Accounting Assignment # 1
Lecturer : Martin Turner
Course Code: ACCT11059
Submitted By : Melissa Elliott
Student ID: Q8750230
Step 1
Introducing Myself
http://melissaelliott.wordpress.com
Hi! My name is Melissa Elliott. I live on a farm outside Bajool and am the mother
of 8 children. Ranging in age from 21 to 5. I am attempting to complete a
Diploma of Business so that I can return to Teaching, which I gave up many years
ago to concentrate on being a mum.
Annual Reports for my company
The last four years of Finbar Groups Annual reports for your viewing pleasure.
http://www.finbar.com.au/investors/financial-reports
Step 2
On my Blog I have given the 2014 description used by the company in their
Annual report, but while I was looking at their 2012 Annual report I found this
much more comprehensive description of who they are and what they do.
About finbar
Finbar Group Limited is an Australian property development company listed on
the Australian Stock Exchange trading under the security code ‘FRI’.
Incorporated in 1984, Finbar first listed as a property development company in
1995 and has established itself as the market leader in built form apartment
development in the Perth metropolitan area and Karratha. Over the past 18
years Finbar has managed the construction and delivery of 3,044 apartments
worth an estimated $1.55 billion.
Finbar’s core business lies in the development of medium to high density
residential apartments and commercial property within the state of Western
Australia where it carries out its development projects in its own right or
through incorporated special purpose entities and Joint Venture companies, of
which the Company either directly or indirectly holds interests in project
profitability and earns project management fees.
In addition to residential projects, the Company has also retained interest in
22,000m2 of commercial space in three commercial office buildings in the
Perth metropolitan area and in the Pilbara, which have been retained to
supplement core residential development income.
The company has expanded into the affluent North West of the State providing
apartment accommodation for communities that support the resources sector.
Branded under the business unit, Finbar Regional Communities, this expansion
has proven to be highly successful and is providing the Company with a strong
potential for growth in the region with development interests now in Karratha
and Port Hedland.
Finbar outsources its development activities to external consultants, sales
persons, and building contractors. The administration of the Company along
with the operating, investment, and acquisitions decisions are made by the
Company board and management. The Company employs just thirteen staff in
its East Perth offices who are an experienced, well-credentialed, and long term
team.
It is the Company’s conservative approach to its business which has held Finbar
in good stead throughout cyclical market trends and the company is well
positioned for sustainable results and future growth.
I have included on my blog the companies’ construction figures from
2013 and 2014 out of curiosity as to which projects were completed
on time and any difficulties that they may have met on the road to
construction.
Here are some news reports and promotional ads for Finbar Group
that they have posted on You tube.
http://finance.ninemsn.com.au/news-andmarkets/company?code=FRI
http://www.businessworld-australia.com.au/business-worldaustralia/february-2015/finbar-group/
https://www.youtube.com/user/FinbarGroup
KCQ
While I was transferring the information across to the spreadsheet I discovered
some terms that I didn’t understand.
I am just listing these random thought and queries as they occurred and then I
am going to seek my answers. I have realised that most of the answers to my
questions will be in the footnotes in my Annual reports. That is the first place
that I shall play hide and seek today.
Q1 What does ‘Revaluation reserve transfer on disposal’ mean?
(Q 1) After investigating footnote 14 I have discovered that this has to do with
property, plant and equipment. Revaluation and transfer from/to inventory
and disposal are all listed under depreciation. So without delving too much
deeper I will hypothesise that it is the amount of money that is lost due to the
depreciation in value of property, plant and/or equipment when it was sold.
The difference in bought value and sold value. This is just a guess. I will try
another source to determine if I am right.
According to Australian accounting standard (Revaluation of Non-current
assets)
7 Revaluation of Depreciable Assets
Treatment of Revaluations
7.1 Subject to paragraph 7.2, where depreciable assets are revalued, any
balances of accumulated depreciation existing as at the revaluation date in
respect of those assets must be credited to the asset accounts to which they
relate. The asset accounts must then be increased or decreased by the amount
of the revaluation increments or revaluation decrements.
7.2 Where an entity revalues depreciable assets by reference to current prices
for assets newer than those being revalued, and adjusts those amounts to
reflect the present condition of the assets, it may restate separately the gross
amounts and related accumulated depreciation of the assets comprising the
class of revalued assets.
