Reporting Process | Boral and Evolution Mining Ltd

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

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Executive Summary
The main purpose of the analysis is to identify the reporting process which is
followed by the businesses of Boral and Evolution Mining Ltd for the year 2019. The
analysis also shows past year trends in terms of increase or decrease in equity and
debt capital which is used by the management of the company. The assessment
also discloses the reporting pattern for assets and liabilities which are used by the
business along with appropriate disclosures which are shown in the financial
statements of the business. The financial performance of the business is also shown
in numerical terms in the analysis which is covered below in details.

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Table of Contents
Introduction...................................................................................................................3
Discussion....................................................................................................................3
Different sources of Funds........................................................................................3
Changes in the Capital Mix.......................................................................................4
Percentage of Different Sources of Funds................................................................5
Pros and Cons of Different Sources of Business.....................................................5
Liabilities of the Businesses......................................................................................6
Provisions, Contingent Liabilities and Contingent Assets........................................7
Reporting for AASB 137............................................................................................7
Classification of Assets.............................................................................................8
Recognition Criteria...................................................................................................9
Conclusion....................................................................................................................9
Reference...................................................................................................................10

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Introduction
The process of accounting is a dynamic process which effectively records all
transactions and presents the financial information of a business in a report format
so that the investors can take decisions based on the same. In most of businesses,
some funds are required for appropriately funding the activities and carrying outs its
work processes. The assessment considers a similar direction for analysis and
considers two companies which belong to the same industry for the purpose of
analysis. The companies which are selected are Evolution Mining Group and Boral
Ltd which are engaged in mining activities and are listed in ASX. The corporate
reporting process which is followed by this company would be considered in the
analysis in terms of assets and liabilities which are reported in the annual reports of
the companies (Maas, Schaltegger and Crutzen 2016). Further the assessment
would be identifying if there is any presence of provisions or contingent liabilities or
contingent assets in either of the companies so that adherence to AASB 137
‘Provisions, Contingent Liabilities and Contingent Assets” can be established.
Discussion
Different sources of Funds
The sources of funds which is utilized by a business are mainly equity capital
and debt capital for which an appropriate mixture is made regarding the source of
funds which is used by a business. The funds are used by businesses for the
purpose of conducting different activities of a business. The annual report for the
business of Evolution Mining Ltd is considered for 2019 and the same shows that the
business utilizes both debt and equity capitals for the purpose of financing the
operations and also for meeting urgent obligations of the business (Bennett,
Schaltegger and Zvezdov 2013). The debt and equity mixture for the business for the
year shows that around 92% of the capital is funded by equity capital and the same
has increased from previous year which shows that Evolution Mining Ltd is more
reliant on utilization of equity capital in replacement of debt capital.
Figure 1: (Capital Mix from the Balance Sheet of Evolution Mining Ltd)
Source: (Evolutionmining.com.au. 2020)
On the other hand, the other company which is considered is Boral Ltd for
which also the annual report is considered. In the case of Boral Ltd, the management
prefers to use equity capital which includes capital accumulated from issue of equity
shares, reserves and retained earnings. As per the analysis of debt equity mix which
is presented in the annual report, the management prefers a 75%: 25% mixture for
equity and debt capital. This shows that the senior officials are trying to manage the

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risks which equity capital brings into the fold. An extract from the balance sheet for
the company is shown below reflecting the capital mixture which is used by the
business for the purpose of financing the activities of the business.
Figure 2: (Capital Mix from the Balance Sheet of Boral Ltd)
Source: (Boral.com. 2020)
Changes in the Capital Mix
The decision to use a particular source of fund lies with the senior
management of a company and therefore it is probable that it will be changing over a
particular time period. The annual report for the present period as well past years
would be considered for identifying the trend in the capital mix which is used by a
business. The situation for Evolution Mining Ltd reveals that the business is trying to
reduce the debt capital which is utilized by the business and increase the equity
capital mix for the business. The debt capital which is used by the management is
shown to be $ 292.47 million in 2018 which is then shown to have reduced in 2019
and the amount is shown to be $ 185.19 million in 2019. In addition to this, the equity
sources of capital such as reserves and retained earnings have increased over the
years which shows that the management is dedicated to reduce the risks which is
associated with the use of debt capital in a business.
On the other hand, the senior officials of Boral Ltd are also trying to attain an
optimum capital structure which can manage the risks and return for the business
appropriately. The senior executives have reduced the debt capital over the years
while at the same time increase the equity capital mixture for the business (Tschopp
and Nastanski 2014). The objective of the senior management is to currently achieve
a lower risk status in the operations and thereby also maintain efficiency in the
operations of the business. The management of Boral Ltd is trying to ensure that
interest burden over the company is lower as the same directly impacts the finance
costs.

