Table of Contents
Introduction. 2
First Five accounting Policy of Sonic Healthcare Ltd. 2
Difference between accounting policies and estimates. 4
Accounting Policy definition in AASB108. 4
Accounting policy example in the annual report of the selected company. 4
Accounting Estimates Definition in AASB108. 4
Accounting Estimates Example in the selected company’s annual report 5
Income and Revenue comparison with last year’s performance. 5
Sonic Healthcare Ltd.’s compliance with AAASB101. 6
Disclosure of the impairments. 6
REFERENCES. 7
Introduction
The present report evaluates the annual report ,2011 of Sonic Health Care Ltd. in reference to AASB 101 and AASB108.
The present report is based on the annual report 2011 of Sonic Healthcare Ltd.
First Five accounting Policy of Sonic Healthcare Ltd.
The below are the five accounting policies of the select company: Sonic Healthcare Limited :
Trade and other payables: The trade and other payables are the liabilities for goods and services in every financial year. These amounts are the unsecured amounts and payable within 30 days of recognition. Trades and other payables are recognized on the fair value and amortized cost of effective interest rate is used for measuring
Interest bearing liabilities
Interest bearing liabilities are documented at fair value. Subsequently loans and borrowings are measured which carry interest are measured at amortised cost by the effective interest method.
Derivative financial instruments
On the date derivative contract is made it is recognized at fair value of it and then it is considered again on the reporting date.
(i) Fair value hedge
In the income statement derivatives are documented at their fair value and subsequently any changes in their fair value, changes in the value of any liabilities and assets subject to any hedged risk.
(ii) Cash flow hedge
The derivatives which are recognized as cash flow hedges are documented in the comprehensive income statements and accumulated in equity reserves.
Employee benefits
(i) Wages and salaries, annual leave
The liabilities of salaries and wages and annual leaves are considered at the expected value or amount when these liabilities are paid or settled.
(ii) Long service leave
The long service leave liabilities are recognized as current provisions if it is settled within 12 months and recorded at expected amount at the time of settlement. However, if these leaves are settled after more than 12 months from the date of reporting then it is considered as noncurrent provisions of employee benefits and recorded at future value which is expected to be paid to the employees.
(iii) Retirement benefit obligations
The company provides some extra benefits to the certain employees on disability, death or retirement. This plan receives a fixed contribution from all group companies.
(iv) Profit sharing and bonus plans
The employees and other creditors receive the profit sharing and bonus plans when the company has no other option than settling the liabilities and the following conditions are accomplished:
– formal plan for deciding the benefits, or
– the benefit amount has be decided prior the completion of financial statements , or
– it gives calculations of the obligation amount.
(v) Employee benefit on-costs
Employee benefit on-costs are recorded on the amount they are expected to be paid or settled.
Borrowing costs
Borrowing costs are the costs such as interest of bank overdrafts, loans both short term and long term , amounts of interest rate swaps, charges of finance lease etc.
Difference between accounting policies and estimates
Accounting Policy definition in AASB108
AASB101 defines the accounting policies as the statements which defines calucations, measurements, timing and the presentation of transactions, ,events etc.
Accounting policy example in the annual report of the selected company
(1) Trade and other payables: The trade and other payables are the liabilities for goods and services in every financial year. These amounts are the unsecured amounts and payable within 30 days of recognition. Trades and other payables are recognized on the fair value and amortized cost of effective interest rate is used for measuring (www.sonichealthcare.com/, 2012)
Accounting Estimates Definition in AASB108
Estimations are the
Estimation involves decisions of judging the accounting definitions on the basis of latest and relevant information.
The estimates include inventory obsolescence, the lives of depreciable assets, bad debts and warranty obligations.
Accounting Estimates Example in the selected company’s annual report
Fair value
In Sonic Healthcare Ltd’s annual report 2011 the amount equivalent to $20,517,000 (2010: $20,514,000) was decided. In each financial year the Directors of the company revaluate the estimates as per the updated information, market prices etc.
Income and Revenue comparison with last year’s performance
The company compared the revenue and income items with last year’s performance by comparing the same items of revenue, profit or loss in the last year. For instance Revenue main heading consists service revenue which has medical service revenue, rental income, ineterst income and operations revenue. Similarly the company compared the income sub headings such as grants from the Government, gain from liquidation of non-current assets, foreign exchange gains and increase in value of the properties etc.( www.aasb.gov.au/admin,2012)
Sonic Healthcare Ltd.’s compliance with AAASB101
Yes. The Sonic Health Care Ltd. has met in its annual report the requirements of AASB 101 disclosure and presentation of financial statements. It has prepared all the required financial statements such as statement of financial position ,changes statement of changes in equity, statement of changes in cash flows and statement of comprehensive income for the financial years. The company also provides notes on accounting policies and estimates.
It also followed the required guidelines of Objective of the statements, disclosure requirements, accounting concepts, structure and contents of the statements, distinguishing the current and non-current assets, notes, consistency in the presentation and so on.
Disclosure of the impairments
The Sonic Healthcare Ltd. discloses the impairments of the property and Goodwill. The following is the evidence from the annual report 2011.
| Year 2011 | Good will ($’000) | Freehold land & buildings($’000) |
Plant& Equipment($’000) |
| Cost | 3,075,258 | 124,844 | 866,572 |
| Accumulated amortization and impairment/Depreciation |
-85,006 | -22,876 | -511,811 |
| Net book amount | 2,990,252 | 101,968 | 354,761 |
Yes. The company has disclosed the amount of goodwill and plant and equipment. The table for the same is as follows:
CONCLUSION
On the basis of above analysis it can be concluded that Sonic Healthcare Ltd. is flowing the guidelines prescribed in AASB101 and AASB108. The analysis was done on accounting policies and estimates, presentation of the financial statements and the disclosure of the financial statements. Disclosures of impairment was taken as an example of disclosures from the com company’s annual report.
REFERENCES
Annual Report ,Sonic Health Care Limited , viewed on 14th may 2012, www.sonichealthcare.com/investor-information/annual–report.aspx
AASB101, viewed on 14th may 2012, www.aasb.gov.au/admin/…/AASB101_09-07_ERDRjun10_07-09.pd..
AASB 108 , viewed on 14th may 2012, www.aasb.gov.au/admin/…/AASB108_07-04_COMPdec09_01-11.p…
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