Corporate Accounting HA2032: Equity, Liability, and Reporting Analysis

This corporate accounting report analyzes the equity and liability sections of the annual reports of BHP Billiton, Adelaide Brighton Limited, and Rio Tinto Limited. The report explains the various items listed in the equity and liability sections, discusses their movements over time, and explores the advantages of different sources of finance. The analysis covers items such as share capital, reserves, retained earnings, and various liabilities, including trade payables and interest-bearing liabilities. The report also discusses the concepts of small proprietary companies, large proprietary companies, and reporting entities, along with the implications of these classifications. The companies' financial performance and changes in their equity and liability positions are examined in detail, providing insights into their financial health and strategies. The report provides a comprehensive overview of corporate accounting practices and financial analysis techniques, making it a valuable resource for students studying finance and accounting.

Corporate Accounting 1
CORPORATE ACCOUNTING
By (Student’s Name)
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Corporate Accounting 2
Abstract
The discussion is section in part A and B. The first part (A) analyzes the items listed in
equity and liability section of the Annual Reports of BHP Billiton, Adelaide Brighton Limited
and Rio Tinton Limited. All the listed items are explained and their changes or movements are
also discussed. In part B, the concepts of small proprietary company, large proprietary company
and reporting are discussed along with the implication of being classified in either one of the
three concepts.

Corporate Accounting 3
Table of Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................4
Equity and Liability Items and Movements.....................................................................................5
Equity Items:................................................................................................................................5
Explanation of Items Listed in Equity:.....................................................................................6
Movement of equity Items:......................................................................................................7
Liability Items..............................................................................................................................8
Explanation of Items in Liability............................................................................................11
Movement in items Liability..................................................................................................13
Advantages of Sources of Finance.............................................................................................13
Part B: Concepts of Large Proprietary Company; Small Proprietary Company; and Reporting
Entity and Implication of Classification........................................................................................13
Conclusion.....................................................................................................................................15
References......................................................................................................................................16
Introduction

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The companies chosen for this discussion are BHP Billiton, Adelaide Brighton Limited
and Rio Tinto. BHP Billiton Limited has emerged as the one of the biggest mining and metal
firms in Australia in the last three decades. BHP Limited has since spread operation in four
continents and has big mining operations encompassing Aluminum, Steel and Copper among
others. BHO also happens to be one of the largest employers in Australia with more than 65000
workers and also making substantial amount of EBIT every year. Nonetheless, the rates of
growth in BP alongside profitability has suffered in the last recent years due to the fierce
competition in the current times as well as due to the global slowdown in building and
construction industry. Beginning the FY 2013, the BHO has been healed significantly by
Andrew McKenzie. In the period 2016-17, nonetheless, BHP went back to remarkable growth
levels.
Rio Tinto happens to be the largest competitor for BHP. Rio Tinto firm was established
in the year 1873 and since then, it has spread its wings significantly to cover a global
perspective. Like BHP, Rio Tinto has also spread its operations in four continents which involve
copper, aluminum and steel among other. The Rio Tinto is also a bigger employer in Australia
with more than 52,000 workers and makes substantial EBIT levels every year. In the last
financial year, Rio Tinto realized a revenue of 40B USD and accomplished a remarkable EBIT
of 14B dollars. The asset of Rio Tinto as at June 30th 2018 stood was much in excess of 100B
dollars.
Adelaide Brighton Limited is a firm dealing in integrated construction materials which
include lime. The major activities of this firm encompasses constriction and infrastructure
alongside processing of minerals. The firm further deals in clinker production alongside
distribution, industrial use limes, cements as well as premixed concrete among others. It is listed

