Question

Nonsense Pty Ltd has 6 shareholders, each of whom is a director involved in a day to day operations of the company. Nonsense Pty Ltd has only 8 full time employees each of whom has direct personal contract with the directors.

The financial statements of Nonsense Pty Ltd for the year ended 30 June 2019 show:
- GROSS ASSETS OF $40,000,000
a LIABILITY OF 9000,000 owed entirely to a public sector bank and
- Gross revenues of $60000,000

Explain, justifying your answer, if Nonesence Pty Ltd is required by the Corporations Act 2001 to produce an annual report according to AASB accounting standards for the year ending 30 June 2019?

Answer 1

As per Part 2M.3 Division 1— 292 of the Corporations Act 2001 ; all large proprietary companies are required to produce an annual report according to AASB accounting standards for the year ending 30 June 2019.

A large proprietary company is one which fulfills any of the two out of the three conditions being laid down below:-

i) Consolidated revenue for the group is $ 25 Million or more.

ii) Consolidated Gross Assets under control of the group is $12.5 Million or more.

iii) Total employees under the control of the group companies is 50 or more.

In the given case, i) is fulfilled as revenue is $60 Million which is more than $ 25 Million and also ii) is fulfilled because Gross assets are $40 Million which is more than $12.5 Million.

Hence, since by fulfilling i) and ii), the Nonsense Pty Ltd has become a large proprietary company and is required to produce an annual report according to AASB accounting standards for the year ending 30 June 2019.

*** The above answer is based on the australian law. Please comment in case of any doubt/query and i will get back to you.***

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