Boral Limited

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1. Introduction
Boral Limited (Boral) is the largest building and construction materials company in Australia. The company is principally engaged in supplying and manufacturing, construction and building materials. The products offered by the company include pre-mix concrete and asphalt, flyash, cement, quarry products, timber, windows, plasterboard, concrete masonry products, clay and concrete roof tiles, clay bricks, and pavers. It serves customers in the construction and building industries. It consists of seven key operating divisions, namely, Australian Construction Materials Timber, Cement, Construction Related Business, Clay & Concrete Products, USA and Plasterboard. 2. Key accounting policies and standards

Boral Limited’s consolidated financial report of the Company for the year ended 30 June 2009 comprises the Company and its controlled entities. The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board and the Corporations Act 2001. The financial report of the Group and the Company comply with International Financial Reporting Standards (IFRS) and interpretations adopted by the International Standards Board.

2.1 Revenue recognition (AASB118)

Revenue is recognized at fair value of the consideration received net of the amount of goods and services tax (GST). When events occurred like risks or rewards of ownership were transferred to buyer, revenues are recognised. Revenues from dividends are recognised upon declaration by controlled entities.

2.2 Goodwill (AASB 1013)

Goodwill represents difference between fair values of net identifiable assets acquired and related cost. With vague useful life, goodwill is systematically tested for impairment at annually balance sheet date. Negative goodwill emerging on an acquisition is recognised in income statement.

2.3 Property, Plant and Equipment (AASB 116)

Accounting treatment for PPE are stated at cost/deemed cost less accumulated depreciation and impairment losses. PPE items include building and leasehold property but excluding freehold land uses straight-line method for depreciation.

2.4 Financial Instrument: Hedging (AASB 1050)

BLD uses various derivative financial instruments to cut risks. Hedging instruments namely hedges of net investment in foreign operation is recorded in income statement, hedging reserve and directly in equity respectively. The ineffective aspect is recognised immediately in income statement.

2.5 Receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost, less allowance for impairment. An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The amount of the allowance is recognized in the income statement.

3. Evaluate the flexibility management in selected key accounting policies:

Revenue: Boral Ltd specifies revenue recognition criteria applied majorly from the sales of goods (figure 1). From the balance sheet, it expressed Boral’s current receivables are always much higher than its non-current receivables which imply there are few long term unearned revenue existed each year. It is because the amount of construction materials needed to be delivered from Boral are periodically and continuously based on the clients’ construction project period. Therefore, it is high flexibility for management on Boral’s revenue because recognition criteria for the sale of goods are more restrictive and AASB 118 requires that the control and the significant risks and rewards of ownership must have passed to the buyer.  The current standard only requires that control of goods must have passed...
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