Financial Accounting: Disclosure, Reporting, and Owners' Equity
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AI Summary
This report discusses financial accounting disclosure and reporting, the relationship between IASB and AASB, and a comparative analysis of owners' equity of four ASX companies. The report concludes that regulated disclosure and reporting should be fully adopted to promote sustainability and transparency in financial accounting.
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Financial Accounting 1
Corporate and Financial Accounting
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Corporate and Financial Accounting
Student Name
Class & Course
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University
City & State
Date
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Financial Accounting 2
Executive Summary
This report focusses based on the concept of financial accounting disclosure and reporting.
The study addresses different aspect of financial accounting disclosure and reporting such as
methods of disclosure, adoption, and application of IASB by member states, and how owners'
equity is affected by respective items. First, the available literature and different opinions,
regulated disclosure and reporting should be supported because it promotes sustainability and
transparency in the financial accounting disclosure and reporting. Second, IASB was formed
to ensure that there is universally accepted accounting standards that promote comparability
and transparency. To achieve this objective IASB cooperates with nationally based
accounting standards such as AASB for converging accounting standards. Third, IASB
allows AASB and other member states to amend the international standards to converge with
their national states. Fourth, changes in owners' equity are impacted by the decrease and
increase of respective items such as issued capital, Treasury stock, Reserves, Retained
earnings, and Non-controlling interest as established in the analysis of four ASX listed
companies.
Table of Contents
Executive Summary
This report focusses based on the concept of financial accounting disclosure and reporting.
The study addresses different aspect of financial accounting disclosure and reporting such as
methods of disclosure, adoption, and application of IASB by member states, and how owners'
equity is affected by respective items. First, the available literature and different opinions,
regulated disclosure and reporting should be supported because it promotes sustainability and
transparency in the financial accounting disclosure and reporting. Second, IASB was formed
to ensure that there is universally accepted accounting standards that promote comparability
and transparency. To achieve this objective IASB cooperates with nationally based
accounting standards such as AASB for converging accounting standards. Third, IASB
allows AASB and other member states to amend the international standards to converge with
their national states. Fourth, changes in owners' equity are impacted by the decrease and
increase of respective items such as issued capital, Treasury stock, Reserves, Retained
earnings, and Non-controlling interest as established in the analysis of four ASX listed
companies.
Table of Contents
Financial Accounting 3
Executive Summary.................................................................................................................2
Introduction..............................................................................................................................4
Corporate and Financial Accounting.....................................................................................4
Section One: Corporate Regulation...................................................................................4
Regulated versus Voluntary financial accounting disclosure and reporting......................4
Section Two: Accounting Standard Setting.......................................................................6
Contribution of AASB to IASB.........................................................................................6
Non-Compulsory adoption of IASB by members..............................................................6
Section Three: Owners’ Equity...........................................................................................7
i) Changes in each item of equity...................................................................................7
a) Beach Energy Limited.............................................................................................8
b) Caltex Australia.......................................................................................................9
c) Santos Limited.......................................................................................................10
d) Woodside Petroleum..............................................................................................11
ii) Comparative analysis of the debt and equity position of the four selected...............11
Conclusion...............................................................................................................................12
References list.........................................................................................................................14
Executive Summary.................................................................................................................2
Introduction..............................................................................................................................4
Corporate and Financial Accounting.....................................................................................4
Section One: Corporate Regulation...................................................................................4
Regulated versus Voluntary financial accounting disclosure and reporting......................4
Section Two: Accounting Standard Setting.......................................................................6
Contribution of AASB to IASB.........................................................................................6
Non-Compulsory adoption of IASB by members..............................................................6
Section Three: Owners’ Equity...........................................................................................7
i) Changes in each item of equity...................................................................................7
a) Beach Energy Limited.............................................................................................8
b) Caltex Australia.......................................................................................................9
c) Santos Limited.......................................................................................................10
d) Woodside Petroleum..............................................................................................11
ii) Comparative analysis of the debt and equity position of the four selected...............11
Conclusion...............................................................................................................................12
References list.........................................................................................................................14
Financial Accounting 4
Introduction
This report is based on the concept of financial accounting disclosure and reporting. The
report is divided into three sections with respective sub-sections. Section One addresses
corporate regulation by choosing the most appropriate accounting reporting and disclosure
method between voluntary and regulated. Section two address the relationship and
cooperation between the IASB and the AASB and why IASB cannot compel member states
to adopt its accounting standards without amendments fully. Section three discusses a
comparative analysis of Owner's equity of four ASX companies namely Beach Energy
Limited, Caltex Australia, Santos Limited and Woodside Petroleum. The section is divided
into two sub-sections: a) analysis of changes in owner's equity between 2014 and 2017 for
each of the company; and b) Comparative analysis of the debt to equity ratio of the four
companies.
