Answer To: Financial Accounting & Reporting 2 Assessment Title: Teamwork Assignment Weighting: 25% Due Date:...
Robert answered on Dec 27 2021
Memorandum
09/14/2017
Memorandum
Name of the Student
NAME OF THE UNIVERSITY
Please find enclosed herewith the memorandum regarding the technical aspect or consolidation
provisions with respect to Wesfarmers financial statement ending on 30th June 2016.
The present report provides a deeper insight to the group composition of Wesfarmers, the
investment which it holds in its subsidiaries and other joint ventures. The report further focusses on
the interest which Wesfarmers has in its group companies especially the transactions which it
conducts with the group companies. The report also makes a comparison of the previous two years
of financial interest it holds in the companies. Overall the report helps us understand how
consolidation works and technical positions around it.
Table of Contents
Particulars Pages Nos.
Wesfarmers Composition 3
Subsidiaries 3
Associates 3
Joint Ventures 4
Other Investment 4
Consolidated Financial Statement 5
Non-Controlling Interest 6
Goodwill or Gain on Bargain Purchase 6
Impairment 8
Intra Group Transaction and Balance 9
Foreign Subsidiaries 9
Company Policy on sustainability, corporate governance and audit
committee
10
References 13
1. Wesfarmers Composition
The Wesfarmers started as Western Australian Farmer Cooperative, 1914 but today it has
grown as one of the largest listed company who has diversified business in different areas i.e.
supermarkets, liquor, hotels, convenience stores, home improvement, department stores,
chemicals business, energy and fertilizers, industrial and safety products and coal.
It is one of the largest private employers giving employment to approx 205,000 employees.
1.1 Subsidiaries:
The subsidiary company is the company in which the other company holds more than 50 %
of the voting rights, the company which holds is known as parent company and the company
which is being controlled is known as subsidiary of the parent company.
The company has more than 300 subsidiaries in the country and worldwide which includes
its presence in Bermuda, China, Hong Kong, New Zealand, United Kingdom, Singapore,
United States of America and many more. The company is still in the process of acquiring
more of the undertakings year to year. This shows that the company is growing day by day
and diversified his business all over the world. Like in financial statement ending 30
th
June
2016 the company acquired 100% stake in Homebased limited for a$665 million which is
based in United Kingdom. Other subsidiaries acquired are Bunnings Services limited,
Quickinstant limited, Sandfords limited, and etc.
1.2.Associates:
The parent company will have a stake or may partly own the company but doesn’t
consolidate its financial statement with the company as in case of subsidiary company. From
the financial statement ending 30
th
June 2016, it shows that the company has 11 associates
companies in all over Australia and one in USA. One associate company namely Bengalla
Agricultural Company Pty Ltd has been discontinued from2016. Further it has been clearly
seen that the investment in the associates has been increased from the last year i.e. from
$545m to $588 m in 2016, as a result the net income from the associates has also been
increased from the last year.
1.3.Joint Ventures
Joint Venture is an arrangement in which two company pool their resources into an entity to
accomplish a specific target. As per the financial statement ending 30
th
June 2016 the
company has a joint venture with BPI NO 1 Pty Ltd which is in Australia and having 50 %
effective interest in the company.
1.4.Other Investment
Apart from the investment made by the company which are cited above the company has also
joint operations with three companies namely
- Sodium Cyaride
- Bengalla
- ISPT
2. Consolidated Financial Statement
The consolidated financial statement is the combination of all the financial statements an
entity owns that is the financial statement of its own operations and also the financial
statement of its subsidiary entities where the financials are consolidated. The consolidated
statements exhibits the revenue, expenses, the assets and liabilities and networth of the
company as one i.e. the parent and the subsidiary companies numbers sit on one company i.e.
the parent company where the statements are clubbed as single entity. This is important from
the investor point of view as the investor would be able to interpret the financial strength or
weaknesses from one look of the consolidated entity.
As per the AASB 10, it is pertinent for the parent entity to make the consolidated financial
statements and the same is applicable for profit making entities and not for...