Assignment Sample on Accounting Policies of Companies Reporting

1. Introduction

This research analysis is based on evaluating the financial state of different twenty companies. The companies belong to different industries however the evaluation is conducted based on different accounting policies and later findings of the analysis are done and evaluated for the elaboration of the financial state of the companies.

2. Discussing Accounting Policies

Accounting policies are some identified principles based on which the financial statement of the company is prepared. As per the view of Garbowski et al. (2019), financial reporting standards are recorded according to the accounting policies of the companies. Apart from that different rules and regulations are also implemented for the proper preparation of the financial statement.

IAS 16

IAS 16 focuses on establishing different policies and principles which are used for the recognition of different properties, equipment, and plants that are kept as assets. This principle helps in measuring the amount that is to be carried out for paying the depreciation charges. As per the view of Svoboda, and Bohušová (2017), several cost-based models are developed using IAS 16. Later on, different impairment losses are also recognized for making further payments. Different tangible items are found in property, plant, and equipment which helps in the production of goods and services and then supplying it, and these are expected to be held during a period.

IAS 38

The IAS 38 deals with the intangible assets, which are the basic requirement of the accounts. These intangible assets are initially the monetary assets, which are present without any physical substances and identifications. According to André, Dionysiou, and Tsalavoutas (2018), impairment and intangible assets of the different assets are affected by IAS 38. However, there is a collision between the intangible assets and different relevant criteria that are recognized. Hence, this method is implemented for measuring the initial cost and subsequent cost.

IAS 40

IAS 40 is implemented for elaborating the investments that are made on a property. This further helps in accounting for capital appreciations and rental earnings. As per the view of Sundgren, Mäki, and Somoza-López, (2018), recognition of different fair values and investment properties are evaluated under IAS 40. The investment property helps in measuring the initial cost of the properties and that can be measured with the help of different cost models for a better understanding of the changes that occurred in the model.

IAS 2

IAS 2 is the inventories that usually comprise the account-based requirements that can be used in accounting the inventories. As per the view of Polachová (2019), different compliances and requirements in the inventories of the financial statement are obtained by IAS 2. That contains the measurement of cost lowering, net realizable values, and lastly the different outlined methods that are used in determining the cost.

IFRS 3

IFRS deals with the business combinations that occur during the method of accounting and then it acquires complete control over the businesses. These types of business combinations are initially used for implementing the method of acquisition. As opined by Masadeh, Mansour, and AL Salamat (2017), IFRS 3 focuses on the changes occurring in the accounting procedures and business combination. Thus, it focuses on measuring the required assets and the assumed liabilities for obtaining a fair value.

IAS 1

IAS 1 focuses on presenting various financial statements and the basic requirement is that the proper structuring of financial statements. As per the view of Al-Sartawi, Al Rawahi, and Sanad (2017), several international accounting standards are balanced in IAS 1. That should be done and based on the accounting terms such as current and non-current distinction, the financial statement should be prepared.

3. Finding Analysis

Table 1: Table of findings based on 20 companies

(Source: MS Word)

4. Evaluation of Findings

As per the observations throughout the research analysis, it will be found that most of the companies that are stated above focus on maintaining the financial statement of the company. As per the view of Bojarenko (2017), companies are free for development and can adopt different recognition criteria for evaluating financial statements. Thus, maintaining the financial statement helps in evaluating the cash flows made by the company. Apart from that many companies are linking with the accounting policy IAS 16, which deals with the land, plant, and equipment for enhancing the company’s performance. Increasing the land, plant, and equipment in many companies, results in increasing the growth rate and the increase in production of the product and services.

Several companies are dealing with accounting policy IAS 38 that deals with intangible assets which are not good and those are the monetary assets of the company. Some companies deal with IFRS 3, which focuses on the business combination, and thus for balancing the business components, there is a requirement of acquisition. According to Socoliuc (2018), several tangible assets are specified in some areas for acquiring safety for environmental reasons. However, the different accounting policies help the companies in many ways, accounting policy provides different frameworks for operating the business properly. It helps in recording the day-to-day transactions and cash flows made by the company and measures different types of assets and liabilities present in the company. Based on accounting policies the entire financial statement is prepared for accessing the business.

