Financial Reporting of Billabong International Limited

Running head: FINANCIAL REPORTING
Financial reporting
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FINANCIAL REPORTING
Table of Contents
Introduction................................................................................................................................2
Requirement 1............................................................................................................................2
Contingencies and Provisions....................................................................................................2
Requirement 2............................................................................................................................4
Recognition criteria and measurement in association with provision or contingent liability....4
Requirement 3............................................................................................................................5
Contingency recorded................................................................................................................5
Requirement 4............................................................................................................................5
Plant and Equipment under Financial Leases............................................................................5
Requirement 5............................................................................................................................6
Treatment of Leases...................................................................................................................6
Requirement 6............................................................................................................................7
Reclassification of the leased item.............................................................................................7
Requirement 7............................................................................................................................8
Non-current asset-impairment method.......................................................................................8
Requirement 8............................................................................................................................9
Valuation method for non-current assets...................................................................................9
Conclusion..................................................................................................................................9
Reference List..........................................................................................................................10

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FINANCIAL REPORTING
Introduction
In this report, proper emphasis had been given on understanding whether the
accounting statement of Billabong International Limited are being prepared and in
compliance to the prescribed standards (Scott 2015). The purpose of the report is to evaluate
the reliability of using these accounting statements by Billabong International Limited in their
operations. The current segment analyses the financial report of Billabong International
Limited and discusses its significant points that are already highlighted in this report. The
primary focus of this report is to deal with providing a detailed understanding as well as
analysing the financial statements of Billabong International Limited.
Requirement 1
Contingencies and Provisions
In this requirement, it is needed to discuss about the contingencies and provisions of
Billabong International Limited. From the annual report of Billabong International Limited, it
is understood that the contingencies are disclosed in these accounting statements of the
Business Corporation further divided into several number of financial elements (Nobes
2014). Contingency means assets as well as liabilities that are not accounted as well as have
occurred in case of any emergency. Guarantee is the first component that is mentioned in the
financial report of Billabong International Limited under the heading Contingencies. To
explain in detail, financial guarantee contract are mostly realized and treated as liability
because the nature of financial can be seen at the time of issuing the guarantee. Furthermore,
this liability is measured at fair value method by following the standards as set by AASB.
Therefore, AASB that deals with this liabilities is mentioned under AASB 137 Provisions,
Contingent assets and contingent liabilities.

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FINANCIAL REPORTING
On the other hand, the financial elements that is treated is the Letters of Credit where
most of the financial disclosures are given in the statements. Therefore, Billabong
International Limited had $2.4 million letters of credit as this is not limited to the leases as
well as insurances.
To explain further, the financial disclosure that are being mentioned in the accounting
statements had been presented below for the financial year 2017 where there is associated
contingent liability mentioned with the terminated agreement. There is further mentioned
about this component in the annual report where Billabong International Limited had incurred
the contingent liability up to $3.5 million (Martínez‐Ferrero, Garcia‐Sanchez and Cuadrado‐
Ballesteros 2015).
Therefore, provisions are mentioned in the accounting statements of Billabong
International Limited and shown in the financial year 2017 and amount to $14,160.