Assignment Sample on Accounting Policies of Companies Reporting
Introduction
Accounting procedures are a set of principles and standards that a corporation chooses to follow when planning and reporting its financial statements. (Gurdian 2020) Accounting Policies Manual-A Tool with Important FiscalAccounting rules are related because they provide a policy that all businesses must adhere to and have equivalent and consistent economic reporting over years and an assessment to other businesses. Accounting policies are the basic standards and processes used to prepare financial statements that are adopted by a company’s executive committee. Any accounting processes, calculation schemes, and disclosure presentation practices fall into this category. Accounting policies vary from accounting practices in that accounting standards are the accounting rules, and accounting policies are how an organization follows those rules. Accounting rules are the processes followed by a business when preparing financial statements.
Accounting practices, as opposed to accounting principles, which are law, are the guidelines for adhering to such rules. Accounting practises may be used to illegally distort earnings. The accounting practices used by an organization will reveal whether management is optimistic or pragmatic in reporting earnings. Accounting rules may be thought of as a set of guidelines for how a business can run. The system is, however, very versatile, and a company’s management team may select various accounting practices that are beneficial to the company’s financial statements. Since accounting rules can be lenient at times, a company’s particular practices are critical.
Accounting policies of companies:
Accounting procedures vary from one organization to the next, but they are all tailored to follow the same International Accounting Standard or other standard bodies, such as local rules or legislation, that are relevant to financial statements.
To do so, businesses create their policies and manuals to ensure continuity with processes and to ensure that their financial reports comply with accounting principles or state regulations.
IAS 16: defines the conditions for classifying ground, plant, and buildings as assets, determining their carrying numbers and measuring the depreciation and loss liability that must be recognized concerning them. The following are tangible assets: land, warehouse, and facilities:
- are held for business or contributing respectable or services, renting to others, or for organizational purposes.
- and intended toused over a historical time.
The original cost of a portion of the land, farm, or machinery is determined. price includes:
- since taking sales incentives and rebates, the purchasing costs, plus weight obligations and non-refundable export tariffs;
- any rate directly associated with moving the quality to the situation and situation required for it to operate in the custom desired by running; and
- If the expenses are related to accounts manufactured during that period, the approximate costs of destroying and extracting the object and innovation the site where it is stored.
IAS 38:agrees the requirements for identifying valuing immaterial objects, as well as the information that must be released about them. A recognizable non-monetary having no physical nature is an intangible asset. (Koliesnichenko 2018). When an asset is separable or emerges from statutory or other legal rights, it is recognizable. Objects that are can be sold, registered, and so on. Computer applications, licenses, charters, and imports are examples of properties. Goodwill gained in a corporate merger is paid for under rather than. Internally created goodwill falls under IAS 38’s purview.
- The commodity will likely have possible economic reimbursement; and
- The asset’s expenditure can be precisely intended.
An intangible asset with an imperfect usable period is amortized and tested for damage. An immaterial commodity with the countless usable period is not amortized, but it is calculated for damage every year. The advantage or loss from the sale is included in benefit or harm. Accounting practices, as opposed to accounting principles, which are law, are the guidelines for adhering to such rules. Accounting practices may be used to illegally distort earnings. The accounting practices used by an organization will reveal whether management is optimistic or pragmatic in reporting earnings.
IAS 40: The initial cost of an investment property is used to determine its value. The lower market of the land attention and the existent value of the lowest lease expenses is used to calculate the expense of an investment property interest owned under a lease in compliance with IAS 17.
For all investment assets, a company must use the fair value model or the expense model as the accounting policy for subsequent calculation. Almeida and Lemes 2019) Determinants secretarial choice CFOs’ individuality matter. Market conditions at the close of the reporting period are reflected in fair valuation. Investment property is valued at cost minus accrued depreciation and any accumulated impairment damages under the cost formula. The market valuation is shown. Benefit or loss accounts for gains and losses on disposals.
IAS 2:It explains how to quantify the cost of inventories and then record the cost as a loss, along with the write-down of net realizable value. It also explains how to assign charges to inventories by using expense calculations. Inventories are calculated using the lower cost and net realizable worth.Gassamaet.al,(2021) Islamization of Accounting Policies as a Solution to the Ethical Problem in Accounting through Accounting Education. Budapest International pp.1607-1617. The valued purchase price the usual course business minus conclusion costs and the estimated costs required to complete the matter is the net realizable value.
Both obtaining costs, alteration costs (direct labor and overhead), and other costs incurred moving records to their recent position complaint are in the expense.
