StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Accounting Policies Analysis - Assignment Example

Cite this document
Summary
The assignment "Accounting Policies Analysis" focuses on the critical analysis of the major issues in accounting policies. The company is involved in the exploration and extraction of heavy metals that are then sold to local industries while the rest is exported to other countries…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.7% of users find it useful

Extract of sample "Accounting Policies Analysis"

TABLE OF CONTENTS Page Number 1. Statement of Comprehensive Income……………………………………………………………………… 3 2. Statement of Financial Position………………………………………………………………………………….3 3. Statement of Changes in Equity………………………………………………………………………………….4 4. Notes to the Financial Statements…………………………………………………………………………….. 6-17 Note 1 Statement of Significant Accounting Policies a) Corporate information b) Basis of preparation c) Statement of compliance d) Summary of Significant Accounting Policies I Property, Plant and Equipment II Inventories III Trade and other receivables IV Cash and cash equivalents V Provision VI Employee benefits VII Trade and other payables VIII Leased Assets IX Revenue X Income Tax XI Earnings per Share (EPS) Note 2 Revenue Note 3 other Income Note 4 Analysis of expenses by function Note 5 Additional Information Note6 Cash and cash equivalent Note 7 Trade and other receivables Note 8 Properties, Plant and Equipment Note 9 Trade and other receivables Note 10 Provisions Note 11 General reserve Note 12 Share capital Note 13 Retained Earnings Note 14 Auditors’ Remuneration Note 15 Estimation uncertainty Note 16 Dividend Note 17 Changes in accounting estimates Note 18 Events after reporting period 5. Directors’ declaration……………………………………………………………………………………………………….. 18 6. Annual directors report…………………………………………………………………………………………………….. 18 7. Annual auditors report……………………………………………………………………………………………………… 20 8. Reference list………………………………………………………………………………………………………………………21 I. Statement of comprehensive income 2014 2013 Revenue (Note 2) 134,900,000 XXX Other Income (Note 3) 8,442, 000 XXX Revenue and other income 143,342,000 XXX Expenses excluding finance costs (Note 4) 121,424,000 XXX Finance cost (Note 5) 387,000 XXX Profit before income tax 21,531,000 XXX Income tax expense 6,459,300 XXX Total comprehensive income for the year 15,071,700 XXX II. Statement of Financial position ASSETS 2014 2013 Current Assets Cash and cash equivalents 3,587,000 XXX Trade and other receivables (Note 7) 4,606,000 XXX Inventories 12,745,000 XXX Total Current Assets 20,938,000 XXX Non current Assets Property, Plant and Equipment (Note 8) 24,560,000 XXX Total Non current assets 24,560,000 XXX Total Assets 45,498,000 XXX LIABILITIES Current Liabilities Accounts payable (Note 9) 4,393,000 XXX Tax payable 4,663,800 XXX Provisions (Note 10) 990,000 XXX Total current Liabilities 10,046,800 XXX Non current Liabilities Provisions (Note 10) 2,505,000 XXX Loan repayable (Note 11) 6,840,000 XXX Total of non current liabilities 9,345,000 XXX Total liabilities 19,391,800 XXX Net Assets 26,106,200 XXX Equity General Reserves 2, 956,000 1,740,000 Share capital 3,634,000 3,634,000 Retained earnings 19,901,200 4,860,000 26,106,200 10,234,000 III. Statement of Changes in Equity Share capital General reserve Retained earnings Total Equity $ $ $ $ Balance at 30 June 2013 3,634,000 1,740,000 4,860,000 10, 234, 0000 Total comprehensive income 17,641,200 17,641,200 Dividends -84,000 -928,000 -1,012,000 Transfer to general reserve 1,300,000 -1,300,000 0 Balance as at 30th June 2014 3,634,000 2,956,000 19,901,200 26,491,200 4. Notes to the financial Statements Note 1: Statement of significant Accounting Policies a) Corporate information The company is involved in the exploring and extraction of heavy metals that are then sold to the local industries while the rest is exported to other countries. The company is among the biggest mining company not only in the country but also in the entire region. The company is a public company that has its shares publicly listed on the Australian stock exchange. The company’s consolidated financial statements for the year ended 30th June 2014 were approved and authorized for issue by the company’s board of directors on 15th September 2014. b) Statement of compliance The financial statements have been prepared in accordance with Australian Accounting standards adopted by the Australian accounting standards board (AASB) as well as the corporations act. The statements are also in compliance with international financial reporting standards (IFRS) as well as interpretations adopted by the International Accounting standards Board (IASB). c) Basis of preparation The financial statements have been presented in Australian dollars. The statements have also been prepared on the basis of historical cost less depreciation or cost net of depreciation. These assets include buildings, equipment, motor vehicles and inventory. However, land has been measured on the