Corporate and Financial Accounting
Section One: Corporate Regulation
Regulated versus Voluntary financial accounting disclosure and reporting
The new trend in the accounting practices require companies to focus their disclosure and
reporting on factors such as corporate governance, social and environmental. Different
stakeholders have interest in understanding the key core business and operation activities of a
company. In other word, stakeholders are interested in the material definitions of an
organization’s activities through financial statements and annual reports (Dagwell, et al.,
2015, p. 69). While some stakeholders support regulated financial accounting reporting and
disclosure others are for a voluntary financial reporting and disclosure option. Therefore,
there is a question on which is the best financial disclosure and reporting option for corporate
managers (Henderson, et al., 2015, p. 312).
Introduction
This report is based on the concept of financial accounting disclosure and reporting. The
report is divided into three sections with respective sub-sections. Section One addresses
corporate regulation by choosing the most appropriate accounting reporting and disclosure
method between voluntary and regulated. Section two address the relationship and
cooperation between the IASB and the AASB and why IASB cannot compel member states
to adopt its accounting standards without amendments fully. Section three discusses a
comparative analysis of Owner's equity of four ASX companies namely Beach Energy
Limited, Caltex Australia, Santos Limited and Woodside Petroleum. The section is divided
into two sub-sections: a) analysis of changes in owner's equity between 2014 and 2017 for
each of the company; and b) Comparative analysis of the debt to equity ratio of the four
companies.
Corporate and Financial Accounting
Section One: Corporate Regulation
Regulated versus Voluntary financial accounting disclosure and reporting
The new trend in the accounting practices require companies to focus their disclosure and
reporting on factors such as corporate governance, social and environmental. Different
stakeholders have interest in understanding the key core business and operation activities of a
company. In other word, stakeholders are interested in the material definitions of an
organization’s activities through financial statements and annual reports (Dagwell, et al.,
2015, p. 69). While some stakeholders support regulated financial accounting reporting and
disclosure others are for a voluntary financial reporting and disclosure option. Therefore,
there is a question on which is the best financial disclosure and reporting option for corporate
managers (Henderson, et al., 2015, p. 312).
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Financial Accounting 5
Different merits and values are considered when choosing the better approach out of the two.
Likewise, different stakeholders have different reasons to support either of the approaches.
Corporations support the voluntary approach because it’s easier manipulate the reports in
their favour (Godfrey & Chalmers, 2007, p. 112). Generalist view states that managers can
easily hide behind voluntary disclosure and reporting of their entities to present only positive
information also known as selective presentation of information. On the other hand, external
stakeholders such as the trade unions, NGOs, employees, suppliers and the government
support regulated financial disclosure and reporting. Managers are under obligation to
disclosure all information pertaining to an entity’s operations. Through regulated disclosure,
external stakeholders are assured that a true and fair value of a company would be presented
(Nobes, 2014, p. 99).
Based on the available literature and different opinions, regulated disclosure and reporting
should be supported. The decision is based on several factors. First, the approach support
innovation and a change in the organizational culture to incorporate interest of all the
stakeholders. Second, regulated disclosure ensures completeness which is not available under
voluntary disclosure and reporting. Third, regulated disclosure and reporting allow
performance comparability. Fourth, the approach does not support non-disclosure and
reporting of negative performance. Fifth, the approach complies with accounting and
financial standards hence enjoys legal certainty. On the other hand, voluntary financial
accounting disclosure and reporting is characterised by conflict of interest, and non-
competitiveness and inefficiency (Dagwell, et al., 2015, p. 201).
Therefore, in promoting sustainability and transparency in the financial accounting disclosure
and reporting, regulated approach should be full adopted. However, the debate on the topic is
not going away any sooner. Merging of the two approaches is considered to be most
appropriate.
Different merits and values are considered when choosing the better approach out of the two.
