Task: The purpose of this essay on business accounting assignment is to provide an understanding of concepts and principles in business accounting. You also need to support your explanation based on the Australian Conceptual Framework for the presentation of financial statements or other relevant documents such as GAAP (General Accepted Accounting Principles). Furthermore, you should be able to identify the implementation of accounting standard in business practices. You are finalising the 2020 annual report of Forester Ltd, a company involved in the mining, refining and retail distribution of petroleum products. As part of financial review, you are aware of the following events that have arisen during the financial year ending on 30 June 2020. On 30 June 2020 an oil tanker owned by the company sank in the rough seas off the coast of Western Australia. The tanker was fully laden and has caused an oil spill stretching for 160 km along the coastline of Western Australia. The tanker was included in the 2019 financial statements at a carrying amount of $25 million. The oil that the tanker was transporting had a carrying amount of $4.5 million. An initial evaluation of the cost of the clean-up operation is estimated at $16 million. There is also a strong possibility that the local oyster, lobster farmers and fishery industry will be impacted. The farmers will take an action against the company for the loss of oysters and lobsters, fishes and related damage to the local farms. The risk management team of the company has assessed that the possible costs of litigation could reach $59 million. You are required to review the information given above and comment on any reporting necessary to be included in the annual report.
Subject Name: Accounting
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