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PART B 2 PURPOSE OF PREACQUISITON ENTRIES

   

Added on  2021-06-18

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FINANCIAL REPORTING ANDCONSOLIDATED FINANCIALSTATEMENTSStudent Name: Student Number:

ContentsEXECUTIVE SUMMARY.................................................................................................................................2INTRODUCTION...........................................................................................................................................2PART A.........................................................................................................................................................2DETAILS OF COMPANY SELECTED............................................................................................................2RELEVANCE AND COMPARABILITY..........................................................................................................2ENVIRONMENTAL REPORTING PRACTICES..............................................................................................2ADEQUACY OF INFORMATION AND DISCLOSURES..................................................................................2RECOMMENDATION TO STRENGHTEN....................................................................................................2PART B.........................................................................................................................................................2PURPOSE OF PREACQUISTION ENTRIES...................................................................................................2DIVIDEND IN PREACQUISITON ENTRIES...................................................................................................2DIVIDED – PRE AND POST........................................................................................................................2EFFECT OF GOODWILL.............................................................................................................................2ADJUSTMENTS IN THE CONSOLIDATED FINANCIAL STATEMENTS...........................................................2CONCLUSION...............................................................................................................................................2LIST OF REFERENCES....................................................................................................................................2EXECUTIVE SUMMARYThe financial reporting shall be made in the manner as defined by the various statutes and lawsand regulations contained therein so as to provide the maximum available information to thestakeholders of the company so that the efficient and the effective decision can be taken. Thisstudy has been conducted with the view to have the understanding of the financial reportingpractices being adopted by the companies across the globe. The report has been framed with thefour main purposes. The first purpose has been to analyze whether the financial reporting madeby the companies is as per the conceptual framework of accounting and represents the qualitativecharacteristics of the financial reporting. The second purpose has been to have analyzed the

compliance with the environmental laws and regulations. The third purpose has been tounderstand how the consolidation financial statements are likely to be prepared and how the eachof the accounting shall be done in the books of accounts. The last major purpose is to considerthe role of the subsidiary in the preparation of the financial statements of the company. Withthese considerations and the purposes the report has been prepared. INTRODUCTIONThe financial reporting made by the company shall have and exhibits the qualitative features.These qualitative features have been prescribed by the conceptual framework of financialreporting. These features shall not be neglected in any manner while preparing and presentingnot only the annual financial statements but also shall be considered in providing interimreporting. For the purpose of verifying the qualitative features of the financial reporting, thefinancial statements have been analysed with reference to the disclosure made and the necessaryinformation provided in the said financial statements. For the furtherance of this report, thecompany – Woolworths Limited has been selected. The company has been one of the tophundred of the ASX listed companies. The report has started with the verification of the presenceof the qualitative features of the financial reporting with the help of the financial statements.Along with the financial Statements of the company, the environment reporting has also beenverified and analyzed as to whether the company has been disclosing the information which willbe relevant for the investors. Then the adequacy of the disclosures made or information providedhave been checked in detail and thereon the recommendation has been provided to themanagement in order to further increase the disclosure requirements. Then the detailed analysisof the accounting of the pre acquisition transaction has been made with respect to clarification onevery part with respect to its accounting treatment and reasons for its differences. The report hasthen ended with the appropriate conclusion.

PART ADETAILS OF COMPANY SELECTEDFor the purpose of making the study, the group has chosen the Woolworths Limited. Thecompany is registered in stock exchange of Australia and is one of the top hundred listedcompanies. It has been founded in the year of 1920 and has its headquarters based in New SouthWales Australia. The company has been into the retail sector since its inception. The areas of thebusiness of the company has been into the chain of the departmental stores where every productof the house can be purchase the items which are required for the running of the household, thenthe company also have the liquor chains and the stores which supplies the fresh food and dairyproducts. With the focus on the customer’s satisfaction, the company has been into the businessfor the last so many years. For the purpose of analysis, the annual report for the year ending 2017and 2016 has been selected (Woolworths Limited, 2017). RELEVANCE AND COMPARABILITYAlthough there are four features which enhance the quality of the financial reporting, but underthis section, two features will be discussed in relation to the annual report of the company. Theseare as follows:Relevance – It states that the information so disclosed in the annual report shall be relevant to thestakeholders so that the accordingly decision can be made (Beyer, 2012). Thus, the information,the omission of which will affect the decision of the users of the financial statements will bereferred as the relevant. As per the annual report of the company, the relevant information hasbeen the exit of Home Improvement business of the company (Schroeder, 2011). The companyhas declared on the 18th of January 2016 that business of the home improvement shall bediscontinued in the future year and therefore, the same has been classified as the operation whichhas been discontinued during the year. All the events that have happened in the series have beendetailed in the annual report as:-Home Timber and the hardware group has been soled-Then the inventory of the masters has been sold-Payment of the amounts to the employees and settling the obligations-The accounting treatment and the presentation of the transaction relating to the homeconsortium.

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