Bhp the Company I Am Studying Is

Bhp The company I am studying is BHP Billiton, the Australian mining company whose ADRs trade on the New York Stock Exchange under the symbol BHP. The following is an analysis of how its GAAP balance sheet would correspond to an economic balance sheet.

Cash, STI, Cash equivalents Core Operations Receivables Core Operations Inventories Core Operations Other Current Assets Non-operating net assets Net property, plant and equipment Core Operations Goodwill and other intangible Non-operating net assets Investments and advances Non-operating net assets Accounts receivable, non-current Core operations Deferred non-current accounts Non-operating net assets Other non-current accounts Non-operating net assets Payables Debt claims Long-term debt and capital leases Debt claims Deferred liabilities, non-current Debt claims Minority interest Other capital claims Provisions, long-term Debt claims Provisions, current Debt claims Current debt Debt claims Deferred liabilities, current Debt claims Current portion of LTD Debt claims Other current liabilities Debt claims Capital stock Equity claims Retained earnings Equity claims Additional paid-in capital Equity claims Treasury stock Equity claims It is entirely possible that there is information in the company's annual report that is not listed in the GAAP statements that might contribute to a better understanding of the economic accounts.

The statements are published in Australian GAAP, not U.S. GAAP. To determine the differences would definitely require a keen understanding of Australian accounting principles and the differences between those and U.S. GAAP. Some potential issues arise with respect to the valuation of undeveloped holdings. In the mining business, there are challenges with respect to valuing properties, because the price paid and the economic output can be quite different from one another.

Further, the economic output is usually not known until development has begun, yet mining companies often own properties that are not presently in development. Thus, valuing assets at different stages of development is a challenge. Furthermore, BHP Billiton's income statement shows that it undertakes hedging positions in key commodities. These positions are usually recorded for accounting purposes on a mark-to-market basis, but until they are realized do not hit the income statement.

Thus, there needs to be some reconciliation process between the GAAP recording of hedge positions and the economic accounting position with regards to such positions. Hedge positions are likely a Core Operation, but could be considered a Debt claim if they are underwater, or depending on the type of position taken. Valuing the non-operating assets is tricky, but under U.S. GAAP the notes to the financial statements will often.