HA3011 Advanced Financial Accounting Assignment 2022

HA3011 Advanced Financial Accounting
Assignment T2 2019

AASB 16
Executive Summary
The changes and the enhanced framework introduced by AASB will help the companies to
attain a better position by reflecting the desired information. In this report, the report deals
with AASB 16 that influence all the organizations. The new standard will have a major
influence on companies that are connected lessees of assets and compliance is made
necessary for the ones who are preparing GPFR. In this report, two major mining giants listed
on the ASX is selected that is Rio Tinto and BHP Billiton.
The report introduced with the two selected companies that is BHP and Rio followed by the
changes that have been introduced by AASB 16. Further, a summary is present of the
disclosures made by the company.

AASB 16
Contents
Introduction........................................................................................................... 4
1. BHP LTD........................................................................................................... 4
 Identify and describe the accounting concepts used.......................................4
 Changes have been incorporated in the new accounting standard for lease
AASB 16................................................................................................................. 5
 Key disclosures the company has made on its accounting for leases.............6
2. RIO TINTO........................................................................................................ 7
 Identify and describe the accounting concepts used.......................................7
 Changes have been incorporated in the new accounting standard for lease
AASB 16................................................................................................................. 7
 Key disclosures the company has made on its accounting for leases.............8
Conclusion........................................................................................................... 10
References........................................................................................................... 11

AASB 16
Introduction
The new standard of accounting will assume a place of special importance in making
different changes in the financials of the company. The implementation of the new standard
will influence the industry as a whole because it will bring various changes such as the
provision of beneficial details to the shareholders in terms of decision-making. The new
standard is likely to make a change in the expenses part that forms a part of the financials
(Laux, 2014). Such expenses are difficult to be ascertained with the help of straight-line
rental base and thereby computed based on the profit that is estimated and leads to an
exaggeration of the net profit (Bodie, Kane & Marcus, 2014). Moreover, the difference of
financial reporting can help in incorporating the ROU assets that projects non-current value
but the lease liabilities will have two major choices that the company needs to ensure. The
new standard will provide a better projection of the financial position of the business thereby
projecting the liabilities and providing meaningful insight into the financial reporting process.
The new standard brought change in the profile of the expense and this will be studied
through the study of Rio Tinto and BHP Billiton. Instead of a straight line expense, there will
be more expenses at the beginning and less during the further years thereby influencing the
earning profiles.
1. BHP LTD
 Identify and describe the accounting concepts used.
The accounts have been prepared as per the Australian Corporation Act, 2001 and UK
Companies Act, 2006. The preparation of the accounting has been done considering the
accounting standards and interpretations as per IFRS that is issued by the IASB. As per the
Australian Accounting Standard issued by the AASB is in line with IFRS and as per
interpretations provided by the EU (BHP Billiton, 2018).
The books are maintained as per going concern basis that is it is expected to continue for
perpetual life that it will not shut down or liquidate shortly.