Likewise, different stakeholders have different reasons to support either of the approaches.
Corporations support the voluntary approach because it’s easier manipulate the reports in
their favour (Godfrey & Chalmers, 2007, p. 112). Generalist view states that managers can
easily hide behind voluntary disclosure and reporting of their entities to present only positive
information also known as selective presentation of information. On the other hand, external
stakeholders such as the trade unions, NGOs, employees, suppliers and the government
support regulated financial disclosure and reporting. Managers are under obligation to
disclosure all information pertaining to an entity’s operations. Through regulated disclosure,
external stakeholders are assured that a true and fair value of a company would be presented
(Nobes, 2014, p. 99).
Based on the available literature and different opinions, regulated disclosure and reporting
should be supported. The decision is based on several factors. First, the approach support
innovation and a change in the organizational culture to incorporate interest of all the
stakeholders. Second, regulated disclosure ensures completeness which is not available under
voluntary disclosure and reporting. Third, regulated disclosure and reporting allow
performance comparability. Fourth, the approach does not support non-disclosure and
reporting of negative performance. Fifth, the approach complies with accounting and
financial standards hence enjoys legal certainty. On the other hand, voluntary financial
accounting disclosure and reporting is characterised by conflict of interest, and non-
competitiveness and inefficiency (Dagwell, et al., 2015, p. 201).
Therefore, in promoting sustainability and transparency in the financial accounting disclosure
and reporting, regulated approach should be full adopted. However, the debate on the topic is
not going away any sooner. Merging of the two approaches is considered to be most
appropriate.
Financial Accounting 6
Section Two: Accounting Standard Setting
Contribution of AASB to IASB
The IFRS standards were first adopted in Australia in 2005. Companies that trade their
securities publically are required to operate in line with IFRS standards which have been
incorporated into the AASB. Therefore, it is important to establish the relationship between
IFRS and AASB accounting standards. While AASB is an accounting agency formed by the
Australian agency, the IASB is a component of IFRS which sought to establish a universal
accounting system to guide the transactions between corporations situated in different
countries (Picker, et al., 2009, p. 56).
First, the Australian government, through the AASB offers monetary support annually to
finance the activities of IASB. Second, IASB was formed to ensure that there are universally
accepted accounting standards that promote comparability and transparency. To achieve this
objective IASB cooperates with nationally based accounting standards such as AASB for
converging accounting standards. Third, the International Public Sector Accounting
Standards Board (IPSASB) facilitates the exchange of information between accounting
agencies like AASB and IASB. Both IASB and AASB consider the information provided by
IPSASB to develop generally accepted accounting standards (Picker, et al., 2009, p. 79).
Non-Compulsory adoption of IASB by members
The adoption of IFRS is not compulsory to the member states of IASB. It should be
understood that different countries have different laws and regulations that guide their
operations. Therefore a country can only adopt accounting standards that are in line with
economic, political and cultural rules and regulations. Members of IASB are at liberty to
amend IASB standards to meet their national specificities (Picker, et al., 2009, p. 213).
Section Two: Accounting Standard Setting
Contribution of AASB to IASB
The IFRS standards were first adopted in Australia in 2005. Companies that trade their
securities publically are required to operate in line with IFRS standards which have been
incorporated into the AASB. Therefore, it is important to establish the relationship between
IFRS and AASB accounting standards. While AASB is an accounting agency formed by the
Australian agency, the IASB is a component of IFRS which sought to establish a universal
accounting system to guide the transactions between corporations situated in different
countries (Picker, et al., 2009, p. 56).
First, the Australian government, through the AASB offers monetary support annually to
finance the activities of IASB. Second, IASB was formed to ensure that there are universally
accepted accounting standards that promote comparability and transparency. To achieve this
objective IASB cooperates with nationally based accounting standards such as AASB for
converging accounting standards. Third, the International Public Sector Accounting
Standards Board (IPSASB) facilitates the exchange of information between accounting
agencies like AASB and IASB. Both IASB and AASB consider the information provided by
IPSASB to develop generally accepted accounting standards (Picker, et al., 2009, p. 79).
Non-Compulsory adoption of IASB by members
The adoption of IFRS is not compulsory to the member states of IASB. It should be
understood that different countries have different laws and regulations that guide their
operations. Therefore a country can only adopt accounting standards that are in line with
economic, political and cultural rules and regulations. Members of IASB are at liberty to
amend IASB standards to meet their national specificities (Picker, et al., 2009, p. 213).
