Question 1-2 Chapter 1

Questions 1-2

Echo Entertainment Group is a large public organisation that specialises in entertainment. Currently in Australia, it has established four hotel and casino complexes, a convention centre and a exhibition centre which are located in Townsville, Gold Coast, Sydney and Brisbane.

Below are three examples of each: assets, liabilities and equity from Echo Entertainment Group Statement of Financial Position 2013.

Assets

1.Cash. $265.5m – note 15

2.Inventories. $7.2m

3.Property, Plant and Equipment. $2,006.2m – note 18

Cash can be on hand/in the firm or in the organisations bank account. Inventories are simply the left over stock at the end of the financial year. Property, Plant and Equipment can be the buildings the organisation owns, and equipment within that business. These items are all assets because they are items of value that are owned by the business.

Liabilities

1.Provisions. $58.5m – note 22 (current)

2.Trade and other Payables. $184m – note 21

3.Interest bearing liabilities. $972.8m – note 23 ( non current )

Provisions is money set aside as emergency funds in case of damage or repair. Trade and other Payables are creditors that are paid within a time period eg (monthly). Interest bearing liabilities are generally interest that needs to be paid as a result of having a long term loan. These are classified as liabilities because they are amounts that the business owes to other organisations or people.

Equity

1.Share capital. $2,580.5m – note 26

2.Retained earnings. $310.5m

3.Reserves. 28.4m – note 26

Share capital is simply the money invested by the owners of the organisation. Retained earnings is the left over funds that is kept within the organisation. Reserves are funds that are put aside for future endeavours. Equity is simply defined as an investment the owners make within the business.