Corporate Accounting 5
in ASX alongside BHP and Rio Tinto and is presently one of the quickest growing firms in
Australia with over 1400 workers.
Equity and Liability Items and Movements
The analysis in this paper would encompass the discussion around shareholder equity and
liabilities and movements of each of the items listed in the equity and liability sections of the
financial statements
Equity Items:
This part list the items under the equity and the understanding of the same as well as the
movements. The following are the items listed by these companies in their financial statements.
BHP Billiton Limited
Items 2017/2018 2016/2017
Share capital invested (BHP Billiton LTD) 1186 1186
Share capital invested (BHP Billiton Plc.) 1057 1057
Treasury shares -3 -33
Various types of reserves 2400 2538
Retained earnings 52618 49542
Minority interest 5468 5781
Shareholder equity 62726 60071
Rio Tinto Limited
Items 2016/2017 2017/2018

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Share capital (Rio Tinto Limited) 4140
Share Capital (Rio Tinto Plc) 220 3915
Share Premium Account 4306 224
Various Reserves 12284 9216
Retained Earnings 23761 21631
Minority Interests 6406 6440
Shareholder’s Equity 51117 45730
Adelaide Brighton
Items 2016/2017 2017/2018
Issued and Paid up capital 733.1 731.4
Retained Earnings 510.6 483.3
Reserves 1.9 2.9
Minority Interest 2.6 2.5
Shareholder’s Equity 1248.2 1220.1
Explanation of Items Listed in Equity:
Share capital invested: This is the amount invested by in the firm by its stockholders. It
is a long-term financing sources and the shareholders obtain company ownership share in return
of their investment. It is a common method of start-up financing (No 2018).
Treasury shares: These are shares that are brought back by issuing firm, decreasing the
number of outstanding shares on open market. All firms have an authorized equity amount
which it can legally issue.

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Various types of reserves: These are two types of reserves which are capital reserve and
revenue reserves. These are taken from the various income sources and often set aside for
distinct purposes. Revenue reserves are created out of profit existing for distribution via
dividend. Capital reserves are created out capital profits from come from sources apart from
normal activities of trading (Sithole 2016).
Retained earnings: These are the profits which a company has earned till now, less any
dividend or additional distributions paid to the investors.
Minority interest: This is part of a subsidiary corporation’s stock which is never owned
by parent company.
Shareholder equity: It is also referred to as stockholder’s equity and it is a company’s
owner’s residual claim once debts are paid and it is the variance between total assets less total
liabilities.
Share Premium Account: It denotes the difference between shared issued par value and
the issue or subscription prices and also called additional paid-in capital or paid-in capital in par
value excess. It is a statutory reserve account which is non-distributable.
Movement of equity Items:
In BHP, in the year 2016, the overal reserves for the BHP stood higher at 2538 million
dollars but the same plunged in the year 2017 at 2400 million dollars. This was due to the
substantial plunge in the hedging reserves of the Company and also due to the payouts owning
under the worker share award reserve in the year 2017. The retained earnings of BHP surged
substantially in the year 2017 from the 49542 million dollars in 2016 to the 52618 million dollars
in the year 2017 as a consequent of good growth in profitability in year 2017. In year 2017,
approximately 35% of the profit after tax was paid by BHP as dividend to its shareholders.

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The Rio Tinto Plc. held share worth 220 million dollars while Rio Tinto Limited held
share bulk of the original share issued amounting to 4140 million dollars. Because of some
32397 shares that were cancelled by Rio Tinto Plc. in the year 2017, the total amount of holding
plunged to 220 million dollars from 22 million dollars. The shareholder equity of Rio Tinto Ltd.
surged to 51117 million dollars in 2017 from the earlier figure of 45730 million dollars in 2016.
This is due to the substantial surge in the reserve and retained earnings of the firm. By year 2017,
the Rio Tinto Company’s reserves included capital redemption reserves, foreign currency
translation reserves, hedging reserves as well as revaluation reserves (Dumay and Hossain 2019).
Nonetheless, the largest reserves for Rio Tinto was listed in the name of “other reserves.”
In Adelaide Brighton, under the Executive Performance Share Plan, Adelaide Brighton
Limited has 618396 shares in the year 2017 and while this was 768352 shares in the year 2016
bringing the total to 2.2 million dollars and 1.7 million dollars in that order. Retained earnings of
Adelaide Brighton surged to 510.6 million dollars in 2017 from the 483.3 million dollars in 2016
as a consequent of addition to the retained earnings in terms of current profits after paying
dividends in the year 2017.
Liability Items
The items listed under the liabilities section by these entities in their respective financial
statements are as showcased in the tables below:
BHP Billiton Limited
Items 2016/2017 2017/2018
Trade payables 5551.00 5389.00
Interest bearing liabilities (short term) 1241.000 4653.00
Other financial liability 394.00 5.00

