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ACC303 - Company Accounting

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Added on  2019-10-31

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The assignment is the company accounting in which the students will be able to develop their written and oral communication skills and strategies in order to complete the Accountants and non Accountants activities. In order to complete the assignment the students will require to work in teams in which maximum three members are must. The assignment includes writing a memorandum to the board of directors and provides the oral presentation related to the assignment. The purpose of the assignment is to enhance the technical knowledge of the students in order to explore the issues, calculations and forces that can be used in the format of memorandum as well as group technical knowledge during completing the presentation. And the student will be able to enhance the communication skills that will be helpful for them in the employment process. 

ACC303 - Company Accounting

   Added on 2019-10-31

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Memo to Board of Directors1
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Date: 12 September 2017To: Board of DirectorsFrom: Subject: Technical aspects of consolidationProposalThis memorandum seeks to explain the technical aspects related to consolidation thatboard of directors needs to consider while developing the financial reports. The termconsolidation of financial statements refers to integrating the financial reports of allsubsidiaries of a multinational organization under the parent company. It has becomeextremely important for the business companies operating at a global level for constantlyadapt their business procedures as per the needs and demands of international market place.As such, development and presentation of consolidated financial statements has becomeessential for companies operating in global market place for improving their businessperformance. This memo has explained the various technical aspects related to theconsolidation process to the board of directors for assisting them to improve the quality offinancial reporting.BackgroundComposition of Group and its Major OperationsThe consolidation basis requires primarily identifying the composition of a group thatcan include subsidiaries, joint ventures and operations, associates. The subsidiaries refer to acompany that is complete owned by the parent company nada such its financial reports arefully consolidated with the main group (Hove, 2006). The joint venture refers to tow or more2
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entities that are controlled by a third party and each business entity retain their individualidentities (Annual Report, 2016). The joint operations refer to an operational partnershipbetween two or more business entities while associates are the partly owned companies of thegroup. Wesfarmers Limited, a recognized Australian conglomerate, listed on ASX andinvolved in retail of chemicals, fertilizers, coal mining and industrial products (Hove, 2006).The Wesfarmers Group consists of associates, joint operations, joint ventures andsubsidiaries. The joint operations of the company include Sodium Cyanide, Bengala and ISPTwhile it has joint venture with BPO NO 1 Pty Ltd. The major subsidiaries of the company areColes Supermarkets, Bunnings Warehouse and many others (Annual Report, 2016). (Source: http://media.corporate-ir.net/media_files/IROL/14/144042/wesfarmers_sr/wesfarmers/group.html )3
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Need to prepare the Consolidation Financial StatementsThe Companies Act requires companies to develop the consolidated financial reportsfor integrating the financial results of all its subsidiaries as a whole (AASB 127, 2007). Asthe subsidiaries prepare their own financial report but in order to provide the users of theannual report the complete performance of the company it is important to include thefinancial results of the subsidiaries together with the own financial results to come with theconsolidation of the financial results. As we know the consolidations of the financialstatements are presented for the group as a whole and group means company it-self andwholly owned subsidiaries (AASB 127, 2007). Subsidiaries refer to the separate legal entitywho prepares its own financial accounts but it has no existence without its holding company.It is very important to fully own by the entity (Annual Report, 2016).Funds used by the company to pay the acquisition amountThe group of companies that are acquired by the Wesfarmers are given above andthey are acquired the management board of Wesfarmers through various sources of funds.While making the acquisition Wesfarmers uses various sources of funds to pay the salesconsideration for the acquired entities (Annual Report, 2016). The main sources of funds areshare capital, debentures or bonds and issue of bonus shares. The subsidiaries acquired by theWesfarmers are now the fully owned by the Wesfarmers itself and there is no other owner ofsuch subsidiaries (Hove, 2006). In the recent year company has acquired HomeBase and to finance the acquisitionamount Wesfarmers has diversified its funding sources. In February 2016, company hasestablished 515 million pounds of three year bank facilities and 115 million pound of oneyear bank facility. This has provided the base to fund the Homebase acquisition and also4
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