Conceptual Framework Obligations of BHP Billiton: An Analysis

CONTEMPORARY ISSUES
IN ACCOUNTING

BHP Billiton
Executive summary
Conceptual framework has become crucial in the modern corporate environment because it
paves a path for companies to enjoy a good market reputation and enhance organizational
effectiveness respectively. With the help of this report, the annual report of BHP has been
considered. Moreover, it will be evaluated whether the company has been efficient in
fulfilling its conceptual framework obligations. For such purpose, consideration of the
company’s fulfillment of conceptual framework objective will be assessed. This will be
followed by its recognition criteria and fundamental and enhancing guidelines.
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BHP Billiton
Contents
Introduction...........................................................................................................................................3
Consideration of objective of the conceptual framework.....................................................................4
Recognition criteria...............................................................................................................................5
Recognition of revenue.........................................................................................................................5
Taxation.................................................................................................................................................5
Trade receivables..................................................................................................................................6
Plant, property, and equipment............................................................................................................6
Goodwill and other intangibles.............................................................................................................6
Closure and rehabilitation.....................................................................................................................6
Fundamental and enhancing guidelines................................................................................................7
Recommendation..................................................................................................................................9
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11
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BHP Billiton
Introduction
In the modern corporate environment, there are several complexities in the financial
transactions that occur on daily basis, and that necessitates fulfillment of conceptual
framework obligations of accounting. The reason behind this ideology can be attributed to the
fact that conceptual framework obligations allow an organization enhance its fundamental
and enhancing qualitative characteristics like materiality, relevance, reliability, faithful
representation, etc of financial reporting, thereby assisting both users and preparers in making
effective decisions for future developments (BHP Billiton, 2017). Furthermore, in the
absence of a conceptual framework of accounting, interpretation of financial information will
become difficult for the users and they may fail in making proper decisions based on such
information, thereby creating a topsy-turvy scenario for the entire organization (Carmichael
& Graham, 2012). With the help of this report, the effectiveness of BHP Billiton in fulfilling
the obligations of the conceptual framework of accounting will be analyzed taking into
consideration its recognition criteria, fundamental and enhancing guidelines, and
consideration of objectives of conceptual framework.
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