Chapter 1 of Study Guide: Question 2.

This writing includes three items for each: Assets, Liabilities and Equity. I explained them mostly through reading the footnotes of the annual reports of my company (CMI) since I had never been in contact with such information before. I have to say that they still seem a bit confusing to understand to me. 

Here we go:

Assets.

1. Property, plant and equipment
The property, plant and equipment bought by the company from the suppliers in order to use these in the making of the products.

They include Gross carrying amount with balance, additions transfers and disposals, and Accumulated Depreciation/ Amortisation / Impairment and net book value at 30 June.

This item has no restrictions.

2.Current trade and other payables

This item includes trade payables and other creditors and accruals.
Includes Fair value, Financial guarantees (not considered materials) and Terms of payables (non interest bearing and generally on 30-60 day terms.

3.Goodwill

It includes Gross carrying amount, Accumulated impairment losses, Net book value, Allocation of goodwill to cash generating units and electrical components. They produce similar products.

The excess if the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired.

Liabilities.

1.Current Borrowings Secured and unsecured

Include Fair values, Interest rate, foreign exchange and liquidity and so on.

2.Current Provisions

Involve Employee benefits (the aggregate amount of annual leave and long service leave entitlements) and onerous leases ( future costs expected to be incurred in relation to the TJM retail premises closed the prior year. )

3.Leases

Includes Financial leases with Leasing arrangements with lease terms of 3-5 years, and Operating leases with leasing arrangements that relate to property, plant and equipment with lease terms of 1-13 years.

Lease also involve non-cancellable operating leases.

Equity.

1.Issued Capital

The issued capital includes Fully paid ordinary shares that includes within Balance at the beginning and end of financial year and Class A shares with the same but entitled to only vote in specific circumstances. These share have the right to a preferred ranking over ordinary shares for payment of dividends

2.Reserves

Reserves include reserves comprise and movements in reserves. Movements in reserves also include Foreign currency translation reserve, Employee Equity settled benefits reserve and class A share reserve.

3.Retained Earnings

Retained Earnings include balance at the beginning of a financial year, the net profit/loss attributable to members of the parent entity and dividends provided for or paid.

I have tried to make sense for each of them. I am open to suggestions, critics and further explanations for each of the items. I believe these would help us understand and have more clues on what the items exactly mean and how we can use them in out advantage to understand the realities of the company that we've been assigned this assessment and later when we will have to deal with a wide range of maybe even larger companies.

This is the link to the company's website : http://www.cmilimited.com.au/Home/

These are the links to its annual reports: http://www.cmilimited.com.au/Investor-Centre/?page=Annual-Reports