To investigate Wesfarmers group 2020 financial statement, https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2020-annual-report.pdf?sfvrsn=67950abb_0

Answer these questions

Issue 1
How does the parent entity decide on which entities’ financial statements should be consolidated? Is the policy with regards to this disclosed in the Annual Report?

The director read that it is possible to require consolidation of investments where the parent entity owns less than 50% of the voting rights. This director asked, “How is it possible for an entity to have power without a majority of the voting rights?” (5.5 marks)

Issue 2

Has there been any goodwill or gain on bargain purchase on acquisition during the year? Where would this be found in the consolidated financial statement?

The director is aware from the article that goodwill is calculated after taking into account the fair value of net assets acquired. The director asked, “Where must the adjusting entries be made to ensure net assets are recorded at fair value? What is the implication if these adjusting entries are not made?” (5 marks)

Issue 3

What is the functional currency of the consolidated financial statements? What about its presentation currency? What is the rationale of choosing a presentation currency? (1.5 marks)

Issue 4

Does the published set of group financial statements reveal the company’s policy on corporate governance? Where is it disclosed? Comment on the adequacy of the disclosure. Is there a requirement to disclose the policy on corporate governance? (2 marks)

Answer rating: 100% (QA)

Issue 1 IFRS 10 establishes principles for presenting and preparing consolidated financial statements when an entity controls one or more other entities IFRS 10 requires an entity the parent that cont... View the full answer