Accounting Standard Analysis of Ramsay Health Care

Running head: ACCOUNTING STANDARD ANALYSIS OF RAMSAY HEALTH CARE
ACCOUNTING STANDARD ANALYSIS OF RAMSAY HEALTH CARE
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ACCOUNTING STANDARD ANALYSIS OF RAMSAY HEALTH CARE1
Table of Contents
Introduction................................................................................................................................2
Accounting Concepts Used by Ramsay Health Care.................................................................2
Changes incorporated in the new accounting standard for lease...............................................5
Issue with Ramsay Health Care regarding change in lease accounting.....................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................7

ACCOUNTING STANDARD ANALYSIS OF RAMSAY HEALTH CARE2
Introduction
This paper is based on the analysis of accounting standards and the accounting
concepts used by Ramsay Health Care in financial reporting. As it name suggests, it is a
health care firm founded by the Paul Ramsay in year of 1964 at Australia. It is an ASX listed
health firm of Australia and current operational in the various countries together with France,
Malaysia, United Kingdom and Indonesia. Ramsay Health Care provides various health care
services to their patients while they are specialized in surgeries, psychiatric treatment and
rehabilitations. Ramsay Health Care is largest health care facility supplier of Australia having
more than 100 centres for providing health services across Australia. Not only that Ramsay
Health Care also have an extensive network of private hospitals in United Kingdom with
more than 20 hospitals. Further, this hospital network of the firm in United Kingdom also
includes numbers of neurological centres and treatment units. The objective of the report is to
analyse the annual report of entity for the year 2018 to identify the accounting concept used
by the firm in their financial reporting. Further, this report analyse the disclosures of the
entities in respect to the accounting for lease. The report analysis the differences between the
AASB 16 accounting for leases and previous accounting standard for lease including their
effects in financial disclosures of Ramsay Health Care.
Accounting Concepts Used by Ramsay Health Care
By analysing Ramsay Health Care’s annual report for the year 2018, it can be
identified which Ramsay Health Care uses the following accounting standards in their
financial reporting: -
 Accrual Concept: - Ramsay Health Care used the accrual concept of accounting in
their financial reporting. According to this accounting concept firm recognizes
revenue when it is earned by the firm while the expenses recognized when firm uses

ACCOUNTING STANDARD ANALYSIS OF RAMSAY HEALTH CARE3
its assets. As per this accounting concept, revenue or expenses reported by the firm in
terms of money in its annual financial report may vary from the actual cash received
or paid by the firm to its creditors or debtors (Schroeder, Clark and Cathey 2019).
Ramsay Health Care uses this concept in their financial reporting as they only
consider those income as well as expenses for the reporting year those are actual
received or paid during the accounting period (Ramsayhealth 2019). Other income
and expenses which are not actually paid in the current accounting period is treated as
the assets and liability in the balance sheet of the firm respectively.
 Economic Entity Concept: - This concept states the transactions of business needs to
be kept separate from the owner of the business as according to this accounting
concept the firm and the its owner both are separate legal entities. This accounting
concept also separates liability and accountability of the owner from its firm. This
accounting standard used by the firm in their reporting as the firm reported the equity
capital in the liability side of the balance sheet (Moore 2017). This means that firm
treats its owner’s investment as its liability. This standards also requires that firms
need to report all the transaction in the annual report even the transaction between the
owner and firm.
 Conservatism Concept: - This concept is develop to increase more conservative
financial statement. As per this accounting concept, firms only recognised those profit
or revenue which have some surety that it will realize. Same like revenue, firm only
recognize those expenses which have any possibility to be incurred in the near future.
The Ramsay Health Care uses this accounting concept in the financial reporting to
report accrued income or outstanding expenses (Kaczmarek 2019). This income and
expenses of the firm are reported in the balance sheet of the firm and not in the profit
statement of the firm.