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You have been randomly assigned an Australian publicly listed company (refer to the separate excel spreadsheet provided to identify your company). Using the financial reports for your company, you are required to prepare an essay that addresses the 7 requirements listed below.

1. Introduction (Company’s main operation/ what the assignment is about/ Topics covered)
2. (a) Select a non-current asset from the financial statements of your company. Provide details of this item (including identify the valuation method used for this item).
(b) With reference to qualitative characteristics, provide an argument for using an alternative valuation method for this non-current asset.
3. (a) Provide details of the intangible assets reported by your company.
(b) Evaluate how the company fulfilled its disclosure requirements in relation to intangible assets.

4. (a) Provide details of the provisions and contingencies recorded or disclosed by your company.
(b) With reference to one specific contingency recorded or disclosed by the company,provide an argument for and against the inclusion of the contingency in the financial report.
5. (a) Provide details of leased items that are recorded or disclosed by your company.
(b) Discuss the classification and presentation requirements relevant to leased items,and in doing so provide an explanation for how the leased items of your company have been presented on the financial statements.
6. (a) Provide details of the revenue disclosed in the annual report of the company.
(b) Justify the revenue recognition criteria for a specific (major) revenue of the company.

K & S Corporation Limited is a listed company which is engaged in transport and logistics, contract management, warehousing and distribution and fuel distribution. The head quarters of the company is situated in Australia. The company has three segments namely Australian Transport, Fuels and New Zealand Transports. The Australian Transport is engaged in providing logistical services to consumers within Australia (Bromwich & Scapens, 2016).

The Fuels Segment is basically engaged in distribution of fuel to customers like fishing, farming and retail within south eastern region of South Australia. The New Zealand Transport segment provides logistical services to consumers within New Zealand. The given assignment is about preparing as essay based on the financial report of the above mentioned company covering the aspects such as fixed tangible and intangible assets, provisions, contingent assets & liabilities, revenue, leases and conclusion drawn from the study of the above aspects (Alexander, 2016).

Property, Plant & Equipment

The Property, Plant and Equipments stands in the Balance Sheet valued at $ 350.998 million as at 30 June 2017. Plants and equipments are valued at cost price as reduced by accumulated depreciation and impairment in value, if any whereas land and buildings are valued at fair value after giving effect to accumulated depreciation and impairment loss, if any, except for land which is a non depreciable asset (Das, 2017).

Alternatively, plants and equipments could be valued at market price instead at cost less depreciation. Market value is the amount at which an asset or liability should exchange on the date of valuation between buyer and seller who are willing to transact in an arm’s length price after doing proper marketing and also where each parties involved had acted knowledgeable and prudent manner without compulsion. In this manner the value of the asset will state its real worth in the market as at the date of balance sheet, which is way more prudent since the value of any asset never remains stagnant (Dichev, 2017).

Intangible assets

The company has reported Intangible assets in the financial reports which includes Goodwill and other intangibles. The disclosure requirements for intangible assets are laid down in IAS 38, issued by International Accounting Standards Board. According to the provisions the intangible assets are required to be value initially at cost and after recognition of the asset either at cost or revaluation model (Belton, 2017). A company is required to disclose the information about each class of intangible assets differentiating between self generated assets and other intangible assets.

Intangible assets

K & S Corporation Limited has properly disclosed the measure of valuation adopted by the company for valuing Goodwill, which is not self generated rather it is acquired in business combination (Goldmann, 2016). Goodwill was initially recognized at cost and after its recognition at cost less impairment loss, if any, also the impairment loss when recognized for goodwill are non reversible. The same measure of valuation is adopted and disclosed in case of other intangible assets. The company has also disclosed the useful lives of the assets as assessed, whether they are finite or infinite and the assets with finite lives are amortized over the period of its useful lives (Linden & Freeman, 2017).

Provisions, Contingent Liabilities (commitments) and Contingent Assets

Provision refers to setting aside of an amount for a known liability. Provisions are recognized when there arises a present obligation resulting from a past event and which requires outflow of resources and a reliable estimate can be made of the outflow of resources. The company has disclosed in the notes to financial statements the information regarding the creation and reversal of provisions. Where the company expects a provision amount to be reimbursed,

it recognizes it as asset if the reimbursement in virtually certain and the provision related expenses are recorded net of ant reimbursements (Jefferson, 2017). The company also discounts the amount of provision at market rate where time value is material. The company has made provisions both current and non-current such as employee benefits, self insured workers’ compensation liability, etc.

Contingent Liabilities are those liabilities which may be incurred depending on the outcome of an uncertain future event. These are disclosed in the financial statements as notes. During the period the company has disclosed contingent liabilities in relation to interlocking guarantees between the company and its subsidiaries and other in relation to legal claim.

