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West Accounting Assignment Exploring Role Of Synergy


Task: How the concept of synergy is impactful for West Ltd and Fishy Tales Ltd for better business opportunities? Discuss the concept by considering the case.


Executive Summary
This West accounting assignment illustrates when two or more organization collaborate together in terms of interaction or cooperation to produce a combined power that is termed as synergy and it is better than the composite of their individual impact. In this report, the major emphasis is on synergy and going by the report, it can be witnessed that West Ltd is doing a strong business when it comes to frozen and canned fish produce. To ensure a formidable business, West Ltd acquired all the assets and liabilities of Fishy Tales Ltd. Such an event will lead to increment in the net position and will have no impact on the statement of profit or loss. This will have a win-win situation. The report will shed light on the accounting treatment and the impact it will have on the functioning.

Synergies discussed in this West accounting assignment often act as a benefactor of goodwill and carrying the number of assets of a brand provided the brands chosen to synergize with should also be as deserving. When high brand value companies synergize with each other, there is an increase in a public positive image and more belief is entrusted on the brand by people at large. This has been a case with many Synergies. But, this is not always true. At times synergies prove to be a failure and one brand's mismanagement takes the other one also to be razed to the ground (Seddon et. al, 2012). However, as an accounting professional, our responsibility is to prepare all due diligence and find out all accounting effects to the company because of the synergy and to make sure correct information about the situation at hand is communicated to the companies way in advance so that depending on the financial and economic viability, the synergy decisions can be taken by the company diligently. As we proceed further into the West accounting assignment, we shall see how there can be different views to a situation but still, there needs to be just one solution towards the end. There has to be an accounting professional for sound bits of advice because clearly in the given situation, the marketing manager is extremely good at his work, had in my opinion given out an incorrect accounting advise and had the company only relied on his views, accounting wise the company would have gone for a toss. In short, experts from their fields should discuss only their area of expertise or else there can be situations of loss (Ross et. al, 2014). Let us proceed deep into the analysis of the case to arrive at a sound decision and advise the same to the management of the reported company- West limited.

Case of West Ltd
Companies take a lot of efforts to increase their goodwill and if this also results in the increase of asset position nothing like it. There have been a lot of instances where the guarantee for payments has been a topic of concern regarding the accounting aspects. In the given case, west limited is a leading company of frozen and canned fish produce. The company sells its products under two brand names. The brand ‘Arctic Fresh’ is the one which has fishes caught in the south Australian waters as its products. ‘Tropical Taste’ is the brand which has the fishes caught in northern waters. The brand ‘Arctic Fresh’ is a self-developed brand of West Limited at the time of its commencement and the brand is used even today. The brand ‘Tropical Taste’ is developed by Fishy Tales limited. A few years ago the West Limited took over the operations of Fishy Tales Limited and also took over all its assets and liabilities. Hence has got the rights to use the brand names of the Fishy Tales Limited as well.

West limited has always marketed itself as a company which carries on sustainable and environmentally friendly methods of fishing. Steve Irwin, a ship which has undertaken the responsibility of disrupting fishing activities and save whales in southern oceans has also got to face a lot of damage to ship in its environmental endeavors. The marketing manager of West Limited has put in his business ideas and derived a way to gain too much publicity by joining its name to the already famous Steve Irwin and encash on the goodwill by attaching itself to the operations of the ship by associating itself to the environmental goodness and sustainable fishing ideas (Porter & Norton, 2014). West limited has already propagated the safety of dolphins and thereby encourage sustainable fishing practices. This will help West limited to get more fame as a sustainable fishing business and gain more fame. However, the marketing manager is of the view that this synergy will not hamper the financial position of the company. So the synergy idea here is to guarantee that West limited will undertake to make good all the damages done to the ship on the sea as it continues to do its endeavors. This act of the ship is already getting a lot of popularity and fame. And attaching itself to this ship will add to the already existing philanthropy activities of West limited. But the marketing manager thinks all such expenses will be capitalized and there will be no effect on the profit and loss account (Petty et. al, 2012). Also, since the costs will be capitalized, there will be an increase in the asset value. Hence there will be a win-win situation for West limited.

The biggest highlight in the West accounting assignment is that the marketing manager has amazing sales capabilities but he lacks good accounting knowledge. He cannot be blamed though since he is great at his forte. West limited should seek accounting expertise knowledge. Hence I place my suggestion as under:

The guarantee which is being undertaken shall be placed in the notes to accounts as a contingent liability after placing a reasonable assumption and estimate of the forthcoming damages to the ship Steve Irwin. However, the amount of damage already done and the cost incurred to repair the same should be accounted for as a business expense and should appear in the statement of profit and loss (Shanks & Bekmamedova, 2012).

Accounting treatments
The reason for the above two accounting treatments can be explained here. The future damages to Steve Irwin and the amount is uncertain. It is certainly visible that the repair to damage expenses is going to occur in the future. Also, it is reasonably certain that in near future these expenses will be incurred since these damages to the ship will continue to happen given the kinds of operations the ship undertakes. And also, repairs to these will be needed. Hence we shall keep the same in contingent liabilities because we although can be sure that damages will happen but the amount will not be in anyways be ascertained as on date (Petty et. al, 2012). A contention in this West accounting assignment can be based on past and current repairs, future repairs can be estimated. But this contention does not hold good here in my opinion because the damage to the ship Steve Irwin is very subjective. The amount of damage today cannot be comparable to any sort of damage in the past or future because although the ship continues its operations and the mode of operation is the same; in the sea damages cannot be estimated. Today the amount can be high and tomorrow it can be too high.

