HI5020 Corporate Accounting: Funds and Liabilities Report

This report provides a comprehensive analysis of corporate accounting, focusing on the financial statements of Whitehaven Coal Limited and Caltex Australia. The report delves into the different sources of funds, including equity and debt, and examines their evolution over a three-year period. It compares the capital structures of both companies, assessing their solvency and financial leverage. The report also explores the merits and drawbacks of debt and equity financing. Furthermore, it examines various types of liabilities, including current and non-current liabilities, and discusses the application of AASB 137 regarding provisions, contingent assets, and liabilities. The analysis extends to different categories of assets and evaluates the measurement basis used for each class of assets by the selected companies, providing a detailed understanding of their financial positions and accounting practices.

CORPORATE ACCOUNTING

Abstract
The report brings out a discussion on analysis of financial statement of two ASX registered.
The organisations include Whitehaven Coal Limited and Caltex Australia. The financial
statements of both the organisations have been performing well. Caltex Australia and
Whitehaven Coal limited include management of investing and financing activities. On the
basis of Caltex Australia and Whitehaven Coal annual reports, it is seen that solvency of
Caltex is 51 percent debt in its capital structure. On the other hand, Whitehaven holds 17
percent of total capital structure.

Contents
Abstract......................................................................................................................................1
Different sources of fund...........................................................................................................3
Evolution of sources used over three financial years with focus on changes............................3
Merits of different source of funds.............................................................................................3
Examination of various types of liabilities.................................................................................3
AASB 137 “Provisions, contingent Assets, and liabilities”.......................................................3
Different categories of assets.....................................................................................................3
Evaluate measurement basis for class of assets.........................................................................3
Conclusion..................................................................................................................................3

Introduction
To discuss and evaluate the financial statements, two ASX registered organisations have been
selected. Organisations include Whitehaven Coal limited and Caltex Australia.
Caltex limited is one of the major leading producer and supplier of the petroleum in
Australia. The organisation exports the items to New Zealand and Singapore. Caltex is the
operations since 1900 and it is headquartered in Australia. It has been operating through two
main segments such as marketing segment, Lytton segment, and supply segment. Former
segment undertakes several selling function of Caltex products including diesel oils,
speciality items, liquefied petroleum gas, lubricant fuel. Furthermore, Lytton segment
undertakes one of the major function “refining” in regards to the crude oil with an aim to
convert it into petroleum items.
Whitehaven coal limited is Australian corporation in the energy sector headquartered in
Australia. It has been engaged in business of development of coal, mines in New South
Wales in Australia. Organisation started in 1999 and currently it supplies coal products to
several coal products to several domestic units with various different foreign nations such as
Taiwan, Indonesia, Chile, Vietnam, India, and Philippines. Whitehaven limited operates the
business in two segments, which includes underground operations and Cut operations. The
organisations own six mines in South North West Wales. It offers thermal coal and
metallurgical coal items.
With an aim to assess financial data of Whitehaven limited and Caltex limited, it is seen that
there are several aspects of financial statements to compare it on the basis of different sources
of fund such as equity and debt. Evolution of several sources of funds for the last three years
2017, 2018 and 2019.

Different sources of funds
Capital structure is comprised of debt, and equity, which fund the company`s overall
operations and align them towards strategic goals.
Evolution of sources used over three financial years with focus on changes
Equity refers to owner`s interest in corporation. In technical terms, it is the remaining part of
organisation’s assets after subtracting whole business liabilities. It represents amount owned
by the organisation to the owners (Nichita, 2019).
Caltex limited
2016 2017 2018
Issued capital $ 524944 $ 524944 $ 524944
Treasury stock -$ 344 -$ 1210 $ 2462
Reserves -$ 7955 -$ 39511 $ 11168
Retained earnings $ 2797399 $ 2610195 $ 2842357
Non-controlling
Interest
$ 12816
$ 13483 $ 13057
Total Equity $ 2810215 $ 3107901 $ 3389064
Whitehaven Coal limited
Particular 2016 2018

2017
Issued capital 3142439 $ 3,136,941 $ 2,993,458
Share based
payments
reserve
18417
$
7,827 $ 13,948
Hedge reserve
-$ 551 -$
13,948 -$ 1,022
Retained
earnings
-$
272400
$
146,246 $ 481388
Total Equity $ 2888983 $ 3,489816 $ 3292296
From the above discussion, it is seen that Whitehaven coal limited has higher issued capital
as compared to Caltex limited. For all the three years, it is seen that issued capital of Caltex
limited is stable (Das, and Swain, 2018). On the other hand, the issued capital has reduced for
Whitehaven coal limited. The retained earnings of Caltex limited is more than Whitehaven
coal limited. Issued capital is part of the share capital as being held by the organisation,
which is issued to shareholders of organisation while seeking funds for operations.
Whitehaven limited reported change in the values of issued capital of Whitehaven limited
(Das, and Swain, 2018). The reason behind mismanagement of capital can be buy back of the
equity shares during the year. Certain shareholders do not hold more than 50 percent of
outstanding shares of organisation. One does not enjoy several voting rights for important
decision as being conducted by organisation. The minority interest of the company`s
shareholdings have changed to the introduction of varied based plan (Nichita, 2019).
Issued capital of Whitehaven has been significantly in all three reported years. This shows
there is a major event taken on the part of the organisation in regards to the capital

