...issued by the IASB | 1 January 2005 | Effective date of IAS 28 (2003) | 10 January 2008 | Some significant revisions of IAS 28 as a result of the Business Combinations Phase II Project relating to loss of significant influence | 22 May 2008 | IAS 28 amended for Annual Improvements to IFRSs 2007 about impairment testing | 1 January 2009 | Effective date of May 2008 amendments to IAS 28 | 1 July 2009 | Effective date of January 2008 amendments to IAS 28 | 12 May 2011 | IAS 28 (as amended in 2011) Investments in Associates and Joint Ventures issued. This version supersedes IAS 28 (2003) Investments in Associates. | 1 January 2013 | Effective date of IAS 28 (as amended in 2011) | | IAS applies to all investments in which an investor has significant influence but not control or joint control except for investments held...
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... Accounting is one of the most complicated forums of recordkeeping in the world. It needs to be very precise in order to provide assurance for business owners and investors. This research will focus on rules-based accounting policies and principle-based accounting policies. While rules- based accounting policies are strict and follow an order, principle-based accounting policies tend to give more freedom for accountants to have the ability to customize policies that will suit the industry they are working in. The research will explore the advantages and disadvantages of both policies and try to apply the policies to real world scenarios. In the end the research will conclude as to what policy is the most suitable, trying to find a balance between the two types in order for accountants to have an easier and more efficient way of recordkeeping, as well as finding a balance in order to provide assurance and accurate recordkeeping for the business, for the investors and anyone else involved in the business. | Introduction In the wake of the US corporate scandals, such as Enron and Lehman Brothers, the integrity of accounting standards were under review. Shareholders’ confidence in financial statements and public accounting firms was shaken, due to the fact that the United States had always used rules-based accounting standards to provide a greater amount of detail and compliance to the Securities Exchange Commission (SEC)...
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...financial distress. In the year of 1984, a number of accounting policy changes were made by the new manager, Peter Roberts. The goals of our team are to figure out whether the company can truly turned around with respect to the Peter Roberts’ decisions. There were several managerial actions that affecting either accounting estimates or accounting policy in the year of 1984. First of all, Harnischfeger’s allowance for doubtful accounts as a percentage of gross accounts receivable dropped from 9.1% in 1983 to 6.3% in 1984 according to the Note 8. If we assume that the company continues to utilize its allowance for doubtful accounts at 9.1% of its gross accounts receivable at the end of 1984, its bad debt expense in 1984 would be $2.6 million more than expenses reported on the incomes statement. Because of the complexity of the components that affects the bad debt expense, it is possible that the management team could manipulate the balance. Then, in 1984, Harnischfeger began to sell products purchased from Kobe Steel in the market. However, a close inspection on the the financial statement reveals that it only included the gross margin from the sale of Kobe originated equipment. And it seems that Harnischfeger's increase in sales in 1984 had no impact on net income based on the note 2. Hence, this may lead to a higher growth for Harnischfeger and would make the company look financially healthier to the investors. Moreover, according to Note 6 and 9, in 1983, the company’s...
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...Evaluations of Financial Statements Wal-Mart Stores, Inc. (“Walmart” or the “Company”) operates retail stores in various formats under 69 banners around the world, aggregated into three reportable segments: Walmart U.S., Walmart International and Sam’s Club. • What is the corporate net income for the most current year available? On what financial statement is net income being reported The Consolidated statement of income shows a positive balance of $16,999 million under the net income category. • What is the balance for Total Assets? On which financial statement is it located? A debit balance of $203,105 million in the consolidated balance sheets reprents the total value of assets with the company. • Discuss Note 1 (accounting policies). What is the company’s revenue recognition principle? The Note 1 (accounting polices) states how the various assets and liabilities of the firm are recognized in the financial statements. Also how company recognizes taxes, costs, payments from suppliers, and the revenue recognizing policies. The Revenue Recognition policy is as follows- o Sales The company recognizes sales revenue, net of sales taxes and estimated sales return at the time it sells merchandize to the customer. o Membership fees The company recognizes the membership fee revenue over the term of the membership, which is typically 12 months. This revenue is recorded under Membership and Other Incomes in the Statement of Incomes. The deferred membership...
