The Factors That Influence Companies

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Introduction In this financial analysis report we are going to examine the factors that influence companies’ financial report in mining industry, especially the balance sheet during 2012 to 2014, when they disclose their financial position. Influenced by its economic resources, net assets, financial structure and capacity to adapt to changes, so it is becoming increasingly clear that balance statements play a significant role in defining the growth of a company, as the search for adding more value always leads to calculating and recognizing such assets. Increased business competition and adoption of new information technologies increase its importance since it is become the major driver of corporate value (Leo & Sweeting 2001). Many…show more content…
1. Accounting Treatment And Methods Used by the Companies Based on the balance sheets of 2012 to 2014 financial years of the two well-known Australian mining companies listed on the Australia Stock Exchange (ASX), which are BHP Billiton and Rio Tinto, it can be seen the relationship between relevance value (the capability of making a difference in user decisions) and reliability value (if the information is realistic, verifiable and neutral for capitalization of assets). BHP Billiton only reports two intangible assets which are goodwill and other intangibles, goodwill being the difference in consideration paid for a business combination where it exceeds the fair value of the of the identifiable net assets acquired, which is immediately recognized in the income statement as it is attributable to a non-controlling interest in a business combination and since it is determined on a transaction by transaction basis. No amortization has taken place either, as its carrying amount is assessed annually against its recoverable amount for impairment. On the disposal of a previously acquired business, any remaining balance of associated goodwill is included in the profit or loss statement (BHP Annual Report 2012, 13 & 14). The amounts paid for the acquisition of identifiable intangibles such as software and
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