To: The General Manager,
Subject: Changes in the accounting requirements for Joint Arrangements and Operating Segments
This report highlights the changes prescribed by the Australian Accounting Standards Board (AASB) with regards to accounting for Joint Arrangements and Operating Segments and analyses the level of compliance achieved by Origin Energy Limited in their financial statements for the Fiscal Year 2013-14.
2. Joint Arrangements
The Australian Accounting Standards Board (AASB) replaced AASB131 Interest in Joint Ventures with AASB11 Joint Arrangements effective January 1, 2013.
AASB131 (2011) classified joint ventures into three main categories with different financial statement reporting requirements as noted below:
a. Jointly controlled operations
• Disclosure: Assets controlled, liabilities and expenses incurred as well as share of income earned.
b. Jointly controlled assets
• Reporting requirements: Assets controlled as per their nature, individual/shared liabilities, expenses incurred and income from the sale of its share of the output.
c. Jointly controlled entities
• Disclosure: Proportionate consolidation or the Equity method.
In contrast, AASB11 (2011) classifies Joint Arrangements in two main categories with slightly different reporting requirements as noted below:
a. Joint operation
• Disclosure: Individual/shared assets, individual/shared liabilities, revenue from the share of output as well as individual/shared expenses.
b. Joint venture
• Disclosure: Equity method as outlined in AASB128 Investments in Associates and Joint Ventures.
These changes were adopted in order to enhance the verifiability, understandability, consistency and compa...
... middle of paper ...
... the equity method. It details the investment summary in joint ventures, the results of equity accounted investees as well as a summary of Australia Pacific LNG’s income statement and balance sheet.
In Note 8(A) of the financial statement, the company has also disclosed that its ownership interest of 37.5% in Australia Pacific LNG is a joint venture as it has ascertained that joint control exists in accordance with the para. 7-13 of AASB11 (AASB11 2011, p.10; Origin 2014, p.81). Also, mentioned in Note 8(A) is an impairment loss of $51million which was an investment in PNG Energy Developments Ltd. This disclosure requirement is outlined in Appendix C3 of AASB11 and requires the application of para. 40 of AASB128.
Hence, from the analysis above, it concluded that Origin Energy Ltd has complied sufficiently with the disclosure requirements of AASB 11.
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