Corporate Accounting (HI5020) Assignment: Funding and Liabilities

This report analyzes the corporate accounting practices of Wesfarmers and Woolworths, focusing on their sources of funding, liabilities, and asset measurement. The assignment examines various funding sources such as shareholder funds, borrowings, and securities, comparing internal and external funding percentages. It explores the different categories of assets, including growth, equity, and defensive assets, and the measurement basis used by the companies, specifically mentioning the use of AASB 9 and the Credit Impairment Model. The report also summarizes key concepts under the AASB 137 standard concerning provisions, contingent liabilities, and contingent assets. The analysis highlights how both companies prepare their reports similarly, and the different methods they use to manage their financial aspects. The report concludes with a discussion of the key findings, emphasizing the importance of understanding these financial aspects in corporate accounting.

CORPORATE ACCOUNTING
N A M E O F T H E S T U D E N T

INTRODUCTION
The AASB 137 is a measure or a standard introduced
to lay regulations regarding the measurement basis.
In line with this, the main aim of the presentation is to
highlight the various provisions made in the annual
report of the two chosen companies.
The companies which have been selected for the
purpose of the analysis are the Wesfarmers Group
and the Woolworths Group.
The presentation will assess their methods of funding
and assess the provisions of liabilities and assets in
their Balance sheet.

SOURCES OF FUNDING
The different sources of funding made use of by Woolworths and
Wesfarmers can be understood to be:
Shareholders funds
Long term borrowings
Bank Loans
Global Bonds
Securities
Derivatives

Wesfarmers
External: 25%
Internal: 75%
Woolworths
External: 30%
Internal: 70%
PERCENTAGE OF INTERNAL AND
EXTERNAL FUNDS

RELATIVE MERITS AND SHORTCOMINGS
OF THE DIFFERENT SOURCES OF FUND
• Long term source of financing but interference of the shareholders.
Shareholder Funds
• The retained earnings help in maintaining autonomy. Additionally,
helps to save interest money.
Retained earnings
• The global bonds have to be paid bank but are a quick access to
money
Global bonds
• High interest rate but good and verified source of money.
Bank Loans

LIABILITIES IN THE ANNUAL REPORTS
The different liabilities which had been identified in the study
can be mentioned to be as follows:
 Current Liabilities
 Non Current Liabilities
Tax
Payable
Trade
Payables
Short
term
Borrowin
gs
Provision
for
Debts
Long
term
borrowin
gs
Derivativ
es

KEY PROVISIONS UNDER THE AASB 137
‘PROVISIONS, CONTINGENT LIABILITIES
AND CONTINGENT ASSETS
1.Measurement basis to the provisions, the
contingent liabilities and assets which are
made can be assessed adequately.
2.The measurement acts as an assistance for
the different enterprises and helps them to
identify the manner of treatment which is
required to be given to the different assets as
well as the various liabilities which are
present with the enterprise.

AASB 137 IN THE COMPANY
Both the enterprises do not apply
the particular AASB 137 as they
are covered by other provisions.
Instead the companies have been
making use of other techniques of
measurement and the recognition
of the different contingent assets
as well as the liabilities.

DIFFERENT CATEGORIES OF ASSETS
Growth Assets
1. Equity Assets
2. Rental property
3. Firm properties
Defensive Assets
4. Debt securities
5. Derivate

MEASUREMENT BASIS USED BY THE
COMPANIES
The firm makes use of AASB 9 in
order to engage in the
measurement of the different
assets of the enterprise.
It helps them to adopt the Credit
Impairment Model
The AASB 9 replaced the AASB 139.
The firm uses this model to classify
the assets and label them
accordingly.

CONCLUSION
Therefore, from the study, it could be rightfully assessed that,:
• The Woolworths and the Wesfarmers prepare
their paper in a similar manner.
• In consideration of this, both the companies do
not follow the AASB 139
• The sources of funds for the enterprises were
identified.
• The measurement norms followed by the
company were also assessed.

REFERENCES
Balashova, N.N., Melikhov, V.A., Ovchinnikov, M.A., Egorova, E.M.
and Tokareva, E.V., 2016. Organizational and methodological
approaches to development of accounting policy for formation
of integrated accounting of interrelated agricultural companies.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced
accounting. McGraw Hill.
Wesfarmers.com.au 2020. Annual report [online]. Available at:
https://www.wesfarmers.com.au/docs/default-source/default-doc
ument-library/2017-annual-report.pdf?sfvrsn=0
(Retrieved on: 23 Jan. 2020).
Woolworthsgroup.com.au 2020. Annual report [online]. Available
at:
https://www.woolworthsgroup.com.au/icms_docs/195396_annual-
report-2018.pdf
(Retrieved on: 23 Jan. 2020).