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ACCT11059 Accounting, Learning & Online Communication ASS#2

Stuart HentschkeAssignment 2 – Step 3

Restating my firms’ financial statements did prove to be time consuming and frustrating.

Restating Statement of Changes in Equity (SOCIE)

The first problem occurred when I realised that I didn’t have anything to restate. My total other comprehensive income for the year wasn’t itemised. I looked at the study guide to Ryman Healthcare’s restated SOCIE and noticed that “Profit and total comprehensive income” hadn’t been allocated to O or F either. The video explained the purpose of restating was to

So, I found and added the breakdown of the other comprehensive income to my original SOCIE and started to allocate the items.

This allowed my statement to match the video (as shown above) with the other comprehensive income listed out for classification.

Actuarial gain on defined benefit plans – OperatingThe footnotes revealed that this item was related to the retirement benefits of employees. It would be involved in operations as it is related to employees which are required to carry out various services.

Gross fair value losses on assets at fair value through other comprehensive income – OperatingThere weren’t any footnotes for this item, so I allocated it to O. I believe assets are not related to the financial side of the business as they aren’t involved with the equity investors or debt investors.

Income tax relating to items that will not be reclassified subsequently to profit or loss – OperatingWhile reading the study guide I had noticed that deferred tax liability was classed as O and it made sense, as operations generate money which is then taxed.

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Fair value gains on cash flow hedges - ??? Cash flow hedge gains transferred to profit or loss - ???I had a lot of trouble deciding on O or F for these items. I noted that in the video Maria classed as O (and many other students have classed as O) and she explained that it depends on the footnotes. The problem I faced when I looked to the footnotes they included

- Foreign exchange risk on forecast sales & purchases (Forward exchange contracts)- Commodity price risk on forecast purchases (Commodity swaps and Commodity

options)- Interest rate risk on highly probable debt (Interest rate swaps and Interest rate options)

By using the totals listed in the annual report below

I quickly discovered that the two items were related.

I struggled trying to decide how to class the items. I felt that the ‘interest rate risk on highly probably debt’ would be financial, as it’s involved with how the debt is managed to finance the company. I thought the other two items would be operating, as ‘foreign exchange risk’ and ‘commodity price risk’ are part of doing business, part of operating. I decided to go back through the previous year’s footnotes and split the items up.

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It all balanced fine but I felt it was overly complicated and I thought maybe I’m making this harder than it should be. I read Martins comments on Facebook on the 25th of April answering another students question, “And do not 'over analyse' things. It is a first year accounting unit, after all. :)” This leads me to believe that I’m on the wrong track. I decided to ask for help. I noticed another student with the same question, so I posted below her question.

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It was great to be able to discuss it with others. I was still undecided about what to do, I wanted one category, either O or F for the lot, so it wasn’t so complicated. I moved onto the balance sheet.

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Restating Your Firm's Balance Sheet

I found restating the Balance sheet relatively straight forward. I followed the video and it balanced first go. I found deciding between O and F to be the hardest part, I have included some items below with their classification.

Other financial assets – FinancialI classed as F, as the financial side of the business that deals with equity investors and debt investors results in either, Net Financial Assets or Net Financial Obligations. I looked at the footnote out of interest, but I couldn’t find the 13.3 total anywhere. I then found the following footnote (Both 1’s are circled below in red) from the table, within the footnote 16

(1) Balances are included in other financial assets/liabilities in the Statement of Financial Position.

This leads me to believe the items below

from my SOCIE should all be classified as F. As the totals from the other financial assets (which I believe to be F) are included within these cash flow hedges.

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Property plant and equipment classified – OperatingWould be required to carry out the business activities, day to day.

Provisions – OperatingThe footnotes explained that provisions are made for liabilities to employees for annual leave, long service leave and other employee entitlements. Therefore, would be classed as operating as it’s involved with employees.

Restating Your Firm’s Income statement

Financial and other income – OperatingBelow is a screenshot of the footnote and it shows the breakdown of financial and other income

- A quick search of the Internet revealed that delay damages are just that, damages that are caused by delay, and this leads me to think all will be operating.

- More information regarding royalty income and management fees was found at note 13

I decided to classify royalty income and management fees as operating as I believe they are more likely to be involved in the operating side of the business rather than the financial.

