This report mainly looks at the revelation of revenue as per AASB 15. It gives the financial analysis of Woolworth Company according to their Cost of sales, revenue, other reason and income for their increment in sales. Woolworths Group Limited is the Australian global group and chain of supermarkets. Listed and Headquartered in Australia, the company employs further than 17,000 staff in around 33 markets, is the largest infrastructure manager of assets in the world and is also top ranked acquisitions and mergers advisor in Australia, with further than A$737 billion in assets beneath management. In this report, the financial analysis of Woolworths Group Limited will be elaborated and the report also examines the requirements of accounting of revenue as per AASB 15 and when and how it came into influence and when mainly AASB 15 was implemented by Macquarie Group Limited. The financial statement of Woolworths Group Limited will be analyzed in this report (Sotti, et al., 2015).
The Framework of AASB was efficient for the annual financial reporting period of Consolidated Entity starting on 1st April 2020. The Framework of AASB gives the AASB a particular base of reliable concepts mainly upon which upcoming standards of accounting will be established. The Framework of AASB will also help in preparing the financial report for developing reliable policies of accounting where mainly no particular or same standard considers a problem (Sotti, et al., 2015).
The Framework of AASB involves entire amendments to the recognition and definition criteria for expenses and income, liabilities, assets, guidance on derecognition and measurement, and other accurate concepts of financial reporting. The solicitation of the updated Framework of AASB did not have the main implication on the financial statements of Consolidated Equity (Kasztelnik, 2015).
Woolworths Group is a diverse group of businesses retailing on the particular journey to become an objective-led company. The purpose of the Woolworths Group is to create an effective experience for the better future and creates the structure for effective operations of the business for the consumers, communities, shareholders and team members. Woolworths Group Limited is mainly committed to creating some positive alterations in its business (Kasztelnik, 2015).
The greatest number of revenue on the report is mainly the key amount, and it could be the crucial component in assessing the financial performance of the company. The International Board of Accounting Standards and the money Standards of Accounting Board generated the standard of revenue recognition. The benefits of the united standard and the 5 methodologies of revenue recognition that mainly apply to transactions of revenue are covered. The objective of this report is to determine decisions regarding the revenue of financial supervisors from the perspectives based on principles as compared to the principles based on rules (Babatunde, 2017).
|31 March 21
|31 March 20
|Net Operating Income||12,774||12,325||4|
|Income tax expenses||(899)||(728)||23|
|Loss attributable to non-controlling interests||7||5||40|
|Profit attributable to ordinary equity holders||3,015||2,731||10|
Attributable of profit to ordinary holders of equity of $A3, 015 million for the ending year of 31st March 2021 maximized 10% from $A2, 731 million in the previous year. Reduced income of net operating lease was mainly driven by the sale of the business of Woolworths Group Limited to the joint venture in the previous year and the sale of Woolworths Group Limited in the present year. Reduced share of net profit from Woolworths Group Limited joint venture and associates predominantly because of loss of equity accounted from and also decreased net profit from the sales essential asset within investments of equity accounted (Babatunde, 2017).
The government of Australia has mainly adopted the International Financial Reporting (IFRS) and also went on with modifications that mainly involve the exclusion of some options and also the addition of a few of the revelations. The Australian Accounting Standards mainly follow compliance for complying with International Financial Reporting Standards (IFRS). The Australian Standards of Accounting also gives the option of adopting the Reduced Disclosure Requirements (RDR) with some exceptions (Garbowski, et al., 2019).
The key basis of the alliance is according to the standards mainly set by the AASB, as the alliance’s Financial Statements involve entire subsidiaries on which the organization has accurate control and might implicate the similar by accessing all its rights but if it mainly control terminates, then the specific supplementary will be deconsolidated. Furthermore, the transactions and balances of the intra-group are removed from any of these consolidations. The whole imperative element of the particular financial statement is as per the Australian Accounting Standard (Garbowski, et al., 2019).