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Percentage of Different Sources of Funds
Figure 3: (Percentage of Funds used by both of the Companies)
Source: (Created by the Author)
The above table shows the different mixes for capital which is used by both
the companies and the same is represented in the form of percentage and the
percentage for the same has changed over the years for both the companies which
shows that both companies has made changes in the capital structure which is
utilized by the business. In the case of both the companies, it is evident that the
management is using more percentage of equity capital and slightly adding debt
capital for the purpose of achieving the leverage effective.
Pros and Cons of Different Sources of Business
The different sources of funds which is used by different businesses helps the
businesses to appropriate select the most appropriate source of capital which is
utilized by the business. The capital structure which is used by the business of Boral
Ltd and Evolution Mining Ltd is mostly similar and therefore the same are discussed
in details along with pros and cons below:
Equity Share Capital
Advantages
 The application of equity capital source in a business is considered to be
permanent and therefore it is one of the most preferred source of financing for
the business (Christensen, Cottrell and Baker 2013). The repayment for such
a source of funding is not required unless the business goes into liquidation.
 The business which is utilizing such a fund source has no obligation to pay
regular dividends and the percentage and payments of dividends depend on
the profit margin which is achieved by the business.
Disadvantages
 The use of equity capital does not provide any other advantage to the
business such as tax benefits or leverage effect in the operations of the
business. In addition to this, use of equity share capital is considered to be a
costly source of capital considering the nature of operations of the business.
 The use of equity segregates the ownership of the business among the
shareholders and therefore hampers quick decision making process for a
business.

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Debt Capital
Advantages
 One of the main advantage of using debt capital in a business is the leverage
effect which is brought into the equation and the same reduces the impact of
taxes as interest payments which is associated with debt capital is tax
deductible.
 In addition to this, the ownership in case of debt capital does not segregate
and therefore the management of a company is free to take quick decisions
for the operations of the business.
Disadvantages
 The interest burden which the management of the company needs to bear in
case of debt capital is one of the main disadvantages and the same creates a
charge against the profits which is generated by the business. The interest
burden is one of the major factors which discourages businesses against use
of debt capital.
 The use of debt capital in a business always comes against a collateral
security and therefore in most of the cases, it creates a charge against the
asset which is to be used by the business.
Retained Earnings
Advantages
 The retained earnings do not form of capital which is collected by issue of
shares but the same is created through savings which is accumulated by the
business.
Disadvantages
 The use of this form of capital impacts the reserves which are kept by the
business and depletes the same and therefore in case of emergency, the
business would be helpless.
Liabilities of the Businesses
The liabilities are obligation which every business needs to pay and the same
are represented appropriately in the balance sheet of the company in an appropriate
presentation. It is to be noted that the total of the liabilities and equity for a business
must be equal to the assets which is possessed by the business. The annual report
for the business of Evolution Mining Ltd shows the breakup of total liabilities on the
basis of current and non-liabilities (Christ and Burritt 2017). The current liabilities
section for Evolution Mining Ltd shows that the liabilities which are of current nature
and includes short term loans, trade payables, provisions which is created by the
business. The trade payables are the largest amount which is shown in the balance
sheet which is of $ 156.83 million and the same is shown to have increased
significantly over the period. In the case of non-current liabilities, interest bearing
liabilities is the largest amount presented and the figure for the same is shown to be
$ 185.16 million. The business is trying to reduce the debt capital for the business
which is evident from the reduction of debt which is used by the business. Another
item which is presented in the financial statements is deferred tax liabilities which are
shown to be of $ 53.19 million for 2019.
The annual position for the business which is represented in the financial
statements is clear for Boral Ltd for 2019. The presentation of financial information
shows that the management has appropriately presented financial information
especially liabilities with appropriate disclosures relating to the same. The managers
of Boral ltd reveal that trade payables and short-term loans for the entity is at the
values of $ 832.6 million and $ 339.7 million. The balance of employee based