basis of historical cost. d) Summary of significant accounting policies i) Property, Plant and Equipment Items of building and equipment are recorded at cost less depreciation while land has been recorded at historical cost. ii) Inventories Inventories have been measured at the lower of cost and net realizable value. iii) Trade and other receivables iv) Cash and cash equivalent These are assets that are conveniently changed to cash and are included in the current assets in the statement of financial position. v) Provisions Provisions are recognized when they meet the recognitio0n criteria of present legal obligation arising from past events with probable outflow of resources that embody economic benefit. i) Annual leave and long leave The company provides annual leave cost when employees leave their positions within the financial year. On the other, the company provides for long leave costs for employees leaving for long leave. ii) Legal case The company provides money for legal cases where it is highly probable that the plaintiff will be compensated. vi) Employee benefits The company provides the employees with benefits in addition to their normal wages. Annual leave is granted to employees annually. In this regard, the employees get 21 days of paid leave every year. vii) Trade and other payables Trade and other payables are recognized at their amortized cost. Trade and other payables include unearned revenue, Accounts payable as well as dividends payable. Unearned revenues are recognized after the service has been rendered. viii) Depreciation Equipments, buildings and vehicles are depreciated on straight line method over their useful life. ix) Revenue Revenue is income arising from the company’s ordinary operating activities. These include sales revenue and service revenue. x) Income tax The corporate statutory tax is 30% and is calculated based on the earnings before tax annually at 30% xi) Earnings per share Earnings per share are arrived at by net income divide by average outstanding shares. It is the allocated profit for each common share issued. Note 2: Revenue AASB 101, Para 97&112 (c) Revenue included sales revenue and service revenue Revenue 2014 2013 $ $ Sales revenue 98,640,000 XXX Service revenue 36,260,000 XXX Total revenue 134,900,000 XXX Note 3: Other Income AASB 101, Para 98© &112 (c) Other income comprises of proceeds on sale of non current assets, interest earned and parking fees Other income 2014 2013 Other income $ $ Gain from sale of non current assets 1,870,000 XXX Interest Earned 22,000 XXX Parking fees 150,000 XXX Total other income 2,042,000 XXX Extra ordinary income Extra ordinary gain refers to the net amount received from the sale of bit coins found during renovation of the company’s building in the CBD. Note 4: Analysis of expenses by function AASB 101 para 99, 103,104 Expenses excluding finance cost include selling and distribution expense, administrative expense as well as miscellaneous expenses Analysis of expenses by function $ Revenue 134,900,000 Cost of sales 63,470,000 Gross profit 71,430,000 Other income 2,042,000 Selling and distribution cost 5,332,000 Administrative expenses 32,057,200 Other expenses 20,923,800 Profit before tax 15,159,000 Selling and distribution expense 2014 2013 $ $ Sales staff bonuses 4,500,300 XXX Cost of sales 63,470,000 XXX Depreciation 112,000 XXX Total 68,082,000 XXX Administrative expenses 2014 2013 General operating expenses 11,400,200 XXX Call centre establishment 545,000 XXX Depreciation –Buildings 432,000 XXX Depreciation- Equipment 490,000 XXX Payment to Auditors 1,560,000 XXX Provision for legal case 510,000 XXX Annual leave expenses 1,100,000 XXX Long leave expense 1,720,000 XXX Redundancy payments 900,000 XXX Salaries and wages 13,400,000 XXX Total 32,057,200 XXX Miscellaneous expenses 2014 2013 $ $ Miscellaneous expenses 20,923,800 XXX Total miscellaneous expenses 20,923,800 XXX Financial expenses 2014 2013 Financial expenses $ $ Interest expenses 196,000 XXX Doubtful debt expense 191,000 XXX Total 387,000 XXX Annual leave expense 2014 2013 Annual leave expenses $ $ Opening balance 620,000 XXX Annual leave paid 1,240,000 XXX Closing balance 480,000 XXX Annual leave expense 1,100,000 XXX Long leave expense 2014 2013 Long leave expense $ $ Opening balance 980,000 XXX Paid 195,000 XXX Long leave expense 1,720,000 XXX Closing balance 2,505,000 XXX Note 5: Additional Information AASB 101 para 104 According to AASB 101 paragraph 104, depreciation, amortization expenses and employee benefits should form part of additional information Depreciation and amortization Depreciation 2014 2013 $ $ Depreciation –Buildings 432,000 XXX Depreciation –Equipment 490,000 XXX Depreciation-Vehicles 112,000 XXX Total 1,034,000 XXX Employee benefits expense 2014 2013 $ $ Bonus to sales staff 4,500,000 XXX Redundancy payments 900,000 XXX Annual leave expense 1,100,000 XXX Long leave expense 2,505,000 XXX Salaries and wages 13,400,000 XXX Total 22,405,000 XXX Financial expense include interest expense as well as doubtful