7.2.1 An entity revaluing a non-current asset may need to estimate its fair
value because, for example, of the absence of a market in the relevant secondhand non-current assets. In these circumstances, an estimate of fair value,
based on the replacement cost of the asset’s remaining future economic
benefits, may be made by reference to
AAS 38 16 ¶6.4.1
The market buying price of components used to produce the asset or the
indexed price for the asset based on a price from a previous period. Where
such estimates have been used, the separate display of gross amounts and
related accumulated depreciation is likely to provide users with relevant
information which will assist in assessments of the condition of the assets by
disclosing the expired component of their useful lives, and the possible amount
and timing of cash outflows for their replacement.
7.2.2 Regardless of whether non-current assets are disclosed at gross or net
amounts upon revaluation, future depreciation expenses are required to be
based on the revalued amounts of the assets (refer to the definition of
“depreciable amount” and related commentary in Australian Accounting
Standard AAS 4 “Depreciation”).
Depreciation expenses based on the gross amount of a revalued depreciable
asset would need to be determined by reference to the total useful life of the
asset to the entity. Alternatively, depreciation expenses based on the carrying
amount of a revalued depreciable asset would be determined by reference to
the remaining useful life of the asset to the entity. Accordingly, the amount of
depreciation expense recognised will be identical irrespective of which method
of presentation is applied.
7.2.3 The term “depreciation”, which is often used interchangeably with the
term “amortisation”, includes amortisation for the purposes of this Standard.
The terms have the same meaning, however, depreciation is generally used in
relation to non-current assets that have physical substance while amortisation
is generally used in relation to intangible non-current assets.
8 Disposal of Assets
8.1 The gain or loss on disposal of a non-current asset must be measured as
the difference between the carrying amount of the asset as at the time of
disposal and the net proceeds, if any, from disposal, and must be recognised in
net profit or loss/result for the reporting period in which disposal of the asset
occurs.
8.1.1 Paragraph 8.1 deals with the recognition, but not display, of the gain or
loss on disposal of non-current assets. Australian Accounting Standard AAS 15
“Revenue” requires the proceeds from the sale of assets other than goods,
including non-current assets, to be disclosed separately as revenue. In
addition, Australian Accounting Standard
AAS 1 “Statement of Financial Performance” requires disclosure of
AAS 38 17 ¶7.2.1 the net gain or loss on disposal of non-current assets that are
not measured at net market value.
To be truthful if I understood all that I would be an accountant. I put it in for
those people who do know what it means and for those of you who do please
feel free to let me know if I am right or wrong in the assumptions that I made.
(Q2) What are inventories?
Inventories are listed in Footnote 18 as Work in progress and Completed stock.
A note at the bottom states that ‘Work in progress recognised as cost of sales.’
But in footnote 17 Tax assets and Liabilities there are inventories listed as
figures under liabilities. Then again in Movement in temporary differences
during the year. Now I have another question to investigate. What does
‘Movement in Temporary Differences during the year’ mean?
I have read a few articles about this Movement in temporary differences and
now am even more confused so I think this a piece of information that I shall
endeavour to understand at a later date.
Q4 What are deferred tax liabilities?
IAS 12
Defines a deferred tax liability as being the amount of income tax payable in
future periods in respect of taxable temporary differences. So, in simple terms,
deferred tax is tax that is payable in the future. However, to understand this
definition more fully, it is necessary to explain the term ‘taxable temporary
differences’.
Temporary differences are defined as being differences between the carrying
amount of an asset (or liability) within the Statement of Financial Position and
its tax base ie the amount at which the asset (or liability) is valued for tax
purposes by the relevant tax authority.
Taxable temporary differences are those on which tax will be charged in the
future when the asset (or liability) is recovered (or settled).
IAS 12 requires that a deferred tax liability is recorded in respect of all taxable
temporary differences that exist at the year-end – this is sometimes known as
the full provision method.
I figure I have killed two birds with one stone here as the above information
also explains (Q 4) as well only so much as a technical definition is given. My
understanding now is that the amount that is shown in the statement is the
final amount after they have taken into account the depreciating value of an
asset over time (probably the year in question) and the tax that will have to be
paid on that item in the future. Please feel free to correct me if I am wrong.
