...ACCOUNTING STANDARDS BOARD FEBRUARY 1999 FRS 15 FIXED ASSETS ACCOUNTING STANDARDS BOARD FINANCIAL REPORTING TA N G I B L E STANDARD 15 Financial Reporting Standard 15 ‘Tangible Fixed Assets’ is issued by the Accounting Standards Board in respect of its application in the United Kingdom and by the Institute of Chartered Accountants in Ireland in respect of its application in the Republic of Ireland. FIXED ASSETS ACCOUNTING STANDARDS BOARD FINANCIAL REPORTING TA N G I B L E STANDARD 15 Financial Reporting Standard 15 is set out in paragraphs 1-110. The Statement of Standard Accounting Practice, which comprises the paragraphs set in bold type, should be read in the context of the Objective as stated in paragraph 1 and the definitions set out in paragraph 2 and also of the Foreword to Accounting Standards and the Statement of Principles for Financial Reporting currently in issue. The explanatory paragraphs contained in the FRS shall be regarded as part of the Statement of Standard Accounting Practice insofar as they assist in interpreting that statement. Appendix IV ‘The development of the FRS’ reviews considerations and arguments that were thought significant by members of the Board in reaching the conclusions on the FRS. ©The Accounting Standards Board Limited 1999 ISBN 1 85712 079 5 ACCOUNTING STANDARDS BOARD FEBRUARY FRS CONTENTS Paragraphs SUMMARY FINANCIAL REPORTING STANDARD 15 ...
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...Asset Valuation Introduction As consultants for a new retail company, B.A.S.S. Customized Jewelers, our recommendations for reporting and valuing various assets of the business, as well as inventory policy, capitalization policy, and how these policies will help the company succeed are presented here. In this line of business, demonstrations of depreciation method recommendations are critical to show the inventory allocation and asset costs over the life of the inventory. Lastly, an examination of the policies and alternative valuation methods to justify the use of certain methods to use will be determined. This is the beginning process of meeting the future goals of the company and it is the desire of our committee and the company that as the C.E.O. you will find the recommendations viable. Inventory Policy Inventory management practices are varied; the accounting management is similar when it comes to inventory items. In the retail business, the shelves hold inventory until the product is purchased by the consumer. “The inventory account of a firm holds the cost of a product until the cost is released to the income statement to be subtracted from (matched with) the revenue from the sale. The cost of a purchased or manufactured product is recorded as an asset and carried in the asset account until the product is sold (or becomes worthless or is lost or stolen), at which point the cost becomes an expense to be reported in the income statement. The cost of an item purchased...
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...accounting principles in valuing assets, which are fair value and historical cost. The property refers to the land and building, as those are the main part of total fixed assets of a company. Asset is the most important element in the balance sheet, hence the method used for assets valuation is very important to avoid over or under estimation. This is the reason why the choice for measurement method is importance in determining the value of assets because it will affects the acquisition price and the comprehensive income of the firm in terms off income and shareholder equity. The author too focuses on the accounting treatment in accordance to International Financial reporting Standard (IFRS), US GAAP and Greek GAAP. With reference to the article, asset can be defined as a good able to provide a constant flow of services such as housing services and a source of cash flow. Assets are ruled by a set of basic aspects such as the cost (cost of land or construction cost), the residual value, the useful life estimation and depreciation charge. These elements are correlated with the type and use form of assets. The author also apply some accounting principles in their study such as prudence, historical costs, substance over form, going concern, true and fair view and many more. Data Methodology/approach The topic is approach by using an integration of fixed assets into four main portfolio categories, which are for own use, investment, held for sale assets and inventories. The data is...
