Introductory Accounting Assignment

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ACCT 2060 Introductory Accounting
Assignment - Semester 2, 2011

This assignment is designed to get you to locate the Annual Reports for a company and become familiar with the contents of an Annual Report, particularly the financial statements and the notes to the financial statements. While we have looked at very basic formats of the financial statements, the financial statements for a company contain a little more detail and information on some items you may not have been introduced to yet. Pay particular attention to the information provided in the notes to the financial statements as you will find a lot of useful information in them that may help with some of the questions.

REQUIRED:
You are required to obtain the 2010 Annual Report of Blackmores Limited and then answer the questions that follow in Part A and Part B.

PART A – THE COMPANY (8 x 1 = 8 marks)

Question 1
Describe the company’s principal operating activities.
Ans:
Blackmores Limited manufactures & develops health products.
[Ref: Blackmores AR Report August 2010, Page 2]

Question 2
An auditing firm will have received remuneration for their services. What services did the auditing firm provide for this company in 2010? Ans:
The auditing firm, DELOITTE TOUCHE TOHMATSU, audited the Remuneration Report included in pages 41 to 48 of the directors’ report for the year ended 30 June 2010. Their responsibility is to express an opinion on the Remuneration Report, based on their audit conducted in accordance with Australian Auditing Standards. [Ref: Blackmores AR Report August 2010, Page 41 to 48, Page 50 and 51]

Question 3
Using the 2010 Annual Report, identify the number of the note that deals with Significant Accounting Policies and identify the method of depreciation the company uses to depreciate property, plant and equipment. What is the underlying assumption of this method in relation to the usefulness of property, plant and equipment? Ans:

Total numbers of notes dealing with Significant Accounting Policies are 22. [Ref: Blackmores AR Report August 2010, Page 58 - 64]. The method of depreciation the company adopt onto depreciation of property, plant and equipment is the straight-line method. The underlying assumption is that the residual value is estimated based on the cost of asset over the expected useful life. Freehold land is not depreciated. The following estimated useful lives are used in the calculation of depreciation: • Buildings 25–40 years

• Leasehold improvements 3–13 years
• Plant and equipment 3–20 years
[Ref: Blackmores AR Report August 2010, Page 59].

Question 4
The annual report contains a number of reports with only some of these being ‘financial reports’. Name all of the financial reports in the 2010 annual report shown for this company in their annual report. Ans:

The financial reports in the 2010 annual report are Statement of Financial position as at 30 June 2010, Statement of Comprehensive Income for the. Statement of Changes in Equity and Statement of cash flows. [Ref: Blackmores AR Report August 2010, Page 53-57].

Question 5
Directors of the company will often own shares in the company as well. Identify the name of the chairman of the board of directors and identify the number of shares the chairman held in the company at the end of their 2010 financial year (financial year ends June 30, 2010). Ans:

Chairman of the board of directors is Marcus C Blackmore AM [Ref: Blackmores AR Report August 2010, Page 36]. The number of fully paid ordinary shares he has is 4,479,278 [Ref: Blackmores AR Report August 2010, Page 38].

Question 6
Describe the purpose of the external auditor’s report.
Ans:
The external auditor’s report is to ensure that the financial reports produced by Blackmores internally are true & fair, complete & accurate.  [Ref: Blackmores AR Report August 2010, Page 51].

Question 7
With reference to the consolidated entity:
• What is the total...
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