Corporate Accounting Group Assignment Semester A 2012 RMIT International University Vietnam COVER PAGE

Course Code: ACCT2159 Course Name: Corporate Accounting Location where you study: HCMC Vietnam Title of Assignment: Group Assignment File(s) submitted ACCT2129 Assignment G3.docx Luu Thanh Huyen Bui Thi Lan Chi Nguyen Chi Giang Pham Mai Linh Nguyen Le Mai Thi Mai Phuong Thuy Phan Huynh Tuy Vi Pham Thuy Vy Vy Le Thoai My Student e-mail address: S3311513@rmit.edu.vn s3311483@rmit.edu.vn s3324376@rmit.edu.vn s3324379@rmit.edu.vn s3297100@rmit.edu.vn s3160867@rmit.edu.vn s3342458@rmit.edu.vn s3325175@rmit.edu.vn s3311593@rmit.edu.vn Learning Facilitator in charge: Ahmed Zaki Assignment due date: 17 APRIL 2012 Date of submission: 6 April 2012 Number of pages including this one: 17 Word Count: 1932 ( Main content) Student name:

"Huyen Luu Than (Amon)" <s3311513@rmit

Chi Bui Thi Lan <s3311483@rmit , Giang Nguyen Ch <s3324376@rmit , Linh Pham Mai <s3324379@rmit , Thi Nguyen Le M <s3297100@rmit , Thuy Mai Phuon <s3160867@rmit , Vi Phan Huynh T <s3342458@rmit , Vy Pham Thuy V Page 1 of 17 <s3325175@rmit

Corporate Accounting Group Assignment Semester A 2012

a) Describe the main sources of regulation of financial reporting in Australia.

There are four main sources of regulation of financial reporting in Australia: Australian Securities and Investments Commission (ASIC)

ASIC is responsible for administering corporations legislation in Australia, which is independent of state ministers or state parliaments, and reports directly to the Commonwealth parliament and the treasurer. Moreover, Corporations Act administered by ASIC outlines the responsibilities of company directors in relation to various activities including the nature of their conduct and financial statement preparation, lodgment and distribution. Australian Accounting Standards Board (AASB)

AASB is charged with developing a conceptual framework for accounting practices and not having the force of an accounting standard, making accounting standards that have force of law under s. 334 of the Corporations Act, formulating accounting standards for other purposes especially entities not governed by The Corporations Law. It also participates in and contributes to the development of a single set of accounting standards for worldwide use. Financial Reporting Council (FRC)

FRC oversees the activities of the AASB, which include 18 people who are nominated by a number of interest groups (stakeholders), as well as chairperson. They are appointed directly by the Federal Treasurer or the Treasurer may specify an organization or body to choose a person to represent them. Some functions of FRC are such as providing broad oversight of the process for setting accounting standards, giving the AASB directions, advice or feedback on matters of general policy. Australian Securities Exchange (ASX)

ASX is under the control of the Corporations Act. ASX, which is regulated by ASIC, develops and imposes regulations on other companies that are listed on its exchange. It has one set of listing rules for all trading floors in each capital city and is known as Listing Rules. However, failure to comply may lead to removal from the Board.

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Corporate Accounting Group Assignment Semester A 2012

b) Identify and fully describe each of the major operating activities of your company.

The principal activities of Coca-Cola Amatil Limited and its subsidiaries (Group or CCA Group) during the financial year ended 31 December 2011 were The manufacture, distribution and marketing of carbonated soft drinks, still and mineral waters, fruit juices, coffee and other alcohol-free beverages; The processing and marketing of fruits, vegetables and other food products; and The manufacture and distribution of premium beer brands and the premium spirits portfolio of Beam Global Spirits and Wine,Inc.(Beam). The Groups principal operations were in Australia, New Zealand, Fiji, Indonesia and Papua New Guinea (PNG).