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...Definition Of A Fixed Asset 3 3. Role Of Municipal Manager 3 4. Role Of Chief Financial Officer 4 5. Format Of Fixed Asset Register 4 6. Classification Of Fixed Assets 5 7. Investment Property 6 8. Fixed Assets Treated As Inventory 7 9. Recognition Of Heritage Assets In The Fixed Asset Register 7 10. Recognition Of Donated Assets 7 11. Safekeeping Of Assets 7 12. Identification Of Fixed Assets 8 13. Procedure In Case Of Loss, Theft, Destruction, Or Impairment Of Fixed Assets 8 14. Capitalisation Criteria: Material Value 9 15. Capitalisation Criteria: Intangible Items 9 16. Capitalisation Criteria: Reinstatement, Maintenance And Other Expenses 9 17. Maintenance Plans 10 18. Deferred Maintenance 10 19. General Maintenance Of Fixed Assets 10 20. Depreciation Of Fixed Assets 11 21. Rate Of Depreciation 11 22. Method Of Depreciation 12 23. Amendment Of Asset Lives And Diminution In The Value Of Fixed Assets 12 24. Alternative Methods Of Depreciation In Specific Instances 12 25. Creation Of Non-Distributable Reserves For Future Depreciation 13 26. Carrying Values Of Fixed Assets 13 27. Revaluation Of Fixed Assets 14 28. Verification Of Fixed Assets 15 29. Disposal Of Fixed Assets 15 30. Other Write-Offs Of Fixed Assets 16 31. Replacement Norms 17 32. Insurance Of Fixed Assets 17 33. Biological Assets 17 34. Fixed Asset Lives 18 ...
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...Ventures Professor Gilles Business Valuation Report The Business Valuation report will discuss how these companies compare and which companies are performing. The report will give and in depth analysis for the financial forecasting and the business valuation models. The four companies Alex and Ani, I.T. source, Mastero technologies, and Veteran Corps of America. The first company Alex an Ani cost of capital and the weighted average for the cost of equity and the cost of debt for each corporation. The cost of capital rate should be used as the discount rate for present value (PV) of the free cash flow (FCF) and terminal value (TV) of the business.The business valuation calculation for Alex an Ani show that the company is profitable and estimates for the company include the present value of the free cash flow (FCF) from the 5-year revenue and earnings forecast and the present value of the terminal value (TV) based on the free cash flow (FCF) in the fifth year using the cost of capital. The combination of present values from discounted cash flows and discounted terminal values would represent the total business values for each of the four privately-held corporation.While this valuation was generated considering as many company, industry and location specific details as available, the value presented in this report is an automated estimation of the assets and liabilities. Some events and circumstances that might impact the overall valuation of a specific business Alex and...
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...for overhead in a manufacturing firm involves many complexities as does measuring and assigning values to the various components. In addition, a global manufacturer needs to adhere to the local reporting rules and regulations. Maintaining consistency across all manufacturing locations is one of the largest issues facing global manufacturers. International Financial Reporting Standards (IFRS) With the trends of globalization, there is a growing acceptance of IFRS. The IFRS aims to harmonize financial reporting across borders. (The Economist, 2007) Over 110 countries already require or permit IFRS reporting. The underlying assumptions of the IFRS standards and framework are that assets should be valued at the price which it could be currently sold, rather than on a valuation technique. The effect of transactions and other events is recognized when they occur, not as cash is received or paid. Finally, the financial statements are prepared on the basis that an entity will continue in operation for the foreseeable future. (QAD2, p. 5) In the US, the Securities and Exchange Commission (SEC) is moving away from requiring only US GAAP reporting to accepting IFRS reporting and will soon announce a timeline to require IFRS standards in the long term. (QAD1, p. 5) Global manufacturers need to adopt a consistent method of reporting across all manufacturing sites. It starts with replacing...
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...Policy J. Economic Growth and Development K. Effects of Government Regulation L. Impact of Economic Factors on Investment Markets IV. Financial Reporting and Analysis A. Financial Reporting System (with an emphasis on IFRS) B. Analysis of Principal Financial Statements C. Financial Reporting Quality D. Analysis of Inventories and Long-Lived Assets E. Analysis of Taxes F. Analysis of Debt G. Analysis of Off-Balance-Sheet Assets and Liabilities H. Analysis of Pensions, Stock Compensation, and Other Employee Benefits I. Analysis of Inter-Corporate Investments J. Analysis of Business Combinations K. Analysis of Global Operations L. Ratio and Financial Analysis V. Corporate Finance A. Corporate Governance B. Capital Investment Decisions C. Business and Financial Risk D. Capital Structure Decisions E. Working Capital Management F. Dividend Policy G. Mergers and Acquisitions and Corporate Restructuring VI. Equity Investments A. Types of Equity Securities and Their Characteristics B. Equity Markets: Characteristics, Institutions, and Benchmarks C. Fundamental Analysis (Sector, Industry, Company) D. Valuation of Individual Equity Securities E. Equity Market...