5. Conclusion

As per the research analysis, it is concluded that there are different accounting policies based on which different companies maintain their cash flows, and transactions. Hence, it helps in keeping a record and tracking the activities and steps that are taken in the company. Different accounting policy plays different roles and it helps in different types of evaluation in different companies as per the requirement. Here, we have taken six accounting policies and evaluated them in twenty different companies.

Reference

Al-Sartawi, A.M.M., Alrawahi, F. and Sanad, Z., 2017. Board characteristics and the level of compliance with IAS 1 in Bahrain. International Journal of Managerial and Financial Accounting, 9(4), pp.303-321. Available at: https://www.researchgate.net/profile/Abdalmuttaleb_Al-Sartawi/publication/322087793_Board_characteristics_and_the_level_of_compliance_with_IAS_1_in_Bahrain/links/5b4740fc45851519b4b14136/Board-characteristics-and-the-level-of-compliance-with-IAS-1-in-Bahrain.pdf

André, P., Dionysiou, D. and Tsalavoutas, I., 2018. Mandated disclosures under IAS 36 Impairment of Assets and IAS 38 Intangible Assets: value relevance and impact on analysts’ forecasts. Applied Economics, 50(7), pp.707-725. Available at: https://dspace.stir.ac.uk/bitstream/1893/25494/1/PA_DD_IT_6_5_2017.pdf ‘

Bojarenko, J., 2017. Variability of accounting policies–advantages and disadvantages. Copernican Journal of Finance & Accounting, 6(3), pp.9-19. Available at: https://apcz.umk.pl/czasopisma/index.php/CJFA/article/download/CJFA.2017.013/14395

Garbowski, M., Drobyazko, S., Matveeva, V., Kyiashko, O. and Dmytrovska, V., 2019. Financial accounting of E-business enterprises. Academy of Accounting and Financial Studies Journal, 23, pp.1-5. Available at: https://www.researchgate.net/profile/Svetlana_Drobyazko/publication/334942641_FINANCIAL_ACCOUNTING_OF_E-BUSINESS_ENTERPRISES/links/5d456681299bf1995b614d8a/FINANCIAL-ACCOUNTING-OF-E-BUSINESS-ENTERPRISES.pdf

Masadeh, W., Mansour, E. and AL Salamat, W., 2017. Changes in IFRS 3 accounting for business combinations: a feedback and effects analysis. Global Journal of Business Research, 11(1), pp.61-70. Available at: https://www.theibfr.com/download/gjbr/2017_gjbr/gjbr_v11n1_2017/GJBR-V11N1-2017.pdf#page=63

Polachová, K., 2019. Compliance with IAS 2 in consolidated financial statements of PSE listed companies. European Financial and Accounting Journal, 2019(3), pp.61-78. Available at: https://efaj.actavia.vse.cz/pdfs/efa/2019/03/02.pdf

Socoliuc, M., 2018. EVALUATION OF TANGIBLE ASSETS IN THE NATIONAL ACCOUNTING LEGISLATION AND IFRS. Ecoforum Journal, 7(2). Available at: http://www.ecoforumjournal.ro/index.php/eco/article/viewFile/818/500

Sundgren, S., Mäki, J. and Somoza-López, A., 2018. Analyst coverage, market liquidity and disclosure quality: a study of fair-value disclosures by European real estate companies under IAS 40 and IFRS 13. The International Journal of Accounting, 53(1), pp.54-75. Available at: http://diposit.ub.edu/dspace/bitstream/2445/128247/1/679474.pdf

Svoboda, P. and Bohušová, H., 2017. Amendments to IAS 16 and IAS 41: Are there any differences between plant and animal from a financial reporting point of view?. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65(1), pp.327-337. Available at: http://actavia.mendelu.cz/pdfs/acu/2017/01/

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