Accounting and Financial Management 1B

| December 20, 2015

Accounting and Financial Management 1B
Order Description
Questions – Select one of the following companies
1. AGL Energy Ltd
2. Billabong International Ltd
3. Cochlear Ltd
4. Woolworths
5. Myer
Answer Questions from (1) to (4)
(1) Describe the policy choices made by the company in relation to Property, plant and equipment (maximum 200 words) (1 mark).
(2) Explain possible reasons for the choices you observe for the property plant and equipment classes with discussion of other measurement methods (maximum 600 words) (3 marks).
(3) Consider the news article relevant only to your selected company. Is it likely that the situation described will result in impairment? Provide an analysis as (i) the likelihood the impairment will occur; and (ii) assume that the impairment does occur discuss the impact on the company’s valuation with supporting calculations. (Maximum 900 words) (9 marks).
AGL Energy: https://www.mywealth.commbank.com.au/companies/agl-flags-asset-sell-offs- amid–435m-impairment-news20150706
Billabong: https://www.smh.com.au/business/billabong-gains-traction-but-has-long-way-to-go- says-ceo-neil-fiske-20150225-13p3e6.html
Cochlear: https://www.fool.com.au/2015/10/09/are-cochlear-limited-shares-worth-100/
Myer: https://www.smh.com.au/business/myer-appoints-former-toll-holdings-chief-financial- officer-grant-devonport-20150609-ghkdc6.html
Woolworths: https://www.abc.net.au/news/2014-08-12/woolworthss-hardware-losses-blow-out-to- 169m/5665580

(4) From the news article relevant to your selected company discuss
(i) whether the item described is a liability through the essential characteristics and recognition criteria within the Conceptual Framework (maximum 200 words) (1 mark);
(ii) should a liability, provision or contingent liability be recorded at the time of writing (maximum 500 words) (3 marks);
“at the time of writing” :
AGL article 30/09/2015
Billabong: 8/09/2015
Cochlear: 24/01/2014
Myer: 26/03/2015
Woolworths: 19/06/2015
(iii) if a liability was recorded what would be the impact on the company’s valuation at the time of the article with supporting calculations (maximum 900 words) (8 marks).
AGL Energy: https://www.smh.com.au/business/energy/agl-energy-deflects-climate-change-heat- ahead-of-agm-20150928-gjwxl7.html
Billabong: https://www.skynews.com.au/business/business/national/2015/09/08/billabong-director- resigns.html
Cochlear: https://www.bloomberg.com/news/articles/2014-01-24/cochlear-loses-131-2-million- verdict-in-patent-lawsuit
Myer: https://www.abc.net.au/news/2015-03-26/myer-sued-by-shareholder-over-surprise-profit- slump/6349374
Woolworths: https://www.smh.com.au/business/retail/recall-of-faulty-heaters-from-woolworths- safeway-and-big-w-20150618-ghrvoh.html

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