(a)   Item:
Capital works in progress

(b)   Description:
Carrying sum at the accounting report date of extensive resource under
development that incorporate development expenses to date on capital
undertakings that have not been finished and resources being built that are not
prepared to be set into service.

The organization: Rio Tinto PLC’s capital works in
advance expanded from 2011 to 2012 yet then declined altogether from 2012 to
2013.

 

 

(b) Compare
the accounting policies for accounting for each class of property, plant and
equipment used by your selected/approved companies.

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2.1 RIO Tinto: Costs which are essentially brought
about while charging new resources, in the period before they are fit for
working in the way expected by administration, are promoted. Improvement costs
caused after the beginning of creation are promoted to the degree they are
relied upon to offer ascent to a future monetary advantage. Enthusiasm on
borrowings identified with development or advancement ventures is promoted, at
the rate payable on venture particular obligation if material, or at Rio
Tinto’s cost of acquiring if not, until the moment that generously every one of
the exercises that are important to influence the advantage for prepared for
its expected utilize are finished.

 

2.2 BHP BILLITON: The conveying measures of property,
plant and hardware (counting starting and any consequent capital use) are
deteriorated to their evaluated lingering an incentive over the assessed
valuable existences of the particular resources concerned, or the evaluated
life of the related mine, field or rent, if shorter. Assessments of leftover
esteems and helpful lives are reassessed yearly and any adjustment in evaluate
is considered in the assurance of outstanding devaluation charges.

Deterioration initiates on the date of charging. The significant classes of
property, plant and gear are deteriorated on a unit of generation as well as
straight-line premise utilizing assessed lives showed beneath. Nonetheless,
where resources are committed to a mine, field or rent and are not promptly
transferable, the beneath valuable lives are liable to the lesser of the
advantage classification’s helpful life and the life of the mine, field or
rent.

 

(c) Drawing on theories explored
in Chapter 2 of the prescribed textbook, explain whether all companies should
be required to use identical accounting policies?

 

 

Accounting
policies are the specific rules, principles, measurement base and practices
that constitute the accounting treatment of a transaction, event or an item (Loftus & Leo, 2015). These policies are
used to deal with accounting practices such as depreciation methods,
recognition of goodwill, consolidation of financial accounts etc.

Accounting
policies comprises of 4 components that include Definition, Recognition,
Measurement and Disclosure.

Definition:

Accounting
policies are set to define all the assets, liabilities, equity and debts,
revenues and expenses of a company (AASB, 2018).

In
this way, a company’s financial position can easily be determined because the
value of all the assets and liabilities of the company are defined.

Recognition:

All
the assets, liabilities, equity, debts, revenues and expenses are recognized
for company’s future economic benefits, sacrifices, residual interests and
consumptions & losses respectively (AASB, 2018).

 

Measurement:

All
the financial assets and liabilities, after recognition, are measured at fair
value (Tatiana, n.d.).

However,
in some cases, the fair value or the cost of an asset can’t be measured
reliably due to different accounting policies.

 

Disclosure:

Disclosures
focuses on company’s requirements to offer in financial statements full, fair
and adequate disclosure of information to the stakeholders which significantly
influence the company’s financial position and performance. (Tatiana, n.d.)

So, disclosure
in the form of Earning reports, press releases and other communications enable the
external users to make informed decisions concerning to the company.

 

Based
on above explanations, it can be concluded that all the assets and liabilities,
etc. must be defined, recognized, measured and disclosed. So, there needs to be
an adequate set of rules and regulations that need to be followed by every
company. This would, in turn, make it easier for the stakeholder to compare the
companies’ financial position and performance. Implementation of identical
accounting policies would help maintain consistency and standardization of
financial statements.

This
would also help in maintaining the information qualitative as well as
quantitative (Tatiana, n.d.).

 

 

 

 

 

PART B

At BHP, “Sustainability is core to our business strategy and integrated into
our decision-making. It helps us live our charter values of putting health and
safety first, being environmentally responsible and supporting our host
communities”. Their commitment
to the safety of employees
is their greatest importance with the recent incident at Escondida mine in October 2016 and Goonyella
Riverside 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 and
set an independent investigation to look into both the fatalities and take
measures to prevent any future damage. In 2017 their commitment to do the
right with respect to the dam failure in Samarco in Brazil increased with the
focus to rebuild the entire community and restore the impact made on the environment. They have also committed themselves to work without
tiring and also for longer duration to do everything in the right way and bring
back the ecosystem back to its original shape. From 2013 they have shown a
dutifully firm and unwavering dedication
to all the values outlined in the charter which is evident in their
sustainability performance targets. They also made $2.3 billion voluntary
contributions 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 to
protect the environment and have worked for it to minimise the impact of their
operations and also encourage the conservation and thoughtful use of natural
environment. Their efforts to reduce greenhouse gas emission and transparency
in disclosure have established themselves as the leaders in mining sector. They
have reduced 975000 tonnes of CO2 since 2013. Their new 5-year sustainability
performance targets are framed on global sustainability agreement and
frameworks which are in alignment to

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