debt expense Note 6: Cash and cash equivalents $450,000 was paid for the legal case and thus should be deducted from cash Cash and cash equivalents $ Cash at bank 3,587,000 Less legal provision 450,000 3,137,000 Note 7: Trade and other receivables AASB 101 para 78 (b) & 112 (c) Calculation for trades and Other receivables 2014 2013 $ $ Accounts receivable 4,708,000 XXX Less allowance for doubtful debt 102,000 XXX Total 4,606,000 XXX Note 8: Property, Plant and Equipment AASB 101, para 78 (a) Property, Plant and Equipment 2014 2013 $ $ Plant& Equipment 3,920,000 XXX Land 6,880,000 XXX Buildings 13,760,000 XXX Total of property, plant and equipment 24,560,000 XXX Note 9: Accounts payable AASB 101, para 72 Trade and other payables 2014 2013 $ $ Accounts payable 3,060,000 XXX Accrued expenses 287,000 XXX Dividend payable 96,000 XXX All funds loan 950,000 XXX Total 4,393,000 XXX Notes 10: Provisions AASB 101, para 78 (d) & 112 (c) AASB 137 paragraph 84 provides for the entity to disclose the carrying amount of provisions both at the beginning and at the end of the financial period as well as additional provisions and any amounts of provisions used up during the current period. Provisions Provisions 2014 2013 Current provision $ $ Legal provision Opening balance 960,000 XXX Less claims settled 450,000 XXX Closing balance 510,000 XXX Annual leave 480,000 XXX Total current provision 990,000 XXX Long term provision 2014 2013 Long-term provision $ $ Long leave 2,505,000 XXX Total long-term provisions 2,505,000 XXX Note 11: General Reserves AASB 101, para 106 b General Reserves 2014 2013 $ $ Opening balance 1,740,000 XXX Transfer from retained earnings 1,300,000 XXX Less dividend paid 84,000 XXX Total 2,956,000 XXX Note 12: Share capital AASB 101, para 106 b Share capital 2014 2013 $ $ Balance as at 30th June 2014 3,634,000 XXX Balance as at 30th June 2014 3,634,000 XXX The information below relates to total shares issued: Date Amount par value Total $ $ 2001 500,000 2 1,000,000 2004 300,000 3 900,000 2012 400,000 4.40 1,760,000 Total 1,200,000 3,660,000 Less issue costs 26,000 Total 1,200,000 3,634,000 Note 13: Retained Earnings AASB 101, para 106 b Retained Earnings $ Balance at 1st July 2013 4,860,000 Less dividend paid 96,000 Total comprehensive income 15,071,700 Balance as at 30th June 2014 19,835,700 Dividends declared and paid 7% on Feb. 2014 (interim) 84,000 Final dividend 96,000 Total dividend 180,000 Note 14: Auditors’ Remuneration AASB 101, para 138.1 (a) & (b) The standard required an entity to disclose the money paid to its auditor for an audit or a review of the entity’s financial statements as well as for non- audit services rendered to the entity. These shall be disclosed seperately with the disclosure detailing the nature and amount of the non –Audit services the auditor provides. Auditor’s remuneration Auditor’s remuneration 2014 2013 $ $ Auditing services Audit 685,000 XXX Non Auditing services Consulting 875,000 XXX Total 1,560,000 XXX Note 15: Estimation of Uncertainty AASB 101 para 125 Note 16: Dividend AASB 101, para 37 Dividend 2014 Cents per share Total amount Date of payment $ 1/2/2014 Interim 7 84,000 xxx 1/7/2014 Final 8 96,000 xxx Total 15 180,000 XXX 2013 Cents per share Total amount 29/6/2013 xxx 832,000 1/9/2013 Total xxx 832,000 1/9/2013 Note 17: Changes in Accounting Estimates AASB 108, para 39 a) The board of directors has reviewed the useful life of buildings and thus increased it from 15 years to 25 years .This saw the amount of depreciation on buildings decrease to $ 432,000. b) The amount of bad debts expense has been significantly reduced this year following the company’s decision to offer reduced sales price on its products purchased on credit. Note 18: Events after Reporting Period AASB 110, para 21 a) On 15th July 2014, the company’s board of directors decides to terminate the call center contract after 30th September 2014 following customer and staff complaints and hence a 15% decline in sales and 40% increase in customer complaints since the establishment of the call center. Consequently, the company will incur costs to rehire, train and employ customer service staff. It is estimated that this will cost the company $2,600,000 for the period ending 30th June 2015. b) On 20th July 2014, the company’s lawyers advised that an employee who had been dismissed by the company in late May 2014 was suing the company for unfair dismissal and is seeking a payment of $60,000. The case had been lodged by the employee on 29th June 2014. The company had dismissed the employee as they had been caught stealing products from the company’s warehouse. The company’s lawyers have advised that there is only 15% probability that the company will be required to make any payment. IV. Director’s declaration The company’s directors hereby declare that: a) The financial statements and notes hereby presented have been prepared in compliance with the applicable accounting standards that are applicable in Australia. b) The financial statements and notes hereby