Share of profit of equity accounted investments – Operating

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I will take a guess that this is to do with joint ventures. After searching I found definition of equity accounting. It stated that when a company has significant control over another certain accounting methods are used. I believe that this is the case with IPL’s joint ventures and therefore would be operating.

Other income from operations – OperatingDue to the word operating, I have classified as operating.

Purchased Services and repairs and maintenance - OperatingInvolves services and repairs presumably to property, plant and equipment for the running of the business to make money.

Lease payments – operating leases – OperatingAssumed operating, due to the word operating, doesn’t contain any footnotes.

Asset impairments write-downs – OperatingThe footnotes revealed the following

Both intangible assets and property, plant and equipment are to do with operations. Writing them down involves reducing their value, classed as operating.

Other expenses – OperatingThere was no footnote and it was -$50.8 Million. This item was listed under the title operating expenses, so I will assume it’s operating.

Other Comprehensive Income

I had returned to Fair value gains on cash flow hedges - ??? Cash flow hedge gains transferred to profit or loss - ???

I’m still not sure about it. I have decided to class both these items as Financial. The reasons are listed:

- It looks like the “other financial assets” item is listed within the cash flow hedges in the balance sheet and these are not separated out. I feel that “other financial assets” is a F and therefore these cash flow hedges are also likely to be F.

- I feel that interest rate swaps are a financial product used to adjust the interest rate by companies. This money is used to finance the operations, therefore financial. When

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discussing on Facebook, Paul mentioned that when using the Investopedia definition, it seems to indicate that they are financial.

- When reading about fair value in notes it states, “The fair value of financial assets and financial liabilities traded in active markets (such as equity securities and fixed interest rate bonds) is the quoted market price at the reporting date.” This leads me to think that F is an appropriate classification.

Exchange differences on translating foreign operations – OperatingI have classed as operating due to the word operations, there wasn’t any footnotes to check further.

Net (losses)/gains on hedge of net investment – OperatingLooking to the footnotes it appears that the amount of $-127.2 Million is related to foreign exchange risk on foreign operations. Due to the word operations I’m guessing that this is classed as operating.

After going through the O’s and F’s, I tried to balance my spreadsheet.

It didn’t balance, so I subtracted the original by the results to determine how much I was out by. I found the problem was related to the line financial expenses. I had accidentally added this line twice. After deleting the incorrect line everything balance.

Now that I had allocated all the O’s and F’s I went back to SOCIE. I deleted my previous work where I had tried to split the categories up. I then followed along with the video and it all balanced.

Helping Another Student

I was also able to help another student who had trouble getting her spreadsheet to balance.

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Using the tips in the video I was able to identify first where the problem was located, either assets or liabilities. Then I was able to search for the problem. I also noticed that the formula to calculate cash was also incorrect. It was calculating 10% instead of 1% of revenue to allocate to O. Once these changes were made everything balanced.

Overall, I enjoyed the process. I did find it difficult trying to decide and dealing with the unknown. This was especially hard as I know that a lot of other students had classified their cash flow hedges as operational. I found the work with Excel enjoyable and I had little trouble getting everything to balance.

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Step 4

I feel that by giving feedback it really helps you to learn. Throughout the process I found myself constantly switching back to my work to make sure that I had completed the advice I was about to give out. It was also great to use the tips from the slides to quickly identify problem areas or check that the formulas were correct. By looking at other students financials it also gave an opportunity to see how others had allocated their O’s and F’s.

PEER FEEDBACK SHEET: ASS#2 Step 4

Feedback From: Stuart Hentschke

Feedback To: Melissa Sergiacomi .

My Comments

Step 3 Your SOCIE looks correct to me. Cells are correctly linked, and all totals match correctly to the original using formulas. I feel that you have interpreted Martins comments correctly. Since I had already split my Other comprehensive income up in my SOCIE and allocated, I have left mine as is (separated out). It makes sense to me that there wouldn’t be the need to do it twice, as Martins states, the detail will be in the income statements or statement of comprehensive income.

I agreed with how you have allocated the various items to O and F in the Balance Sheet. By using keyboard shortcut I was able to show all formulas (Ctrl + `) and all appeared to be correctly linked and totalled using sum formula. I checked the following

All were correct. Cash is allocated correctly, all to Operating. Tax also appears correct.

