Comparative Analysis of Corporate Funds and Financial Accounting

This report delves into corporate and financial accounting, focusing on the sources of funds for Catlex Australia Limited and Beach Energy Limited. It examines their equity sections, including movements in items like issued capital, reserves, and retained earnings, and their liability sections, encompassing current and non-current liabilities. The analysis includes the advantages and disadvantages of various funding sources such as short-term and long-term borrowings, and equity capital. Furthermore, the report discusses the classification of companies, including small and large proprietary companies, and their respective compliance and reporting requirements, particularly for reporting entities. The report provides a comprehensive understanding of financial reporting and compliance within the Australian context.

Running Head: CORPORATE AND FINANCIAL ACCOUNTING
CORPORATE AND FINANCIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

1CORPORATE AND FINANCIAL ACCOUNTING
Abstract
The sources of fund are generated by organizations for its developments as well as
expansions. These business organizations have generally two sources of fund that is
internal sources of the fund as well as the external sources of the fund. The fund
sources are required by companies at different period to fulfill various requirements.
Further, reporting as well as compliance requirements are different for different
companies. Hence, this assignment includes the discussion on the various sources
of fund raised by the company as well as different classifications of the entities for
the reporting entities.

2CORPORATE AND FINANCIAL ACCOUNTING
Table of Contents
Introduction...................................................................................................................3
Discussion.....................................................................................................................3
Part A........................................................................................................................3
Company’s Background........................................................................................3
Sections of Owner’s Equity...................................................................................4
Movements in Items of Owner’s Equity.................................................................5
Sections of Liabilities.............................................................................................6
Movements in Items of Liabilities..........................................................................7
Advantages and Disadvantages of Sources of Fund............................................8
Part B........................................................................................................................9
Types of Classification of Companies and their Compliance and Reporting
Requirements........................................................................................................9
Conclusion..................................................................................................................10
Reference...................................................................................................................11

3CORPORATE AND FINANCIAL ACCOUNTING
Introduction
The sources of the funds are the mediums, with the help of which the
organization raises its working capital as well as long-term capital as well as the
working capital. Funds plays vital role in the organization as no business could live
without the help of funds. All through the life of the business organization, funds are
continuously required. The funds can be raised by the business organizations for
meeting the needs such as starting the business as the initial expenditures, for
funding the continuous business activities as well as for expanding the business.
Moreover, the regulatory compliance as well as reporting requirements is the natural
extension of duties of governance that is shouldered by the top management and the
boards of corporate (Enekwe, Agu and Nnagbogu 2014). Hence, in this assignment,
comparative analysis will be done on the source of fund used by Catlex Australia
Limited and Beach Energy Limited by identifying their movements. Moreover,
discussion will be on different classification of the entities for the purposes of
reporting.
Discussion
Part A
Company’s Background
Catlex Australia Limited is the company based in Australia is the fuel supplier
of transport as well as Convenience Company in retain, which is engaged in the
business of purchasing, refining distributing and lastly marketing the products of
petroleum as well as operating the convenience stores all across the Australia. It
operates in two segments that include Lytton as well as Supply and Marketing
(Caltex. 2019).

4CORPORATE AND FINANCIAL ACCOUNTING
Beach Energy is the ASX listed company based in Australia, which is involved
in the oil and the gas exploration as well as production. It is largest producers of
onshore oil in Australia. The company has operated as well as non-operated,
offshore and onshore, gas and oil production from the five basins across the
Australia and the New Zealand and it is the key supplier to gas market of Australian
east coastal (Beachenergy.com.au. 2019).
i)
Sections of Owner’s Equity
Caltex
The equity section of the company is consists of total parent entity interest as
well as non-controlling interest. The total parent entity interest includes issued
capital, treasury stock, reserves as well as retained earnings.
Beach Energy Limited
The equity section of the company is consists of contributed equity, reserves
as well as retained earnings or accumulated losses.
Descriptions of Items
The owner’s equity is that proportion of company’s total value of the assets,
which can be claimed by their owners. It is the share of the owner’s assets of
business. It is sometimes known as the net assets as the claim is done by the
owners’ to the assets of the company after all liabilities of the company have been
paid off. Non-controlling interest is the position of ownership in which less than fifty
percent of outstanding shares are owned by shareholders and they are having no
control over the decisions. Issued capital is defined as total number of the shares