presented have been prepared in accordance with the applicable international financial reporting standards. c) The financial statements and notes hereby presented have been prepared in accordance with the corporations act 2001; d) The company’s financial statement hereby presented gives a true and fair view of the company’s financial position and of its performance for the year ended 30th June 2014. e) The directors are of the opinion that there are reasonable grounds to believe that the company will be able to meet its financial obligations when they become due and payable. f) These declarations have been issued in compliance to the requirements of s295A of the corporations Act 2001 for the year ended 30th June 2014. For and on behalf of the board Chairman Executive director Executive director V. Directors’ Report The following is the directors’ report for the company in accordance with a resolution of the board of directors for the year ended 30th June 2014. Principal activity The company’s principle activity during the financial period has been exploration, extracting and selling of heavy metals both nationally and internationally. There are no significant changes with regard to the company’s principle activities during the year. Financial Performance Our net profit for the year under review was $15,071,700. This was arrived at after subtracting income tax expense of $6,459,300. The company’s overall financial performance has been presented on page 2 of this report. Dividends The dividends paid by the company during the year are presented below; Dividend Date declared Date paid Dividend per share Total dividend Interim dividend for the year ended 30th June 2014 1 Feb. 2014 XXX 7 cents $ 84,000 Final dividend for the year ended 30th June 2014 1 July 2014 XXX 8 cents $96,000 On 1st September 2013, the company paid a dividend of $832,000 that had been declared on 29th June 2013. The dividend was paid from retained earnings. Significant changes in the company’s state of affairs No significant changes in the company’s state of affairs have been observed during the year ended 30th June 2014. Events occurring after the end of the financial year The board of directors is not aware of any matter arising after the end of the financial year that in their opinion would significantly affect the future of the company’s operations or the company’s state of affairs. Outlook The financial year ended 30th June 2014 was relatively good for the company. However, the introduction of the call center in a bid to cut on cost did not turn out as expected. Consequently, it has been decided that the project be terminated at a cost of $2,600,000 during the year ending 30th June 2015. Details of directors and executives There have not been any significant changes in the composition of the company’s board of directors. The following is the list of the company’s directors 1. 2. 3. This report was prepared on 20th August 2014 and has been signed in compliance with the resolutions of the board of directors. VI. Independent Audit Report Lead Auditor’s Independence declaration under section 30C of the corporations’ act 2001 To: the board of directors I declare that to the best of my knowledge and belief, in relation to the audit for the financial year ended 30th June 2014, there have been; i) No contraventions of the auditors independence requirements as required by the corporations act 2001 in relation to the audit ii) No contraventions of any applicable code of professional conduct in relation to the audit. In my opinion: i) The financial report of the company is in accordance with the corporations act 2001, including: -Compliance with the applicable accounting standards in Australia, and -giving a true and fair view of the company’s financial position as at 30th June 2014 and of its performance for the year ended 30th June 2014. 2. The company has: - Availed to me all the information, assistance and explanation needed for the conduct of the audit - maintained financial records sufficient to enable the financial report to be prepared and audited -Kept the records and registers in accordance to the corporations’ act 2001. Joseldo Kant References: Qantas, Qantas Annual Report 2012. Warren, C2007, Corporate financial accounting, London, Rutledge. BHP Billiton, BHP Billiton Annual Report 2012. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Annual Report Assignment Example | Topics and Well Written Essays - 2932 words, n.d.)
Annual Report Assignment Example | Topics and Well Written Essays - 2932 words. https://studentshare.org/finance-accounting/2068993-annual-report-assignment
(Annual Report Assignment Example | Topics and Well Written Essays - 2932 Words)
Annual Report Assignment Example | Topics and Well Written Essays - 2932 Words. https://studentshare.org/finance-accounting/2068993-annual-report-assignment.
“Annual Report Assignment Example | Topics and Well Written Essays - 2932 Words”. https://studentshare.org/finance-accounting/2068993-annual-report-assignment.
  • Cited: 0 times

