EBOS Group Financial Reporting: Analysis of Accounting Practices

This report provides a detailed analysis of EBOS Group's financial reporting practices, focusing on key aspects such as property, plant, and equipment, intangible assets, provisions and contingent liabilities, leases, and revenue recognition. The analysis covers how EBOS Group values its assets, including the treatment of goodwill and impairment expenses, and its depreciation methods. It examines the company's handling of intangible assets, differentiating between indefinite and finite life intangibles, and how these are disclosed in the financial statements. The report also discusses the provisions made for employee expenses and deferred taxes, as well as the treatment of contingent liabilities. Leases are analyzed, distinguishing between finance and operating leases, and the impact of IFRS 16 on their accounting. Finally, the report reviews EBOS Group's revenue recognition policies, highlighting the five-step model used to account for contracts with customers. The report concludes that EBOS Group complies with relevant accounting standards and regulations in its financial reporting.

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Introduction:
The company chosen is EBOS Group which deals in the healthcare, medical and the
pharmaceutical products. The company is also a very leading marketer and distributor of the
animal are products of the company of Australia.
The company has about more than 3,000 employee in about 52 different locations all across
the country of Australia (EBOS, 2018).
Plant and equipment and property:
In respect of plant, property and equipment, the amount reports its values at their recoverable
amounts. This goes on to include in the goodwill as at the date of the balance sheet. In case,
the carrying value of the asset is more than the asset, then the expense is recognised as an
impairment expense which is reported in the statement of income. The Annual report of the
company states that it has some separate cash generating units. The recoverable amounts of
these assets is the higher of the value in use or the fair value less the costs of selling. The
present values of the future cash flows have been calculated in, in the case of these assets.
The company depreciates and amortises its assets on the basis of straight line basis. But the
assets other than the freehold land are deprecated at their costs less there residual values.
In respect of the Accounting policies, the notes to the financial statements states that the
carrying values of these assets are reviewed at regular intervals for the purposes of
determining as to whether there is any indication of any impairment in the value of the asset
or not. In case, there is any such indication, then the recoverable amount of the asset is
calculated for determining the loss of impairment. The company estimates in the recoverable
amounts of the assets wherein the asset does not have any specific cash generating unit. The
recoverable amount is considered to be the higher of the fair values less the costs of selling
and the value which is in use. For the purposes of assessing in the value in use, all of the

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future expected cash flows are discounted at their present values on the basis of the pre-tax
discount which indicates in the market conditions and the connected time value of money and
also the various risks that are connected with that asset.
The property, plant and equipment are reported at their cost which is the original
consideration which has been paid towards the purchase of that asset and which is directly
connected with the location and the condition for its intended use. After the cost has been
recognised, it- is reported at their respective costs less the accumulated depreciation. The
amount of the depreciation charged on these assets is calculated using the straight line
method of deprecation. This method helps in the allocation of the cost or the fair value
amount of the asset less any amount of the residual value over the estimated number of the
lives of the company.
Intangible assets:
a. The company has goodwill and other indefinite life intangibles as have bene disclosed
in their annual report. The indefinite life intangibles include Terry white Chemmart
Brands, other pharmacy brands, franchisee network, animal care brands, Trademarks.
And the finite intangibles include the customer relationships and contracts.
b. The company has disclosed these intangibles in the most apt manner since it has
disclosed these ta their net values on the face of the Balance sheet and in the notes to
the financial statements, it has shown its values, the impairment loss that has been
calculated on these and the net values. And the method through which the impairment
has been calculated on these. The notes also states in the different calculations.
Provisions and contingent liabilities:
a. The company has provided a provision for the employee expense. The provision has
been made for the benefits which pertains to the employees and are owed by the

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company to them. These expenses relates with the wages, salaries, annual leaves, the
leaves that are of a longer service and the employee incentives for the services that
have been rendered. These are the provisions that have been recognised when the
company is sure that these would have to be paid in the future and also are capable of
being measured reliably. These are the expenses that are reported at the rate of the
remuneration at the time of the settlements and have been calculated using the
discount rate as and when the payment would become due.
Provision have been made for the deferred taxes along with the Trade receivables.
The contingent liabilities of the company includes the guarantees given by the company to
the third parties.
b. Though this is an amount that could have been payable by the company or not in the
near future, hence it is fair for the company to include it in a contingent liability.
But if the company is certain that this expense would be payable in the future, hence a
provision is more favourable for it.
Leases:
a. The company has finance leases and operating fiancé lease. The company has
reported the operating leases since the company has leased out some of the lands,
buildings and the equipment’s. The operating leases are identified when the lessor
than the retention of the risk and the benefit that are associated with the item that has
bene leased out. These payments have also bene included in the determination pf the
profits and the losses in the equal instalments over the lease period. These are the
incentives that are cognised over the straight line basis of the period. There are many
of the lease arrangements that pertain to the land, buildings, plant and equipment and
that have the lease term which ranges from 1 to 12 years. This contract also has some

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market review clauses when these options become due. The company does not have
the option to purchase or own that asset after the term of the lease has been expired.
b. The operational lease rental expenses have been disclosed under the head of expenses
in A1.b section of the notes to the financial statements. The non-cancellable operating
lease payments are shown under “Operating expenditure commitments” in section H2
of the notes to financial statements. As per the annual report of the company, the
company recognises the leases as per the IFRS 16. The stated standard differentiates
between the leases and the service contracts on the basis of the assets that are
identified on the basis of the customers. The differentiation between the operating
leases from the balance sheet and the finance leases on the balance sheet are removed
from the accounting for leases and is replaced by the right to use in the asset along
with the corresponding liability that will have to be recognised for all of the leases by
the lessee. The right of the use these assets are measured initially at their respective
costs and then are measured at their respective costs less any accumulated
depreciation. Then these are adjusted for the interest and the lease payments. In terms
of classification, these operating lease payments are presented as cash flows. These
lease payments are then further bifurcated into principal and the interest that are
further shown in the financial and the operating cash flows. There is an introduction
of a new standard in which there is a major impact of the lease liability on the
consolidated financial statements of the company.
Revenue:

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a. The consolidated income statements of the company shows the revenue as
$7625854,000 and the Income from associates for $4062,000 less acquisition costs of
$7021,000.
b. In terms of revenue, the company provides a single and a comprehensive based five
step based model which is applied on all of the contracts with the customers. This
requirement requires in the identification of the contract that has been entered into
with the customer. This further includes the obligations which pertain to the
performance, the price that has been agreed upon to be paid, the price of the
obligation of the performance that has been agreed upon, amongst others and the
revenue is recognised as and when the company satisfies in the performance
obligation (Annual report, 2018).
Conclusion:
In terms of contingencies and provisions, the company has provisions for the employee
expenses.
The company reports the lease obligations in the financial statements. The company has also
reports in its non-current assets at their costs less costs to sell. In the nutshell, it would be apt
to state that the company has complied with all of the rules and the regulations that the
company is exposed to, when it comes to the preparation of the financial statements. This can
also be stated from the fact that the Auditor report of the company states a clean opinion.

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References:
Ebosgroup.com. (2018). Our Company » EBOS Group Limited. [online] Available at:
https://.ebosgroup.com/about-us/our-company/ [Accessed 15 Sep. 2018].
ebosgroup.com. (2018). EBOS Group Annual Report. [online] Available at:
https://investor.ebosgroup.com/static-files/fdec4b60-0ba3-4c88-9815-eb602133b073
[Accessed 15 Sep. 2018].