Corporate Accounting and Reporting: Analysis of Wesfarmers Demerger

Desklib provides past papers and solved assignments for students. This report analyzes Wesfarmers' 2018 Coles demerger.

Corporate Accounting and
Reporting

Table of Contents
QUESTION 1...................................................................................................................................1
(b):..........................................................................................................................................1
(e):...........................................................................................................................................1
REFERENCES................................................................................................................................2

QUESTION 1
(b):
In the year 2018, Wesfarmers has planned to retain maximum profit of 20% of new Cole’s
business as per the analyst’s point of view the worth is about $18 billion. The Coles historical
balance sheet tends to provide specific information about the asset and liabilities that has been
held by the company as on 30th June, 2018, prior to demerger which has been occurring to
derived from the financial data. It has been directly associated with the Coles from the financial
records of Wesfarmers adjusted to the goodwill (Thornock, 2013). The value which is recorded
in the balance is about $ 17860 million. The Wesfarmers shareholder would have been seen a
downfall in the ASX price of Wesfarmers shares. It has been valued excluding Coles group other
than Wesfarmers 15% retained stake. It has been found that there was a relatively low return on
capital is exacerbating through the significant goodwill as well as the intangible assets
recognised on during the time of acquisition of Coles. The value of intangible assets was
primarily associated with the Cole is evaluated as around 75% or $13.3billion including goodwill
on acquisition. The net assets as per the decreasing share price from $20.07 to $8.83 but NTA
share values has increased from $4.32 to $5 as a outcome of de-recognition of goodwill.
(e):
Wesfarmers has diversified their operations by considerable value expending their current
business and entering into new industries. The acquisition has created various divisions such as
Coles, Kmart and target as well as double their earnings. In the year 2018, Wesfarmers has
reported a total net profit after tax is $1197 million till the 30th June, 2018. The profit consists of
a loss which are arise from the discontinued operation of $1407 million that would results in
specific items from UK during the financial period of time (Hilton and Platt, 2013). NPAT has
been continuing their operations excluding a $300 million non-cash impairment as their target
which as increase to 5.2 percent to $2904 %. NCI is said to be portion of equity ownership which
is secondary not applicable to the parent entity that has controlling interest of more than 50% but
below to 100%. The Non-controlling interest portion is $12 million out of the total income of
Wesfarmers limited in the 2018. Wesfarmers would also have a wide number of other controlling
interest that consists of 15% interest in Coles. It has been analysed that eligible shareholders
would retain one Coles share for each Wesfarmers share that has been held during the time.
1

REFERENCES
Books and Journals:
 Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
 Thornock, J. (2013). The effects of dividend taxation on short selling and market
quality. The Accounting Review. 88(5).1833-1856.
2