There is a legal claim in relation to number of minor legal actions pending against the companies within the consolidated entity, the liability of which is not admitted and the claims will be defended (Saeidi, 2012). The Directors are of the view that the amount involved is not of significant value. There are two views: Firstly, the company may not disclose such contingent liability since the legal actions are minor and the same are not expected to materialize and if it does it will not affect the company significantly and reporting contingent liabilities affects the investors view on the company. Secondly, the disclosure of contingent liability is very significant even if it relates to minor amount. It makes the financial report more transparent and reliable.

Provisions, Contingent Liabilities (commitments) and Contingent Assets

Contingent assets are possible assets which may arise as a result of a gain which is contingent on future events which are not in entity’s hand. It is prudent to not disclose such assets in the financial statements and the company has not recorded any such contingent assets in the financial reports (Heminway, 2017).


Finance Lease is considered as the company’s one of the financial instruments. During the period the company has acquired property, plant and equipment amounting to $ 46.10 million by means of finance lease. The company has disclosed various information as per AASB 16 regarding the classification and valuation, the company classifies the leased assets under Level 2 (Knechel & Salterio, 2016). The company has identified the lease assets as long term lease and the expenses in relation to the leased assets are considered as operating lease.

The company has leased premises in Australia, South Australia, Victoria, New South Wales and Northern Territory.  The operating lease rental commitments are classified as within one year, more than one year but less than five years and more than five years. The consolidated entity leases property under non cancellable lease agreement having a term of one to fifteen years which can be renewed and terms can be renegotiated.


Revenue recognition is a very important aspect of a company. Revenue is recognized when the flow of future economic benefit is probable and the amount of revenue is measurable. Where the flow of economic benefit is not probable then revenue is not recognized.

K & S Corporation Limited has also recognized revenue on the basis of probability of flow of income to the entity. There are some specific criteria in respect of recognition of revenue in certain cases. These are discussed below:

  • Sale of Goods: In case of sale of goods the revenue is recognized by the company at the time of transfer of risks and rewards of the ownership of the good to the buyer from the seller and the same is measurable. The risks and rewards are considered as transferred when the goods are delivered to the customer. The net sale consideration is taken for revenue recognition, i.e., after providing for discount allowed, sales return. In case of fuel products sales revenue is recognized when fuel is provided. The company’s sales revenue is comprised of sale of fuel products to entities other than the consolidated entity(Trieu, 2017).
  • Provision of Service: The Company recognizes revenue from distribution of customer goods when the goods are dispatched.
  • Interest: The Company uses effective interest method for recognizing revenue when the interest accrues. Under this method the interest is calculated on the basis of amortized cost of the financial asset using the effective interest rate which is same as the rate that exactly discounts the estimated future cash receipts and the same is allocated over the relevant period.
  • Dividend: The Company recognized dividend when the same has been declared and the right to receive has been established(Werner, 2017).


K & S Corporation Limited is a leading transport and logistics company having various segments. The above data has compiled from the financial report for the year ended 30 June 2017 of the company. On the analysis of the above data we can conclude that the company has a sound disclosure system which is clear and understandable. The method of valuation and basis of reporting by the company leaves no place for doubts..

The system of revenue recognition is broadly explained in the notes to financial statements. The company has also disclosed contingent liabilities of even minor amount to maintain transparency and provide more insight to financial statements. The fixed assets are value at cost less depreciation and provisions are created which are both current and non-current. To sum it up, the main purpose of this assignment is analyze the method of valuation and disclosures of various information the financial statements, and the same has been met.


Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-431.

Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat International ltd.

Bromwich, M., & Scapens, R. (2016). Management Accounting Research: 25 years on. Management Accounting Research, 31(1), 1-9.

Das, P. (2017). Financing Pattern and Utilization of Fixed Assets - A Study. Asian Journal of Social Science Studies, 2(2), 10-17.

Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617-632. doi

Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish Business. Financial Environment and Business Development, 4(3), 103-112.

Heminway, J. (2017). Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents. SSRN, 1-35.

Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland . Technological Forecasting and Social Change, 353-354.

Knechel, W., & Salterio, S. (2016). Auditing:Assurance and Risk (fourth ed.). New York: Routledge.

Linden, B., & Freeman, R. (2017). Profit and Other Values: Thick Evaluation in Decision Making. Business Ethics Quarterly, 27(3), 353-379. 

Saeidi, F. (2012). Audit expectations gap and corporate fraud: Empirical evidence from Iran. African Journal of Business Management, 6(23), 7031-41.

Trieu, V. (2017). Getting value from Business Intelligence systems: A review and research agenda. Decision Support Systems, 93(1), 111-124.

Werner, M. (2017). Financial process mining - Accounting data structure dependent control flow inference. International Journal of Accounting Information Systems, 25(1), 57-80.

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