Corporate Accounting: Funds, Liabilities, and Asset Analysis Report

This report provides an analysis of corporate accounting practices, focusing on the financial aspects of BHP Billiton Ltd and Rio Tinto Ltd. It examines the sources of funds used by these companies, highlighting the reliance on equity capital. The report explores the classification and presentation of liabilities, including current and non-current liabilities, and references the annual reports of Evolution Mining Ltd and Boral Ltd to illustrate these concepts. It also covers asset classification, recognition criteria, and measurement bases, including goodwill and inventory valuation methods like FIFO and weighted-average cost. Furthermore, the report delves into the reporting requirements of AASB 137, addressing contingent assets, liabilities, and provisions, as demonstrated by the practices of Evolution Mining Ltd and Boral Ltd. The conclusion emphasizes the consistent application of the conceptual framework in the reporting processes of the selected companies for the year 2019.

Corporate Accounting

Introduction
 Corporate accounting deals with some
process such as the preparation of cash
flow statements, financial records,
balance sheets and more about
financials of the company.
 The analysis which is presented deals
with the capital structure which is used
by the business of BHP Billiton Ltd and
Rio Tinto Ltd which are engaged in same
industry.

Business Performance
Summary
BHP Billiton Ltd Rio Tinto Ltd

Source of Fund
 The sources of funds which is utilized by a
business are mainly equity capital and debt
capital for managing the operations of the
business.
 The companies which are considered for this
analysis are Rio Tinto Ltd and BHP Billiton Ltd.
 The capital structure which is used by both the
companies are quite similar in nature and the
analysis reveals that the business relies more on
equity source of capital for the purpose of
financing the operations.

Proportion of Funds Used

Liabilities of the Businesses
 The liabilities are obligation which every business needs to pay and
the same are represented appropriately in the balance sheet of the
company in an appropriate presentation. It is to be noted that the
total of the liabilities and equity for a business must be equal to the
assets which is possessed by the business. The annual report for
the business of Evolution Mining Ltd shows the breakup of total
liabilities on the basis of current and non-liabilities
 The annual position for the business which is represented in the
financial statements is clear for Boral Ltd for 2019. The
presentation of financial information shows that the management
has appropriately presented financial information especially
liabilities with appropriate disclosures relating to the same. The
managers of Boral ltd reveal that trade payables and short-term
loans for the entity is at the values of $ 832.6 million and $ 339.7
million.

Assets Classification (Rio Tinto)
 The assets which are
covered in the financial
statements of the business
is appropriate present in
the table.
 The assets are recognised
appropriately and
portrayed along with
proper notes which are
provided in the disclosures
which the management
has provided appropriately.

Assets Classification (BHP
Billiton)
 The assets which are
covered in the balance
sheet of BHP Billiton ltd
is appropriately present
in the table provided.
 The assets are
portrayed and
classified appropriately
in the noted as well as
the balance sheet of
the company.

Recognition Criteria
 Goodwill = (Consideration paid + Fair value of non-
controlling interests + Fair value of equity interests) –
Fair value of net identifiable assets
 Cost of inventories must be measured using either,
 FIFO method (First-in, First-out method)
 Weighted-average cost (WAC) method
 The calculation of Inventory purchase is:
 (Closing balance – Opening balance)+ Cost of goods
sold= Inventory purchase
 Deferred Tax assets= Temporary difference x Tax rate

Reporting for AASB 137
 The business of Evolution Mining Ltd has appropriately
presented the contingent assets, liabilities and provisions
in the annual report and the same is provided as per the
requirement of relevant accounting standard of the
business.
 In the case of Boral Ltd, the senior officials of the business
have also taken appropriate steps for presenting the
contingent liabilities and provisions so that a level of
accuracy is maintained. The business during the period
has created provision of $ 23.8 million for a restoration
project of a limestone quarry and in addition to this; the
company has also made provisions for various losses
which is estimated by the business

Conclusion
 The presentation separately shows the
reporting process which is followed by
BHP Billiton Ltd and Rio Tinto Ltd for the
year 2019.
 The reporting process which is followed
is consistent with the conceptual
framework which is widely accepted
across the global.

Thank You