Now to justify the number of repairs incurred for damage done currently, the decision to guarantee to pay for all repairs of damages is done in the ordinary course of business. It is a part of the day to day activity (Laux, 2014). No special resolution has been passed and no separate acquisition is done to go for this. Hence, if the guarantee to make good the damages experienced by the ship, by paying for the damages, is done in the ordinary course of business, the expenses should also be a part of the current operations (Lapsley, 2012).

Now it is important to note here that the marketing manager's contention that there will be no hamper in the financial position of the company, in my opinion, is not right. The image and publicity that Steve Irwin is receiving in recent times are immense.

One view can also be that a provisional account is prepared, a pool is created and all repair costs are added to the provision, and similarly capitalized. But even if this happens, an asset increase will increase in liability too to offset the same. But this accounting treatment will not be as logical as the above-mentioned one. This accounting treatment illustrated in this West accounting assignment will hence be a part of the statement of profit and loss too. The manager’s content that the statement of profit and loss account will remain untouched is not correct. It is true that the costs will be incurred for marketing purposes and hence any expense so incurred will be added in the profit and loss account as marketing expenses only (Gowthrope, 2011). And it is noteworthy to remember that since no asset is coming into being here, and there is not any significant increase in goodwill which can be measured in monetary terms, the costs cannot be capitalized.

Using a similar company's work, and associating its name with the other company can help in a favorable image building but how far will it help in encasing this benefit is questionable. This is because West limited has already associated itself with another company and is using their brand names to sell its products. The goodwill it has is already a result of a big synergy and now another synergy will increase the goodwill but the magnitude will be difficult to measure (Barnat, 2014).

The board should be sure that the accounting resend suggested by the marketing manager is not up to the mark and that West limited should be sure that there is little scope that they will reap the benefits of the association with Steve Irwin without incurring any costs and the idea that West limited will be in clear win-win situation is also not correct. Had there been any overtake of assets or had there been an increase in assets, this disrespect could have been capitalized but not in this case. However, the fact that there will be an incredible increase in goodwill can also not be ignored hence after the synergy; the accountants should value the goodwill to understand the value of profit this synergy will bring to West limited (Brown et. al, 2017).

There is no doubt that there will be an increase in the value of the brand of West limited, but whether it shall increase in the carrying amount of the brand or will be offset by expenses incurred thereby should be evaluated by an experienced accounting professional. In my opinion, I have given my view on the synergy in this West accounting assignment but they should also be evaluated and accounted for by an experienced and smart accounting professional.

Hence we can conclude to the fact in this West accounting assignment that the synergy can definitely prove to be beneficial to the company because it's sustainable fishing enterprise, and environment friendly practice adopting company shall get a boost because Steve Irwin is also seemingly doing the same thing, trying to avoid whale fishers from entering into the southern seas and thereby acting as a savior for the whales. The ship in return faces so much damage but it continues the operations. Joining names with the Steve Irwin is going to give a boost to the seemingly doing well brand image of West limited when it comes to it being an environmentally friendly company. It's a philanthropic activity to save whales, but encouraging Steve Irwin to continue its operations whereas West limited guaranteeing to make good all the damages experienced by the ship, by paying for the repairs of the damages is, in fact, a great initiative. As a bonus, what West limited gets is a share of the publicity which Steve Irwin has been gathering of late. West accounting assignments are being prepared by our accounting assignment help experts from top universities which let us to provide you a reliable top assignment help service.

Reference List
Barnat, R. (2014). Strategic Management formulation and implementation. Retrieved from:

Brown, J. L., Fisher, J. G., Peffer, S. A., & Sprinkle, G. B. (2017). The effect of budget framing and budget-setting process on managerial reporting. West accounting assignment Journal of Management Accounting Research, 29(1), 31. Retrieved from: [Accessed 3 July 2019]

Gowthrope, C. (2011). Business accounting and finance for non specialists (3rd ed.). South Western

Lapsley, I. (2012). Commentary: Financial Accountability & Management. Qualitative Research in Accounting & Management. 9(3), pp. 291-292. Retrieved from

Laux, B. (2014). Discussion of The role of revenue recognition in performance reporting. Accounting and Business Research. 44(4), 380-382. Retrieved from:

Petty, J. W, Titman, S., Keown, A. J., Martin, J. D., Burrow, M. and Nguyen, H. (2012). Financial Management: Principles and Applications, 6th ed. Australia: Pearson Education Australia.

Porter, G. and Norton, C. (2014). Financial Accounting: The Impact on Decision Maker. Texas: Cengage Learning

Ross, S., Christensen, M., Drew, M., Bianchi, R., Westerfield, R. And Jordan, B. (2014). Fundamentals of Corporate Finance, 7th ed. North Ryde: McGraw-Hill Australia Pty Ltd.

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