Greenvale Energy Limited: Accounting for Business Combinations Report

This report examines the accounting for business combinations, specifically focusing on Greenvale Energy Limited's adherence to AASB 8. It analyzes the company's operating and reportable segments, assessing whether the disclosures provide sufficient information about the nature of the product, production processes, and customers. The report highlights the company's asset development operations, including the exploration of the Alpha Oil Shale Deposit, and discusses the implications of outdated data. Furthermore, the report evaluates the clarity and conciseness of the Asset Divestment disclosure. It concludes that Greenvale Energy Limited has largely complied with AASB 8, while also pointing out potential areas for improvement, such as enhancing the data supporting the operating segments and ensuring that all financial items are accounted for on an accrual basis. The report references the company's annual report and relevant academic literature to support its findings.

Running head: ACCOUNTING FOR BUSINESS COMBINATIONS
Accounting for Business Combinations
Student’s Name:
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Author Note

1ACCOUNTING FOR BUSINESS COMBINATIONS
Table of Contents
Introduction................................................................................................................................2
Operating Segment and Reportable Segment of Greenvale Energy Limited............................2
Compliance with AASB 8..........................................................................................................3
References..................................................................................................................................4

2ACCOUNTING FOR BUSINESS COMBINATIONS
Introduction
The issue presented in the question is that Greenvale Energy Limited in its annual
report of 2016 has revealed its financial performance and operations during the year that it
has committed. Now the question lies in the fact that whether the company has adhered to the
requirements as mentioned in AASB 8. Therefore in this study a brief idea about AASB 8 as
well as the operating standards of Greenvale Energy Limited can be known.
Operating Segment and Reportable Segment of Greenvale Energy Limited
The operating segment of any entity means essentially a list of the operations
undertaken in order to add to the revenue generation of the company. On the other hand the
term reportable segment refers to the fact whether the information disclosed in the operating
segments have been reported properly or not, that is, whether there is enough information
about the nature of the product, its production process, nature and type of customer and all
other relevant information. Disclosures not having quantitative thresholds are also considered
a reportable segment. Greenvale Energy Limited in its annual report has mentioned that it has
undertaken the operation of asset development by exploring the Alpha Oil Shale Deposit.
Though the company has mentioned in this certain disclosure that it has failed to provide the
Statement of Resources and Reserves now because of partially out-dated data that has been
preserved poorly and has been outdated, thus the operation has been downgraded to the level
of exploration target. Tables summarizing the oil shale exploration targets have also been
disclosed. The Asset Divestment disclosed by the company is a clear and concise report and
very effectively gives a clear understanding of the actions taken by the company. In the Asset
Divestment disclosure as revealed by the company every little detail in regards to the
downfall of the company in the financial year of 2015 till the time when it sold its assets,
everything has been mentioned in a clear and concise way (Annual Report, 2016).

3ACCOUNTING FOR BUSINESS COMBINATIONS
Compliance with AASB 8
The company, Greenvale Energy Limited has rightly adhered to the laid down
regulations and policies of AASB 8. The disclosures essentially have been prepared in such a
way that a particular investor or a stakeholder will get a clear idea about the financial
condition and position of the company. There are certain areas where ample scope regarding
improvement can be identified (Farías and Rodríguez 2015). For instance the operating
segments broadly do not meet the quantitative threshold, that is, if the segments cold have
been backed up by more data then it could have been included under operating segments
without having to include them under reportable segments. Moreover the information
disclosed by the company in the concerned disclosure is simple and easy to understand and
comprehend enabling any third party investor to get interested in the affairs of the company
thus adhering rightly to the mentioned standards in AASB 8 (Kan and Gray 2013).
For each disclosed financial item if the total of all reportable segments do not equal to
the corresponding consolidated figures for the whole group then the particular financial item
may still not have been received that is it has been recorded on terms of its occurrence and
not receipt. This would definitely prove that the financial statements are prepared on the basis
of accrual basis of accounting.

4ACCOUNTING FOR BUSINESS COMBINATIONS
References
Annual Report of Greenvale Energy Limited, 2016.
Farías, P. and Rodríguez, R., 2015. Segment disclosures under IFRS 8’s management
approach: has segment reporting improved?. Spanish Journal of Finance and
Accounting/Revista Espanola de Financiacion y Contabilidad, 44(2), pp.117-133.
Kang, H. and Gray, S.J., 2013. Segment reporting practices in Australia: Has IFRS 8 made a
difference?. Australian Accounting Review, 23(3), pp.232-243.