Assessment: Financial Statement Project
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
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
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
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.
Pacnet Limited (RELEVANT
( MEDIA RELEASED LINK)
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
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
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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