(a) Item:Capital works in progress (b) Description:Carrying sum at the accounting report date of extensive resource underdevelopment that incorporate development expenses to date on capitalundertakings that have not been finished and resources being built that are notprepared to be set into service. The organization: Rio Tinto PLC’s capital works inadvance expanded from 2011 to 2012 yet then declined altogether from 2012 to2013. (b) Comparethe accounting policies for accounting for each class of property, plant andequipment used by your selected/approved companies. 2.1 RIO Tinto: Costs which are essentially broughtabout while charging new resources, in the period before they are fit forworking in the way expected by administration, are promoted.
Improvement costscaused after the beginning of creation are promoted to the degree they arerelied upon to offer ascent to a future monetary advantage. Enthusiasm onborrowings identified with development or advancement ventures is promoted, atthe rate payable on venture particular obligation if material, or at RioTinto’s cost of acquiring if not, until the moment that generously every one ofthe exercises that are important to influence the advantage for prepared forits expected utilize are finished. 2.2 BHP BILLITON: The conveying measures of property,plant and hardware (counting starting and any consequent capital use) aredeteriorated to their evaluated lingering an incentive over the assessedvaluable existences of the particular resources concerned, or the evaluatedlife of the related mine, field or rent, if shorter. Assessments of leftoveresteems and helpful lives are reassessed yearly and any adjustment in evaluateis considered in the assurance of outstanding devaluation charges.Deterioration initiates on the date of charging. The significant classes ofproperty, plant and gear are deteriorated on a unit of generation as well asstraight-line premise utilizing assessed lives showed beneath.
Nonetheless,where resources are committed to a mine, field or rent and are not promptlytransferable, the beneath valuable lives are liable to the lesser of theadvantage classification’s helpful life and the life of the mine, field orrent. (c) Drawing on theories exploredin Chapter 2 of the prescribed textbook, explain whether all companies shouldbe required to use identical accounting policies? Accountingpolicies are the specific rules, principles, measurement base and practicesthat constitute the accounting treatment of a transaction, event or an item (Loftus & Leo, 2015). These policies areused to deal with accounting practices such as depreciation methods,recognition of goodwill, consolidation of financial accounts etc.Accountingpolicies comprises of 4 components that include Definition, Recognition,Measurement and Disclosure.Definition:Accountingpolicies are set to define all the assets, liabilities, equity and debts,revenues and expenses of a company (AASB, 2018).Inthis way, a company’s financial position can easily be determined because thevalue of all the assets and liabilities of the company are defined.Recognition:Allthe assets, liabilities, equity, debts, revenues and expenses are recognizedfor company’s future economic benefits, sacrifices, residual interests andconsumptions & losses respectively (AASB, 2018). Measurement:Allthe financial assets and liabilities, after recognition, are measured at fairvalue (Tatiana, n.
d.).However,in some cases, the fair value or the cost of an asset can’t be measuredreliably due to different accounting policies. Disclosure:Disclosuresfocuses on company’s requirements to offer in financial statements full, fairand adequate disclosure of information to the stakeholders which significantlyinfluence the company’s financial position and performance.
(Tatiana, n.d.)So, disclosurein the form of Earning reports, press releases and other communications enable theexternal users to make informed decisions concerning to the company. Basedon above explanations, it can be concluded that all the assets and liabilities,etc. must be defined, recognized, measured and disclosed.
So, there needs to bean adequate set of rules and regulations that need to be followed by everycompany. This would, in turn, make it easier for the stakeholder to compare thecompanies’ financial position and performance. Implementation of identicalaccounting policies would help maintain consistency and standardization offinancial statements.Thiswould also help in maintaining the information qualitative as well asquantitative (Tatiana, n.d.
). PART BAt BHP, “Sustainability is core to our business strategy and integrated intoour decision-making. It helps us live our charter values of putting health andsafety first, being environmentally responsible and supporting our hostcommunities”. Their commitmentto the safety of employeesis their greatest importance with the recent incident at Escondida mine in October 2016 and GoonyellaRiverside mine in August 2017 their commitment to safety became the main priority as they lost 2 lives in the incident which pushed the company to take measures on improvement of their workers safety andset an independent investigation to look into both the fatalities and takemeasures to prevent any future damage.
In 2017 their commitment to do theright with respect to the dam failure in Samarco in Brazil increased with thefocus to rebuild the entire community and restore the impact made on the environment. They have also committed themselves to work withouttiring and also for longer duration to do everything in the right way and bringback the ecosystem back to its original shape. From 2013 they have shown adutifully firm and unwavering dedicationto all the values outlined in the charter which is evident in theirsustainability performance targets.
They also made $2.3 billion voluntarycontributions in community programs since 2001, 4.7 billion paid in taxes and royalties in just FY2017(Bhp.com, 2018). They aim to overreach the minimum compliance requirements toprotect the environment and have worked for it to minimise the impact of theiroperations and also encourage the conservation and thoughtful use of naturalenvironment. Their efforts to reduce greenhouse gas emission and transparencyin disclosure have established themselves as the leaders in mining sector. Theyhave reduced 975000 tonnes of CO2 since 2013.
Their new 5-year sustainabilityperformance targets are framed on global sustainability agreement andframeworks which are in alignment to