The rate of accounts is determined by the following factors:
- For inventory products that are not usually interchangeable, detailed cost identification is required;
- The first-in, first-out or subjective average rate rule is used for goods that typically transposable (generally large quantities of individually insignificant items).
IFRS 3: In a company arrangement, IFRS 3 specifies guidelines and conditions for how an acquirer:
- recognizes and accounts for the assets and obligations purchased, as well as the other parties’ interest in the acquiree in the financial statements;
- recognizes and tests the goodwill gained through a merger or a profit from a discount purchase; and
- determines what facts to use in the financial statements to enable consumers to assess the essence and financial impact of the company mix.
The key assumptions are that the acquirer calculates the expense of an acquisition at the reasonable value of the consideration charged, allocates the cost to the purchased recognizable assets and liabilities on their reasonable prices, allocates residual cost to goodwill, and recognizes the excess of developed assets and responsibilities over the compensation paid in p. The acquirer makes material available that allows consumers to assess the acquisition’s existence and financial implications.
IAS 1:Presentation lays out the general conditions for financial statements, organized, the A declaration of financial status, a speech of help loss and other complete profits, a of adjustments of equity, and a statement of cash flows must all be included in a full package of monetary statements, according to standard.
- a financial status speech at the end of the period.
- requires a company to present either a single consolidated benefit and loss statement or two discrete accounts of profit and loss and other descriptive profits.
- a statement of the period’s equity changes
- a cash balance statement for the period
- notes, which provide a list of key accounting policies as well as other explanations.
- A organization files a statement of financial position as of the beginning of the preceding corresponding year when it applies an accounting rule retrospectively, makes a historical restatement of items in its financial records, or reclassifies items in its financial statements.
20 companies and their financial statement according to IFRS:
| Company | Sector | IAS 16
(measurement) |
IAS 38
(assets) |
IAS 40(investment property) | IAS2(inventories) | IFRs3(Business Combination) | IAS 1(presentation) | ||||
| Aban offshore | Exploration &Prodution | Cost model | Revaluation model | Revaluation model | Cost model | Cost model | Revaluation model | ||||
| ACC Limited | Building materials & fixtures | Revaluation model | Cost model | Cost model | Cost model | Revaluation model | Cost model | ||||
| Adani Group | Conglomerate | Revaluation model | Cost model | Cost model | Cost model | Revaluation model | Cost model | ||||
| Aditya Birla Group | Conglomerate | Revaluation model | Cost model | Cost model | Revaluation model | Cost model | Cost model | ||||
| Air India Express | Airlines | Revaluation model | Revaluation model | Cost model | Cost model | Cost model | Cost model | ||||
| Ambuja Cement | Building materials & fixtures | Revaluation model | Cost model | Cost model | Revaluation model | Revaluation model | Cost model | ||||
| Asia Motorworks | Commercial vehicles & trucks | Cost model | Cost model | Cost model | Cost model | Cost model | Revaluation model | ||||
| Bajaj Auto | Automobiles | Cost model | Revaluation model | Cot model | Revaluation model | Revaluation model | Revaluation model | ||||
| Bajaj Group | Conglomerate | Revaluation model | Revaluation model | Cost model | Cost model | Revaluation model | revaluation model | ||||
| Balaji Group | Broadcasting &entertainments | Cost model | Revaluation model | Cost model | Cost model | Cost model | Revaluation model | ||||
| Bharat Petroleum | Exploration &production | Cost model | Cost model | Cost model | Cost model | Cost model | Cost model | ||||
| CESC Limited | Conventional electricity | Cost model | Revaluation model | Cost model | Revaluation model | Cost model | Cost model | ||||
| Cipla | Pharmaceuticals | Cost model | Cost model | Cost model | Revaluation model | Cost model | Cost model | ||||
| Coal India Limited | Coal | Revaluation model | Cost model | Revaluation model | revaluations model | Cost model | Cost model | ||||
| Escorts Group | Industrial engineering | Revaluation model | Cost model | revaluation model | Cost model | reevaluation model | Cost model | ||||
| Exide Industries | Electrical components & equipment | Reevaluation model | Cost model | revaluation model | Cost model | Revaluation model | Revaluation model | ||||
| Hindustan Times | Publishing | Revaluation model | Cost model | Cost model | Cost model | Revaluation model | Cost model | ||||
| Hindustan zinc | Precious metals and minerals | Cost model | Cost model | Cost model | Cost model | Cost model | Revaluation model | ||||
| India bulls | Financial service | Cost model | reevaluation model | Cost model | Cost model | Cost model | Revaluation model | ||||
| Indian oil corporation | Exploration and production | Cost model | Cost model | Cost model | Cost model | Cost model | Revaluation model | ||||
With the given above chart, it is clearly stated that most of the companies are using cost models for their industries. (Lugovskу and Kuter 2019) May. Accounting policies, office estimations, and its role in the research of financial declarations in the numeral economy. In International Conference Integrated Science (pp. 165-176). Springer Cham. Almost 90% of the companies use the cost model. The cost model is an accounting policy that is used in the balance sheet to report the quantity of property, factory, and services (fixed assets). It states that an asset should be kept at the initial cost (also known as historical cost), less any depreciation and damage losses. While asset revaluation is prohibited, some accounting standards authorize the recovery of past impairment losses.
