Essay About Annual Report And General-Purpose Financial Statements

Accounting
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Part 1:Australian Accounting standard plays a very important role in developing the high quality and clear accounting standards that are required while preparing the general-purpose financial statements. It is an independent accounting setter based on Melbourne (aasb.gov.au). This part includes the information on three different companies regarding one of the accounting standard set my AASB that is ‘Consolidated Financial Statement’(AASB 10). We have chose Qantas Australia, Wesfarmers and BPH energy in order to study their consolidation practices.Nicoleta & Munteanu(2014) defined consolidated financial statement as the financial statements comprising of the a parent company and it subsidiaries as a single economic unit. When mentioning about the Wesfarmers Group, it has a number of agreements with its associates and joint ventures that it considers when determining whether it has a control, a joint control or a significant influence (Wesfarmers Annual Report 2014).  On the basis of the requirements under AASB10 paragraph 1, Wesfarmers as a parent entity controls many of their subsidiaries to present the consolidated financial statements.  In addition to that, Wesfarmers also ensures if it has the authority to direct the significant activities of investee by considering their respective rights and powers mentioned on the contract (Wesfarmers Annual Report, pp 134). Hence, in accordance to AASB10, Wesfarmers is able to fulfill the requirements given as an entity.

Likewise, Qantas is an airline company incorporated in Australia. When mentioning about the consolidation practices, Qantas is able to comply with the requirements given in AASB10. It acts as a parent company and prepares its consolidated financial report comprising with their subsidiary companies (Qantas Annual Report 2014). As per the annual report, Qantas has five subsidiaries that are material to the Qantas Group. Similarly, As mentioned in AASB, the preparation of the consolidated financial statement requires management to make judgments and estimates that affects the accounting policies and the reported amounts of various aspects. Qantas group makes its consolidated financial statement on the basis of its historical cost excluding the assets and liabilities specified at their fair value. They see to make approximation and assumptions and review them continuously. Therefore, by studying their annual report, Qantas passes to comply with the criteria as per AASB.BPH energy on the other hand also prepares its financial statement in accordance with AASB. The financial report prepared by BPH includes the consolidated financial statements and the notes of BPH energy and its consolidated groups. As mentioned in the annual report of BPH (2014)  pp 44, the  main principles of consolidation are subsidiaries and changes in the ownership interest.  It is stated that BPH incorporates the assets and liabilities of all its controlled entities and their results to form a consolidated financial report. As mentioned in pp 55 of BHP’s Annual report (2014), BHP has provided a clarification about their adopted standards that are stated in AASB10 in replacement of AASB127.