structuring. Employees have exercised some share based incentive plan, which has changed
the era of issued capital of organisation. Treasury stock has been covered through the amount
in financial statements because it has reflected in share capital on the account of share buy-
back.
Hedging reserve has been maintained to commence hedging actions. Organisation has earned
profitability on hedging transaction, 206, 2017, and 2018 because of which hedging reserves
have been raised. Parent organisation is the company, which holds maximum portion of
shareholding of shares.
Comparati
ve Analysis Whitehaven Coal Proportion Caltex Limited
Proporti
on
Equity
$
3,108.26 83% $3,292.30 49%
Debt
$
674.74 17%
$ 3,247.32
51%
Capital
Structure
$
3,967.04
100.00% $ 6,355.58 100.00%
As far as the insolvency is concerned, Caltex has been facing high risk because of higher debt
proportion in entire capital. Caltex has been relying on more than the debt financing as
compared to the internal financing for business operations and hen it has higher financial
leverage (Cyril, 2016). The equity funds that are being generated internally is nearly 49

percent in 2017 and 2018 for Caltex limited. On the other hand, the Whitehaven coal limited
has internally generated equity funds at 83 percent in 2017 and 2018.
On the other hand, Whitehaven has been relying on equity financing and it has not been
financing risks where it has greater risks related to loss of control over the ownership of the
organisation because of its heavy reliance on the equity funds (Michalski, 2017).
Merits of different source of funds
Advantages of debt
Debt funds do not dissolute ownership. It avails the benefit of maintaining the ownership.
This avails maintaining complete control on the main decision accomplished through the
organisation (Ahmad, Omar, and Junoh, 2018).
Internal revenues undertake interest paid as business expense that can permit organisation to
subtract payment from income from corporates and other business operations (Das, and
Swain, 2018).
A lender is eligible to compensation of contracted upon majority of loan in additional to
interest volume with no claims on forthcoming profits (Michalski, 2017).
Disadvantage of debt
Although too much liability can hinder evolution of the organisation. The owner and business
have satisfactory credit assessments to be eligible.
Interest expenditures and principal are finished on special periods without failures.
Organisations often have volatile cash flows that have difficulties in creating loan
expenditures. Declining sales can result into severe issues in accomplishing loan sum dates.

Taking too much debt can make corporate more likely to face several issues in gathering loan
expenses when cash flow failures. Stakeholders can foresee organisation as advanced threat
and remain reluctant when making additional equity funds (Michalski, 2018).
Taking too much obligation creates corporate is expected to face matters and consultation
loan payments when cash flow reduces.
Advantages of equity
It is moderately uncertain with equity funds where one do not have to repay stable monthly
sum.
When the organisation has loan issues, equity funding is suitable excellent for funds and
promote growth.
Long-term debt has been accessible where interest rate can be extraordinary. Equity investors
do not hope the receiving of yield on investment. It is quite possible to loose funds and face
corporate failure.
Equity funding does not take out the fund of corporate whereas; debt loan reimbursement can
select for fund of cash flows of the organisation reduce the money needed to support growth.
Disadvantage of equity
In regards to outlay funds, one will have to give up controller of the corporate. Stockholders
not only segment profits buy but also consider how well business is running.
It leads to the acceptance investment funds from family, which can affect private relationship
when corporate fails. Approaching stakeholders and conducting investment ready is severe
where it takes money and time. Corporate often undergo where the business can spend lot of
time on the venture approaches (Das, and Swain, 2018).

Examination of various types of liabilities
Caltex limited
2016 ($)
2017 ($) 2018 ($)
Current
liabilities
Trade and
trade
payables
1079389
1735254 1827169
Interest
bearing
loans and
borrowing
s
134
270269 150421
Provisions 158985 107521 65257
Employee
benefits
96379
93677 85639
Current
tax
liabilities
167569
151948 65708
Non-
current
liabilities
Payables 8356 10855 41686
Provisions 244730 251825 252098
Interest
bearing
loans and
698340 588652 810914

borrowing
Total
liabilities
2492519
3247319 3338559
Whitehaven Coal limited
2016 ($)
2017 ($)
2018
($)
Current
liabilities
Trade and
trade payables
135928
166054 223984
Interest
bearing loans
and
borrowings
24451
23560 35137
Provisions 7260 5188 6136
Derivative
financial
instruments
1138
582 1136
Non-current
liabilities
Deferred tax
liability
-
- 201995
Provisions 84996 84574 102201
Interest
bearing loans
and borrowing
936115
374715 34083
Total
liabilities
1206760
3292296 3489816

Bearings of interest
AASB 137 “Provisions, contingent Assets, and liabilities”
This AASB 137 recognises and identifies the criteria for provisions such as an entity, which
present obligations as being resulted of past happening. It is quite possible that the discharge
of possessions embody several resources for economic benefits as needed to settle the
obligations. It gives a reliable estimation of obliged amount. Furthermore, contingent
liabilities will be examined whether they have become actual liabilities (Anuar, and Chin,
2016). This can be done only when certain criteria are met when the entity has present
obligation because of past events. The contingent liability is identified in the financial
statements with the change in the possibility occurs. For Whitehaven, it is seen that-
Requirements are created for expected cost of the restoration when it relates to expanses
distributed when mine operation takes place but they are not rehabilitated up to the reporting
date. These activities will include dismantling and eliminating the operational facilities.
According to the recognition and measurement idea, obligations to rehabilitate occur at the
time of commencement of mining project (Luke et al., 2016). These provisions are identified
as rehabilitation provisions with corresponding asset, which will include mining properly
with the development of assets. In the idea of restoration of provisions, it is seen that
additional disturbance and changes in rehabilitation cost as being reflected in present value
with the corresponding change in cost of related asset. Whitehaven records unwinding effect
of discounting provisions, which have been recorded as business costs in the consolidated
financial declarations of comprehensive income. Carrying amount as being capitalised being
the part of mining properties and development, which is depreciated after the useful life of
related asset. When the mines are closed, related changes to the estimated cost have been
immediately identified in financial statement of comprehensive income (Tahat et al., 2016).
This amount is provisions relate to reintegration of the environmental disruption as being