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HI5020 Corporate Accounting Help

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HI5020 Corporate Accounting Help

 HI5020 Corporate Accounting Help

It is necessary for all companies to perform corporate accounting. In this report, a discussion is going to be conducted over BC Iron Ltd and Boral Ltd, the two most important ASX listed companies working in Australia. The BC Iron Ltd, which is also called the BCI Mineral Ltd, is a resource-based company in Australia involved in the development of industrial minerals supported with iron ore earnings (Bciminerals.com.au, 2018). The company has several projects such as the Iron Valley and the Buckland project. Boral Ltd, on the other hand, is another Australian company selling construction and materials for buildings with more approximately 15994 employees and 700 operational sites (Boral.com, 2018). In this report, the corporate accounting, which has been performed in these two companies have been evaluated along with conducting an analysis of the tax accounting treatments of the two companies. It will evaluate the cash flow statements, the other comprehensive income statement and the financial statements of BC Iron Ltd and Boral Ltd along with interpreting the constituents in them.

Owners equity

(i) From your companies’ financial statements, list each item of equity and write your understanding of each item

The statement of financial position of a company consists of its ownership interest breakdown and this is called equity (Geske, Subrahmanyam & Zhou, 2014).

It can be seen from the above table that BC Iron Ltd and Boral Ltd has four different items listed in their equity capital. The contributed equity or the issued capital in the equity section of a company refers to the amount of equity held in a company from the number of shares, which the company had issued to public (Baker & Xuan, 2016). On the other hand, reserves refer to the amount that has been kept aside by insurance companies for future claims, which have not yet been reported but have been settled or filed to the insurance company (Sheets, 2018). According to Bunea et al. (2016), the accumulated losses of a company represent the negative retained profit balance while the retained earnings refer to the positive retained profit balance in a company, both of them arising from net income.

It can be noticed from the table above that all the items listed under the equity of BC Iron Ltd and Boral Ltd have changed in the past two financial periods 2016 and 2017. The contributed equity in the companies has increased by $24268000 and $2018.90 million in BC Iron Ltd and Boral Ltd respectively (Bciminerals.com.au & Boral.com, 2018). This increase has been due to the further issue of equity shares to public and purchase of the shares by potential investors. On the contrary, the reserves have reduced by $142.70 million in Boral Ltd while increased in BC Iron Ltd by $543000 between 2016 and 2017 (Bciminerals.com.au & Boral.com, 2018). This might have been due to the reduction or increase in the claims of the companies during the one-year span. At the same time, the accumulated losses and retained earnings of both BC Iron Ltd and Boral Ltd show a decrease (Bciminerals.com.au & Boral.com, 2018). This might have been due to the decrease in their profits or increase in the amounts distributed to shareholders.

 

From the financial statement of your chosen companies, list each item reported in the cash flows statement

The financial statement in a firm, which records the outgoings and the subsequent incomings of cash in it, is called its cash flows statement (Nurnberg, 2015). The following points show the items listed in cash flows statements of BC Iron Ltd and Boral Ltd along with their respective understandings, changes and the possible reasons for changes -

·         Net cash used in operating activities - Changes taking place in the net cash balance of a firm because of day-to-day operational activities is called net cash used in operating activities (Miao, Teoh & Zhu, 2016). The items listed in BCI Iron’s net cash used in operating activities include management fees receipt, payment to employees and suppliers and customer receipts (Bciminerals.com.au, 2018). However, Boral Ltd has recorded payment to employees and suppliers, dividend and interest receipt, tax and borrowings paid and acquisition, restricting or integration expenses under this cash flow category (Boral.com, 2018). Increases and decreases can be noticed in these items in BC Iron Ltd and Boral Ltd respectively, the amounts of which have been stated in the next part (Bciminerals.com.au & Boral.com, 2018). These changes might have taken place due to the enhancement or delays in debtor and creditor payments and tax payments.

Net cash used in investing activities - Changes taking place in the net cash balance of a firm because of investing activities such as buying and selling assets is called net cash used in operating activities (Lewellen & Lewellen, 2016). The items listed in BCI Iron’s net cash used in investing activities are payments for exploration projects, plant, equipments, property and development (Bciminerals.com.au, 2018). However, this category in Boral Ltd has several items such as intangibles, plant, equipments, and property, cash from acquisition, repayment of loan, and others (Boral.com, 2018).



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