Woolworths Limited: Institution Affiliations
WoolWorths Limited
Insert your Name here
Institution Affiliations
According to a recently reviewed financial statement on WoolWorths limited by Australian Stock market as at the year ending 30th Nov, 2013, it recorded an outstanding profit before tax of $1,122,387,456 or approximately $1,122 million.
One of the ways the WoolWorths limited (WOW) would use to change its profits is by applying AASB 139 Financial instruments: Recognition and Measurement.
Terms and conditions on loans fall under AASB 139 and failure to observe them causes enormous complications which are a great risk to the Company. The fair value of the loans could be different from the exact amount and therefore AASB 139 necessitates …show more content…
that there be need for the two parties to record the asset or liability first at a considerable value(in addition to the transaction costs for items that might not be measured at fair value).
Therefore, WoolWorths limited should ensure that the fair value of the financial assets or liabilities is not less than the repayable amount.
Secondly, WoolsWorths limited could realize AASB 127 Consolidated and Separate Financial Statements as a standard measurement to calculate and report its profits.
The AASB 127 is relevant where loan is made by a subsidiary to the parent.
Occurrence of any differences between the fair value and the actual amount of loan must be recorded.
The WoolsWorths limited should carefully observe the loan demand feature such that the full loan amount is recorded by borrower. Failure to do this might greatly affect the profit.
A third way, is to ensure that the financial statements are given in effect of the inter-company loan as required by AASB 124 Related Party Disclosures. The WoolWorths limited should ensure that it records its assets or liabilities at a fair value and that loans are loans are given on a non-arm’s length terms. This could increase interests and maximize profits as seen in 33.73% for last month.
Fourthly, valuing goodwill is another reliable method that Woolworth limited should implement for calculations of the residual value which requires the valuation of the net assets and equity (market value) identified.
A fifth way is adopting and applying AASB 123 borrowing costs standard. It defines the acquisition of the best qualifying asset or liability for borrowing. The WOW should implement the standard in order to directly discover the qualification, production or acquisition of qualifying asset that can be borrowed and maximize on
returns.
REFERENCES
Thornton, G. (july, 2009). Technical accounting alert, inter-company loans. Australia.
WoolWorths limited ( WOW). (n.d.). Retrieved from http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=WOW
Insert your Name here
Institution Affiliations
According to a recently reviewed financial statement on WoolWorths limited by Australian Stock market as at the year ending 30th Nov, 2013, it recorded an outstanding profit before tax of $1,122,387,456 or approximately $1,122 million.
One of the ways the WoolWorths limited (WOW) would use to change its profits is by applying AASB 139 Financial instruments: Recognition and Measurement.
Terms and conditions on loans fall under AASB 139 and failure to observe them causes enormous complications which are a great risk to the Company. The fair value of the loans could be different from the exact amount and therefore AASB 139 necessitates …show more content…
that there be need for the two parties to record the asset or liability first at a considerable value(in addition to the transaction costs for items that might not be measured at fair value).
Therefore, WoolWorths limited should ensure that the fair value of the financial assets or liabilities is not less than the repayable amount.
Secondly, WoolsWorths limited could realize AASB 127 Consolidated and Separate Financial Statements as a standard measurement to calculate and report its profits.
The AASB 127 is relevant where loan is made by a subsidiary to the parent.
Occurrence of any differences between the fair value and the actual amount of loan must be recorded.
The WoolsWorths limited should carefully observe the loan demand feature such that the full loan amount is recorded by borrower. Failure to do this might greatly affect the profit.
A third way, is to ensure that the financial statements are given in effect of the inter-company loan as required by AASB 124 Related Party Disclosures. The WoolWorths limited should ensure that it records its assets or liabilities at a fair value and that loans are loans are given on a non-arm’s length terms. This could increase interests and maximize profits as seen in 33.73% for last month.
Fourthly, valuing goodwill is another reliable method that Woolworth limited should implement for calculations of the residual value which requires the valuation of the net assets and equity (market value) identified.
A fifth way is adopting and applying AASB 123 borrowing costs standard. It defines the acquisition of the best qualifying asset or liability for borrowing. The WOW should implement the standard in order to directly discover the qualification, production or acquisition of qualifying asset that can be borrowed and maximize on
returns.
REFERENCES
Thornton, G. (july, 2009). Technical accounting alert, inter-company loans. Australia.
WoolWorths limited ( WOW). (n.d.). Retrieved from http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=WOW