STERIHEALTH 2012 ANNUAL REPORTS: DISCLOSURE AND PERFORMANCEEquity Analysis: Question No. 1Contribution Equity; The value for the contributed capital remains constant for both periods, which is, $AUD 52,404,000 for both periods; 2011 and 2012(Sterihealth. Com 2012). This figure does not change because the Company has not been authorized to increase its share capital base in respect to its shares probably because it has not been listed in the stock exchange market where the activity of both buying and selling of a company’s stock price is conducted. Basically, there is no movement of stocks in respect to stock exchanges (Sterihealth. Com 2012). In mere terms, contributed equity in a company’s financial resource structure is brought about whenever the aforementioned company embarks on raising its asset-base structure through potential selling or in other circumstances exchange of its underlying common stock.
In the event that this happens it is safe to indicate that additional capital resource is recognized in the balance sheet as well as depicted as an asset in relation to a liability created. In our case, the Company’s contributed equity is established as consisting of merely common form of stock and through the notes provided it is made clear that these common stocks are not authorized.
Thus, it means that the firm has been limited in terms of the number of shares which it can issue to the public. In some cases, it is noted that companies require their own shares in order to enhance the future of its other permissible programs as contemplation of reducing future dividends to be paid, provide immediate assistance to the existing compensation programs as well as in eliminating any possible hostile business environment. Revaluation Reserve: The revaluation reserve as an item of equity for the firm also remains unaffected over the two financial periods.
The value for the aforementioned item stands at $ AUD 140,000(Sterihealth. Com 2012). In its nature, revaluation reserve is established whenever it is figured out that the immediate value of an asset has appreciated in its value as compared to the previous value it held in the balance sheet. This subsequent increase in the value of the asset is affected as an increase in the amount of shareholder’s resource funds contributed (Sterihealth. Com 2012).
However, it is quite notable to comprehend to the assumption that not all increases in respect to assets are affected as additional to the revaluation reserve given the fact that numerous facets are considered before the decision is sealed. For instance, it is crucial that the historical background concerning an asset is performed in order to establish whether or not it has been impaired before the effect is made good. With respect to the accounting principle of fair value, it is encouraged that firms revalue their respective assets in case it is established that there exists a material distinction between the immediate present market values of the asset under consideration as well as the worth it carries in the case that it has been affected in the balance sheet.
Moving forward, it is advised that such fixed assets as land and other fixed investments be determined through revaluation procedure given the fact that they possess a current market value which exists as well as their immediate fair value can be computed effectively.