FIN311 Agricultural Accounting and Business Law Part A Report Sample

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FIN311 Agricultural Accounting and Business Law Part A Report Sample

Details

This assessment is a group assignment and you are required to complete the assignment in order to pass the course.

You are required to access the most recent annual report of one of the agricultural companies and one of the non-agricultural companies listed on the Australian Stock Exchange (Annual reports are available via www.asx.au. They are also available on the company website.):

This assignment requires an analysis of below accounting problems on non-current assets in Agriculture Company and a non-agricultural company. The group must analyse the relevant accounting data, apply different accounting techniques to solve the problem provide a solution in the form of a report (Word limit: 700 words)

1. What particular attributes of agricultural assets differentiate them from other assets?

2. How is a class of ‘assets” defined? Would residential land and farming land be included in the same class of assets? Explain.

3. How is the revaluation of an agricultural property treated differently from the revaluation of a non-agricultural property? Refer your answer to selected companies.

Please note that reports that relate to companies other than the above (one of the agricultural companies and one of the non-agricultural companies), or years earlier than the most recent financial year, will not be marked and will receive a Zero grade. You are required to write an executive report with a maximum length of 700 words

When preparing your report you should refer to:

• the financial statements

• disclosures

• academic journals (minimum of 2)

• textbooks (minimum of 2)

• the assignment rubric

You are not expected to systematically reference the annual report that you are analysing and you are not required to attach the financial statements to your report. However, when referring to specific information inside your report, you should include a page and section reference to indicate the source of your information. Any source other than the company financial report which you use in your report, such as journals and textbooks, should be referenced both in-text and at the end of text.

Solution

1. Attributes

The assets of Costa Group Holdings along with BHP Group also differ greatly because they are two very different businesses operating in separate industries. The following characteristics separate Costa Group Holdings' land holdings apart from those of BHP Group:
Assets' Types:

• Farmland, orchards, greenhouses, and processing facilities enabling the cultivation and harvest of fruits and vegetables are among the agricultural assets that Costa Group Holdings principally owns and manages (Spataru, Faggian & Docking, 2020).

• On the other hand, BHP Group is a multinational mining and resource corporation. Mineral resources, mining infrastructure, oil and gas reserves, and industrial facilities make up its assets.

Industry focus:

• The Costa Group is primarily involved in agriculture and horticulture, with a concentration on the provision of fresh products.

• Natural resource extraction and processing, including those of metals, minerals, oil, and gas, are the main business activities of BHP Group.

Geographical Locations:

• The agricultural assets of Costa Group are frequently dispersed across several nations and locations that have climatic conditions favorable for growing particular crops, such as Australia, the United States, and Morocco.

• Assets of BHP Group are spread over several nations, including Australia, the United States, Chile, and others, and are frequently situated close to mineral-rich regions (O'Faircheallaigh, 2023).

Turbulence in markets

• The agriculture sector frequently faces unique market dynamics and difficulties, such as crop yields that are affected by the weather and price swings.

• Global commodities markets, which can be extremely cyclical and vulnerable to price volatility, have an impact on the assets of BHP Group.

2. Class of Assets

The following asset classes might be included in Costa Group Holdings' class of assets as an agricultural business:

Biological Assets: This category would include every living thing the business owns, such as trees, plants, and crops that bear fruit. University Assignment Help, These assets could be appraised using another suitable accounting methodology or their fair worth less costs to sell.

Property, Equipment, and Plant: Assets such as greenhouses, machinery, irrigation systems, and other tangible assets involved in agricultural production are often included in the class of property, plant, and equipment.

Intangible Assets: The Costa Group may hold assets that cannot be physically touched, such as trademarks, patents, or licensing for exclusive agricultural technologies.

Financial Assets: This category would include any type of financial asset, including investments in other businesses or financial instruments.

Inventories: This class of assets includes things like harvested crops that are being held either for sale or that are being produced.

Non-Current and Current Assets: This class would include any assets, such as receivables or prepaid expenses that do not fall within the aforementioned categories but are nevertheless necessary to the running of the business.

Asset Impairment: Both biological and non-biological assets, which are analyzed for impairment by Costa Group, may be included in a separate class.

3. Revaluation

Revaluation of Agricultural Property Owned by Costa Group Holdings:

Periodic Revaluation - Agricultural property is normally valued under IFRS (International Financial Reporting Standards) at fair value less costs of sale (the fair value model). Revaluation for agricultural property happens less frequently and typically only when the property's fair worth significantly changes.
Basis for Value: Farmland and orchards are evaluated according to their fair worth, which takes into account agricultural-specific elements including market pricing, and anticipated cash flows, including biological aspects like crop yields.

Treatment of Revaluation Surplus - Any rise in fair value for agricultural property is reported as a revaluation surplus in the statement of financial position's revaluation surplus section (Costa Group Holdings, 2022). Most of the time, this surplus cannot be counted as income on the income statement.
Subsequent Measurement - After revaluation, the agricultural property is measured at depreciation, and its revalued amount, is computed using this new value.
 
Property of Resources and Mining Company of BHP Group has been revalued:

Revaluation Frequency: To reflect shifting market conditions or sizable changes in the assets' fair value, BHP Group normally performs more regular revaluations of plant, property, and equipment.

Value Basis: Plant, property, and equipment, such as mining machinery and infrastructure, may also be assessed at fair market value (BHP Group, 2022). Fair market value is established using market-based data, such as recent sales of comparable assets.

Treatment for Revaluation Surplus - A revaluation surplus may be recorded when the plant, fair value for the property, and equipment increases. However, any revaluation-related shortfall is normally recorded on the income statement, which lowers profit. Revaluation surpluses can thus have a direct influence on the revenue of the business.

Subsequent Measurement - Afterwards, property, plant, and equipment are measured at their revalued quantity, and depreciation is computed using this new value. The income statement may be affected by any excess or deficit.
 

References

BHP Group, 2022. Annual Reports. https://www.bhp.com/-/media/documents/investors/annual-reports/2022/220906_bhpannualreport2022.pdf

Costa Group Holdings, 2022. Annual Reports. https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_CGC_2022.pdf

O'Faircheallaigh, C. (2023). Indigenous Peoples and Mining: A Global Perspective. Oxford University Press. https://books.google.com/books?hl=en&lr=&id=eBnMEAAAQBAJ&oi=fnd&pg=PP1&dq=%E2%80%A2%09Assets+of+BHP+Group+are+spread+over+a+number+of+nations,+including+Australia,+United+States,+Chile,+and+others,+and+are+frequently+situated+close+to+mineral-rich+regions.++++&ots=wLZfCUB1Uw&sig=kvni-pQT4wqKTMnjXDo7Iyq1DIQ

Spataru, A., Faggian, R., & Docking, A. (2020). Principles of multifunctional agriculture for supporting agriculture in metropolitan peri-urban areas: The case of
Greater Melbourne, Australia. Journal of Rural Studies, 74, 34-44. https://www.sciencedirect.com/science/article/pii/S0743016719304255

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