Corporate Accounting Analysis 2022

Running head: CORPORATE ACCOUNTING
CORPORATE ACCOUNTING
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Author’s Note

CORPORATE ACOUNTING1
Part A
Rio Tinto Owner’s Equity
After analysing the owner’s equity part of the balance sheet in the annual report of 2018,
2017 and 2016, it can be observed that the owner’s equity contains share capital, share premium
account, other reserves and retained earnings (Riotinto.com. 2019).
BHP Group
After analysing the owner’s equity part of the balance sheet in the annual report of 2018,
2017 and 2016, it can be observed that the owner’s equity contain share capital, treasury shares,
reserves and the retained earnings.
Share Capital
The amount raised by the company from the market in exchange of the ownership rights
are termed as share capital. The shares are distinguished as either common stock or preferred
share. The shares, which are released by the company, can change depending on the financial
structure of the company and the strategy formulated by the management of the company.
Share Premium
Share premium is the amount, which the shareholders assure to pay against the buying of
shares. The share premiums are always higher than the cost of the share. The amounts are mainly
used for cost underwriting or for issuing bonus share.
Reserve
The reserve is a fund that the company maintains to meet the future obligations, which
arises unexpectedly. The fund mainly contains either cash or highly liquid assets.

CORPORATE ACOUNTING2
Treasury Stock
Treasury stock is the percentage of shares that the company holds in its treasury. The
share is mainly accumulated from the float or from outstanding of shares. In some instances, the
company hold the share in its treasury, which are never issued in the public.
Retained Earnings
Retained Earnings is the net income, which the company gains after paying the dividends
to their shareholders. The retained earnings can be positive or negative. If the amount is positive
then the company has made profits, and if the amount is negative then the company incurred
losses.
Rio Tinto’s Owner’s Equity Movement
After analysing the annual report of 2018, 2017 and 2016, it can be observed that the
company’s share capital is declining. In 2016, the company’s share capital was US $224m, but
the amount decreased to US $220m in 2017. The share capital of the company further declined in
2018. The declining share capital reflects the shareholder’s phycology. As it can be determined
that the shareholders’ did not able to keep faith on the company. Thus, the share price of the
company may also be decline in future. On the other hand, the share premium of the company
has increased. Though, the growth is negligible, but the company’s share premium has increased.
The reserves of the company have also increased in last three years (Riotinto.com. 2019). This
proves that the company’s investment ability will increase. After analysing the annual report of
the company it can be observed that the retained earnings of the company have increased in last
three years. The increase in the retained earnings assists the company not only to invest in the
project but it also helps to increase the liquidity of the company.