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...OPINION SURVEY OF THE FACTORS IMPACTING ON DIVIDEND POLICY OF FIRMS OPERATING IN THE FINANCIAL SECTOR OF MAURITIUS 1. In which sub-sector does your company operate in? Please tick the appropriate Banking Offshore Banking Insurance Re-Insurance Investment Leasing 2. Approximately how many employees work in your company? Please encircle the appropriate • Less than 10 • 10 – 19 • 20-49 • 50-99 • 100 and above 3. What type of dividend payout does your company distribute every year? Please encircle the appropriate • We do not pay dividend at all • We distribute a constant dividend pay out every year • We offer an increasing amount of dividend payments from year to year • We offer a decreasing amount of dividend from year to year • Our dividend payments fluctuates from year to year 4. Do you consider dividend policy to be important? Please tick the appropriate. Yes No 5. Why do you think a firm pays dividends? Please rate the following possible answers. (1=strongly disagree; 2=disagree; 3=no opinion; 4=agree; 5=strongly agree) • The payment of dividends encourages a firm’s managers to act in the interest of the firm’s outside shareholders. (…..) • The payment of dividends forces a firm to seek more external (debt or equity) financing, which subjects the firm to additional investor scrutiny. (…..) • Dividend policy plays an important role in determining firm capital...
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...financial statements of businesses. The full disclosure principle was adopted by the accounting professionals to ensure financial reporting of any financial facts significant enough to influence the judgement of an informed reader;” (Wiley & Sons, 2013). This principle is relevant to materiality and requires the full information be disclosed in the financial statements or in the notes to the financial statements. Need for Full Disclosure Full disclosure in financial report is necessary to help establish consistency in reporting from one company to another. It also standardizes accounting definitions, methods, and assumptions. The full disclosure principle exists to make sure the accounting policies are disclosed so users can understand what the basis of accounting in the company is, what the contingent liabilities are and how the company handled significant events or the details of property, plant and equipment. In short, the full disclosure principle is necessary so investors and other interested parties, who are familiar with reading financial information, have all the information to make informed, sound decisions about the company. The footnotes in the financial statements will disclose accounting policies regarding such things as revenue recognition, property depreciation policies, income tax and inventory accounting practices, Effects of foreign currencies, leases, stock options, and contingent liabilities are disclosed in other notes to financial statements. Increase...
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...Examine the statement of equity(or equivalent) section of the accounts and investigate if the data provided conform to the relevant Accounting Standards. Statement of equity is a ‘Financial statement showing the beginning balance, additions to and deductions from, and the ending balance of the shareholders' equity account, for a specified period’.(http://www.businessdictionary.com/definition/statement-of-owners-equity.html viewed April 20th) The statement of equity for the toll company is displayed in a table format clearly, with two-sub headings total comprehensive income for the year, and transactions with owners, recorded directly in equity. Underneath the heading there are sub headings, which clearly identifies in which category the figures go. At the bottom of the table it shows the balance of that financial year. The statement of equity report is useful to the owners as its vital to their future decision- making and it shows how much profit or loss is left over for the individual equity. Accounting standards have been established to govern the use of appropriate measurement and reporting rules in the financial statements. The statements report is on a monetary terms. The reports are to be presented fairly, clearly and completely of the entity. The statement of Equity for the toll company is reported in the annual report, which is prepared at the end of each financial year. In the year 2009, the balance was two million five hundred and ninety nine dollars and...
