No i do not plan on submitting a tutors work.

I have already written this paragraph, i just need to know if I'm on the correct track and if not how can i make it so that i am, examples of what should be answered in the question etc.

Evaluations of financial statements can be insightful for many internal and external users. Analysis of financial statements can assist internally by allowing management to make informed business decisions regarding performance, liquidity, cash flows and profitability. Internal users can be anyone within the corporation looking to make decisions regarding its operations however external users are not always looking to better the corporation rather they may be competitors, creditors or government authorities.

Users of Telstra's financial statements can range anywhere from consumers to competitors. Consumers may use this analysis to consider Telstra as a potential supplier, before entering a contract however the consumer will want to evaluate and review Telstra's financial statements to judge weather their financial ability aligns with that of its customers.

Creditors are another user that are interested in following up on a corporation's financial statements. Creditors need to be certain that a corporation, in this case Telstra will honour its payments on the due date.

Investors of Telstra are individuals or businesses which have purchased some kind of stock or shares in the corporation who will be curious about Telstra's performance, as this is the determining factor on whether dividends are paid. Depending on how Telstra fluctuates this could also be a deal breaker for some investors, they may choose to buy, hold or sell part of their shares depending on how high or low the company is trading.

The Australian Government also relies on the financial reports of Telstra to determine how well the economy is performing so they can implement and plan for policies. These statements may also be evaluated by tax authorities to ensure Telstra is currently paying the correct taxes.

Financial statement information can assist to gain a better understanding and knowledge of Telstra's past business decisions including ones which may have helped or hindered the corporations financial status. In this scenario the sale of Ooyala Inc and Ooyala AB caused a loss of $85 million for Telstra in October 2018 (Telstra 2019). This loss came only 6 years after the initial purchase of Ooyala back in 2012, this is quite a significant loss only 6 years after the purchase. Telstra investors would have potentially seen a drop in the share price and many may have considered the sale of any existing shares they owned in the corporation.

Hi i have this question in my assignment and I'm not sure how to answer it appropriately, please help.

Assessmenttasks:

Assume that you are a summer vacation intern at the Melbourne office of an international accounting firm and that along with some fellow interns you have been assigned toa team toworktogetherto produce a reportto the shareholders of Telstra Ltdthat:

i.Explains:

the financial statement reporting by Telstra ofits step acquisition ofOoyalaback in August 2014(see Telstra annual report year ended 30 June 2014)

the financial statement reportingby Telstra of its investment inOoyala, Videoplaza, and Nativ including the treatment of goodwill on acquisition(see Telstra annual report year ended 30 June 2015)andthereafterin subsequent financial reporting periods (when referred to astheOoyalaHoldingTeam)

the financial statement reporting by Telstra of its sale of theOoyalaHoldingTeam(see Telstra annual report year ended 30 June 2019).

ii.Evaluates the usefulness to users of the above financial statement information.

Thereport tothe shareholders ofTelstrashouldincludesome background material aboutTelstra,Ooyala, Videoplaza, Nativ (and thereafter, theOoyalaHoldingTeam), refer to relevant accounting standards including paragraph numbers as necessary.

My question is in regard to the bolder question ii)

I have done the others questions which i can send the answers to if that will assist!

Please find attached the answers to the previous questions, question II) RELATES TO HOW THAT INFORMATION CAN BE USEFUL TO USERS!

Financial Statement Reporting of Acquisition of Ooyala

In Telstra Ltd's 2014 Annual report in the section, 'Notes to the Financial Statements', it is announced on 11 August 2014 that Telstra entered an agreement to acquire additional shares in Ooyala Inc . for a total cash consideration of US$270 million subject to any completion adjustments. This a two year round investments from an initial US$35 million dollar investment for 5 per cent stake of the company in June 18th2012 (Burrows, 2012), and a further US$26 million in the intervening years.

As presented in the Telstra's 2014 report the acquisition agreement was entered after the 2013/14 year reporting period and before the financial statements were authorised for issue. Telstra would have had to refer to AASB 110/IAS 10Events after the Reporting Period; to ensure that Telstra is complying with Australian Accounting Standards. This event would qualify as a non-adjusting event as described in paragraph 3 of AASB 10/IAS 10 as the acquisition was indicative of conditions that arose after the end of the reporting period. Paragraph 21 of AASB 10/IAS 10 requires the event must be disclosed by way of notes to the financial statements with a description of the nature of the event, and an estimation of possible financial effect. Reviewing the 2014 Annual Report Telstra has complied with this accounting standard.

Telstra goes on to describe in the note that this acquisition will comprise of 98% equity ownership with total cost of investment of US$331 million(Telstra Corporation Limited, 2014). The full financial statement was signed by then CEO of Telstra Ltd David Thodey and Chairman Catherine Livingstone in directors' declaration required by theCorporations Act 2001. The integrity of the accounting standards was reinforced with confidence from an independent auditor's report from Ernst & Young that the report complies with section 300A of theCorporations Act 2001.