In your Income statement all formula’s and links looked correct. I can’t find anything wrong with it.

Restated Statement of Changes in Equity

Balance Sheet

Income Statement

Commentary and discussion with others

(Note: You may wish to give some comments on their Excel spreadsheet)

Step 4

Individual feedback with other students

It was great to see you adding to the Facebook discussions and clarifying queries. Like it has been said, everyone else will have the same questions.

Individual feedback not provided

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Overall ASS#2 Steps 3 & 4 Overall, you have done a great job! I found your word document easy to read and understand (something that I have struggled with). My only suggestion for improvements (which you would already know) is to complete the formatting using the format painter. I understand that this is best left to complete at the end. I also looked at Maria’s company’s annual report to try to gain some extra information as to why things were classified the way they were. 😊

Note: Please use this sheet as a guide.



Feedback To: Leigh Scherer .

My Comments

Step 3 SOCIE: All correct. You have listed opening and closing balance, linked to correct cells and total formulas are used when required. I couldn’t find a word document or any explanation of why items have been classified in a certain way.

Balance Sheet: I agree with your allocations of O and F. I did noticed that

Doesn’t equal

It’s out by up to $1000. Using (Ctrl + `) I highlighted a problem that the deferred tax asset and your deferred tax liability had been type in rather than linked, I thought that this would solve the rounding issue but it didn’t.

Looking to the original financial statement I noticed that in the years 2018 and 2016 a + 1 has been included (Presumably to


Balance Sheet

Income Statement



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balance due to rounding issues).

I removed these + 1 and I could balance the total assets and the total liabilities to original but there was a problem with equity not balancing. You might need to adjust your original balance sheet and get it to match your annual report (without the + 1) prior to allocating your O’s and F’s. Allow a few decimal places to check that the numbers are correct if needed.

Income Statement: First check your OI + NFE = total comprehensive income in the CI in original financials all matched nicely. Next check was that O CI + F CI matches that in restated SOCIE CI. This also matched nicely although I noticed that in your restated SOCIE the total for ‘other comprehensive income’ wasn’t listed (it was only in the original SOCIE). It might not be necessary, but I would list this total to make it easier to identify. Your allocations of cash and the tax benefit appear to be correct.

Step 4


Not Provided.

Overall ASS#2 Steps 3 & 4 Do you have a word document to explain why you classified each item the way you have? I have agreed with the listings based on the titles alone, it would be good to have some additional information about how you made your decisions. Please let me know if any of my comments don’t make sense. Overall, I think that you have done a great job, well done!




Feedback To: Dezlyn Coetzee .

My Comments

Step 3 The first thing that I notice was that the restated closing balance

doesn’t equal the original Financial Statement closing balance.


Balance Sheet

Income Statement


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I also noticed that the original financial statement closing balance has been typed in, rather than calculated using a sum formula.

Using a sum formula to correct the original is shown below.

Only 2017 was out by $65,000. This issue appears with Total Comprehensive Income totals as one is $1,717,534 and the other in the restated is $1,717,469. Out by $65,000.

Looking to the original Income Statement revealed another typed formula. I would suggest you go back to the original Financial Statement and ensure your totals add up with sum formulas to the original annual report.

Looking at the Balance sheet I would have thought that receivables would be classed as O rather than F. As receivables is “debts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.” I could be wrong, please look to your footnotes and include a summary of why you allocated things the way you did. I can’t find your summary on Moodle or on your Blog. Please let me know if it’s available for download. Other allocations appear to be correct. I have noticed that your NOA does not equal your NFO + Equity in 2018. I believe this could be due to your original numbers being incorrect. I would get the first Financial statements pages to balance with formula prior to Restating your Financial Statements. Your layout and linking appears to be correct along with formulas on your restated Financial statements, well done!

Income statement allocations, linking and formula appear to be correct. Until those original values are confirmed finding errors will be difficult to do.

Step 4


Not Provided

Overall ASS#2 Steps 3 & 4 Your spreadsheet looks in quite good shape with regards to linking and formula entered on the restated financial statements tab. I believe that you need to go back to your original numbers and confirm that all your totals are correct prior to investigating where the numbers don’t balance in the restated statements. The hardest part of entering all the information has been done and now it requires fine tuning to balance. Let me know if you would like me to take another look with balancing once those original numbers are totaled and confirmed.

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