[SOLVED] CS ACCT 6010 Advanced Financial Reporting

ACCT 6010 Advanced Financial Reporting
Introduction to the unit & overview of inter-entity investments
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1.1 Intro to the unit (course admin)

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1.2 Overview of inter-entity investments 1.3 Case firm: BlueScope Ltd
1.4 Academic readings
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LS Class 1 1

ACCT 6010 Advanced Financial Reporting
Class 1.1: Introduction to the unit
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Acknowledgement of country
Meet the ACCT6010 Team
Class format
Health & safety notices (on campus)
Online support (remote learning)
Unit of study outline
Assessment tasks
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LS Class 1 2

Acknowledgement of Country
I would like to acknowledge the Traditional Owners of Australia and recognise their continuing connection to land, water and culture. I am currently on the land of the Gadigal people of the Eora Nation and pay my respects to their Elders, past, present and emerging.
I further acknowledge the Traditional Owners of the country on which you are on and pay respects to their Elders, past, present and future.
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Meet the ACCT6010 Team
Dr Dr Neal
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1 x 90-minute live lecture
Lecture recording available from Tuesday morning
1 x 90-minute tutorial live tutorial
Oncampus(CC)
RemoteviaZoom(RE)
Commence in Week 1
Attend only tutorial class you are enrolled in
TimetablingchangescanberequesteduntiltheendofWeek2via the Timetabling system.
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Keeping our community safe (on campus)
We can all help reduce the spread of COVID-19 through following good hygiene practices:
Wash hands regularly, for at least 20 seconds with soap and water, or use an alcohol-based hand rub.
Cover your mouth when coughing and sneezing with a tissue or a flexed elbow.
Maintainadistanceofatleast1.5mbetweenyourselfand others, where possible.
Avoid large gatherings, where possible.
Avoidclosecontactwithanyonewithcoldorflusymptoms,
e.g. fever, cough, runny nose or shortness of breath. The University of 9
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Keeping our community safe (on campus)
All students and staff who have cold or flu symptoms should isolate themselves from others.
If you are unwell with any symptoms please excuse yourself from this class and get tested for COVID-19 as soon as possible. We will support you to continue the work remotely.
Make sure you read the information on special consideration in the unit outline.
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Keeping our community safe (on campus)
The University is following advice from the government and related public health authorities.
For the latest information, see the advice on the University website.
In some classes, especially those involving use of shared equipment, please follow additional advice from your coordinators.
Please take care of each other and yourselves and if you need support reach out to your unit coordinator or the health and wellbeing area of the Current Students website.
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Tips for students joining online (remote)
Remember that you are still in a space with other students.
Mute your microphone when not speaking.
Use earphones or headphones the mic is better and youll disturb others less.
If you have a webcam, please switch it on so we can see you, if you are comfortable doing so.
Try not to talk over someone else.
Some classes may use breakout rooms engaging fully in
these is a great way to meet classmates and your teachers.
Help your teachers know youre there by participating in chat, polls and other activities during class were all in this together.
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Tips for students learning online (remote)
For tips and guides on learning online and the tools you will use, refer to Learning while off campus resources in Canvas. This is especially useful if its your first time learning online at university.
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Unit of Study outline
Assessment tasks and due dates Weekly schedule
Prescribed readings
Learning outcomes
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Assessment tasks
Final exam Quizzes
Four(4)smallonlinequizzesonCanvas
Scheduledduringlecturetime(Monday2pm)inWeeks5,7,9&11 Case study
Formgroupsoffour(4)studentsinyourtutorialclass Tutorial participation
Two(2)grouppresentations3markseach
Weeklyparticipation1markperclassforbest9outof12
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Learning materials organised in weekly modules Learningchecklist&readings
Lecturematerials
Self-studymaterials
Practicequizcompletepriortotutorials
Additionalresourcesincludingstudentvideos
Assumed knowledge test and revision materials TakethetestinWeek1
Reviewrelevanttopics
Consultation times (on campus or via Zoom) The University of 16
ACCT 6010 Advanced Financial Reporting
Class 1.2:
Overview of inter-entity investments
The University of 18
LS Class 1 8

Learning Objectives
Learning objectives:
After completing this topic students should be able to
1. Describe the different classifications for investments in other entities and explain the accounting methods that apply to each.
2. Explain the concepts of parent, subsidiary and group
3. Explain the alternative concepts of consolidation
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Readings & Videos
Arthur et al. 8th Edition Chapter 1.1-1.6 SAC 1 Definition of the Reporting Entity
AASB 127 Separate Financial Statements Dean & van der Laan 2010
Refer also to videos on Canvas
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LS Class 1 9