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...Sampa Video, Inc. • A small video chain is deciding whether to engage in a new line of delivery business and is conducting an economic analysis of the valuation impacts of this decision. • This is a case basically regarding how to measure the benefits of financial leverage via different valuation approaches. Firm valuation (discount cash flow) and cost of capital • When you use the after-tax cost of capital to be the discount rate, you basically take in the effect of the financing. • If you discount the project cash flows (without financing) by the after-tax cost of capital, you will get the exact net present value as you use it to discount the total cash flows (project cash flows plus the financing cash flows). • That is, when you use the after-tax cost of capital to discount financing related cash flows, the net present value would be zero. ） （t=0） Initial invest. (total cost) Inc. rev. Inc. cost Deprec. OP CF NOP CF Project CF Financing Interest (AT) Repay. Fin. Rel. CF Total CF 8,000,000 0 (8,000,000) 8,000,000 (8,000,000) ） （t=1） ） （t=2） ） （t=3） ） （t=4） 6,000,000 (2,000,000) 2,000,000 3,500,000 6,000,000 (2,000,000) 2,000,000 3,500,000 6,000,000 (2,000,000) 2,000,000 3,500,000 6,000,000 (2,000,000) 2,000,000 3,500,000 3,000,000 3,500,000 3,500,000 3,500,000 6,500,000 (360,000) (360,000) (360,000) (360,000) (8,000,000) (360,000) 3,140,000 (360,000) 3,140,000 (360,000) 3,140,000 (8,360,000) (1,860,000) ...
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...Key areas of Accounting Judgement Assessment 1 Financial Analysis (Part 1) Accounting for Managers Executive Summary The financial statements are used for providing information on the financial position of a company to various stakeholders, who are associated to the company directly or indirectly. These statements help them to make decisions about their future association with the company. This makes it necessary for the financial statements to be accurate and verifiable and the essay discourses some key areas in financial accounting where judgement is required to be applied. The financial statements of an enterprise comprises of primarily the balance sheet that summarises the assets, liabilities and shareholder’s equity at the end of a year or a specified period (quarter / half year etc.), the income statement also known as the profit and loss statement summarises the revenues and expenditures incurred during a specified period (year / half year / quarter) and statement of cash flows. There are various stakeholders who are interested in the financial statements. Stakeholders can be shareholders, trade creditors who have supplied material to the organisation, banks & financial institutions who have lent money, government and statutory authorities for taxes and other compliance of various provisions of law. Therefore, the objective of financial statements is to provide information about the financial position, performance and changes in financial...
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...|IPO Valuation Procedure in Bangladesh | | | | | | | Internship Report IPO Valuation Procedure in Bangladesh Prepared for: Professor Shakil Huda Chairman IBA Career Center Institute of Business Administration University of Dhaka Supervised by: MsSyedaMahrufa Bashar Lecturer Institute of Business Administration University of Dhaka Prepared by: Asif Rezwan Roll: 64, MBA 44D and Management Trainee Officer, LankaBangla Investments Limited Institute of Business Administration University of Dhaka June 24, 2012 June 24, 2012 MS. Kanij Fahmida Assistant Professor Department of Accounting Faculty of Business Studies Bangladesh University of Business & Technology(BUBT) Dear Sir, Subject: Letter of Transmittal for Internship Report I, Ibna Shina Shibly, am submitting my internship report on “IPO Valuation Procedure in Bangladesh”. The internship period and the subsequent effort in writing this...