5CORPORATE AND FINANCIAL ACCOUNTING
that are issued by company to their shareholders. Treasury stock is the stock that is
repurchased by the issuer as well as intended for the retirement or the resale to the
public. Contributed equity is the amount of the cash as well as other assets, which
shareholders have given to organization in the exchange of the stock. Reserves of
the company is the amount that is kept aside for the specific purposes and which
could not be used for some other purposes. Retained earnings are that profits, which
are being earned till date, less any other distributions or dividends paid to the
shareholders (Macht and Weatherston 2014).
ii)
Movements in Items of Owner’s Equity
Caltex
During 2017-2018, the total change in the equity of the company was
$281,163, in which total parent entity interest was changed was $281,589 and the
change in non-controlling interest was ($426). The reason for the changes was
reduction of the treasury stock of the company, increase in the company’s retained
earnings as well as reserves (Bendel 2014).
However, during 2016-17, the total change in the equity of the company was
$297,686 in which total parent entity interest was changes was $297,019 and the
change in non-controlling interest was $667. The reason for the changes was great
reduction in treasury stock and reserves but it is because of increase in company’s
retained earnings, its total equity has been increased (Akeem et al. 2014).
Beach Energy Limited
During 2017-2018, the total changes in the equity was $436, in which the
contributed equity was changed to $300.6 million, reserves was changed to ($21.9)

6CORPORATE AND FINANCIAL ACCOUNTING
million and retained losses was ($157.3) million. The reason for the changes was
increase in the contributed equity. It has changed the structure of total equity
(Beachenergy.com.au. 2019).
However, during 2016-17, the total changes in the equity was $327.5 million,
in which the contributed equity was changed to $9.8 million, reserves was changed
to ($51.1) million and retained losses was ($368.8) million. The reason for the
changes was increase in the amount of retained earnings, which have resulted into
increase in the total equity (Mahdaleta 2016).
iii)
Sections of Liabilities
Caltex
The items in the liabilities is consists of current liabilities and the non-current
liabilities. The company’s current liabilities is consists of payables, interests bearing
liabilities, current tax liabilities, employee benefits and the provisions. Further, the
non-current liabilities include payables, interests bearing liabilities, employee benefits
and provisions (Zani et al. 2014).
Beach Energy Limited
In this company, the total liability is sum of current liabilities as well as the
non-current liabilities. The current liabilities of the company include payables,
employee entitlements, provisions, current tax liabilities, derivatives financial
instruments as well as liabilities held for sale. Further, the non-current liabilities
include employee entitlements, provisions, borrowings and derivatives financial
instruments (Rouf 2015).

7CORPORATE AND FINANCIAL ACCOUNTING
Description of Items
The payable is the short-term payments of debt that requires to be paid for
avoiding any kind of default. The Interest bearing liabilities is the debt, which the
company is required for paying the interest for finance even if there is the plan for
paying off the account in less than the month. The current tax liabilities are the total
tax amount debt that is owed by the company to the taxman. The employee Benefits
is the perks or the fringe benefits that is provided to the employees apart from the
wages as well as salaries. The provisions are the amount that is kept aside by the
company for covering future liability. The derivatives financial instruments are the
contract between the two or more than two parties, values of which is based on the
agreed-upon underlying assets. The borrowings are defined as receiving the amount
in the exchange for obligation for paying back something of the greater value at the
specific time in the future (Della Croce and Gatti 2014).
iv)
Movements in Items of Liabilities
Caltex
During 2017-2018, the total liabilities of the company have increased to
$91,240, in which total current liabilities have reduced to ($164,475) and total non-
current liabilities was increased to $255,715. The reason for these changes was
increase in the long-term interest bearing liabilities and increase in the payables
(Albanez 2015).
However, during 2016-2017, the total liabilities of the company have
increased to $754,800, in which total current liabilities have increased to $856,213
and total non-current liabilities was reduced to ($101,413). The reason for these