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...ESSAY CASE: ‘Ponzi schemes’ ‘Ponzi schemes’ are scams in which investors are promised exaggerated profits (often short-term) from supposedly can’t-miss investments. If and when early investors are paid returns, the money doesn’t come from actual investment gains; it comes from new cash pouring in from later investors. Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The "return" to the initial investors is paid out of the investments of new entrants, and not out of profits. Often the high returns lead investors to leave their money in the scheme, leading the promoter not to have to pay out very much to investors; they simply have to send statements to investors showing them how much they earned. This maintains the deception that the scheme is a fund with high returns. Ponzi scammers promise windfall returns, counting on their victims to be either gullible or greedy—and sometimes both. The appeal of quick and hefty profits is precisely why some people fall for Ponzi schemes, even though they clearly fall into the category of too good to be true. Charles Ponzi, an Italian immigrant living in Boston in the early 20th century, was a master at playing the gullibility-greed game. He was clever, yes, but more than that, he was charming and charismatic, easily convincing people to jump aboard his pie-in-the-sky schemes. He...
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... As long as we look at the economic fundamentals, we are doing fundamental analysis. For the purpose of this tutorial, fundamental analysis always is referred to in the context of stocks. Intrinsic Value of Fundamental Analysis: Intrinsic value is one of the primary assumptions of fundamental analysis is that the price on the stock market does not fully reflect a stock’s “real” value. In financial jargon, this true value is known as the intrinsic value. For example, let’s say that a company’s stock was trading at $20. After doing extensive homework on the company, we determine that it really is worth $25. In other words, we determine the intrinsic value of the firm to be $25. This is clearly relevant because an investor wants to buy stocks that are trading at prices significantly below their estimated intrinsic value. This leads us to one of the second major assumptions of fundamental analysis: in the long run, the stock market will reflect the fundamentals. There...
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...of accounting policy and auditing responsibility I. Halliburton’s background After being founded in 1919, Halliburton has asserted its dominance over the oilfield services industry. It is one of the world’s largest providers of such products and services, and the company employs over 75,000 people. Its presence in the international market is supported by its locations in 80 countries and diverse workforce from 140 nationalities. Halliburton has one of the world’s largest selections of oilfield products and services due to its massive corporate size and healthy portfolio of subsidiary holding, construction, oilfield, and many other companies (Halliburton). Accountants at Halliburton have dealt with a plethora of judgment calls regarding how exactly to record transactional events. Issues like job order costing, prepaid assets, subcontracting, and future economic benefits from land only begin the list. Difficulties in accounting are inherent in massive conglomerate corporations with unprecedented situations. What executives may have overlooked is the importance of stringent and professional accounting. Not only are Halliburton’s financial statements relied upon by investors, but also the SEC and a number of other interested parties. II. Scandal From 1946 to 2002, the auditing firm Arthur Andersen, LLP provided a variety of attestation and consultation services to Halliburton. A major duty of Arthur Andersen was to audit published financial statements. In a scandal...
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... • How greedy auditors colluded to misrepresent financial statements. 3. How collapse of Enron could have been prevented. • Did the relevant act negligently abetting in the corporate collapse. • How loopholes in financial laws can be exploited • How the investors were blinded by quick gains preventing them being cautious when investing. • How over speculation can lead to huge loses. 4. Lessons from the collapsed corporation. • Lesson that were taught to the policy makers and the investing public from the collapse. • Lessons that the collapse taught other corporations. 5. Conclusions and recommendations. 1. Historical background of the collapsed Enron corporation • How the corporate was founded and its growth • The corporate culture of the collapsed corporation. 2. What caused the collapse of Enron • How bonuses to the executives lead to their financial misreporting. • How greedy auditors colluded to misrepresent financial statements. 3. How collapse of Enron could have been prevented. • Did the relevant act negligently abetting in the corporate collapse. • How loopholes in financial laws can be exploited • How the investors were blinded by quick gains preventing them being cautious when investing. • How over speculation can lead to huge loses. 4. Lessons from the collapsed corporation. • Lesson that were taught to the policy makers and the investing public from the collapse. • Lessons...