The consolidated statement of finance of Woolworths incorporates the liabilities, assets and results of entire subsidiaries for the particular period of 27th June 2021. Subsidiaries are entire entities mainly over which the Woolworths Group has entire control. The Woolworths Group mainly controls the entity particular when it is disclosed to, or has some rights. Inventories are mainly valued at the inferior cost and net attainable value (Alneyadi, et al., 2021).
Accounting Treatment of Revenue Recognition
As per the Woolworths criteria of IFRS, for recognizing revenue, the given conditions should be satisfied:
- Rewards and risks of ownership have been transported from the vendor to the consumer.
- The control of the seller loses over the sold goods
- The payment collection from services or goods is reasonably certain.
- The revenue amount could be sensibly measured (Alneyadi, et al., 2021).
- Revenue cost could be effectively measured.
Revenue recognition is particularly concerned with the specific timing of revenue recognition in the profit and loss enterprise of Woolworths Group. The revenue amount that rises during the transaction is mainly determined by contracts between involved parties in the particular transaction (Massaro, et al., 2016).
When some uncertainties occur related to the determination of the particular amount, or its related costs then these kinds of uncertainties might affect the revenue timing. The main criteria to determine when revenue should be recognized from the transaction including the goods sale are that the vendor has mainly transferred the particular property in the products to the consumer for consideration. Situations might arise where the transportation of property in products does not mainly concur with the transportation of rewards and risks of ownership (Massaro, et al., 2016).
By this report, it has been concluded that Woolworths Group has superb growth in sales in the year 2021 and has consecutive development in their sales and revenue including revenue from exterior sources and deferred revenue. Some factors such as buying the products via online stores related to the maximization in financials of Woolworths Group. Inclusively, from the assessment from the financial analysis, maximization is there in the company’s financials and also will mainly tend for maintaining the profitability for future years by mainly developing effective strategies of the business.
Alneyadi, A., Almansoori, A., Almansoori, B., Alhefeiti, M., Alseiari, K., Almazrouie, S., Almansoori, S. and Nobanee, H., 2021. Financial analysis of Emaar properties. Available at SSRN 3895784. https://www.researchgate.net/profile/Haitham-Nobanee/publication/353556447_Financial_Analysis_of_EMAAR_Properties/links/6102d964169a1a0103c70e4b/Financial-Analysis-of-EMAAR-Properties.pdf
Babatunde, S.A., 2017. Implementing international public sector accounting standards in Nigeria: issues and challenges. International Journal of Business, Economics and Law, 12(1), pp.52-61. https://www.ijbel.com/wp-content/uploads/2017/05/ACC-35.pdf
Garbowski, M., Drobyazko, S., Matveeva, V., Kyiashko, O. and Dmytrovska, V., 2019. Financial accounting of E-business enterprises. Academy of Accounting and Financial Studies Journal, 23, pp.1-5. https://www.researchgate.net/profile/Svetlana-Drobyazko/publication/334942641_FINANCIAL_ACCOUNTING_OF_E-BUSINESS_ENTERPRISES/links/5d456681299bf1995b614d8a/FINANCIAL-ACCOUNTING-OF-E-BUSINESS-ENTERPRISES.pdf
Kasztelnik, K., 2015. The value relevance of revenue recognition under International Financial Reporting Standards. Accounting and Finance Research, 4(3), pp.88-98. https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.990.6920&rep=rep1&type=pdf
Massaro, A., Barbuzzi, D., Vitti, V., Galiano, A., Aruci, M. and Pirlo, G., 2016, November. Predictive Sales Analysis According to the Effect of Weather. In RTA-CSIT (pp. 53-55). https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1081.528&rep=rep1&type=pdf
Sotti, F., Rinaldi, L. and Gavana, G., 2015. Measurement Options for Non-controlling interests and their Effects on Consolidated Financial Statements Consistency. Which Should the Disclosure Be. Corporate Ownership and Control, 12(2), pp.293-302. https://pdfs.semanticscholar.org/d535/b289ca7f07e89db1c67a04ce871c93fa15ab.pdf