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Corporate Accounting Group Assignment Semester A 2012

c) What are the major changes in operating activities of your company, identified in the Directors Report? According to the CCA Annual Report (2011), there were several significant changes in the states of affairs during the financial year ended December 2012. 03/2011: CCA entered into a new 10 year agreement with Beam for the manufacture and distribution of Beam premium spirits in Australia. 20/06/ 2011: CCA and SABMiller plc (SABMiller) entered the Pacific Beverages joint venture agreement (Variation). The Variation comprised a number of agreements, including a put option over CCAs 50% interest in Pacific Beverages, which was exercisable following certain conditions being met. 16/12/2011: the put option was exercised by CCA, requiring SABMiller to unconditionally purchase CCAs 50% interest in Pacific Beverages by 15/01/2012. 13/01/2012: CCA received the agreed sale proceeds. In the opinion of the Directors, there have been no other significant changes in the Groups state of affairs or principal operating activities during the financial year ended December 2011.

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Corporate Accounting Group Assignment Semester A 2012

d) Describe the key elements of the financial performance of your company, as reported in the Directors Report. The key elements of the financial performance of CCA Ltd are: Trading revenue for the financial year increased by 6.9% to $4,801.2 million, compared with $4,490.3 million for 2010. Net profit attributable to members of the Company was $591.8 million, compared with $497.3 million in 2010, representing a 19.0% increase from last financial year. Operating cash flow increased by 9.6% to $641.8 million, compared with $585.4 million in 2010. Subsequent to the end of the financial year, CCA completed a $250.0 million debt raising in the Euro markets, with the issue of Euro Medium Term.

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Corporate Accounting Group Assignment Semester A 2012

e) What is the carrying amount of each class of Property, Plant, and Equipment, at reporting date, of your company?

Reporting day: 31 December 2011

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Corporate Accounting Group Assignment Semester A 2012

f) Describe the information disclosed about Property, Plant, and Equipment in the annual financial report of your company. Depreciation methods and the depreciation rates used: Property, plant and equipment, other than freehold land is depreciated or amortized on a straight line basis at various rates dependent upon the estimated average useful life for that asset to the Group. The estimated useful lives of each class of asset for the current and prior year are as follows: Freehold land and leasehold building Plant and equipment Gross carrying amount at the end of the period 20 to 50 years 3 to 15 years

Accumulated depreciation and impairment

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Corporate Accounting Group Assignment Semester A 2012

Reconciliation of Carrying Amount at beginning and the end of the period Additions

Sale of Property, Plant and Equipment: Proceeds from sales of Property, Plant and Equipment: $3.6 million Loss/Profit from disposal of Property, Plant and Equipment: no information provided

Depreciation

Net exchange difference (net foreign currency movements)

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Corporate Accounting Group Assignment Semester A 2012

g) Describe the accounting policies relating to Property, Plant, and Equipment adopted by your company. According to AASB 116 defines a class of Property, Plant and Equipment as a group of assets of similar nature and use in an entitys operations. Measurement after recognition: Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic benefits will flow to the group. All other subsequent expenditure is expensed in the period in which it is incurred. Property, plant and equipment, other than freehold land, is depreciated or amortized on a straight line method. Estimation of useful lives of asset (for the current and prior years): Freehold and leasehold buildings: 20 to 50 years plant and equipment: 3 to 15 years

Derecognition of property, plant and equipment (In accordance with AASB 116) :
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the financial year the item is derecognised.

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Corporate Accounting Group Assignment Semester A 2012

h) What is the carrying amount of each class of Intangible Assets, at reporting date, of your company?

Reporting day: 31 December 2011

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Corporate Accounting Group Assignment Semester A 2012

i) Describe the information disclosed about Intangible Assets in the annual financial report of your company. Reporting date: 31 December 2011

Reconciliation of Carrying Amount at beginning and the end of the period Addition of asset:

Impairment calculation- Key assumption: The useful life of customer lists is finite and amortization is on a straight line basis. The brand names have a finite useful life and accordingly SPCA brand names have been assessed as having straight line basis. Other brand names have been assessed as having finite useful life and amortized on a straight line basis. Software development assets represent internally generated intangible assets with finite useful lives and are amortized on a straight line basis All intangible assets with finite useful lives were assessed for indicators of impairment and all intangible assets with indefinite useful lives were tested for impairment at 31 December 2011

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Corporate Accounting Group Assignment Semester A 2012

j) Describe the accounting policies relating to Intangible Assets adopted by your company. Company adopted Intangible assets: (In accordance with AASB 138) and Impairment of assets including goodwill and intangibles (In accordance with AASB 136) accounting policies Identifiable intangible assets. Intangible assets acquired separately are capitalized at cost and from a business combination are capitalized at fair value as at the date of acquisition. The useful lives of these intangible assets are assessed to be either finite or indefinite. The estimation of useful lives of assets has been based on historical experience. Amortization is charged on assets with finite lives using straight line basis.

