Financial Accounting: Analysis of JB-HiFi's Annual Report

qwertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfgh
jklzxcvbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbnmqwer
tyuiopasdfghjklzxcvbnmqwertyuiopas
dfghjklzxcvbnmqwertyuiopasdfghjklzx
cvbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwerty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmrty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
FINANCIAL ACCOUNTING

JB-Hifi
Introduction
A financial statement is important for every organization and it helps the related parties to frame
a decision regarding the prospect of the company. Financial reporting comprises of disclosures
and other relevant accounting policies that enables preparation of the report. JB-HiFi is a
reporting entity and discloses the relevant information for the users (Deegan, 2011). The
preparation of the task is done with the help of the annual report. It is from the annual report that
various information regarding PPE its recognition and revaluation is done. Further, the balance
sheet is evaluated and researched to trace the intangible assets and its reporting. The noncurrent
assets are even put to a discussion where the evaluation in part is discussed whether it went
upward or downward. Hence, the total discussion and explanation have been done with the help
of the annual report. For an entity, all the major information is present in the annual report and
the same is considered by the stakeholders for the purpose of decision making.
JB the Hi-Fi Limited
1. Items of PPE revalued by the entity during the current FY or the last year
Plant, property, and equipment (PPE) form a major part of the company’s non-current assets. In
order to procure such PPE, the company requires balances of cash that will result in the decline
of figures of cash and cash equivalents. Therefore, an increase in the company’s property, plant
and equipment, will also result in an increment in depreciation expense. The accounting policy
followed by the company is that Plant and Equipment and leasehold improvement are reported at
historical cost net of any impairments and deprecation accumulated till the reporting date. The
historical cost comprises all such expenses which can be related directly to the assets reported.
The straight-line basis method of calculation of depreciation is used so as to facilitate the net cost
of the asset being written off over the useful life of the asset expected with consideration to its
estimated residual value. A review of the methods of depreciation, net realizable values of the
assets and the expected useful and productive life of the assets is undertaken at the end of the
each reporting period to account and provide for any such changes and the effect of the same is
done on a prospective basis. If the carrying value of the asses exceeds its net realizable value,
then an impairment loss is recognized (JB-Hifi, 2017). Alternatively, the higher of the fair value
of the asset and its value in use is also taken to be the net realizable value of the asset.
2

JB-Hifi
From the information available in the annual report, it can be said that evaluations of Property,
Plant and equipment and leasehold improvements have not been reported to have taken place
during the current year or the previous year.
2. Items of PPE derecognized during the year. Disclosure of the profit and loss made from the
derecognition of the assets.
Any asset is considered to be productive and value generating as long as there are tangible
returns from the same. Once the returns and benefits from the asset are stopped, then such asset
is considered to be non performing and non value generating and thus it has to be written off or
derecognized. In case this treatment is required to be adopted for any asset, then the net of the
carrying amount of the asset and the sale proceeds received is to be recognized in the Income
statement either under other expenses or under other income depending upon the amounts
realized (Hamilton et. al, 2011).
From the Annual report, it can be ascertained that the breakup of the various items that are
clubbed under other expenses has not been provided, hence it is not possible to provide the
financial amounts involved in the derecognition of such assets which might or might not be
forming a part of the other expenses.
3. Intangible Assets – Types and amounts involved with the accounting treatment of Goodwill
From the Statement of Financial Position for period ending 30/06/2017, reported amount of
intangible assets is $1,026.6m whereas it was $98.5m for the previous year ending 30 June 2016
(JB-Hifi, 2017).
An extract from the Annual Report is as under:
3