Financial Accounting 7
For example, the AASB adopted the IASB standards after amending several provisions to
accommodate Australian laws and regulations. For instance, AASB amended terminologies
relating to the treatment of public and Private Corporations in line with the Australian
regulations. Currently, the Australian version of IFRS is known as AIFRS. It is proper to say
that IASB member states use IFRS for guidance when developing accounting standards that
can fully meet their specific financial accounting requirements (Dagwell, et al., 2015, p. 263).
Another factor that hinders full adoption and convergence of the IASB standards are the
nature of taxes in a country. IASB allowed its member states to amend IFRS to form tax-
driven accounting standards that meet their specific needs. Therefore, members cannot be
forced to fully adopt the IASB standards, without amendments, when they would not meet
their specific needs (Godfrey & Chalmers, 2007, p. 251).
Section Three: Owners’ Equity
i) Changes in each item of equity
Four public listed companies in the Australian energy industry have been chosen for
discussion. The companies are Beach Energy Limited, Caltex Australia, Santos Limited and
Woodside Petroleum. Respective annuals reports were obtained from the companies'
websites. This section discusses the changes in the equity items for respective companies.
For example, the AASB adopted the IASB standards after amending several provisions to
accommodate Australian laws and regulations. For instance, AASB amended terminologies
relating to the treatment of public and Private Corporations in line with the Australian
regulations. Currently, the Australian version of IFRS is known as AIFRS. It is proper to say
that IASB member states use IFRS for guidance when developing accounting standards that
can fully meet their specific financial accounting requirements (Dagwell, et al., 2015, p. 263).
Another factor that hinders full adoption and convergence of the IASB standards are the
nature of taxes in a country. IASB allowed its member states to amend IFRS to form tax-
driven accounting standards that meet their specific needs. Therefore, members cannot be
forced to fully adopt the IASB standards, without amendments, when they would not meet
their specific needs (Godfrey & Chalmers, 2007, p. 251).
Section Three: Owners’ Equity
i) Changes in each item of equity
Four public listed companies in the Australian energy industry have been chosen for
discussion. The companies are Beach Energy Limited, Caltex Australia, Santos Limited and
Woodside Petroleum. Respective annuals reports were obtained from the companies'
websites. This section discusses the changes in the equity items for respective companies.
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Financial Accounting 8
a) Beach Energy Limited
The company's owners' equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Contributed equity 1239.9 1250.1 1,548.70 1,558.50
Reserves 58.3 273.4 283.3 232.2
Retained earnings/ (accumulated losses) 572.6 -168.7 -757.5 -388.7
Total Equity 1870.8 1354.8 1074.5 1402
Source: Beach Energy, (2015, p. 72); Beach Energy, (2017, p. 78)
According to the analysis, Beach Energy Company had the highest equity in 2014 and the
lowest equity level in 2016. Generally, equity reduced between 2014 and 2016 before
increasing in 2017 (Deegan, 2013, p. 123). The changes between 2014 and 2016 were
attributed to the increase in accumulated losses.
Contributed Equity: The number of shared issued and paid increased during the period from $
1239.9 million in 2014 to $1558.50 million in 2017.
Reserves: The number of reserves increased from $ 58.3 million in 2014 to $ 283.3 million in
2016 before decreasing to $ 232.2 million in 2017.
Retained earnings/ accumulated losses: The Company had reserves amounting to $572.6
million. In the subsequent years, Beach Energy Limited incurred accumulated losses which
caused a significant reduction in its total equity (Maynard, 2017, p. 77).
a) Beach Energy Limited
The company's owners' equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Contributed equity 1239.9 1250.1 1,548.70 1,558.50
Reserves 58.3 273.4 283.3 232.2
Retained earnings/ (accumulated losses) 572.6 -168.7 -757.5 -388.7
Total Equity 1870.8 1354.8 1074.5 1402
Source: Beach Energy, (2015, p. 72); Beach Energy, (2017, p. 78)
According to the analysis, Beach Energy Company had the highest equity in 2014 and the
lowest equity level in 2016. Generally, equity reduced between 2014 and 2016 before
increasing in 2017 (Deegan, 2013, p. 123). The changes between 2014 and 2016 were
attributed to the increase in accumulated losses.
