Company Accounting letter 2022

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student:
Name of the University:
Author’s Note:

1COMPANY ACCOUNITNG
Memo
To : The Board of Directors
From : [Name, Designation]
Date : August 08, 2019
Subject : Essentials of consolidated financial statement and its purpose.
This memorandum is prepared to analyse the consolidated financial statement of APA
Group, Australia and to outline the key elements and fair presentation of the group financial
performance and position of the APA Group. This memorandum also explains issues and
technical aspects of the preparation and presentation of the consolidated financial statement.
Preparation and presentation of the consolidated financial statement is a compliance
requirement for public companies having the reporting entity status. Hence its essence must
be understood and correct techniques and policies must be followed in preparation of the
consolidated financial statement.
Consolidation of financial statement is the process of integrating financial
performance of all the individual companies within a group and presenting the financial
position of the companies together. The purpose of preparation of the consolidated financial
statement is to present the financial performance and the financial position of the companies
within a group as a whole. Therefore, to prepare and present the financial performance of the
group, components of incomes and expenses need to be added based on the nature and the
line likeliness of those components. Two most important part of the consolidated financial
statement is the Consolidated Statement of Profit and Loss and Other Comprehensive Income
and another is the Consolidated Statement of Financial Position. Incomes and expenses of the
subsidiaries are presented jointly in the consolidated statement of profit and loss and on the
other hand, assets and liabilities are presented jointly in the consolidated statement of
financial position.

2COMPANY ACCOUNITNG
Preparation and presentation of the consolidated financial statement requires proper
knowledge of accounting and accounting standards. Each and every item of the profit and
loss statement needs to be added and finalised with due care. Income items must be added
with the line income items and on the other hand the expenses items must be added with the
line expenses items. In doing so the effect of intercompany transactions must be analysed and
must be eliminated with a proper accounting treatment if any. In the consolidated statement
of financial position also, each and every item of liabilities and assets must be consolidated
with proper accounting adjustments. If there is any intercompany debt, that must be
eliminated from the consolidated figure of that line item. If there is any intercompany
unrealised profits that must be eliminated along with the respective intercompany sales
transaction. Therefore, the issues of preparation of consolidated financial statement lies with
the intercompany transactions. Each and every intercompany transactions must be analyzed
properly the consequences and effects of those intercompany transactions must be eliminated
from the consolidated figures.
APA Group is having various subsidiaries some and most of them are fully owned by
the APA Group. They also have 96% ownership interest in Amadeus Gas Trust and in N.T.
Gas Pty Ltd. It can be observed from the note 24 to the 2018 consolidated financial statement
of the APA Group that, they APA Orbost Gas Plant Pty Ltd has been acquired in 2018 and
this is a wholly owned subsidiary of the APA Group. Most of the subsidiaries have entered
into a cross guarantee with the APT Pipelines Limited which itself is a wholly owned
subsidiary of the APA Group. The 2018 Annual Report of the APA Group presents all the
important financial information related to the company and its subsidiaries as a whole.
AASB 10 requires the companies to prepare and present the consolidated financial
statement which are also in parallel to the IFRS10 (AASB 10 2019). The standard applies to
all the reporting entities that are liable to prepare financial statement. It applies to the parent