Financial Statement Reporting of investment on Ooyala, Videoplaza and Nativ

Telstra group acquired Ooyala, US based video streaming platform by 9% in 2012 and it increased its holding to 98% by 2014.

The performance of Ooyala was not as expected as by Telstra. Later in 2015, Telstra had to give up Ooyala. This action of Telstra resulted them in a wastage of $500 million. This complete buying, selling action resulted in certain changes in the goodwill of Tesla.

In the 2014/15 financial year, as per the financial statement of Telstra's 2015 Annual Report, Telstrahad a huge adjustment in its goodwill. The major acquisition took place on this reporting period. It was in this year, Telstra merged with Pacnet Limited, Ooyala Inc, Videoplaza and Nativ Holdings Limited. This merger increased the investment expense of Telstra by an amount of $1,157 million. This acquisition resulted in an additional investment of $1,151 million to Telstra's total investment, which was $6 million in the beginning.

Total goodwill of Telstra in the financial year 2014-15 was recognized as to be $1,173 million which included an addition of goodwill of $317 million from the acquisition of Ooyala, $72 million and $58 million from Nativ respectively.

In the year 2016, there was a major set down of Ooyala. In this year Ooyala suffered from a devastating loss of $246 million. This has increased the impairment expense which amounts to $253 million. At the end of this reporting period, Telstra valued the goodwill for its cash generating units and it amounted to be $251 million. There was no significant mergers or acquisitions took place in the year of 2017 neither any drastic ups or downs. The goodwill of Telstra's cash generating units on the year of 2017 was valued at $242 million.

There was an increase in trade payables and other expenses of Telstra in the year 2018. Trade and other payables this year amounted to $646 million. Also, there was a reduction in the current liability of Telstra. The current liability of Telstra amounts to $8,816 million. This change in liability and payables could be associated with an impairment charge associated with Ooyala (Telstra 2019). The recognized charge for Tesla was $273 million.

From the recent financial report published by Telstra on 2019, the operating expense has been increased. It was mentioned in their reports that the sale of Ooyala occurred during this accounting period because of the loss it caused to Telstra. And as a result of the sale, the loss has been carried over to the operating expense which resulted in its increase. The loss on the sale of Ooyala was $26 million (Telstra 2019). Also, there was a significant drop down on the Goodwill of Telstra.

Financial Statement Reporting of sale of Ooyala Holding Team

Published in Telstra's annual report 2018, Chairman John P Mullen and CEO and managing Director Andrew R Penn, stated that during the year, they recognised an impairment charge of the Ooyala Holding Group, which resulted in a write down for the company of $273 million (Telstra 2018).

Purchased in two stages, in 2012 and 2014, Telstra's direction of former chief, David Thodey, had spent more than $500 million during this process. Telstra acquired 9 per cent of the Silicon Valley-based Ooyala in 2012, and increased its holdings in Ooyala to 98 per cent in 2014 (Chris 2018). Telstra has accepted that the worth of Ooyala has diminished to approximately $246 million in 2016 (Daniel 2018).However, on February 2018, the face value for Ooyala has declined to zero. Announced on October 11th2018, Telstra has completed the sale of Ooyala to the video technology company's upper management (Daniel 2018). In 2018's annual report, total other expenses increased from $478 million to $4,984 million by 10.6 per cent. Impairment expense correspondingly enlarged dramatically of $262 million due to an impairment burden recognised for Ooyala Holding Group of $273 million (Telstra 2018).

In 2018, property, plant and equipment have a large increase of $758 million which was largely due to the mobile and Networks 2020 investments. However, this was moderately balanced by a decrease of $378 million in intangible asset which occurred from the impairment of Ooylala Holdings Group of $273 million (Telstra 2018). Telstra total income for the year ending 30 June 2019 was $27.8 billion which is a decrease of 3.6 per cent from the previous year. This result in an earning before interest, Tax depreciation and Amortisation of $8.0 billion, a decrease of 21.7 per cent from 2018 (Telstra 2019). Therefore, the overall profit after tax for Telstra for the year ending 30 June 2019 was $2.1 billion, which depicts a decrease of 39.6 percent (Telstra 2019).

Telstra's income for the year ended 30 June 2019 decreased from $28,841 million in 2018 to $27,807 million in 2019. This therefore reflect a increase of expenses from $18,622 million in 2018 to $19,835 million as year ended 30 June 2019 (Telstra 2019). This is due to the other operating expense increasing from $287 million to $387 million in 2019 which included the loss of $85 million from the sale of Ooyala Inc and Ooyala AB in October 2018 (Telstra 2019).

As at 30thof June 2019, Telstra has invested in a large number of controlled entities. Ooyala Holdings Inc. is one of the entities listed in Telstra's annual financial report year ended 30 June 2019. the country of incorporation for Ooyala Holdings Inc. is the United States (Telstra 2019). The percentage of equity held by immediate parent as at 30 June increased from 97 percent in 2018 to 100 percent in 2019. Similarity, the percentage of equity helf by ultimate parents as 30 of June 2018 has also increased from 97 percent to 100 percent in 2019 (Telstra 2019).