Corporate Accounting - BHP Billiton Ltd and Boral Ltd.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note

CORPORATE ACCOUNTING1
Abstract
The focus of the assessment is to comment on the reporting process which is followed
by two companies which belong to the same industry. The companies which are
selected are BHP Billiton ltd and Boral Ltd. The assessment compares the sources of
capital which is used by the businesses and relative advantages and disadvantages
associated with the same. The analysis also presents reporting process which is
followed by the management of the company for reporting assets and liabilities of the
businesses. The assessment also shows if the business has appropriately presented
the contingent liabilities and provisions for the business.
Table of Contents

CORPORATE ACCOUNTING2
Introduction........................................................................................................................3
Discussion..........................................................................................................................3
Sources of Funds...........................................................................................................3
Changes in the Sources of Funds..................................................................................4
Different Sources of Funds (Percentage)......................................................................5
Advantages and Disadvantages of Different Funds......................................................5
Liabilities of the Businesses...........................................................................................6
Provisions, Contingent Liabilities and Contingent Assets..............................................6
Reporting for AASB 137.................................................................................................7
Classification of Assets..................................................................................................9
Recognition Criteria........................................................................................................9
Conclusion.........................................................................................................................9
Reference........................................................................................................................11

CORPORATE ACCOUNTING3
Introduction
The assessment considers the businesses of BHP Billiton Ltd and Boral Ltd
which are engaged in mining and material extraction operations and both the
companies belong to the same industry (Bhp.com. 2020). The assessment would be
reviewing the reporting of key items such as assets, liabilities and equities which the
companies have presented in their respective annual reports. For the purpose of
consideration, the most recent annual report for both the companies are considered.
Furthermore, the analysis would also be identifying if there have been any changes in
the capital structure for both the companies over a period of three years and the
reasons which are three for the same. The reporting framework which is used by the
entities for showing provisions would be reviewed and ascertained if the same is
consistent with the provisions which are stated under AASB 137 ‘Provisions, Contingent
Liabilities and Contingent Assets.
Discussion
Sources of Funds
The capital structure which is used by a business comprises of two main sources
of funds which are the equity and debt sources. These types of funds are used by
businesses for effectively making investments in different activities of the business. The
annual report for BHP Billiton Ltd for the year 2019 reveals that the company is more
dependent on debt capital as the same is used in more proportion in comparison to
equity capital. The debt capital for the business is shown to be $ 23,167 million for the
year. The equity capital on the other hand which is used by the business is made up of
shares, retained earnings, reserves and treasury shares. An extract from the annual
report for 2019 is presented below:
Source: (Bhp.com. 2020)
For the business of Boral Ltd, the annual report for 2019 reveals that the
company prefers more equity-based capital sources in comparison to debt. This
approach reveals that the company does not want to take unwilling risks with excessive
debt capital in the business. The equity capital comprises of issued shares, reserves
and retained earnings and the total of all these figures is shown to be $ 5858.9 million
for 2019 while the debt capital figure is reflected to be 2060.8 million (Boral.com. 2020).