Reference no: EM131476508 , Length: word count:700

Corporate Accounting Assignment

Topic: Disclosure and the Usefulness of Financial Reports

Disclosing entities are regulated by the Corporations Act (2001), Accounting Standards and ASX requirements. The continuous disclosure requirements in ASX LR 3.1 require timely reporting to the ASX of significant events and financial information that is likely to impact the price of the entity's securities. ASX LR 3.1 contains an overriding general requirement to disclose information that a reasonable person would expect to have a material effect on price, however the rule includes the following exceptions:

• It would breach the law to disclose information
• The information relates to an incomplete proposal or negotiation
• The information comprises matters of supposition or is insufficiently definite to warrant disclosure
• Information is generated for internal management of the company
• Information is a trade secret
• A reasonable person would not expect the information to be disclosed
• The information is confidential and ASX has not formed a view that has ceased to be confidential.

Immediate notification to the ASX is required when particular instances occur (these are listed in LR 3.1) and includes:

• The fact that the entity's earnings will be materially different from market expectations.

Part I -

Using the consolidated financial statements of Bellamy's Australia Ltd, calculate comparing the 2015 and 2016 figures:

1. The percentage increase in Gross profit.

2. The percentage increase in net profit after tax.

3. Return on investment (assets) for 2015 & 16. (hint, use EBIT).

4. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2016.

5. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Financial Position for 2016.

6. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Cash Flows for 2016.

7. Based on your analysis, and BEFORE knowledge of the recent share price decline and share trading halt, would you have recommended to your clients to buy, hold or sell Bellamy's shares? Why?

Part II -

Read and analyse the three attached articles by:

• Wang Xia and Wu Min. (2011). The quality of financial reporting in China: An examination from an accounting restatement perspective. China Journal of Accounting Research, Vol. 4. pp. 167-196.
• Ghazali, N.A.M. (2010). The importance and usefulness of corporate annual reports in Malaysia. GadjahMada International Journal of Business, Vol. 12 No. 1, pp. 31-54.
• Alzarouni, A., Aljifri, K., Ng, C and Tahir, M, I. (2011). The usefulness of corporate financial reports: Evidence from the United Arab Emirates. Accounting & Taxation, Vol. 3 No. 2, pp. 17-37.

And answer the following research question:

Annual reports are an outdated mode of informing users regarding the activities of a company. Do you agree? Why or why not?

Attachment:- Assignment Files.zip