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Current tax payables 119.00 451.00
Provisions 1959.00 1765.00
Deferred incomes 102.00 77.00
Total current liabilities 11366.00 12340.00
Trade payables (long term ) 5.00 13.00
Interest bearing liabilities- non current 29233.00 31768.00
Other financial liabilities 1106.00 1778.00
Deferred tax liabilities 3765.00 4324.00
Provisions 8445.00 8381.00
Deferred incomes 360.00 278.00
Total 42914.00 46542.00
Total liability 54280.00 58882.00
Rio Tinto Limited
Items 2016/2017 2017/2018
Trade payables 7061.00 6361.00
Interest bearing liabilities (short term)
Borrowing etc. 904.00 922.00
Tax payables 1985.00 764.00
Provisions (including benefits of retirements) 1275.00 1315.00
Deferred incomes
Total current liabilities: 11225.00 9362.00
Trade payables (long term) 856.00 789.00
Borrowing etc. 15148.00 17470.00

Corporate Accounting 10
Tax payables 263.00 274.00
Provision (including benefits of retirement) 13367.00 12479.00
Liabilities held for sale 124.00 38.00
Deferred liabilities 3628.00 3121.00
Total 33386.00 34171.00
Total Liabilities 44611.00 43533.00
Adelaide Brighton Limited
Items 2016/2017 2017/2018
Current Liability
Trade Payables 145.80 117.00
Borrowings 0.30 0.40
Current tax liabilities 9.80 15.40
Provisions 33.80 31.90
Other liabilities 15.10 3.30
Total current liabilities 204.80 168.00
Noncurrent liabilities
Borrowings 428.90 309.00
Deferred tax liabilities 86.00 89.00
Provisions 45.00 39.00
Other non-current liabilities 0.10 0.10
Total non-current liabilities 560.00 438.60
Total liabilities 764.80 606.60

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Explanation of Items in Liability
Item Explanation
Trade payables Amount billed to a corporation by the suppliers for
delivered goods or rendered services in ordinary
business course (Sheet 2017).
Interest bearing liabilities (short term) The short term liabilities which carry interest
Other financial liability Include current tax payable, provision, deferred
incomes (Robinson et al. 2015)
Current tax payables A current liability which is owed to local government
where a firm operates and which is anchored on the
firm’s profitability within a specific period.
Provisions Implies keeping certain money for a known liability
that is probable to emerge following some time
(Campiglio, Godin and Kemp-Benedict 2017)
Deferred incomes Also called deferred revenue/unearned
revenue/unearned income and it is the money
received for services or goods that is are yet to be
delivered.
Total current liabilities Summation of all current liability of a business
Trade payables (long term ) This is a long-term liability which has an interest
payment linked to and it is classified as long-term
debt.
Interest bearing liabilities- non current Long term liability which carry interest

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Other financial liabilities Include provisions, deferred incomes and deferred
tax liabilities
Deferred tax liabilities A tax which is assessed or is owing for the current
period yet it is not paid already and records the
reality that a corporation shall be paying extra
income tax in forthcoming due to a transaction which
happened in current period like sale receivable
installment
Provisions It is estimated liabilities which remain definite
liability yet precise timing alongside amount in
indeterminable like income tax
Deferred incomes A deferred revenue account classified as a long-term
liability since performance is never expected with
one year.
Borrowings This refers to money taken from someone as advance
or loan and is part of liabilities owed by a firm
Liabilities held for sale These are current liabilities held for trading or for
which a company lacks unconditional right to defer
payment past 12 months.