Answered: - Assessment: Financial Statement Project 1.0 Introduction

Assessment: Financial Statement Project

1.0 Introduction

Corporate reporting entities are required to produce financial statements in accordance with Accounting Standards. These statements are available to users such as investors, financial planners, lenders, creditors, employees and shareholders.

The Project requires students to research and critically analyse specific Accounting Standards referring to goodwill potentially arising on acquisitions and operating segments, then critically evaluate the compliance of these Accounting Standards and/or the differences in disclosure as reported in the most recent financial statements of Telestra Corporation Limited. All necessary requirements are attached!

Assessment: Financial Statement Project

 

1.0 Introduction

 

Corporate reporting entities are required to produce financial statements in accordance with Accounting

 

Standards. These statements are available to users such as investors, financial planners, lenders, creditors,

 

employees and shareholders.

 

 

The Project requires students to research and critically analyse specific Accounting Standards referring to goodwill

 

potentially arising on acquisitions and operating segments, then critically evaluate the compliance of these

 

Accounting Standards and/or the differences in disclosure as reported in the most recent financial statements of

 

Telestra Corporation Limited

 

 

For the report, will need to:

 

 

a) TELESTRA CORPORATION LIMITED will have BOTH an operating segment disclosure AND potentially some form

 

of goodwill arising from specified acquisitions in their published accounts. Essential to this Project will be the

 

ability to access the entity?s annual financial statements which ended in the period 1 January 2014 ? 31 December

 

2015 (?the 2015 financial year?) the annual report, including full (not concise) financial statements of the entity

 

for the 2015 financial year.

 

 

b) In relation to chosen entity, prepare an individual report that addresses all the following three sections (that is,

 

A., B. & C.) in the manner indicated:

 

 

A. Review of Consolidated Financial Statements

 

 

Including specific page number(s) and/or notes to the accounts references to the annual report, financial

 

statements and associated notes, answer the following specific questions about your chosen entity:

 

1. What are the entity?s principal activities?

 

 

2. How much is consolidated profit after tax attributable to the shareholders of the parent entity for the 2015

 

financial year?

 

 

3. Who is the CEO? How much was CEO remuneration in the 2015 financial year (consistent with the requirements

 

of the Australian accounting standards (AASB))?

 

 

4. Who are the auditors? How much are audit services related fees for the 2015 financial year?

 

 

5. Does the entity have any subsidiaries (controlled entities)? If so, how many at the end of the 2015 financial

 

year? How many of these are 100% owned? How many are less than 50% owned? How many are foreign

 

subsidiaries?; and

 

 

6. What is the value of consolidated goodwill at the end of the 2015 financial year? Has there been any

 

impairment of goodwill in the 2015 financial year? If so, by how much?

 

 

The answers provided to these questions, which will not form part of the overall word count for this report, should

 

be included in the Individual Report as Appendix A.

 

 

Telstra Corporation

 

Limited

 

 

(TLS)

 

 

Pacnet Limited (RELEVANT

 

ACQUISITION)

 

 

( MEDIA RELEASED LINK)

 

http://www.telstra.com.au/aboutus/media/media-releases/telstra-completes-acquisition-of-pacnet.xml

 

Financial Statement Project

 

B. Research into Accounting Standards

 

a. Goodwill arising on acquisitions

 

 

Goodwill or gain on bargain purchase can arise from many types of acquisitions, and will be dependent on how

 

each acquisition is constituted and negotiated. Companies may choose to grow organically or through acquisitions

 

of interests from other entities. Further, the allocation of goodwill becomes particularly difficult when dealing with

 

non-controlling interests, where different methodologies have been proposed on the grounds that a ?fairer?

 

allocation of goodwill can be provided.

 

Within the body of the report, you will need to address the following:

 

1. General - through independent research with direct reference to the relevant Accounting Standards, succinctly

 

define goodwill and gain on bargain purchase. Critically analyse different ?business? acquisition scenarios that

 

could result in different reporting and disclosure requirements/expectations related to goodwill / gain on bargain

 

purchase;

 

 

2. General - Briefly explain circumstances when different accounting treatments for goodwill may be appropriate

 

(for example (but not necessarily limited to) the 100% and partial goodwill allocation methods); and

 

 

3. Company Specific - using the financial year 2015 financial statements of your selected individual company,

 

critically analyse the disclosures made related to determination of goodwill on the relevant acquisition and the

 

treatment adopted for any goodwill arising in the relevant acquisition identified for your organisation, cross

 

referencing the financial statements to specific AASB paragraphs in the Report. Critically evaluate the observed

 

assessed goodwill and accounting methodology in terms of suitability to the company being reviewed, the industry

 

within which it operates and the accounting Standard requirements, concluding on the overall suitability of the

 

methods utilised in the overall circumstances.

 

 

b. Operating Segments

 

 

The most recent significant changes to accounting requirements for Operating Segments occurred in 2008 in

 

AASB8. Thus reporting entities should have had sufficient time to ensure that they are in compliance with the

 

 

requirements of the relevant accounting standard. However, recent Media Releases from the Australian Securities

 

and Investment Commission (ASIC) stated that they ?are still finding some entities that do not appear to have met

 

the core principle in AASB 8 Operating segments and disclosed segment information that may be important to

 

investors. This includes some entities that provide select segment information in market announcements and

 

other documents but do not disclose segment information in their financial reports?.

 

Within the body of the report, you will need to:

 

1. Independently research all directly relevant Australian Accounting Standards (AASB) re operating segments,

 

summarising generically what basis has been used in the operating segments disclosure in your company?s 2015

 

annual financial

 

 

Financial Statement Project

 

statements, supported by reference to the relevant AASB and specific page/note references from your chosen

 

company?s annual financial report (Hint: you are aware that your General Manager has a preference for tabular

 

presentations for this type of exercise); and

 

 

2. Review the operating segments disclosure provided in your company?s 2015 annual financial report, critically

 

analysing and evaluating in detail the level of compliance that your selected company has achieved in regard to all

 

of the relevant AASB requirements on operating segments. You may not assume that compliance occurs simply

 

because there is not a qualified audit report, and you will need to conclude on a level of compliance achieved,

 

explaining why any apparent non-compliance has been allowed by the auditors. An appendix, which will not count

 

towards your word count, can be utilised to undertake this compliance exercise, with key compliance issues for

 

your chosen company being specifically addressed/highlighted within the body of your individual report.

 

 

C. Format and Submission of Report

 

 

The format of the report should include:

 

i. To whom the report is addressed;

 

ii. A subject matter and date;

 

iii. A short introduction as to the purpose of the report;

 

iv. Your analysis of Sections B. above;

 

v. A short concluding paragraph;

 

vi. A Reference List; and

 

vii. Appendix A ? Review of Consolidated Financial Statements.

 

 

The Report should be fully referenced in-text following the Harvard style referencing system, The overall length of

 

the entire Report (excluding in-text references, the reference list and Appendix A) must be between 1,000 ? 1,200

 

words. A minimum of four (4) external references (that is, not AASB, not Financial Statements, not Seminar notes)

 

must be used in support of your evaluation. Submitted Reports should be prepared in the following format: singlesided, double spaced, in Times New Roman 11 font, and in a professional manner suitable for presentation to your

 

General Manager. submitted in PDF format. The file name should be prepared as:

 

?Family name?_ ?Given name?_ ?Student ID?_ ACCT7104

 

(that is, : SANDHU NAMRATA_ 43856316_ACCT7104 )

 

 



 

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