Intro Single Entity Structure
ACCT5001&6001focusonthefinancialreporting of a single business entity
(e.g. company, partnership)
Recall:Acompany
is a separate legal entity from its owners raises equity (share capital) by issuing
shares to its owners (shareholders)
usually has limited liability
may be required to prepare and lodge audited financial statements if a reporting entity [SAC 1]*
as a legal entity may invest (acquire ownership interests) in another company
* [] are references to AASB pronouncements in the Accounting Handbook
The University of 100% of BSL shares
Prepares financial reports for shareholders and other stakeholders
BSL Shareholders
Bluescope Steel Ltd (listed entity)
Bluescope Steel Ltd Single Entity Financial Statements
The University of another entity may give rise to intercorporate investments, e.g. Bluescope Steel Ltd owns 100% of the shares in Ltd and 50% of shares in Steel Ltd. BSLshareholdersmaynotonlybe interested in Bluescope Steel Ltd, but also in BSL investments.
HowshouldBSLreportitscorporate
investments to shareholders?
ACCT6010coversintercorporate investments and the financial reporting of these multiple entity structures.
Intro Multiple entity structure
BSL Shareholders
Bluescope Steel Ltd*
Fielders Australia Pty Ltd
* Extract of corporate tree
LS Class 1 10

Categories of intercorporate investments
Investor Investee
Investee type/ name
Relationship
Investor name
Principal Relevant AASBs
Subsidiary
Joint arrangement Joint venture
Joint operation
Joint control
Joint investor
Joint venturer Joint operator
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Significant influence
no special name
Equity instrument
Ordinary investment; no special relationship
no special name
Subsidiaries
Controlled entities
Investor is referred to as the parent
The parent and its subsidiaries together represent a group
How is control achieved?
One of the elements is rights that enable the investor to direct relevant activities
This can include voting rights
Definition and concept of control is covered in class 2
Benefits?
Management of the parent (or group) can use power over the investee to affect the variable returns
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Degree of power

Associates
If investor does not have control or joint control, it may have significant influence over investee.
Associates are significantly influenced by the investor.
What is significant influence?
Defined as the ability to participate in operating and financial policy decisions
Accounting method is equity accounting
Investor recognises its share of the profit of the associate as income
Why would managers seek to gain significant influence?
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Joint Arrangements
Where two (2) or more parties have joint control.
Means they control the joint arrangement collectively (through a
contractual agreement)
Decisions about the relevant activities require unanimous consent of the
parties that together control the joint arrangement Advantages:
Sharing of risk
Sharing of resources
So, commonly seen in large scale and / or risky projects
(e.g., mineral exploration)
Accounting:
varies according to type of joint arrangement (joint venture or joint operation)
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LS Class 1 12

Other investments
This category is for corporate investments that are not controlled, jointly controlled or significantly influenced
Normally measured at fair value
Cost is permitted in limited circumstances
Covered in ACCT 6001
Motivations
Highly liquid (if traded); expected return (c.f. cash); diversification
Example: USyd most recent balance sheet shows $287m invested in listed securities (plus $1,285m of financial assets with external fund
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ACCT 6010 Advanced Financial Reporting
Class 1.3:
Case firm BlueScope Steel Ltd Group
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Case firm: Bluescope Steel Ltd Introduction
Australian public company (Ticker: BSL)
Included in the S&P/ASX 200 index
Manufacturer and distributor of steel and building products
Operations in Australia,, North America and Asia
Five businesses in the materials sector:
Australian Steel Products
Buildings North America
Building Products Asia and North America & Pacific Islands
North Star BlueScope Steel
https://www.bluescope.com/about-us/our-business/
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Case firm: Bluescope Steel Ltd Introduction (cont.)
vDownload Bluescope Steel Ltd Annual Report
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1. Introduction Corporate Combinations & Associations
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Excerpt from Note 22: Investment in subsidiaries
Operations are carried out by >100 entities in 22 countries owned (fully or partially) by Bluescope Steel Ltd
v LSQ 1.1: How should Bluescope Steel Ltd financial statements be prepared?
Next Class: Accounting for Business Combinations
Prepare for class
Complete pre-knowledge test Pre-read Chapter 2 of text
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