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...interested parties such as managers, investors, bankers and creditors to make important business decisions. The final product of accounting is a set of financial statements comprising at least Balance Sheet and Profit & Loss Statement. These statements are useful to different users for different reasons. Accounting may be divided into financial accounting and management accounting. Financial accounting is the field of accounting that provides financial information for potential investors, creditors and other external users. Management accounting provides financial information for managers and other internal users. There are different kinds of users of financial statements. The users of financial statements may be from inside or outside of the business. They use financial statements for a large variety of business purposes and their ability to understand and analyse financial statements helps them to succeed in the business world. The various users of financial statements are classified and detailed as internal users and external users. Those who lack direct access to the financial information generated by the internal operations of a business are considered as external users. They rely on the financial accounting reports that management has prepared according to financial accounting regulations. These external users include investors group, lenders, suppliers, competitors, customers, public and the government. The investors group comprises both existing and potential...
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...ADMS 4510 term project Q1 We agree with most proposals in paragraph 35 and 36. However, some requirements are ambiguous and further clarifications are required. When reviewing the exposure draft, we have several major concerns with satisfaction of performance obligations. There should be persuasive evidence to show the existence of an agreement. Delivery of goods should have been occurred and services should have been rendered for revenue recognition. Sufficient evidence should support for the proposal to result in revenue being recognized over time. Also, there is chance that revenue could be recognized without the entity being reasonably assured to have a right to consideration. As is explained below, we have some disagreements. For 35(a), customer controls asset as it is created or enhanced. We partially agree with the concept of recognizing revenue over time when the entity creates or enhances an assets that the customer controls is consistent with the principle of recognizing revenue with transfer of goods and services. It follows the core principle in paragraph 31. However, this assumption may be problematic, controls may not be transferred over time but at a point in time. Hence, the proposal could hardly be applied to the situation where a customer has obtained control of goods ...
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...For those periodic reports in which financial statements are included, and should state that the financial information provided in the report is fairly presented. C. The issuer’s internal control over financial reporting should be assessed or reviewed. D. Information should be available to the public on a timely basis E. Periodic reports should be filed with the relevant regulator. F. The information should be stored to facilitate public access to the information. G. Disclosure criteria. H. Equal access to disclosure. I. Equivalence of disclosure. Page 3 4 5 5 6 7 7 20 2 3 21 22 23 24 25 26 27 Appendix 1 – Feedback Statement on the Public Comments on the 28 Consultation Report – Principles for Periodic Disclosure by Listed Entities Appendix 2 – Comment Letters on Consultation Report – Principles 36 for Periodic Disclosure by Listed Entities. 2 Chapter 1. Introduction In the increasingly globalized securities markets, widely accepted international disclosure standards play an important role in facilitating cross-border capital raising. International agreement on disclosure standards enables issuers to tap the global markets more quickly, while assuring a high level of investor protection internationally. The International Organization of Securities Commissions (IOSCO) has recognized that disclosure of reliable, timely information that is readily accessible contributes to liquid and efficient markets by enabling investors to make investment decisions based on all the...
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...quality disclosure and transparency helps the public understand the company’s activities, policies and performance with regard to environmental and ethical standards as well as the relationship of the company with the stakeholders. The Global Financial Crisis has demonstrated how poor quality disclosure and lack of transparency can mask excessive risk-taking and leveraging by global financial institutions. Hence, high quality disclosure and transparency not only serves to protect investors but helps regulators in maintaining market confidence and systemic stability. The strengthening of disclosures and transparency involves actions by a range of market participants as it covers processes from verification, the determination of information for the publication and communication. Quantitative and qualitative corporate information is then disseminated through various periodic reports such as the annual and quarterly reports, other disclosures and through various media or other stakeholder engagement sessions. In this context, the quality of disclosures can be assessed in terms of how useful the information provided is in assisting investors and other stakeholders to make judgments. There are five pillars of disclosure and transparency which are truthfulness, completeness, and materiality of information, timeliness and accessibility. According to Elorrieta (2002), markets and investors...
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