What is carrying value or carrying amount of an asset?
According to Accounting Tools.
Carrying value is the original cost of an asset, less the accumulated amount of
any depreciation or amortization, less the accumulated amount of any asset
impairments. The concept is only used to denote the remaining amount of an
asset recorded in a company's books - it has nothing to do with the underlying
market value (if any) of an asset. Market value is based on supply and demand
and perceived value, and so could vary substantially from the carrying value of
an asset. For instance, a building may have been purchased many years ago
and has since appreciated in value, while the owner has been depreciating it
for a number of years; the result is a wide disparity between carrying value and
market value.
Also, a business that engages in excellent equipment maintenance practices
may find that the market value of its assets are significantly higher than those
of a company that does not invest a sufficient amount in asset maintenance.
(Q3) If loans and borrowings has a zero balance does that mean they don’t owe
any money or they just didn’t pay any yet?
Martin answered this for me in the lecture. The balance sheet is for a set day in
the year so at that particular time they may not have actually paid that. They
might pay it the next day or week but it does not show up because on that day
they had not.
Top four blogs.
Sorry can’t possibly restrict myself to top 3 there are too many that are worth
checking out. So in no particular order.
Lucie Loginow
http:// blogforaccounting11059.blogspot.com.au
Lucie has put in a lot of hard work here it is interesting to read her information
about her company and I love the way she has approached her draft
assignment
Ellie Anderson http://ellieankateanderson.blogspot.com.au
Ellie’s site is great love the background picture. Navigating around is easy and
what she writes is very interesting to read.
Emily Messenger http://emessenger.blogspot.com.au
Emily’s site is beautiful I love the roses she has put in a lot of effort.
Lucy Price http://lucyprice97.blogspot.com.au
Love it. Check it out. Honest straight forward writing.
There are so many great blogs I have really enjoyed the way that everybody
has attacked this assignment. They are interesting and really show peoples
personalities. It’s good to cruise around the other sites to get ideas and
insights into how to attack your own assignment.
Step 3
The spreadsheet has been posted to my blog.
Step 4
KCQ
The first question I had was what the heck does KCQ mean. Penny drop
moment Oh… Key Concepts and Questions. Of course what else could it mean?
What is accounting?
A very scary thing 4 weeks ago that I was pretty sure it was going to make my
brain explode with all the new stuff that I was learning. Turns out it is nowhere
near as scary and the only thing I had to fear was my own self-doubts. It
appears that accounting is a rather large amount of terms and formulas and
once you get your head around what they are and what they do it isn’t quite as
scary.
Key concepts from chapter 1
-Basic accounting formula
Assets –Liability = Equity
-Extended accounting equation
Assets = Equity + (Revenue-Expenses) +Liabilities
- Chapter 1 Study guide states “Assets and liabilities represent the value of the
firm. Equity represents the value of the interest of its owners in the firm. “I
would have to think that this is a key concept of accounting.
-Ideas are powerful.
-Double entry accounting is a system of recording transactions of a firm in such
a way as to ensure the relationship between the different elements of the
business model that underpins accounting is kept intact.
Still don’t understand all the jargon but have come to understand that the
most important thing about recording transactions is that they be accurate and
relevant
Key concepts from Chapter 3
-Biggest shock ever THERE ARE NO SPECIFIC RULES ABOUT HOW FIRMS SET
OUT THERE FINANCIAL STATEMENTS. I have always thought that there was
some set in concrete secret method that only accountants got taught and that
was that.
- A firm’s balance sheet shows its financial position on a particular day, on just
one day.
There are four main financial statements that people are interested in
-balance sheet, income statement, statement of changes in equity and cash
flow statement.
- The income statement shows the revenue and expenses and thus the profit
of our firm over a period. The other two financial statements give us insights
into how two key items in our balance sheet have changed: equity and cash.
What do I find difficult to understand, confusing, boring, exciting or
surprising?
I think the obvious answer to this is accounting. It is all of these things the most
surprising thing to me is I am actually finding it interesting. My brain has not
exploded yet with all the different types of terms, equations and definitions
that I have not heard before or have not been interested enough to find out
what they meant.