Land, factory, and infrastructure accounting is handled according to IAS 16 under IFRS. It wants the cost model or revision model to be used as an accounting policy for the entire category stuff, Plant, and Equipment.
A capital asset is listed in the balance sheet at the original expense, minus any accrued depreciation and impairment losses, according to the cost model. The IFRS provides for the recovery of previously known impairment damages, but only up to the original carrying value of an asset calculated for accrued depreciation.
Conclusion:
Although IFRS statements include a more similar nature which often contains ambiguous terminology and meanings, it has been possible to create judgment mechanisms for IFRS statements under scrutiny and, in addition, structure compound bookkeeping ideals such as fair value approach. When doing a typical audit, these decision-making mechanisms may be used. Accounting policies vary from accounting practices in that accounting standards are the accounting rules, and accounting policies are how an organization follows those rules. Accounting rules are the processes followed by a business when preparing financial statements. The acquirer makes material available that allows consumers to assess the acquisition’s existence and financial implications. Build software procedural procedures that can be incorporated into an existing audit this automated approach, as opposed to a manual transition, lower the cost of any changeover and is a must for assisting a group of small to intermediate sized business with their changeover. The relevance of International Bookkeeping Standards for SMEs is growing, as is the need for software-driven solutions. As a result of the work, software programmers who aren’t normally specialist in financial coverage will be able to design request routine based on the frameworks developed.
References:
(Ageeva and Formusatii, 2019) Elements of Accounting Policy Selection and Its Influence on Financial Statements Indicators. VestnikUniversiteta, (1), pp.158-162.
(Almeida and Lemes 2019) Determinants of accounting choice: do CFOs’ characteristics matter?. Management Research Review.
(Azeved 2020) Deadlines and software: disentangling local government accounting reforms in Brazil. Public Money & Management, 40(7), pp.509-518.
(Bojarenko 2017) Variability of accounting policies–advantages and disadvantages. Copernican Journal of Finance & Accounting, 6(3), pp.9-19.
(Bychkova and Eliashev 2019) ACCOUNTING POLICIES OF AGRO-INDUSTRIAL COMPOSITE COMPANIES AS A KEY ELEMENT OF THE SUPERVISORY SYSTEM IN THE ENVIRONMENTS OF THE DIGITAL BUDGET1. Scientific Programme Committee, p.136.). Atlantis Press.
(Georgieva 2018) Structure, content, and elements of the accounting policies of hotels in Bulgaria.
(Guorong 2019) February. Study on the Influence of Innovation and Reform of Accounting Policies on the Impairment of Commercial Bank Credit Card. In 2019 4th International Conference on Financial Innovation and Economic Development (ICFIED 2019) (pp. 315-323
(Gurău, and Grigore 2019) THE ACCOUNTANT’S AVERSION TO RISK WHEN CHOOSING ACCOUNTING POLICIES. Challenges of the Knowledge Society, pp.1041-1045.
(Gurdian 2020) Accounting Policies Manual-A Tool with Important Fiscal
(Koliesnichenko 2018) Impact accounting policies on the information content financial statements.
(Kulibayev 2018) SALARY ACCOUNTING AND ITS FEATURES IN STATE MEDICAL ORGANISATIONS. International Finance and Accounting, 2018(5), p.4.
(Lugovskу and Kuter 2019). In International Conference on Integrated Science (pp. 165-176). Springer, Cham.
(Manea 2017) The Public Institutions Accounting Policies and Procedures Manual–The Entities Accounting Professionals’ or the Specialized Firms’ Design?. Journal of Public Administration, Finance and Law, (11), pp.197-208.
Garbowskiet.al,(2019) Financial accounting of E-business enterprises. Academy of Accounting and Financial Studies Journal, 23, pp.1-5.
Gassamaet. al,(2021) Islamization of Accounting Policies as a Solution to the Ethical Problem in Accounting through Accounting Education. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 4(2), pp.1607-1617.
Juliantoet.al, (2019) November. Impact of Conflict of Interest on Accounting Policies Overview of Gender. In International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 19
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