Contributed Equity: The number of shared issued and paid increased during the period from $
1239.9 million in 2014 to $1558.50 million in 2017.
Reserves: The number of reserves increased from $ 58.3 million in 2014 to $ 283.3 million in
2016 before decreasing to $ 232.2 million in 2017.
Retained earnings/ accumulated losses: The Company had reserves amounting to $572.6
million. In the subsequent years, Beach Energy Limited incurred accumulated losses which
caused a significant reduction in its total equity (Maynard, 2017, p. 77).
Financial Accounting 9
b) Caltex Australia
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued capital 543.415 543.415 524.944 524.944
Treasury stock -0.607 -0.644 -0.344 -1.21
Reserves -3.498 -9.223 -7.955 -39.511
Retained earnings 1981.319 2241.981 2,280.75 2610.195
Non-controlling interest 11.962 12.276 12.816 13.483
Total equity 2532.591 2787.805 2810.215 3107.901
Source: (Caltex Australia, 2015, p. 57); (Caltex Australia, 2017, p. 80).
Caltex Australia's equity increased during the period from $2532.6 million in 2014 to
$3107.9 million in 2017. The changes were attributed to;
i) Issued Capital: The number of issued and paid shares stood at $543.4 million in 2014
and 2015 before reducing to $525 million in 2016 and 2017.
ii) Treasury stock: The Treasury stock was recorded at negative values during the entire
period which negatively impacted the company's equity.
iii) Reserves: Reserves recorded negative values from $-3.498 million in 2014 to $-
39.511 million in 2017. The item had a negative impact on the equity.
iv) Retained Earnings: Retained earnings was increased on an annual basis between 2014
and 2016 before a reduction in 2017. Retained earnings were $1981.3 million in 2014,
$2241.8 million in 2015, $2280.7 in 2016 and $2610. 1 million in 2017.
v) Non-Controlling interest: The item increased during the entire period from $11.9
million in 2014 to $13.5 million in 2017 (Kimmel, et al., 2010, p. 98).
b) Caltex Australia
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued capital 543.415 543.415 524.944 524.944
Treasury stock -0.607 -0.644 -0.344 -1.21
Reserves -3.498 -9.223 -7.955 -39.511
Retained earnings 1981.319 2241.981 2,280.75 2610.195
Non-controlling interest 11.962 12.276 12.816 13.483
Total equity 2532.591 2787.805 2810.215 3107.901
Source: (Caltex Australia, 2015, p. 57); (Caltex Australia, 2017, p. 80).
Caltex Australia's equity increased during the period from $2532.6 million in 2014 to
$3107.9 million in 2017. The changes were attributed to;
i) Issued Capital: The number of issued and paid shares stood at $543.4 million in 2014
and 2015 before reducing to $525 million in 2016 and 2017.
ii) Treasury stock: The Treasury stock was recorded at negative values during the entire
period which negatively impacted the company's equity.
iii) Reserves: Reserves recorded negative values from $-3.498 million in 2014 to $-
39.511 million in 2017. The item had a negative impact on the equity.
iv) Retained Earnings: Retained earnings was increased on an annual basis between 2014
and 2016 before a reduction in 2017. Retained earnings were $1981.3 million in 2014,
$2241.8 million in 2015, $2280.7 in 2016 and $2610. 1 million in 2017.
v) Non-Controlling interest: The item increased during the entire period from $11.9
million in 2014 to $13.5 million in 2017 (Kimmel, et al., 2010, p. 98).
Financial Accounting 10
c) Santos Limited
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued capital 6905 10192 8883 9034
Reserves 346 985 -510 51
Accumulated losses 2166 -975 -1293 -1934
Non-controlling interests -4 0 0 0
Total Equity 9413 10202 7080 7151
Sources: (Santos Limited, 2015, p. 58); (Santos Limited, 2017, p. 58).
