ACCM 4300 Financial Reporting 2: OZ Minerals Consolidation Memo

This report provides an analysis of the consolidation process for OZ Minerals Limited, focusing on key technical aspects such as intra-group transactions and balances, as well as the accounting treatment of foreign subsidiaries. The report highlights that all intra-group balances are null, and any unrealized gains or losses have been removed from the consolidated financial statements. It also explains how foreign subsidiaries, like OZ Minerals Insurance Pte Ltd (Singapore) and OZ Exploration (USA) LLC, prepare their financial statements in their own currency, which are then translated into Australian Dollars (the holding company's currency) during consolidation, in accordance with IAS 21.

Assignment
Company:
OZ Minerals Limited
Consolidation: It refers to the collection of the data of different companies under
the same group. There are some technical aspects to be considered some of them, are
as under:
(1)
Intra-group transactions and balances:
 These are the transaction which are carried out between the companies of a group.
 Each company book such transaction as per their accounting policies.
 During consolidation, there are some factors which ensures the difference between
the intra-group transactions.

Assignment
Company:
OZ Minerals Limited
Factors causes
difference in intra-
group transactions
Difference in
reporting
periods
Sales considered
as fixed assets
Profit margin on
sales etc.
 At the time of consolidation, all these transactions among the companies become
reciprocal to each other.
 At the time of consolidation, all these transactions among the companies become
reciprocal to each other.
In present case following is position of intra-group transaction and balances:
 All the intra-group balances are null.
 Unrealized gain or loss has been removed from the consolidated financial
statements.

Assignment
Company:
OZ Minerals Limited
(2)
Accounting of Foreign Subsidiaries:
Foreign
Subsidiaries of
the company
OZ Minerals
Insurance Pte
Ltd (Singapore)
OZ Exploration
(USA) LLC
OZ Exploration
Chile Limitada
(Chile) etc.
 Foreign subsidiaries prepared their financial statements in their own currency.
 During consolidation, financial statements are to be reported in currency of holding
company.
 Translation of foreign currency financial statement to be done into the holding
company currency.

Assignment
Company:
OZ Minerals Limited
Translation
Assets &
Liabilities
Rate of
reporting date
Income &
Expenses
Rate of the
date of
transaction
Equity Rate of
reporting date
 Any difference in exchange rates has been dealt with in accordance with the IAS
21.
In present case following is the treatment of Foreign Subsidiaries::
 In this case, home currency is Australian Dollar.
 In this company, translation of foreign subsidiaries financial statements are done
into the Australian Dollar.