Corporate Accounting

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

1CORPORATE ACCOUNTING
Executive Summary:
The report is focused on analysing the various items listed in the financial statements of BHP
Billiton, Rio Tinto and Ausdrill Limited. The objective is to evaluate their cash flow position,
other comprehensive income statement, debt and equity positions along with corporate taxation.
The initial section of the report has emphasised on the debt and equity aspects of the three above-
mentioned organisations. After this, the cash flow positions of the organisations are evaluated
effectively. The next section has dealt with assessing the other comprehensive income statements
of the organisations. Finally, the report has shed light on evaluating the different aspects of
taxation of the organisations.

2CORPORATE ACCOUNTING
Table of Contents
Introduction:....................................................................................................................................4
Equity and liability:.........................................................................................................................5
Question (i):.................................................................................................................................5
Question (ii):................................................................................................................................6
Question (iii):...............................................................................................................................7
Cash flow statement:........................................................................................................................8
Question (iv):...............................................................................................................................8
Question (v):..............................................................................................................................10
Question (vi):.............................................................................................................................13
Other comprehensive income statement:.......................................................................................14
Question (vii):............................................................................................................................14
Question (viii):...........................................................................................................................14
Question (ix):.............................................................................................................................14
Question (x):..............................................................................................................................15
Accounting for corporate income tax:...........................................................................................15
Question (xi):.............................................................................................................................15
Question (xii):............................................................................................................................16
Question (xiii):...........................................................................................................................17

3CORPORATE ACCOUNTING
Question (xiv):...........................................................................................................................17
Question (xv):............................................................................................................................18
Question (xvi):...........................................................................................................................18
Question (xvii):..........................................................................................................................18
Conclusion:....................................................................................................................................19
References and Bibliographies:.....................................................................................................20

4CORPORATE ACCOUNTING
Introduction:
The report intends to analyse the financial statements of three ASX listed organisations
functioning in the same industrial sector. The organisations chosen include BHP Billiton, Rio
Tinto and Ausdrill Limited, as they operate in the Australian mining sector. The report takes into
account the evaluation of the latest annual reports of the three organisations including the
assessment of segments such as equity and liability, other comprehensive income statement and
corporate income tax.
BHP Billiton is one of the leading mining companies in Australia, which is involved in
inventing, acquiring, developing and marketing natural resources globally. The main products of
the organisation include copper, petroleum, coal and iron ore. It has been founded in 1851 with
an employee base of 27,161 staffs (BHP 2018).
Rio Tinto is engaged in mining, finding along with processing mineral resources globally.
The organisation provides copper, aluminium, molybdenum, silver, industrial minerals, gold,
titanium dioxide, borates, iron ore, salt, uranium, metallurgical coal and iron ore. It is an Anglo-
Australian organisation established in 1973 with workforce of around 46,807 staffs
(Riotinto.com 2018).
Ausdrill Limited functions as a global mining services organisation. The main operations
include Drilling Services Australia, Contract Mining Services Africa, Equipment Services and
Supplies and other segments. The organisation is engaged in reverse circulation, rotary air blast,
diamond drilling, bores production and monitoring, surface hole drilling, rotary air blast and

5CORPORATE ACCOUNTING
others. The organisation is founded in 1987 having employee base of around 5,278
(Ausdrill.com.au 2018).
Equity and liability:
Question (i):
From the annual reports of the three chosen organisations, it is apparent that all of them
have certain equity items in their balance sheet statement.
As per the annual reports of Rio Tinto, there are three main equity items, which include
share capital, reserves and retained earnings. The share capital of the organisation has increased
from $4,174 million in 2015 to $4,360 million in 2017 owing to the rise in number of equity
shares. Increase in reserves could be observed from $9,139 million in 2015 to $12,284 million in
2017 owing to the increase in foreign currency translation reserve, hedge reserve and others
(Brigham et al. 2016). Finally, increase in retained earnings could be observed from $19,736
million in 2015 to $23,761 million in 2017, as it has managed to increase its profit over margin
over the years (Riotinto.com 2018).
For BHP Billiton, the main equity items include share capital, treasury shares, reserved
and retained earnings. No change could be observed in share capital from 2015 to 2017, as the
organisation has not issued additional equity shares in the market (Miller-Nobles, Mattison and
Matsumura 2016). Treasury shares are observed to decline significantly from $76 million in
2015 to $3 million in 2017, as it has minimised its share buyback strategy. Reserves are observed
to decline from $2,557 million in 2015 to $2,400 million in 2017 due to the fall in hedge reserve
and foreign currency translation reserve (Marshall 2016). Finally, retained earnings have fallen