This article discusses financial accounting and reporting for Paladin Energy Ltd, a mining company producing uranium. It covers topics such as consolidated financial statements, non-controlling interest, goodwill, intra-group transactions, and corporate governance. References are provided for further reading.
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Running head: FINANCIAL ACCOUNTING AND REPORTING Financial Accounting and Reporting Name of the Student: Name of the University: Author Note:
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FINANCIAL ACCOUNTING AND REPORTING1 Memorandum To:Boards of Directors From:Paladin Energy Ltd. Date:12.09.2018 Subject:Financial Accounting and Reporting 1. Palagin Energy Ltd was started by Uranerz Australia in 1970 at Perth, Western Australia with John Borshoff. It is a mining company producing uranium. Currently it is operating mines in Africa at Nambibia and Malawi. It has joint venture with Isa Uranium. Palagin Energy has 100% owned subsidiary in two companies Fusion Resource Pty. Ltd and Valhalla Uranium Pty Ltd. 2. Parent Company has to draw consolidated financial statement though subsidiary is a permissible distinct entity because the creditors and bondholders of subsidiary generally have no privilege on the parent company. Also, bondholders do not share the part of proceeds with the parent company. Though, consolidated financial statements are of importance for those who are interested in attainment of material about income, capital liabilities and assets. Palagin Energy Ltd satisfies the conditions of preparing consolidated financial statement as per IFRS10. In the consolidated comprehensive income statement adjustments related to its subsidiary is recorded. (Rabbiosi and Santangelo 2013). 3. The non-controlling interest on assets is documented in the consolidated shareholders’ equity and the privilege on net income is documented at the time of apportionment of
2FINANCIAL ACCOUNTING AND REPORTING consolidating net income. Non- controlling interest is positioned at the consolidated balance sheet normally between the liabilities and the shareholder`s equity. A direct non- controlling interest is comprehensive of pre and post-acquisition figure of equities. Indirect non-controlling interest is received after the acquisition had taken place. It is adjusted while calculating the figures for preparing consolidated financial statement. As per stated in the annual report Summit holds 50 percent interest in the Valhalla/Skal Projects by the further 50% interest detained by the Paladin Group. As a significance of the overthrow of the Summit Group, the above mentioned percentage now replicates 100 percent of the Valhalla/Skal Projects with the non- controlling interest imitated on the appearance of the declaration of the Financial Position. The figure in the consolidated balance sheet is US$104540000 in the year 2017 and US$78500000. (Maroun and Zijl,2016). 4. The difference figure arrived after deduction of the figure of tangible and intangible asset of the acquiring firm is referred as Goodwill. The acquisition is documented by the procurer company in the consolidated balance sheet and the adjustments related to this is shown under notes to accounts. Goodwill is recorded in the assets side of the balance sheet. An impairment of assets of US$243900000 in 2017 was recorded in the balance sheet. 5.Intra- group transactions are recognized as monetary or commercial transactions where two companies are involved in the cluster concurrently.Intra- group transaction is recognized in both the financial statements of both units of the entity at the arms-length with unrelated parties. Intra transaction is not recorded in the consolidated financial statement of the group to avoid counting twice of asset and liabilities. The Palagin Group subsidiary Summit Resouces contributed equity of $99381000.
3FINANCIAL ACCOUNTING AND REPORTING 6. Palagin Energy Group has foreign subsidiaries and their items incorporated in the Financial Statements of every of the Group's entities of Palagin Energy are calculated by the coinage of the main monetary surroundings in which the body functions known as the practical exchange. The Consolidated Financial Statements are accessible in United States dollars which is the Company’s efficient and appearance exchange. 7. The company policy on Corporate Governance, Audit committee and Sustainability is presented in the financial statement of the Group Company as well in the financial statements of subsidiary company.Accounting polices is disclosed for both the investors present and the potential. Palagin Energy Ltd has presented the companies policies in the annual report under the different heading as per the conditions laid down by ASB. Sustainability and Corporate Governance report is presented before the financial statements. The reports provide overall insight of soundness of the Group. Corporate Governance report of Palagin Energy states about the growth, good practice and current legislation of the company. Audit of Palagin Energy Ltd is done by PWC. (Allen and Kowalewski 2013). 8. Board of Director’s shall put more stress in explaining the management analysis and its decision of expanding. They shall consider the reasons of losses and selling of its assets reasonably so that they can clearly present their financial statements to its share holders and other new investors. They could merely show how the application of IFRS has been implied while preparing the financial reports. (Bepari and Mollik 2015).
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4FINANCIAL ACCOUNTING AND REPORTING Reference: Allen, F., Gu, X. and Kowalewski, O., 2013. Corporate governance and intra-group transactions in European bank holding companies during the crisis. InGlobal Banking, Financial Markets and Crises(pp. 365-431). Emerald Group Publishing Limited. Bepari, M.K. and Mollik, A.T., 2015. Effect of audit quality and accounting and finance backgrounds of audit committee members on firms’ compliance with IFRS for goodwill impairment testing.Journal of Applied Accounting Research,16(2), pp.196-220. Buchuk, D., Larrain, B., Muñoz, F. and Urzúa, F., 2014. The internal capital markets of business groups: Evidence from intra-group loans.Journal of Financial Economics,112(2), pp.190-212. Gluzová, T., 2016. Disclosure of subsidiaries with non-controlling interest in accordance with IFRS 12: case of materiality.Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis,64(1), pp.275-281. Kaunda, C.S., 2013. Energy situation, potential and application status of small-scale hydropower systems in Malawi.Renewable and Sustainable Energy Reviews,26, pp.1-19. Lee, T.A. and Parker, R.H., 2014. Company financial statements: an essay in business history 1830–1950. InEvolution of Corporate Financial Reporting (RLE Accounting)(pp. 27-51). Routledge. Maroun, W. and van Zijl, W., 2016. Isomorphism and resistance in implementing IFRS 10 and IFRS 12.The British Accounting Review,48(2), pp.220-239.
5FINANCIAL ACCOUNTING AND REPORTING Pucheta‐Martínez, M.C. and García‐Meca, E., 2014. Institutional investors on boards and audit committees and their effects on financial reporting quality.Corporate Governance: An International Review,22(4), pp.347-363. Rabbiosi, L. and Santangelo, G.D., 2013. Parent company benefits from reverse knowledge transfer: The role of the liability of newness in MNEs.Journal of World Business,48(1), pp.160- 170.