Financial Statements Analysis

This assignment presents a case study of financial statements analysis involving calculations for various assets like land and plant. It delves into the application of accounting standards (AASB) by highlighting the valuation of assets in both US$ and AUS$. The analysis also covers comprehensive income, reflecting the impact of different revenue and expense recognition methods.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Case Study A:.............................................................................................................................2
1. Determining the functional currency of the foreign subsidiaries with discussion on relevant
AASB sections:..........................................................................................................................2
Case Study B:.............................................................................................................................3
1. Preparing financial statements of BULL LIMITED at 30 June 2018 in currency Australian
dollar:.........................................................................................................................................3
2. Verifying the foreign exchange transaction adjustment:.......................................................6
Reference and Bibliography:......................................................................................................9

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Case Study A:
1. Determining the functional currency of the foreign subsidiaries with discussion on
relevant AASB sections:
AUD Thailand Value
1 26.03 0.03841721
USD Thailand Value
1 33.19 0.03012956
USD AUD Value
1 1.27 0.78740157
AUD 0.03826454
Difference 0.00015267
AUD Vietnam Value
1 17825.46 0.00005610
USD Vietnam Value
1 22722.11 0.00004401
USD AUD Value
1 1.27 0.78740157
AUD 0.00005589
Difference 0.00000021
From the overall evaluation of the case study adequate currency use that could be
conducted by Lotus limited for operating in Thailand and Vietnam. Moreover, the evaluation

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of the above table could directly help in identifying the currency, which might be used in
supporting the company’s subsidiaries and projecting the relevant income generation, which
could be archived by the organisation. In addition, the company could have used only two
different types of currency such as USD and AUD, as the overall benchmark for currency
exchange in both Thailand and Vietnam. This could eventually allow the organisation to
project the overall profitability that is obtained in two different countries (Halbouni and
Yasin 2016). The overall subsidiary of Lotus limited that is situated in Thailand and Vietnam
could directly provide Australian dollar to its parent company for adequately projecting
profitability.
Therefore, the current condition could mainly help in generating higher revenue from
investment, which could be portrayed from subsidiaries. In addition, the AASB 121
paragraph 21 mainly indicates the relevant foreign exchange rates, which could help in
depicting the actual annual report with subsidiary reports for Lotus limited (Aasb.gov.au
2017). Moreover, the AASB 121 paragraph 21 directly depicts the relevant effects of changes
in foreign exchange rates, which needs to be recorded as relevant transactions. Furthermore,
the AASB 121 paragraph 22 mainly states the overall date of transaction that needs to be
provided in the annual report as per the Australian Accounting Standards. According to the
AASB ruling 121, it is directly stated that all the relevant recognition of revenue, non
monetary liability and receipt that is been conducted by the company.
Case Study B:
1. Preparing financial statements of BULL LIMITED at 30 June 2018 in currency
Australian dollar:
Particulars AUS$ 2018 AUS$ 2018

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Sales revenues 2,800,000
Cost of sales:
Opening inventories 245,000
Purchases 1,470,000
Closing inventories 490,000 1,225,000
Gross profit 1,575,000
Expenses
Depreciation 156,800
Other 466,140 622,940
Profit before tax 952,060
Income tax expense 350,000
PAT 602,060
Retained earnings 1 July 2017 400,000
1,002,060
Dividend paid 204,000
Dividend declared 300,000 504,000
Retained earnings 30 June 2018 498,060
Particulars AUS$ 2018
Current Assets
Inventories 420,000
Accounts receivable 30,000
Cash 30,000
Total current assets 480,000

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Non-current assets
Patent 120,000
plant 1,104,000
Accumulated depreciation (195,000)
Land 770,000
Building 1,410,000
Accumulated depreciation (180,000)
Total noncurrent assets 3,029,000
Total assets 3,509,000
Current liabilities
Provisions 750,000
Account payable 480,000
Total current liabilities 1,230,000
Noncurrent liabilities
Loan from Westland ltd 1,060,000
Total liabilities 2,290,000
Net assets 1,219,000
Equity
Share capital 1,080,000
Retained earnings 498,060
Loss from foreign exchange (359,060)
Total equity 1,219,000

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2. Verifying the foreign exchange transaction adjustment:
Date Particulars US$ AUS$ Conversion rate
a) Jan-18 New plant purchase 120,000 204,000 1.7
b) Apr-18 Land purchase 200,000 320,000 1.6
c) Oct-17 New building 100,000 180,000 1.8
d) Jan-18 Interim dividend 120,000 204,000 1.7
d) Jun-18 Interim dividend 200,000 300,000 1.5
e) Jun-18 Inventories 280,000 420,000 1.5
f) Jan-18 Interest 21,200 36,040 1.7
f) Jun-18 Interest 21,200 31,800 1.5
Particulars Amount
Depreciation 90,000
New plant depreciation 24,000
New building 10,000
Depreciation in US$ 56,000
Depreciation in AUS$ 98,000
Depreciation in AUS$ of new machine 40,800
Depreciation in AUS$ of New building 18,000
Total depreciation 156,800
Particulars Amount
Other 270,000
Interest on loan 42,400

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Other expense in US$ 227,600
Other expense in AUS$ 398,300
Interest on 30 June 36,040
Interest on 1 Jan 31,800
Total other expenses in AUS$ 466,140
Particulars Amount
Building 920,000
New purchase 100,000
Land in US$ 820,000
Land in AUS$ 1,230,000
New purchase in AUS$ 180,000
Total Building value in AUS$ 1,410,000
Particulars Amount
Plant 720,000
New plant purchase 120,000
Plant in US$ 600,000
Plant in AUS$ 900,000
New purchase in AUS$ 204,000
Total plant value in AUS$ 1,104,000
Particulars Amount
Land 500,000