Goodman Group is an Australian company reporting under a form of IFRS acceptable in Australia. Under IFRS,

Question:

Goodman Group is an Australian company reporting under a form of IFRS acceptable in Australia. Under IFRS, associate companies are those entities over whose financial and operating policies the consolidated entity exercises significant influence but not control (under

U.S. GAAP, these are referred to as â€œequity-method investmentsâ€). Joint ventures, or entities that are jointly controlled by the consolidated entity and another entity, are also accounted for using the equity method under both U.S. GAAP and IFRS.

The June 30, 2010, balance sheet for Goodman follows:

Goodman Group is an Australian company reporting under a form

The equity investments (for instance, $2,071.4 for 2010) include both investments in joint
ventures and investments in associate companies. Information on these affiliated company
investments follows:

Joint ventures are often used by companies to purchase assets that the firm cannot afford to purchase on its own.

Required:
A. Using the balance sheet, compute the ratio of total liabilities to total assets.
B. Assume that instead of reporting only the net investment, the standards required the consolidated entity to reflect separately Goodmanâ€™s percentage of both assets and liabilities for its investment in joint ventures. Compute the ratio of total liabilities to total assets and comment.
C. Repeat part B, except assume that the standards required the consolidated entity to reflect separately Goodmanâ€™s percentage of both assets and liabilities for all equity investments. Compute the ratio of total liabilities to total assets and comment.
D. Assume that the equity investments in joint ventures are fully consolidated instead (typically, the ownership percentage is close to 50%). Compute the ratio of total liabilities to total assets. Compare your answer to part A, and comment.
E. Assume that all equity investments are fully consolidated. Compute the ratio of total liabilities to total assets. Compare your answer to parts A and B and C andcomment.

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...