Corporate Accounting Report: Telstra Corporation Financial Analysis

This report provides a comprehensive analysis of corporate accounting practices, using Telstra Corporation as a case study. It is divided into two parts, with the first part exploring qualitative characteristics like comparability and relevance within financial reporting, alongside environmental disclosure practices. The report highlights Telstra's sustainability efforts, including reductions in greenhouse gas emissions, digital literacy programs, and employee volunteering. The second part delves into pre-acquisition entries in consolidated financial statements, explaining their role in preventing double-counting of assets and equities, and discusses dividend treatments in different scenarios. Furthermore, it covers the treatment of goodwill under partial and full goodwill methods and the necessary adjustments when carrying amounts differ from fair values during acquisitions. The report also offers recommendations for improving the presentation of financial and sustainability information, such as the inclusion of more quantitative data and comparative information.

Running head: CORPORATE ACCOUNTING
Name of the Student
Name of the University
Author Note

1CORPORATE ACCOUNTING
Executive Summary:
The relevant discussions of the study have been taken into consideration with aspects of
corporate accounting in terms of “Telstra Corporations limited”. The report has been
segregated into two parts, the first part has stated about the qualitative characteristics of
compatibility and relevance thereby disclosing the environmental reporting practices. The
second part of the study have shown the intention of pre-acquisition entries during the
depression of consolidated financial statements. The findings of the study reveal that the
overall sustainability and judgement of the company with the stakeholder is more than 71%
and it is aimed at focusing 68% reduction in greenhouse gas emissions. The sustainability
efforts have concentrated on most significant issues associated to reaching to more than
63000 people via digital literacy programs and their employees taking part in more than 8900
volunteering days in the community. Some of the other excerpts of the study have found that
the pre-acquisition entries are conducive in preventing any instance of “double counting of
assets”. The pre-acquisition entries are also conducive vital in preventing any instance of
“double counting” associated with the equities of the concerned organisation.

2CORPORATE ACCOUNTING
Table of Contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................3
Part A 1a:....................................................................................................................................3
Part A 1b:...................................................................................................................................5
Part A 2......................................................................................................................................7
Part A 3......................................................................................................................................8
Part B 1.......................................................................................................................................9
Part B 2.......................................................................................................................................9
Part B 3.....................................................................................................................................10
Part B 4.....................................................................................................................................10
Part B 5.....................................................................................................................................11
Conclusion:..............................................................................................................................12
References................................................................................................................................13

3CORPORATE ACCOUNTING
Introduction:
The analysis based on the financial statement of the company is depicted to be having
a significant role in terms of corporate accounting. It is to be discerned that financial
statements often serve as a performance statement of company. Therefore, “consolidated
balance sheet”, “comprehensive income statement”, “cash flow statement” and the “statement
showing equity changes”, cannot be overlooked. The consideration of these vital things
serves as various qualities of financial statements and the environmental aspects for making
disclosure about compliance to the top management. The present study has discussed the
various aspects of corporate accounting in terms of “Telstra Corporations limited”. The report
has been segregated into two parts, the first part has stated about the qualitative
characteristics of compatibility and relevance thereby disclosing the environmental reporting
practices. The second part of the study have shown the intention of pre-acquisition entries
during the depression of consolidated financial statements (Leung, Parker & Courtis, 2015).
Discussion:
Part A 1a:
The important aspects of the qualitative characteristics considered from the excerpts
of financial report are related to “comparability, understand ability and reliability” of the
reporting. In this segment, the principle of relevance and comparability is duly discussed with
reference to the financial statement of Telstra Corporations (Telstra.com.au, 2018).
Relevance: The important aspect of relevance of in the financial report states that the various
types of qualitative data should be relevant to the information which is being investigated by
the stakeholders. As the statements have a critical role in the economic decision-making, the
results of this information must be considered with utmost care. Henceforth, the omission of
such information can lead to detrimental repercussions. The total amount of dividend

4CORPORATE ACCOUNTING
payment is considered with the total income for a period along with net cash flow at the end
of the year (Plumlee et al., 2015).
Dividend Payment for 2017:
Cash flow at the end of 2017:
Comparability: The consideration for comparability of the financial statement is seen to be
most important in nature. If the investors are not able to measure their returns, then the sole
purpose of preparation of financial report is not worthwhile. Some of the main excerpts taken
from the financial report of Telstra corporations clearly shows the comparability aspects in
terms of dividend payment and cash flows. This comparison is clearly stated with person to

5CORPORATE ACCOUNTING
changing the summary of statement items in terms of 2017 and 2016. Similarly, the company
has compared the cash flow from financing activities based on 2016 and 2017 information
(Nobanee & Ellili, 2016).
Part A 1b:
Telstra corporations being one of the largest telecommunications network have
considered several aspects of sustainability disclosure in its financial report. The main
considerations of the sustainability aspects are in agreement with “United Nations Global
Compact Communication on Progress”, and in accordance with the “Global Reporting
Initiative (GRI) G4 Sustainability Reporting Guidelines” (Lu & Abeysekera, 2014). Some of
the main initiatives under the sustainability disclosures include:
 The overall sustainability and judgement of the company with the stakeholder is more
than 71% and it is aimed at focusing 68% reduction in greenhouse gas emissions
(Nobanee and Ellili, 2016).
 In addition to this, the company has taken several initiatives to assist more than 1
million vulnerable customers to stay connected with their telecommunications
network.

