Comprehensive Analysis of APA Group's Company Accounting Report

This report analyzes the consolidated financial statement of APA Group, Australia, focusing on the key elements and fair presentation of the group's financial performance and position. The memorandum outlines the importance of consolidated financial statements for public companies, detailing the process of integrating financial performance and position of individual companies within a group. It emphasizes the Consolidated Statement of Profit and Loss and Other Comprehensive Income, along with the Consolidated Statement of Financial Position, highlighting the need for proper accounting knowledge and the elimination of intercompany transactions. The report discusses APA Group's subsidiaries, their ownership structures, and compliance with AASB 10. It also addresses the presentation of goodwill and the need for impairment tests, providing a comprehensive overview of the company's financial reporting practices and corporate governance policies. The report uses APA Group's 2018 Annual Report and Sustainability Report as references.

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student:
Name of the University:
Author’s Note:

1COMPANY ACCOUNITNG
Memo
To : The Board of Directors
From : [Name, Designation]
Date : August 08, 2019
Subject : Essentials of consolidated financial statement and its purpose.
This memorandum is prepared to analyse the consolidated financial statement of APA
Group, Australia and to outline the key elements and fair presentation of the group financial
performance and position of the APA Group. This memorandum also explains issues and
technical aspects of the preparation and presentation of the consolidated financial statement.
Preparation and presentation of the consolidated financial statement is a compliance
requirement for public companies having the reporting entity status. Hence its essence must
be understood and correct techniques and policies must be followed in preparation of the
consolidated financial statement.
Consolidation of financial statement is the process of integrating financial
performance of all the individual companies within a group and presenting the financial
position of the companies together. The purpose of preparation of the consolidated financial
statement is to present the financial performance and the financial position of the companies
within a group as a whole. Therefore, to prepare and present the financial performance of the
group, components of incomes and expenses need to be added based on the nature and the
line likeliness of those components. Two most important part of the consolidated financial
statement is the Consolidated Statement of Profit and Loss and Other Comprehensive Income
and another is the Consolidated Statement of Financial Position. Incomes and expenses of the
subsidiaries are presented jointly in the consolidated statement of profit and loss and on the
other hand, assets and liabilities are presented jointly in the consolidated statement of
financial position.

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Preparation and presentation of the consolidated financial statement requires proper
knowledge of accounting and accounting standards. Each and every item of the profit and
loss statement needs to be added and finalised with due care. Income items must be added
with the line income items and on the other hand the expenses items must be added with the
line expenses items. In doing so the effect of intercompany transactions must be analysed and
must be eliminated with a proper accounting treatment if any. In the consolidated statement
of financial position also, each and every item of liabilities and assets must be consolidated
with proper accounting adjustments. If there is any intercompany debt, that must be
eliminated from the consolidated figure of that line item. If there is any intercompany
unrealised profits that must be eliminated along with the respective intercompany sales
transaction. Therefore, the issues of preparation of consolidated financial statement lies with
the intercompany transactions. Each and every intercompany transactions must be analyzed
properly the consequences and effects of those intercompany transactions must be eliminated
from the consolidated figures.
APA Group is having various subsidiaries some and most of them are fully owned by
the APA Group. They also have 96% ownership interest in Amadeus Gas Trust and in N.T.
Gas Pty Ltd. It can be observed from the note 24 to the 2018 consolidated financial statement
of the APA Group that, they APA Orbost Gas Plant Pty Ltd has been acquired in 2018 and
this is a wholly owned subsidiary of the APA Group. Most of the subsidiaries have entered
into a cross guarantee with the APT Pipelines Limited which itself is a wholly owned
subsidiary of the APA Group. The 2018 Annual Report of the APA Group presents all the
important financial information related to the company and its subsidiaries as a whole.
AASB 10 requires the companies to prepare and present the consolidated financial
statement which are also in parallel to the IFRS10 (AASB 10 2019). The standard applies to
all the reporting entities that are liable to prepare financial statement. It applies to the parent

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entity which has some substantial interest or has a controlling interest in the other entity.
Though each of the subsidiaries are a separate legal entity, their assets and liabilities are
clubbed with the assets and liabilities of the group and the financial performance is
aggregated and presented jointly (Ifrs.org 2019). As the APA Group is having hundred
percent control or substantial controlling interest on the subsidiaries, they are required to
prepare the consolidated financial statement to comply with the requirements of the
accounting standards and the reporting standards. The preparation and presentation of the
consolidated financial statement is also required to correctly assess the financial position of
the group as a whole and to correctly present the financial solvency and financial position of
the group as a whole.
The annual report of the APA Group and the Sustainability report which have been
published by the APA Group reveal the financial performance and the financial position of
the Group as a whole (APA Group Sustainability Report 2018 2019). It also reveals various
accounting policies and practices adopted by the companies and each of such important
accounting policies and practices have been listed and explained in the notes to the
consolidated financial statement (APA Group Annual Report 2018). It also reveals and
explains the corporate governance policies and practices of the APA Group. In the
chairman’s report, their views and strategies towards the stakeholders have been outlined by
the Chairman himself. In the director’s report the availability of the corporate governance
report has been given along with the link to access those reports and the corporate
governance statement explains each and every policies and practices of their corporate
governance (Apa.com.au 2019).
In the 2018 Consolidated Statement of Financial Position shows a goodwill of
$1,183,604 which has been explained further in note 12 to the consolidated financial
statement. From the note 12 Goodwill and Intangibles, it can be observed that there was an

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opening balance in the goodwill account for and amount of $1,183,604 and in the fiscal year
2018 there was no such gain on bargain purchase (APA Group Annual Report 2018). It also
describes their policies for measurement. They measure the good will initially at cost and
subsequently it is measured as cost less accumulated impairment. They have allocated the
goodwill to different cash generating units for the impairment test.
It can be observed from the 2018 Consolidated Financial Statement of the APA
Group, the all the items of the consolidated statement of the profit and loss and the
consolidated statement of their financial position have been presented properly and explained
in the notes to the financial statement wherever required (APA Group Annual Report 2018).
But there are certain ambiguity in some cases which needs more detailed explanations and
disclosures. It can also be observed that, despite having a huge amount in the goodwill
account, there is no impairment of goodwill in the current year. Therefore, an impairment test
of the goodwill can give a more realistic valuation and measurement of the goodwill of the
APA Group.
Signature
[Name, Designation]

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References:
AASB 10. (2019). [ebook] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB10_07-15_COMPdec15_01-18.pdf
[Accessed 7 Aug. 2019].
APA Group Annual Report 2018. (2019). [ebook] Available at:
https://www.apa.com.au/globalassets/documents/annual-reports/2018-annual-reports/
apa_group_annual_and_sustainability_reports_2018.pdf [Accessed 7 Aug. 2019].
APA Group Sustainability Report 2018. (2019). [ebook] Available at:
https://www.apa.com.au/globalassets/documents/annual-reports/2018-annual-reports/apa-
group_sustainability-report_2018.pdf [Accessed 7 Aug. 2019].
Apa.com.au. (2019). apa corporate governance - APA Group. [online] Available at:
https://www.apa.com.au/about-apa/our-organisation/corporate-governance/ [Accessed 7 Aug.
2019].
Ifrs.org. (2019). IFRS . [online] Available at: https://www.ifrs.org/issued-standards/list-of-
standards/ifrs-10-consolidated-financial-statements/ [Accessed 7 Aug. 2019].