally responsible image by guaranteeing to repair any damage caused to the Steve Irwin as a result of attempts to disrupt the Japanese whalers. He believes that this action will increase Pewter Ltd's environmental reputation, adding ACCM4200 FAR1 Assignment Information Page 3 of 3 to the company's goodwill. He has told the board that such a guarantee will have no effect on Pewter Ltd's reported profitability. He has explained that, if any damage to the Steve Irwin occurs, Pewter Ltd can capitalise the resulting repair costs to the carrying amounts of its brands, as such costs will have been incurred basically for marketing purposes. Accordingly, as the company's net asset position will increase, and there will be no effect on the statement of profit or loss and other comprehensive income, this will be a win-win situation for everyone. The chairman of the board knows that the marketing manager is very effective at selling ideas but knows very little about accounting. The chairman has, therefore, asked me to provide him with a summary advising the board on how the proposal should be accounted for under the Financial Reporting Standards and how such a proposal would affect Pewter Ltd's financial statements.
I need to identify objectively two main issues and relate them with the correct AASB accounting standard to answer.
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