6CORPORATE ACCOUNTING
 The sustainability efforts have concentrated on most significant issues associated to
reaching to more than 63000 people via digital literacy programs and their employees
taking part in more than 8900 volunteering days in the community.
 Some of the core sustainability approach of the report have been considered with
Digital futures, environmental solutions, consideration for climate change and energy
and utilising resources efficiently thereby minimising environmental footprints in the
value chain (Ben-Amar, Chang & McIlkenny, 2017)
The non-financial disclosure about sustainability engagement is depicted below as
follows:

7CORPORATE ACCOUNTING
Part A 2
Telstra corporations have made comprehensive and robust disclosure in the report
which have considered several aspects of the performance aspects. Being a
telecommunications company, it has considered for various concerns for the society and
community at large. Some of the important disclosures of these aspects have been listed
below as follows:
 “Digital Future”
 “Environmental Solutions”

8CORPORATE ACCOUNTING
 “Responsible Business”
 “Ethics and Governance”
 “Culture and Capabilities”
 “Environmental and Resource Efficiency”
 “Networks”
 “Tech for Good”
 “Everyone Connected initiative”
It is to be discerned that the company has provided sufficient disclosures about each
of the relevant topics as mentioned in the above excerpt. Whether it is information regarding
climate change or considering the needs of culture and capabilities the company has produced
significant amount of disclosure in the major environmental segments. Additionally, the
efficiency in the disclosure of efforts associated with climate change and energy have been
clearly stated with mitigating the climate change impacts and helping the stakeholders and
communities to achieve the same. Some of the various initiatives for maintaining ethics and
governance has been duly depicted with the consideration of transparency in doing business.
The culture and Ability concept is taken into consideration with creating a world-class
workplace for the people (Diouf & Boiral, 2017).
Part A 3
Based on the financial statement of the company, the management has adhered to the
following disclosures in the annual report as per:
 Telstra corporations is particularly ensured that the disclosure of the annual
statements is accurate, user-friendly and consists of adequate representation
encompassing all the vital criteria’s. This is essential for the company to consider a

9CORPORATE ACCOUNTING
robust and pictorial presentation of information as to say that the financial
performance along with considering biodiversity and environmental reports. The
reporting will be considered successful only when the users of financial statement will
be able to understand the exact disclosures made by the company. Additionally, the
company should consider adding more number of graphs beside pictorial presentation
of data (Ina and Adriana, 2013).
 It is also recommended for Telstra corporations to exhibit the environmental impact
and climate change disclosures in a more quantitative manner by the inclusion of
tables and graphs. This consideration will benefit the users in having a better
understanding of different aspects of the financial perspectives. In addition to this,
Telstra should provide more previous information on the environmental and
sustainability report for increasing the comparability aspect. For instance, the
environmental disclosure along with climate change initiatives for a particular
financial year can be represented in a tabular form which will show the various
implications of previous year as well. Additionally, the company needs to consider
comparing the data by taking into account the health hazards in the nearby area which
are involved with network towers (Kraft, 2014).
Part B 1
The different types of important consideration for the pre-acquisition entries have
been stated below as follows:
 Pre-acquisition entries are conducive in preventing any instance of “double counting
of assets”
 The pre-acquisition entries are also conducive vital in preventing any instance of
“double counting” associated with the equities of the concerned organisation

10CORPORATE ACCOUNTING
 The important purpose of recognising the bargain purchase is evident with the
inclusion of pre-acquisition entries (Lombrano, A. and Zanin, 2013)
Part B 2
The report has identified two main conditions which needs to be considered for
payment of dividend “on the date of acquisition”. The aforementioned two conditions include
the disclosure of payment cum dividend and payment of ex dividend. These are listed as
follows:
 Payment of Cum dividend: In case the dividend is paid on the acquisition date by a
certain company and if it is discerned that the dividend declared is included with the
final amount then the entry must be shown in the books of accounts. Henceforth, the
payment of cum dividend even if paid at the acquisition date needs to be deducted
from the total acquisition value considered for amalgamation. This suggests that the
dividend has been accepted on the date of acquisition. In case, a similar situation is
repeated then the company may consider adjustment of the same in the consolidated
financial report during the end of FY (Holzmann, Scholz & Kreidl, 2017).
 Payment of ex-dividend: In case it has been discerned that the subsidiaries of the
company is paying ex dividend at the date of acquisition then such a dividend
payment is not considered to be a part of financial accounts.
Part B 3
The simulation of me and post dividend is very significant to be considered from
financial perspective of an organisation. At the time of dividend declaring the pre-acquisition
profits later on received by the buyer is deducted from the total investment cost. Henceforth,
total dividend from pre-acquisition profit is considered as the pre-acquisition dividend. On

11CORPORATE ACCOUNTING
the other hand, post acquisition dividend is credited to the PL account of the company.
Similarly, the dividend received from post-acquisition are termed as post acquisition dividend
(Tauseef and Nishat, 2015).
Part B 4
During the acquisition process, the identifiable net assets are considered for monetary
consideration pertaining to the subsidiary company which has been acquired. Moreover, the
resultant goodwill amount will be duly shown in the books of accounts of subsidiary
organisation, which will not be able to qualify for an identifiable asset of the company. On
the other hand, in the books of account of subsidiary company, the goodwill will not be taken
into account (Chan, Song and Fan, 2016).
In the aforementioned situation, the two methods of computing the goodwill will be
based on “partial goodwill method” and the “full goodwill method”. Additionally, there needs
to be a separate treatment for goodwill which is received from subsidiary company which is
obtained at the date of acquisition taking place. In the partial goodwill method, only that
goodwill which is received from the transaction is recorded, which is received from the
transaction. However, in the full goodwill method, the company considers the goodwill
received from subsidiary as well as on from the transactions. Additionally, the company
depicts the differences between the two which eventually results in goodwill for the parent
company.
Part B 5
In case in the date the parent acquires controlling interest in a subsidiary the carrying
amount are not equal to the fair value then there needs to be specific adjustment made as per
certain process.