Intangible assets with indefinite lives are tested for impairment at least annually at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Intangible assets are impaired at each balance date. These calculations involve an estimation of the recoverable amount of the cash generating unit to which intangible assets with indefinite lives are allocated; Intangible assets, excluding software development assets, created within the business are not capitalized and costs are taken to the income statement when incurred. Any costs carried forward are amortized over the assets useful lives. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the income statement when the asset is derecognised. The estimated useful lives of existing finite lived intangible assets for the current and prior year are as follows Customer lists Brand names Software development assets Goodwill Goodwill is not amortized but will be tested annually or more frequently if required, for any impairment in the carrying amount. Impairment is determined by assessing the recoverable amount of the cash generating unit to which the goodwill relates. Page 12 of 17 5 years 40 to 50 years 3 to 10 years

Corporate Accounting Group Assignment Semester A 2012

Goodwill arising on the acquisition of subsidiaries is treated as an asset of the subsidiary. Goodwill is allocated to cash generating units for the purpose of impairment testing.

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Corporate Accounting Group Assignment Semester A 2012

k) Are any items of Property, Plant, and Equipment, and/or Intangible Assets of your company impaired? If so, identify which assets are impaired, and the amount of accumulated impairment losses. Property, Plant and Equipment. Items that impaired: Freehold and leasehold buildings Plant and equipment Intangible Assets. Items that impaired: Customer lists Brand names Software development assets Coca-colas financial statement did not show exactly the amount of accumulated impairment losses for Property, Pland and Equipment as well as Intangible Assets. Instead, they combine the depreciation and amortization with the impairment losses into a figure called Accumulated Depreciation and Impairment or Accumulated Amortization and Impairment. Property, Plant and Equipment

Accumulated depreciation and Impairment PROPERTY, PLANT AND EQUIPMENT Freehold and leasehold buildings Pland and equipment Total Intangible Assets 2011 ($m) 72.0 1456.7 1528.7

Accumulated amortization and Impairment INTANGIBLE ASSETS Customer lists Brand names Software development assets Total 2011 ($m) 7.3 8.2 59.6 75.1

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Corporate Accounting Group Assignment Semester A 2012

l) What is the carrying amount of leased assets and lease liabilities, at reporting date, of your company?

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Corporate Accounting Group Assignment Semester A 2012

m) Describe the information disclosed about leased assets and lease liabilities in the annual financial report of your company. According to the CCA Annual Report (2011), we have Group as a lessee Leases are classified at their inception as either finance or operating leases based on the economic substance of the arrangement so as to reflect the risks and benefits incidental to ownership. There are no material finance leases within the group. Operating leases An asset or liability is recognized for the difference between the amount paid and the lease expense released to earnings on a straight line basis. Lease liabilities payments are charged to the Income Statement on a straight line basis over the lease term. Lease income from operating leases is recognised as income on a straight line basis over the lease term.

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Corporate Accounting Group Assignment Semester A 2012

n) Who is the auditor of your company? Explain whether the Audit Report of your company is qualified. Coca Cola Amatil Limited was audited by Ernst & Young at 30 December, 2011 Audit report of the company is unqualified. According to the Auditors opinion, the financial report of Coca-Cola Amatil Limited is qualified, because of those following reasons: It is in accordance with the Corporations Act 2001, including: o giving a true and fair view of the consolidated entitys financial position as at 31 December 2011 and of its performance for the year ended on that date; and o complying with Australian Accounting Standards and the Corporations Regulations 2001 The financial report also complies with International Financial Reporting Standards

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