Honestly if I was not doing this subject I could go a whole lifetime without
knowing what those terms are and I would be quite happy. In reality that is a
lie because I have started to look at my own personal finances to find out what
my assets and liabilities are and how to improve any loss of money through
identifying where my money goes and why. Without doing this course I would
have no ideas where to look, what to look at and how to make the necessary
changes. To go forward one must look back at the past. Not to let it envelop
them but to learn from it so as to not make the same mistakes again.
Paraphrasing Machiavelli who’d of thought that would be happening in an
accounting assignment.
I haven’t discovered the exciting bit yet but I figure that is coming.
What have I learned while doing this assignment.
Information ( how it is gathered/used is very important) but how it is
represented is even more important.
Being organised is the most important thing that a person / company can be,
because by being disorganised you lose time and money and as they say "time
is money".
How to find word on my computer.
How to fill in a spreadsheet.
How to create a blog.
How to comment on other peoples blogs.
Surface level insight into my company Finbar Group.
That there is a company called Finbar Group.
I obviously learned how to cut/ copy and paste.
Regurgitate text from readings.
What do I really need to learn from this assignment? How to critically assess
the information.
The feedback I received and the assignments I read made me feel that I had
not researched my company enough, that I didn't provide enough information
to answer that component. So I went nuts and added a lot of fluff to make it
look like I had delved deeper, looked further, show that I can navigate around
the annual reports. I did read a few news articles and watch some ads on the
Finbar promotions on You tube but I hadn't included them because at the time
I didn't know how to include them. There you go something else I have learned
doing this assignment I now know how to include links to other web sites. ( You
will notice that I have actually included those links now)
Funny part is though while cruising around those annual reports trying to find
more information I did actually learn a little bit more about the company. I
think the assignment I finally submit will be a reworking of the one I have done
with a little less fluff.
Quantity or Quality?
I think most of the assignments I read had a lot of good quality information.
Surface and deep level questioning and thinking. I think I have gone for
quantity over quality and I think that I need to improve the quality.
Step 5
Provide feedback.
The people who provided me with feedback were
Rebecca Taurino, David Dickinson, Helen Bensilium, Lucie Loginow.
The people I provided with feedback were:
Rebecca Taurino, Jack Hilton, Sabrina Koay, Campbell McArthur.
The three people who I was assigned to a group with had not posted their
assignments and also did not respond to my emails so I simply chose other
people to provide feedback to and receive it from.
The feedback that I received was very helpful. It is amazing how people think
and to see the level of feedback you can receive. I think that the feedback that
I received was very accurate and relevant and helped me a great deal to
improve my assignment.
Giving feedback to other people was also very beneficial as it allowed me to
see where I could improve my own work. I just hope that the feedback I gave
was as helpful as the feedback I received. I did provide more feedback to other
people but as I didn’t realise we had to include this until now I did not keep
track of who they were.
Things I have realised that is most important about accounting isFirst - read the whole question; understand task
Second- keep accurate records of all dealings; who you spoke to what you
spoke about
Third- record all information so that it is easy to retrieve
Fourth -Be organised.
References
http://www.aasb.gov.au/admin/file/content102/c3/AAS38_1
2-99.pdf
http://www.accaglobal.com/content/dam/acca/global/pdf/s
a_aug09_baker_clendon.pdf
http://www.accountingtools.com/questions-andanswers/what-is-carrying-value.html
This blurb is taken directly from the 2014 Annual report. I
think it pretty much sums up as much as I know about the
company at this point in time. Stay tuned for further updates
as they become available. Hope you are having a fabulous
day.
Down to the nitty gritty. Finbar Group is my company seems
like a profitable concern. Never heard of them before now.
Assets – Cash, Trade and other receivables and Investment
Property.
Liabilities – Trade and other payables, loans and borrowings,
Employee benefits
Equity – Share capital, Retained earnings, Reserves.
Introducing myself.
Hi! My name is Melissa Elliott. I live on a farm outside Bajool
and am the mother of 8 children. Ranging in age from 21 to
5. I am attempting to complete a Diploma of Business so that
I can return to Teaching, which I gave up many years ago to
concentrate on being a mum.
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