Accounting for Business Combinations for Greenvale Energy

Question: Discuss about theAccounting for Business Combinations for Greenvale Energy. Answer: Introduction The issue presented in the question is that Greenvale Energy Limited in its annual report of 2016 has revealed its financial performance and operations during the year that it has committed. Now the question lies in the fact that whether the company has adhered to the requirements as mentioned in AASB 8. Therefore in this study a brief idea about AASB 8 as well as the operating standards of Greenvale Energy Limited can be known. Operating Segment and Reportable Segment of Greenvale Energy Limited The operating segment of any entity means essentially a list of the operations undertaken in order to add to the revenue generation of the company. On the other hand the term reportable segment refers to the fact whether the information disclosed in the operating segments have been reported properly or not, that is, whether there is enough information about the nature of the product, its production process, nature and type of customer and all other relevant information. Disclosures not having quantitative thresholds are also considered a reportable segment. Greenvale Energy Limited in its annual report has mentioned that it has undertaken the operation of asset development by exploring the Alpha Oil Shale Deposit. Though the company has mentioned in this certain disclosure that it has failed to provide the Statement of Resources and Reserves now because of partially out-dated data that has been preserved poorly and has been outdated, thus the operation has been downgraded to the leve l of exploration target. Tables summarizing the oil shale exploration targets have also been disclosed. The Asset Divestment disclosed by the company is a clear and concise report and very effectively gives a clear understanding of the actions taken by the company. In the Asset Divestment disclosure as revealed by the company every little detail in regards to the downfall of the company in the financial year of 2015 till the time when it sold its assets, everything has been mentioned in a clear and concise way (Annual Report, 2016). Compliance with AASB 8 The company, Greenvale Energy Limited has rightly adhered to the laid down regulations and policies of AASB 8. The disclosures essentially have been prepared in such a way that a particular investor or a stakeholder will get a clear idea about the financial condition and position of the company. There are certain areas where ample scope regarding improvement can be identified (Faras and Rodrguez 2015). For instance the operating segments broadly do not meet the quantitative threshold, that is, if the segments cold have been backed up by more data then it could have been included under operating segments without having to include them under reportable segments. Moreover the information disclosed by the company in the concerned disclosure is simple and easy to understand and comprehend enabling any third party investor to get interested in the affairs of the company thus adhering rightly to the mentioned standards in AASB 8 (Kan and Gray 2013). For each disclosed financial item if the total of all reportable segments do not equal to the corresponding consolidated figures for the whole group then the particular financial item may still not have been received that is it has been recorded on terms of its occurrence and not receipt. This would definitely prove that the financial statements are prepared on the basis of accrual basis of accounting. References Annual Report of Greenvale Energy Limited, 2016. Faras, P. and Rodrguez, R., 2015. Segment disclosures under IFRS 8s management approach: has segment reporting improved?. Spanish Journal of Finance and Accounting/Revista Espanola de Financiacion y Contabilidad, 44(2), pp.117-133. Kang, H. and Gray, S.J., 2013. Segment reporting practices in Australia: Has IFRS 8 made a difference?. Australian Accounting Review, 23(3), pp.232-243.