Santos Limited's equity stood at $9413 million in 2014, $10, 202 million in 2015, $ 7,080
million in 2016 and $ 7151 million in 2017. The changes were as a result of;
i) Increase and decrease in the amount realised from issued and paid shares as
summarised in the table.
ii) An increased and decrease in the company's reserves. Reserves increased from $ 346
million in 2014 to $985 million in 2015 before decreasing to $-510 million in 2016
and $51 million in 2017.
iii) Accumulated losses had a significant impact on total equity. Accumulated losses
amounted to $ 2166 million in 2014, $ -975 million in 2015, $ -1293 million in 2016
and $-1934 million in 2017.
iv) Non-controlling interests were only registered in 2014 at $-4 million.
c) Santos Limited
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued capital 6905 10192 8883 9034
Reserves 346 985 -510 51
Accumulated losses 2166 -975 -1293 -1934
Non-controlling interests -4 0 0 0
Total Equity 9413 10202 7080 7151
Sources: (Santos Limited, 2015, p. 58); (Santos Limited, 2017, p. 58).
Santos Limited's equity stood at $9413 million in 2014, $10, 202 million in 2015, $ 7,080
million in 2016 and $ 7151 million in 2017. The changes were as a result of;
i) Increase and decrease in the amount realised from issued and paid shares as
summarised in the table.
ii) An increased and decrease in the company's reserves. Reserves increased from $ 346
million in 2014 to $985 million in 2015 before decreasing to $-510 million in 2016
and $51 million in 2017.
iii) Accumulated losses had a significant impact on total equity. Accumulated losses
amounted to $ 2166 million in 2014, $ -975 million in 2015, $ -1293 million in 2016
and $-1934 million in 2017.
iv) Non-controlling interests were only registered in 2014 at $-4 million.
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Financial Accounting 11
d) Woodside Petroleum
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued and fully paid shares 6547 6547 6919 6919
Shares reserved for employee share plans -38 -27 -30 -35
Other reserves 920 963 979 997
Retained earnings 8447 6743 6971 7169
Non-controling interest 783 799 823 830
Total Equity 16659 15025 15662 15880
Source: (Woodside Petroleum, 2015, p. 77); (Woodside Petroleum, 2017, p. 102)
Woodside Petroleum had total equity amounting to $16,659 million in 2014, $15,025 million
in 2015, $ 15662 million in 2016, and $15880 million in 2017. The changes were caused by;
a) Increased in the number of issued and fully paid company shares.
b) The negative impact of the shares reserved for employee share plans.
c) Increase in the other reserves between 2014 and 2017 financial years.
d) Reduction in the amount of retained earnings between 2014 and 2016 and a further
increase in 2017.
e) And, an increase in non-controlling interest during the entire period.
ii) Comparative analysis of the debt and equity position of the four selected
The position of debt and equity of the four companies has been based on the 2017 annual
reports. The Debt-to-Equity ratio is used for comparative analysis. The findings are as shown
in the table below.
Firms Beach Energy Caltex Santos Woodside
d) Woodside Petroleum
The company’s owners’ equity between 2014 and 2017 fiscal years have been summarised as
shown below.
Equity 2014 ($ million) 2015 ($ million) 2016 ($ million)2017 ($ million)
Issued and fully paid shares 6547 6547 6919 6919
Shares reserved for employee share plans -38 -27 -30 -35
Other reserves 920 963 979 997
Retained earnings 8447 6743 6971 7169
Non-controling interest 783 799 823 830
Total Equity 16659 15025 15662 15880
Source: (Woodside Petroleum, 2015, p. 77); (Woodside Petroleum, 2017, p. 102)
Woodside Petroleum had total equity amounting to $16,659 million in 2014, $15,025 million
in 2015, $ 15662 million in 2016, and $15880 million in 2017. The changes were caused by;
a) Increased in the number of issued and fully paid company shares.
b) The negative impact of the shares reserved for employee share plans.
c) Increase in the other reserves between 2014 and 2017 financial years.
d) Reduction in the amount of retained earnings between 2014 and 2016 and a further
increase in 2017.
e) And, an increase in non-controlling interest during the entire period.
ii) Comparative analysis of the debt and equity position of the four selected
The position of debt and equity of the four companies has been based on the 2017 annual
reports. The Debt-to-Equity ratio is used for comparative analysis. The findings are as shown
in the table below.