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liabilities and provisions are appropriately presented in the financial statements
(Warren and Jones 2018). The non-current liability which is presented by the
business is shown to be loans and other interest based liabilities for the business.
The liabilities of the business in terms of total figure are represented to be a little
higher than previous year.
Provisions, Contingent Liabilities and Contingent Assets
The provisions which is stated in by AASB 137 “Provisions, Contingent
Liabilities and Contingent Assets”, makes it clear that the these items needs to be
represented in the financial statements of the business for better presentation of
financial information of the business. The standard further points out that proper
disclosures needs to provided so that a level of transparency is maintained in the
reporting framework of the business (Honggowati et al. 2017). The standard requires
businesses to appropriately disclose all losses or [provisions which is created by the
business during the period.
Reporting for AASB 137
The business of Evolution Mining Ltd has appropriately presented the
contingent assets, liabilities and provisions in the annual report and the same is
provided as per the requirement of relevant accounting standard of the business. An
extract of the reporting process which is provided in the financial statement is
presented below:
The group has claims and guarantees which are covered in the annual report
of the company and the same is properly presented with full disclosures. The above
extracts shows the disclosures which is provided and the same is also evidence of
the adjustment which is made by the business in terms of such elements in the
financial statements.
In the case of Boral Ltd, the senior officials of the business have also taken
appropriate steps for presenting the contingent liabilities and provisions so that a
level of accuracy is maintained. The business during the period has created
provision of $ 23.8 million for a restoration project of a limestone quarry and in
addition to this; the company has also made provisions for various losses which is
estimated by the business (Ramanna 2013). An extract of the notes to accounts of
the business is presented below showing the disclosures which is provided by the
management.

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The contingent liabilities which are presented in the annual reports is mainly
the clean-up process which the business is required to undertake considering the
nature of activities of the business. Further evidences are provided bellow in the form
of an extract:
Classification of Assets
The assets for a business are important as the same are used for the purpose
of generation of revenue and also for the purpose of expanding the operations of the
business. The assets in the case of Evolution Mining Ltd reveal that the business is

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following conceptual framework for the purpose of reporting and has shown
classification on the basis of current assets and non-current assets (Zeitun and Tian
2014). The current assets involve trade receivables, other current assets and tax
assets while non-current assets contain fixed assets for the business. The assets of
the business are fairly represented along with proper disclosures related to the
same.
The management of Boral Ltd has also presented similar aspects in reporting
and properly provided classification of the assets along with proper disclosures
related to the same. As both the companies are from mining industry therefore, the
assets and liabilities which are shown in case of both the companies are quite
similar.
Recognition Criteria
The recognition of different aspects of reporting for both the companies are
done on the basis of conceptual framework and the sane also involves guidance’s
which is from relevant accounting standards. Fixed assets for both the companies
are measured at cost less accumulated depreciation and impairment losses. The
inventory for both the companies is followed either in cost basis or market value
basis (Uyar 2016). In addition to this, ledger accounts are used for the
mathematically accuracy of the financial statements of the business. The recognition
criteria which is followed by the business is appropriately presented in the notes to
accounts section of the annual reports.
Conclusion
The above analysis effectively shows the information which is shown in the
financial statements of a business considering different elements which are covered
in the annual report of a business. The analysis covers the types of capital which is
utilize by the business for the purpose of financing the operations of the business
and also shows changes in the capital structure of the business during the period.
Both the companies, Evolution Mining Ltd and Boral Ltd is shown to have more
reliance on equity share capital more than debt capital for the business. The analysis
also covers reporting for items which are extraordinary in nature such as contingent
assets and liabilities and whether the same has been included in the financial
statements of the business.
Reference

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