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
| Name: | Unilever |
| Sector: | Consumer goods |
| Accounting policies: | The company, Unilever can acquire IAS 16, IAS 38, IAS 40, IAS 2, IFRS 3, and IAS 1. The company, Unilever, acquires the accounting policies that can be implemented on the company because the company deals with various property, land, and equipment. Apart from that, different business combinations are observed in the company. As the cost inflows of the company are measured reliably for better future economic growth of the company. The financial statement is recorded by recognizing the profit and losses faced by the company that is specified by capital advances that come under the non-assets. |
| Name: | Tesco Plc |
| Sector: | Retail |
| Accounting policies: | The company, Tesco Plc can acquire the IAS 1 accounting policies. The company Tesco Plc, acquires the accounting policies because through the year the company deals with different profits and losses in the company. The company wants to adopt new standards to maintain the accounting presentation of the company. The different operations which take place in the company can increase the overall profit of the company. |
| Name: | AstraZeneca |
| Sector: | Pharmaceutical |
| Accounting policies: | The company, AstraZeneca can acquire IAS 16, IAS 38, IAS 2, and IAS 1 accounting policies. The company deals with different property and equipment-based policies. The different impairment losses and depreciation are measured in the company to bring the required assets and generate them in recognized criteria. |
| Name: | HSBC |
| Sector: | Financial services |
| Accounting policies: | The company, HSBC can acquire the IAS 1 accounting policy. The company deals with several accounting standards and the company has to keep a record of a large number of financial statements that are processed in the company. |
| Name: | Vodafone Group Plc |
| Sector: | Telecommunication |
| Accounting policies: | The company Vodafone Group Plc can acquire IAS 38 and IAS 1 accounting policies. This company mainly aims towards achieving the economic benefits required for the company for development. The company makes investments in various projects and on the employees of the company to attain the short-term and long-term benefits. |
| Name: | GlaxoSmithKline |
| Sector: | Pharmaceutical |
| Accounting policies: | The company GlaxoSmithKline can adapt IAS 16, IAS 38, and IAS 1 accounting policies. The company’s financial statement is being prepared after observing the financial assets and liabilities of the company. This company’s financial statement is made according to accounting standards hence so that it can define the benefit plans for the company. |
| Name: | Compass Group |
| Sector: | Foodservice |
| Accounting policies: | The company compass group can take up the IAS 1 accounting policy. The company tends to improve the financial statement of the company and thus it makes several strategies and efforts to attain the meet. Hence, making financial statements of the company can improve the performance of the company. |
| Name: | British American Tobacco |
| Sector: | Tobacco |
| Accounting policies: | The company British American Tobacco can adapt IAS 38, IAS 40, and IAS 1. The company deals with several intangible assets and the company has made several investments in improving the financial state of the company. However, to maintain the investors of the company has to balance the financial statement of the company. |
| Name: | Reckitt |
| Sector: | Consumer goods |
| Accounting policies: | The company Reckitt can take up IAS 1 accounting policy. This company has to prepare the proper balanced financial statement. Hence, this will help in better management of the company. |
| Name: | Swire |
| Sector: | Conglomerate |
| Accounting policies: | The company Swire can adapt IAS 16 accounting policy. This company deals with the land, plant, and equipment; however, the company is trying to improve and enlarge the company by increasing the land capacity of the hotel. Hence, this will help in the future development of the hotel. |
| Name: | British gas |
| Sector: | Utilities |
| Accounting policies: | The company, British gas, can acquire IAS 16 and IAS 38 accounting policies. This company focuses on maintaining the land, plant, and equipment for better maintenance of the company. The company focuses on the assets and liabilities of the company to balance the performance and cash outflows of the company. |
| Name: | BT Group Plc |
| Sector: | Telecommunication |
| Accounting policies: | The company BT Group Plc can take up IAS 40 accounting policy. The company focuses on maintaining the accounting standards of the company. The company aims to invest money and account for the net cost and the net tax of the company. |
| Name: | House of Fraser |
| Sector: | Retail |
| Accounting policies: | The company House of Fraser can acquire IAS 40 and IAS 1 accounting policies. The company is aiming towards reaching the accounting standard day by day and hence the company can return the tax. This will help in maintaining the investments and the financial statement of the company over a period. |
| Name: | Boots |
| Sector: | Hardware and software |
| Accounting policies: | The company Boots can take up IAS 1 accounting policy. The company deals with many cash exchanges and non-financial transactions. The products and goods of the company are maintained by cash flows and assets. Thus, maintaining a proper financial statement for the company is much needed. |
| Name: | Diageo |
| Sector: | Beverages |
| Accounting policies: | The company Diageo can acquire IAS 1 accounting policy. This company is a public limited company. This company makes basic financial statements using accounting policies thus it will help in recording different tax-related incomes and investments. |
| Name: | Rio Tinto Group |
| Sector: | Mining |
| Accounting policies: | The company Rio Tinto Group can take up IAS 40 accounting policy. The company requires to increase the cash flow and income of the company. Thus, it will help in returning the assets over a short period, this will help in making more investment in the company. |
| Name: | Sainsbury’s |
| Sector: | Retail |
| Accounting policies: | Sainsbury’s company can acquire IAS 16 accounting policy. This company deals with intangible assets and exchanges cash flows. The financial reporting is observed over a period and evaluated for proper financial accounting. |
| Name: | Linde Plc |
| Sector: | Materials |
| Accounting policies: | Linde Plc company can take up IAS 40 accounting policy. The company is facing impacts due to changes in liabilities and thus, this company is trying to improve the financial and environmental changes by investing in the company. |
| Name: | International Airlines group |
| Sector: | Aviation |
| Accounting policies: | The company International Airlines group acquires IAS 16, IAS 40, and IAS 1 accounting policies. This company is focusing on increasing the land, equipment, and plant for the company because it can help in reaching new development firms by the company, and thus the company is investing in it. |
| Name: | Centrica |
| Sector: | Utilities |
| Accounting policies: | The company Centrica can acquire IAS 1 accounting policy. This company is trying to maintain the accounting standards and reduce energy consumption. This is required for making a proper financial statement for the company. |
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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