Financial Report Analysis

2883 WordsNov 2, 201212 Pages
Table of Contents Executive Summary 2 1. Summary of IPL’s activities and strategies 3 2. Key accounting policies and Accounting Standards 3 2.1 Revenue Recognition – AASB 118 3 2.2 Foreign Currency Translation – AASB 121 3 2.3 Income Taxes – AASB 112 4 2.4 Consolidation – AASB 127 4 2.5 Impairment of Assets – AASB 136 4 3. Management’s flexibility in selecting key accounting policies 4 3.1 Interest Bearing Liabilities 4 3.2 Derivative Financial instruments 5 3.3 Interest Bearing Liabilities 5 3.4 Intangible Assets - Goodwill 5 4. Accounting strategy employed by management and incentivesl 5 4.1Evaluation of accounting strategy employed by management 5 4.2Evaluation of incentives strategy employed by…show more content…
Trade allowances, amounts collected on behalf of third parties and net of returns comprise the revenue. Revenue is recognised as sales revenue, interest income and dividend receivable. Sales revenue is recognised when the considerable risks and rewards of the ownership have been transferred to the buyer. Interest income is recognised on an accrual basis, while dividend receivable recognition occurs when it is declared or received. 2.2 Foreign Currency Translation – AASB 121 Items presented in the financial statements of each of the Group`s entities are measured using the functional currency. IPL’s presentation currency is the Australian dollar, the currency used to present its consolidated financial statements. Foreign currency transactions are translated into the functional currency at the exchange rate on the day the transaction occurs. Foreign exchange gains and losses are recognised in the statement of comprehensive income, except when they are `deferred in equity as qualifying cash flow hedges`. These have been calculated following the AASB 121 `The effects of changes in Foreign exchange rates` and AASB 139 `Financial instruments – recognition and measurement`. 2.3 Income Taxes – AASB 112 The current and deferred tax constitutes the income tax expense which is shown in the statement of comprehensive income. The current tax comprises tax that has to be paid on the taxable income for that period at tax rates as of the reporting date. It
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