CHECK THESE SAMPLES OF Accounting Policies Analysis

Analysis of Financial Statements of Bogus Limited For the Year-ended 30 June 2004-2005

The two-year financial results posted by Bogus Limited are analysed.... The company's financial performance, efficiency and stability are evaluated through the use of relevant ratios.... .... ... ... The two-year financial results posted by Bogus Limited are analysed.... The company's financial performance, efficiency and stability are evaluated through the use of relevant ratios....
7 Pages (1750 words) Essay

Organization Management and the Development of Environmental Accounting

The paper "Organization Management and the Development of Environmental accounting" examines the environmental impact of businesses.... Business accounting systems have historically been considered unsuitable for environmental accounting.... The capacity to make available this vital fiscal and non-fiscal information for organization management has witnessed the development of environmental accounting (Clarke & O'Neill, 2005)....
12 Pages (3000 words) Essay

The accounting policies of Marks and Spencer

This essay describes the accounting policies of Marks and Spencer from two sides: in order to assess their usefulness and to determine the degree of transition towards international financial reporting standards.... Bringing accounting policies to single standard has become a basis of free competition.... The first part of the report analyses the development of two accounting policies regarding tangible fixed assets and intangible one.... There are different accounting policies on depreciation, but the most commonly used two are straight line depreciation and reducing balance....
13 Pages (3250 words) Essay

Accounting as a Career and the Financial Coverage Process

The paper "accounting as a Career and the Financial Coverage Process" discusses the accountancy career field.... accounting assistants record a firm's business actions by creating academic journal access in sub- or common ledgers.... Periodicals and ledgers are accounting statistics.... accounting personnel confirms that balances are correct by checking periodical entries, dealer bills, and customer proof of purchase.... accounting personnel also execute bank settlement tasks....
5 Pages (1250 words) Essay

Accounting: Tools for Business Decision Making

Ratio analysis is a tool of financial analysis that is widely used to compare the relationship between risk and returns of firms of different sizes (Kimmel et al 290).... Ratio analysis is a tool of financial analysis that is widely used to compare the relationship between risk and returns of firms of different sizes (Kimmel et al 290).... Ratio analysis is a tool of financial analysis that is widely used to compare the relationship between risk and returns of firms of different sizes (Kimmel et al 290)....
6 Pages (1500 words)

Creative Accounting, Internal Auditing and Shareholders Interest in Saudi Arabia

The paper 'Creative accounting, Internal Auditing and Shareholders' Interest in Saudi Arabia' is an earnest example of a finance & accounting case study.... There are a lot of definitions that are capable of being used to convey the term creative accounting.... The paper 'Creative accounting, Internal Auditing and Shareholders' Interest in Saudi Arabia' is an earnest example of a finance & accounting case study....
10 Pages (2500 words) Case Study

Analysis of Etisalat Accounting Policies

The paper "Analysis of Etisalat accounting policies" is a great example of a report on finance and accounting.... The paper "Analysis of Etisalat accounting policies" is a great example of a report on finance and accounting.... The paper "Analysis of Etisalat accounting policies" is a great example of a report on finance and accounting....
10 Pages (2500 words)

Quality of Financial Disclosure & Reporting Analysis: Sing Pao Media

The paper "Quality of Financial Disclosure & Reporting analysis: Sing Pao Media" is an outstanding example of a Finance & Accounting case study.... The paper "Quality of Financial Disclosure & Reporting analysis: Sing Pao Media" is an outstanding example of a Finance & Accounting case study.... The paper "Quality of Financial Disclosure & Reporting analysis: Sing Pao Media" is an outstanding example of a Finance & Accounting case study....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us