Accounting Business Reporting for Decision Making

260 Accounting: Business Reporting for Decision Making

JB Hi-Fi Ltd as requiring critical judgements and the critical judgements to be made in

relation to these areas.

c. Explain the impact on the profit and equity of the net realisable value of inventories being lower

than their carrying amount. What accounts would be affected?

6.39 Understanding a statement of profit or loss, statement of comprehensive income and statement

of changes in equity    LO7, 8, 9

Locate the most recent annual financial statements for Samsung Group from its website. Examine

the information in the report and answer the following questions about Samsung’s statement of

changes in equity.

Required

a. Identify and state Samsung’s total comprehensive income for the period.

b. Identify and state Samsung’s profit for the period.

c. Explain why Samsung’s total comprehensive income and expense differ from its profit.

d. Identify and state the amount of Samsung’s transactions with equity holders as equity holders

during the period.

e. Identify if the profit in the statement of changes in equity agrees with that in the statement of

profit or loss.

f. Identify if the balance of retained earnings at the end of the period agrees with that in the bal-

ance sheet.

6.40 Global citizenship    LO1, 9

Samsung Group upholds a belief in shared responsibility — to its people, the planet and the

society. Samsung Electronics produces a sustainability report that includes the company’s pro-

files as well as its economic, environmental, and social performance indicators to ensure the full

sharing of information across all sectors.

a. Describe the Samsung business principles.

b. Discuss five ways that Samsung acts as a responsible citizen.

c. List some of the quantitative indicators used to report on Samsung’s sustainability performance.

d. Discuss if sustainability performance enhances or hinders financial performance.

e. The sustainability report is produced using the Guidelines of the Global Reporting Initiative

(GRI). Summarise the GRI. Your summary should include the organisation, the priorities, the

reporting framework and the global reach of GRI.

6.41 Changes in accounting policies and estimations    LO3, 4

Facelook Ltd is reviewing its accounting policies and estimations. Detailed below are its current

policies and estimations. Using these current policies, the company’s calculated profit figure is

$620 000. What would Facelook Ltd’s profit be if the alternative accounting policies and esti-

mations are applied?

Current Alternative

Depreciation rate for plant and equipment

with a cost price of $725 000 and residual

value of $100 000

20% straight-line 50% diminishing

balance

Accounts receivable impairment 2% of gross accounts

receivable

5% of gross accounts

receivable

Accounts receivable (gross) $200 000

Development expenditure $50 000 expensed $50 000 capitalised

6.42 Revenue recognition    LO5, 7

The International Accounting Standards Board (IASB) and the US accounting standard-setting

board worked on a joint project to develop a new standard on revenue recognition. Podcasts sum-

marising the project are available on various websites including that of the IASB.