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...ACC/541 Professor Mark Taylor August 13, 2012 Client’s cleat understanding is a goal of ABC Company. The firms provide detailed explanations to address each customer’s need. ABC Company recognizes that your company has questions related to adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment. Inventories of companies are recorded at cost, except when the inventory declines in value below its original cost. When the cost declines below the original cost the company should write down the inventory to report this loss. “A company abandons the historical cost principle when the future utility of the asset drops below its original cost. Companies therefor report inventories at the lower-of-cost-or-market (LCM) at each reporting period” (Kieso, E., & Weygandt, 2010, p. 438). LCM uses a conservative approach to inventory valuation, meaning that when doubt exists about the value of an asset the company should use the lower value of an asset, which will reduce net income. This provides the company with a more conservative balance sheet and income statement valuations. To determine LCM, one must also consider net realizable value (NRV). This value represents the selling price of inventories minus the fees associated with completion of sales. Conclusion of market value also refers to an items current replacement cost. This cost falls between the NRV...
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...and|Definition | | |3 with your own |Acquisition of PP&E: | | |material here, or |General | | |throughout as |Self-constructed assets | | |desired |Interest costs during construction | | | |Initial cost of natural resources | | | |Valuation at acquisition: | | | |Exchange of non-monetary assets | | | |Lump-sum purchases | | | |Deferred payment contracts | | | |Purchase paid for using company stock ...
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... His second consideration is to become a broker for another manufacturer. He would have to adapt to becoming a distributor and not a manufacturer. The last option that Mr. Navallez has is to continue on the current path. There are several ways of determining the optimal choice for Mr. Navallez. A sensitivity analysis, and calculated net value for each option was conducted and the results are as follows. As we know that, the weighted average cost of capital is: WACC=Kd * 1-T * Wd + Ke * We This is defined as: Kd Cost of debt before tax 7.5% T Tax rate 42% Wd Weight of debt in the capital structure 84.3% 82.4% Ke Cost of equity 11.34 We Weight of equity in the capital structure 15.7 17.5 Weight of Debt: Information from Assets, Liabilities & Equity Information Wd 2007= Total liability/ Total Equity=$1,130,963/$211,111+$1,130,963= 84.3% Wd 2008=Total liability /Total Equity=$1,109,358/$235,805+$1,109,358= 82.4% Cost of equity: Risk...
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...Financial Instruments: Valuation and Reporting Samuel Kifle*, K.V. Siva Prasad and* K.Lakshmana Rao* Abstract The valuation and Reporting of financial instruments receive special attention in the course of Financial Reporting. The paper discusses the initial measurement, subsequent recognition of gain and losses on the financial instruments and their balance sheet presentation as prescribed by Accounting Standards of The institute of chartered Accountants of India (AS 30, 31 and 32), UK’s reporting standard and the International Reporting Standards. ____________________________ *Research Scholars, Department of Commerce and Management Studies, Andhra University, Vsiakhapatnam-530003. Definitions of Financial Instruments A Financial Instrument can involve very simple things like cash, or something far more complicated, such as a derivative. AS 31 define Financial Instrument as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Financial Reporting Exposure Draft (FRED) 30 of the UK and the International Accounting Standard (IAS) 32 similarly define a financial instrument as any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. A financial asset is any asset that is: a)...
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...parts. In its Form 10-K, filed with the SEC, the following information was disclosed. First, on the basis of assumptions underlying the acceleration of the Company’s strategy refocus, management projects a decline in the net cash flows for the A2 Americas segment. As a result, in the third quarter of 2010, management has tested the long-lived assets of this segment for recoverability. They recorded a pretax impairment charge of $1.76 billion in cost of sales. Secondly, during the third quarter of 2010, management also reviewed their business plan for the Alpha and Beta operating units. These units projected lower sales, a decline in net cash flows, and currency exchange deterioration. As a result, they tested the long-lived assets of these units for recoverability and recorded a pretax impairment loss of $1.28 billion. Lastly, during 2009, management updated their Asia Pacific Improvement Plan for the Alpha and Beta operating units. They projected a decline in net cash flows for these units based on market projections that reflected the recent market performance for Alpha. As a result, management tested the long-lived assets for impairment and recorded a pretax impairment charge of $1.04 billion. After this 10-K was filed with the SEC, the SEC responded to the Company and required them to explain the inconsistencies of this reporting. The SEC noted that the Company had determined the appropriate amount of impairment for the A2 Americas segment for the Americas operations...
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