8CORPORATE AND FINANCIAL ACCOUNTING
changes was highly increase in the short-term payables as well as interest bearing
liabilities (Agyei and Owusu 2014).
Beach Energy Limited
During 2017-2018, the total liabilities of the company have increased to
$1747.7 million, in which total current liabilities have increased to $356.5 million and
total non-current liabilities was increased to $1391.2 million. The reason for these
changes was highly increase in the short-term liabilities as well as long-term
liabilities (Beachenergy.com.au. 2019).
However, during 2016-2017, the total liabilities of the company have reduced
to ($59.9) million, in which total current liabilities has reduced to ($22.9) million and
total non-current liabilities was reduced to ($37) million. The reason for these
changes was decrease in short-term as well as long-term debt of company (Agyei
and Owusu 2014).
v)
Advantages and Disadvantages of Sources of Fund
The funds used by Catlex Australia Limited as well as Beach Energy Limited
are short-term borrowings, long-term borrowings and the equity shares. The
advantage of the short-term borrowing includes its fast approval, paying of less
interest, improving of credit rating and more flexibility; however, it includes drawback
of higher costs of loan and making a seasonal borrower. Further, the advantages of
the long-term borrowings includes providing of the opportunities for undertaking
larger projects, providing good opportunities for commercial banks for investing in
their surplus funds and others. However, the shortcoming of it includes high level of
the risks as well as financial challenges such as restricting monthly cash flows,

9CORPORATE AND FINANCIAL ACCOUNTING
collateral risks and others. Lastly, the advantages of equity capital includes non-
requirement of payments of interests, no requirement of repayments as well as it is
less risky. However, the disadvantage of equity capital includes dilution of the
ownerships, higher costs and others (Umer 2014)
Part B
Types of Classification of Companies and their Compliance and Reporting
Requirements
Small Proprietary Companies
The entity is required to satisfy two criteria as per the section of 45A (2) for
categorizing it into the small proprietary company. The criteria that is required to be
met includes that at end of financial year, fifty or fewer than fifty employees needs to
be controlled by entities. Further, during financial year, gross assets consolidated
value as well as the entities controlled requires less than total amount of $12.5
million (Crowther 2018). Lastly, during financial year, consolidated gross operating
revenue and the entities controlled by it requires to be less than $25 million. In this
type of company, financial accounting and reporting obligations are not required.
This is except in case, when it is directed to do so, given under the section 293 as
well as 294, under situation, when it is controlled by the foreign companies and when
it is not consolidated in the accounts that are lodged with the ASIC by the registered
company of foreign.
Large Proprietary Companies
The entity is classified into the category of large proprietary companies if the
criteria of consolidated revenue of $25 million or more, number of total number of
employees needs to be above fifty and consolidated gross assets needs to be $12.5

10CORPORATE AND FINANCIAL ACCOUNTING
are met (Bianchi Martini et al. 2016). According to Corporation Act, large proprietary
companies are obliged to prepare audited reports as well they are required for
implementing the policy of whistleblower. These companies are required to have
compliance of the whistle blower in the regime of whistleblower with corporation act
(Asic.gov.au. 2019).
Reporting Entities
The classification of the reporting entity is based on the fact that in case of
this type of entity, the users are dependent on the general purpose financial report
for gaining the understanding of entity’s financial performances as well as position
and for making decisions, which are based on the financial and the other information.
The reporting entities are required to prepare general-purpose financial statement,
which needs to be according to accounting standards of Australia that is being
issued by the AASB (Frias‐Aceituno, Rodríguez‐Ariza and Garcia‐Sánchez 2014).
Conclusion
Hence, it has been analyzed that the business for being successful, it
becomes crucial for them for determining that when, how and where for obtaining the
required sources of fund. The movement of the sources of the funds shows
decisions made by the management of the company in relation to expansion,
development or any other reasons. Further, sources of fund used by both the
company include equity capital, long-term borrowing as well as short-term
borrowings. Further, it has been analyzed that in Australia, there is classification of
the types of entity into small, large and reporting entity. Moreover, all these three
classified entities have different requirements of reporting as well as compliance.

11CORPORATE AND FINANCIAL ACCOUNTING
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