Firms Beach Energy Caltex Santos Woodside
Financial Accounting 12
Limited Australia Limited Petroleum
Total Debts 491.1 3,247 6,555 9,521
Total Equity 1402 3107.9 7151 15880
Debt/ Equity
Ratio
0.35 1.04 0.92 0.60
Debt to Equity ratio examines the amount of debts used by a company to fund its assets
compared to owner's equity (Kimmel, et al., 2010, p. 67). The higher the ratio, the higher the
degree on a company's dependence on debts to finance its assets. Based on the analysis;
a) Caltex Australia has the highest Debt to Equity ratio of 1.04. The company relies
more on debts to finance its assets.
b) Santos Limited has the second highest Debt to Equity ratio of 0.92.
c) Woodside Petroleum has the third highest Debt to Equity ratio of 0.60.
d) Beach Energy Limited has the lowest Debt to Equity ratio of 0.35.
Conclusion
First, the new trend in the accounting practices requires companies to focus their disclosure
and reporting on factors such as corporate governance, social and environmental. While some
stakeholders support regulated reporting and disclosure others are for a voluntary reporting
and disclosure. Studies have shown that in promoting sustainability and transparency in the
financial accounting disclosure and reporting, the regulated approach should be fully adopted.
Second, the IASB provides a universal accounting system to guide the transactions between
corporations situated in different countries. Australia being a member state provides
monetary support annually to finance the activities of IASB. AASB also cooperate with IASB
for converging accounting standards. Last ASSB engages in the exchange of information and
ideas with IASB via IPSASB to develop generally accepted accounting standards. However,
IASB does not compel its members to adopt its standards compulsorily; members are at
Limited Australia Limited Petroleum
Total Debts 491.1 3,247 6,555 9,521
Total Equity 1402 3107.9 7151 15880
Debt/ Equity
Ratio
0.35 1.04 0.92 0.60
Debt to Equity ratio examines the amount of debts used by a company to fund its assets
compared to owner's equity (Kimmel, et al., 2010, p. 67). The higher the ratio, the higher the
degree on a company's dependence on debts to finance its assets. Based on the analysis;
a) Caltex Australia has the highest Debt to Equity ratio of 1.04. The company relies
more on debts to finance its assets.
b) Santos Limited has the second highest Debt to Equity ratio of 0.92.
c) Woodside Petroleum has the third highest Debt to Equity ratio of 0.60.
d) Beach Energy Limited has the lowest Debt to Equity ratio of 0.35.
Conclusion
First, the new trend in the accounting practices requires companies to focus their disclosure
and reporting on factors such as corporate governance, social and environmental. While some
stakeholders support regulated reporting and disclosure others are for a voluntary reporting
and disclosure. Studies have shown that in promoting sustainability and transparency in the
financial accounting disclosure and reporting, the regulated approach should be fully adopted.
Second, the IASB provides a universal accounting system to guide the transactions between
corporations situated in different countries. Australia being a member state provides
monetary support annually to finance the activities of IASB. AASB also cooperate with IASB
for converging accounting standards. Last ASSB engages in the exchange of information and
ideas with IASB via IPSASB to develop generally accepted accounting standards. However,
IASB does not compel its members to adopt its standards compulsorily; members are at
Financial Accounting 13
liberty to amend the international standard in line with their political, economic and social
regulations.
Lastly, the report has established that changes in owners' equity are impacted by the decrease
and increase of respective items such as issued capital, Treasury stock, Reserves, Retained
earnings, and Non-controlling interest.
liberty to amend the international standard in line with their political, economic and social
regulations.
Lastly, the report has established that changes in owners' equity are impacted by the decrease
and increase of respective items such as issued capital, Treasury stock, Reserves, Retained
earnings, and Non-controlling interest.
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Financial Accounting 14
References list
Beach Energy, 2015. Annual Report 2015. [Online]
Available at: http://www.beachenergy.com.au/irm/content/annual-reports2.aspx?RID=215
[Accessed 21 09 2018].
Beach Energy, 2017. Annual Report 2017. [Online]
Available at: http://www.beachenergy.com.au/irm/content/annual-reports2.aspx?RID=215
[Accessed 21 09 2018].
Caltex Australia, 2015. Annual Report 2015. [Online]
Available at: https://www.caltex.com.au/our-company/investor-centre/annual-reports-and-
reviews
[Accessed 21 09 2018].
Caltex Australia, 2017. Annual Report 2017. [Online]
Available at: https://www.caltex.com.au/our-company/investor-centre/annual-reports-and-
reviews
[Accessed 21 09 2018].
Dagwell, R., Wines, G. & Lambert, C., 2015. Corporate Accounting in Australia. Sydney:
Pearson Higher Education AU.
