Ansell Plc Financial Report: Inventory and Depreciation Analysis

This report provides a comprehensive analysis of Ansell Plc's financial accounting practices, specifically focusing on inventory valuation and depreciation methods. The analysis begins with an examination of the company's inventory processes, highlighting the importance of inventory as a key element of its business activities. The report notes the value of inventory as presented in the balance sheet for 2016 and 2017, and comments on the absence of detailed inventory valuation methods in the annual report. It recommends improvements in the inventory management system. The report then delves into the accounting process, starting with journal entries and their impact on financial statements. It includes examples of journal entries, profit and loss accounts, balance sheets, and cash flow statements. Furthermore, the report assesses Ansell Limited's depreciation policies, comparing depreciation amounts between 2016 and 2017, and discusses the use of the straight-line method. It emphasizes the importance of clear disclosures regarding depreciation changes and the impact of depreciation journal entries on asset values and net profit. The report concludes by highlighting the importance of accurate and transparent financial reporting.

Running head: INTRODUCTORY FINANCIAL ACCOUNTING
Introductory Financial Accounting
Name of the Student:
Name of the University:
Author’s Note

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INTRODUCTORY FINANCIAL ACCOUNTING
Table of Contents
Step 1...............................................................................................................................................2
Step 2...............................................................................................................................................2
Step 3...............................................................................................................................................3
Step 4...............................................................................................................................................4
Step 5...............................................................................................................................................5
Step 6...............................................................................................................................................7
Step 7...............................................................................................................................................8
Step 8.............................................................................................................................................10
Step 9.............................................................................................................................................11
Step 10...........................................................................................................................................14
Step 11...........................................................................................................................................15
Reference.......................................................................................................................................17

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Step 7
In this paper an assessment of the financial reports of Ansell Plc, with the intention of
having knowledge about their inventory processes and this is a key element of the business
activities of the firm. The inventory valuation has been addressed in the financial report with
respect to which the scenario of the firm is disclosed. The inventory treatment and the full
disclosure is given out in the accounting notes of the organization. The value of the inventory has
been laid down in the balance sheet of the company and the value comes to $331.9 in the year
2017, and the value has been lower in the year 2016 as the value was $322.8. The provision that
is maintained has lowered as well in accordance to last year and the figures related to inventory
have indicated that there has been a rise in the level of inventory in accordance to 2016.
The organization in their annual report has not published the process that they have used
in order to evaluate the inventory and therefore nothing regarding the same has been observed in
the notes to accounts section in the annual report. Furthermore, in the section that is related to the
risk management and the principle of risk, indicates that the company does not have an effective
level management process of their inventory. Hence, it becomes tough for the financial report
users to gain an understanding regarding the process that is used by the company during the
valuation of their inventory. It can be recommended that the organizational management
undertakes the initiative to undertake necessary changes within the management system of the
inventory. As there is no explanation of the process of valuation of the inventory, it is not
possible to explain the inventory system management of the firm.
The first step towards the construction of the financial reports have been to record the
journal entries. The journal entries are recorded just after the transactions are taking place and
these entries are posted in the ledger account of the respective items. The over amount of the

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INTRODUCTORY FINANCIAL ACCOUNTING
ledger accounts are recorded in the financial statements. Hence, it can be concluded that the
entire accounting method initiates with the transactions being journalised. If any manipulations
are made within the ledge and the journal balances, then it can have a significant amount of
impact on the financial statements of the firm. The wrong entry in the journal that is done by
mistake or intentionally would have an impact on the financial reports and the outcome that
would be obtained can be misleading to inappropriate decisions and judgments.
Step 8
Figure 1: (Journal Entries of S&S Chemical ltd)

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INTRODUCTORY FINANCIAL ACCOUNTING
Source: (Created by Author)
Figure 1: (Profit and Loss A/c of S&S Chemical ltd)
Source: (Created by Author)

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INTRODUCTORY FINANCIAL ACCOUNTING
Figure 1: (Balance Sheet of S&S Chemical ltd)
Source: (Created by Author)

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Figure 1: (Cash Flow Statement of S&S Chemical ltd)
Source: (Created by Author)
Step 9
In accordance to the policy of depreciation for Ansell Limited, the amount of
depreciation that is levied by the firm has shown a rise by undertaking an analysis of the annual
report of the firm. The property, plant and equipment depreciation is segregated according to the
products they manufacture. The results have indicated that the amount of depreciation has
increased in the year 2017 in accordance to the last year and the value has been $30.7 in 2017
and the value had been $29 in the year 2016. The results have indicated that the firm has
incorporated new assets within their businesses.
The notes to accounts in the annual report of the firm comprises of all the data which is
associated to the depreciation that is levied on each asset categories of the firm. It can be
assumed by looking at the assessment of the financial report of the firm that the management
prepares depreciation based on the straight line method for the asset of the organization. The
notes part in the annual report explains that in case of equipment, property and plant, the
effective asset life are found after the subtraction of the residual value from the asset costs and
this is helpful in attaining equivalent amount for depreciation.
Additionally, I have the opinion that the financial report users should be disclosed with
clear and precise information regarding any sort of alterations in the process of depreciation
charging is taking place and even in circumstances if the process remains unaltered. The
disclosure statement regarding depreciation has been provided properly in the annual report

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which makes it easier for the users to understand. The organization has accumulated depreciation
that has been disclosed in the profit or loss statement of the firm.
The depreciation related journal entries are a result of the treatment of depreciation
within the business and this even has an impact on the asset values in case these values are not
presented properly. This would have an impact on the entire financial report. This would even
have an impact on the net profit of the company. It is seen that these journal entries can be
changed in case the management decides to transform their process of depreciation charging with
any kind of authentic reasons. This would lead to a misstatement of the financial reports.