Corporate Accounting | Wesfarmers Limited and Jb Hi-fi Limited

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

CORPORATE ACCOUNTING1
Abstract
Business organizations require funds in order to continue their business operation
along with facilitating certain expansion plans or business growth. Moreover.
Different types of assets and liabilities can be seen in the companies that require the
companies to adopt the appropriate measurement basis to measure and recognize
them. There are three different parts of the report. The first part discusses about the
internal and external sources of funds in Wesfarmers Limited and JB Hi-Fi Limited.
The second part discusses about description of liabilities along with the provisions of
the accounting standard of AASB 137 Provisions, Contingent Liabilities and
Contingent Assets. The last part discusses about the assets in these two companies
along with the adopted measurement basis by these two companies.

CORPORATE ACCOUNTING2
Table of Contents
Introduction...................................................................................................................3
Different Sources of Fund.............................................................................................3
Evolution of Funds........................................................................................................3
Percentage of Internally Generated and Externally Generated Funds........................4
Relative Merits and Shortcomings of Sources of Funds Used.....................................5
Types of Liabilities........................................................................................................6
Provisions under AASB 137.........................................................................................6
References to the Standard of AASB 137 in the Annual Report..................................7
Different Categories of Assets......................................................................................7
Measurement Basis of Assets used by the Companies...............................................7
Conclusion....................................................................................................................9
References.................................................................................................................10

CORPORATE ACCOUNTING3
Introduction
The key purpose of this report is the analysis and evaluation of some of the
major financial aspects of two ASX listed companies; they are Wesfarmers Limited
(Wesfarmers) and JB Hi-Fi Limited (JB Hi-Fi). This report discusses about different
types of funds used by these two companies and the evolution of these funds for the
last three years. This also discusses about the advantages and disadvantages of
sources of funds used by these firms. After that, this report sheds light on the
provisions of AASB 137 and the use of the same standard in the annual reports of
these two companies. Lastly, this report discusses about the types of assets
reported by these two companies. In addition, it shows the measurement bases
adopted by these two companies for the reported assets in the financial statements.
Different Sources of Fund
Wesfarmers – Wesfarmers has used four source of funds for the business. They are
interest bearing loans and borrowings, issued capital, reserves, retained earnings
and current liabilities (wesfarmers.com.au 2019). The company has used these
funds with the aim to fund its business operations.
JB Hi Fi – JB Hi-Fi has also used certain sources of funds for the business; they are
borrowings, contributed equity, reserves, retained earnings and current liabilities.
The management of JB Hi-Fi has used these sources of funds for the purpose of
financing its business operations (investors.jbhifi.com.au 2019).
Evolution of Funds
Wesfarmers – Wesfarmers has divided its interest bearing loans and borrowings
under current liabilities and non-current liabilities over the last three years
(wesfarmers.com.au 2019). Interest bearing loans and borrowings under current
liabilities have decreased from 2017 to 2019; that is $1347 million in 2017, $1159
million in 2018 and $356 million in 2019. The same trend can be seen in case of
interest bearing loans and borrowings under non-current liabilities; that is $4066
million, $2985 million and $2673 million (wesfarmers.com.au 2019). The main
reason for this decrease is the large repayment of borrowings. Issued capital has
decreased over the years that is $22268 million in 2017, $22277 million in 2018 and
$15809 million in 2019 (wesfarmers.com.au 2019). The reserves have also
decreased over the years and 2019 has registered negative reserve and this is
because of accumulated losses due to poor business performance. Wesfarmers has
also reported accumulated losses in 2019 after the reduction of retained earnings
from 2017 to 2018 (wesfarmers.com.au 2019).
JB Hi-Fi – In JB Hi-Fi, the borrowings have decreased over the last three years that
is $558.8 million in 2017, $469.4 million in 2018 and $439.1 million in 2019: and
continuous repayment of borrowings is the main reason for this reduction in the
source of fund (investors.jbhifi.com.au 2019). Contributed equity has increased from
$438.7 million in 2017 to $441.7 million in 2018 and then decreased in 2018 that is
$434.8 million (investors.jbhifi.com.au 2019). This is due to the deviation in the issue
of shares and share prices. JB Hi-Fi has increased its reserve from 2017 to 2019
continuously that is $33.2 million in 2017, $42.7 million in 2018 and $53.7 million in
2019. Like reserves, retained earnings of the company has also increased
continuously from 2017 to 2019; that is $381.6 million in 2017, $463.2 million in 2018
and $555.6 million in 2019 (investors.jbhifi.com.au 2019).