Deegan, C., 2013. Financial accounting theory. 4th Edition ed. North Ryde, N.S.W:
McGraw-Hill Education.
Godfrey, J. M. & Chalmers, K., 2007. Globalisation of Accounting Standards. New York:
Edward Elgar Publishing.
Henderson, S., Peirson, G., Herbohn, K. & Howieson, B., 2015. Issues in Financial
Accounting. Sydney: Pearson Higher Education AU.
References list
Beach Energy, 2015. Annual Report 2015. [Online]
Available at: http://www.beachenergy.com.au/irm/content/annual-reports2.aspx?RID=215
[Accessed 21 09 2018].
Beach Energy, 2017. Annual Report 2017. [Online]
Available at: http://www.beachenergy.com.au/irm/content/annual-reports2.aspx?RID=215
[Accessed 21 09 2018].
Caltex Australia, 2015. Annual Report 2015. [Online]
Available at: https://www.caltex.com.au/our-company/investor-centre/annual-reports-and-
reviews
[Accessed 21 09 2018].
Caltex Australia, 2017. Annual Report 2017. [Online]
Available at: https://www.caltex.com.au/our-company/investor-centre/annual-reports-and-
reviews
[Accessed 21 09 2018].
Dagwell, R., Wines, G. & Lambert, C., 2015. Corporate Accounting in Australia. Sydney:
Pearson Higher Education AU.
Deegan, C., 2013. Financial accounting theory. 4th Edition ed. North Ryde, N.S.W:
McGraw-Hill Education.
Godfrey, J. M. & Chalmers, K., 2007. Globalisation of Accounting Standards. New York:
Edward Elgar Publishing.
Henderson, S., Peirson, G., Herbohn, K. & Howieson, B., 2015. Issues in Financial
Accounting. Sydney: Pearson Higher Education AU.
Financial Accounting 15
Kimmel, P. D., Weygandt, J. J. & Kieso, D. E., 2010. Financial Accounting: Tools for
Business Decision Making. New York: John Wiley & Sons.
Maynard, J., 2017. Financial Accounting, Reporting, and Analysis. Chicago: Oxford
University Press.
Nobes, C., 2014. International Classification of Financial Reporting. Third Edition ed. New
York: Routledge.
Picker, R. et al., 2009. Australian Accounting Standards. Australia: Wiley.
Santos Limited, 2015. Annual Report 2015. [Online]
Available at: http://www.annualreports.com/Company/Santos-Ltd
[Accessed 21 09 2018].
Santos Limited, 2017. Annual Report 2017. [Online]
Available at: http://www.annualreports.com/Company/Santos-Ltd
[Accessed 21 09 2018].
Woodside Petroleum, 2015. Annual Report 2015. [Online]
Available at: http://www.annualreports.com/Company/Woodside-Petroleum-Limited
[Accessed 21 09 2018].
Woodside Petroleum, 2017. Annual Report 2017. [Online]
Available at: http://www.annualreports.com/Company/Woodside-Petroleum-Limited
[Accessed 21 09 2018].
Kimmel, P. D., Weygandt, J. J. & Kieso, D. E., 2010. Financial Accounting: Tools for
Business Decision Making. New York: John Wiley & Sons.
Maynard, J., 2017. Financial Accounting, Reporting, and Analysis. Chicago: Oxford
University Press.
Nobes, C., 2014. International Classification of Financial Reporting. Third Edition ed. New
York: Routledge.
Picker, R. et al., 2009. Australian Accounting Standards. Australia: Wiley.
Santos Limited, 2015. Annual Report 2015. [Online]
Available at: http://www.annualreports.com/Company/Santos-Ltd
[Accessed 21 09 2018].
Santos Limited, 2017. Annual Report 2017. [Online]
Available at: http://www.annualreports.com/Company/Santos-Ltd
[Accessed 21 09 2018].
Woodside Petroleum, 2015. Annual Report 2015. [Online]
Available at: http://www.annualreports.com/Company/Woodside-Petroleum-Limited
[Accessed 21 09 2018].
Woodside Petroleum, 2017. Annual Report 2017. [Online]
Available at: http://www.annualreports.com/Company/Woodside-Petroleum-Limited
[Accessed 21 09 2018].
Financial Accounting 16
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