Custom Search


Thursday, November 25, 2010

Balance Sheet Disclosures in Company Accounts

  • Fixed assets
    Unless indicate otherwise, the points below relate also to fixed asset investments and intangibles.
    1. Cost of valuation of each fixed asset category
    2. Cumulative depreciation for each fixed asset category
    3. For fixed asset included on a valuation basis
    4. Land and buildings analysis of NBV between freehold, long leasehold and short leasehold
    5. For fixed assets included at a valuation state, either aggregate cost or aggregate depreciation as would have been determined under historical cost rules; or difference between above and amounts actually includes in balance sheet under modified historical cost.
    6. If no record of original price or production cost of asset
    7. For investment properties
  • Investments
  • Significant shareholders
  • Intangible fixed assets
  • Stocks and long term contracts
  • Debtors
  • Creditors
  • Taxation
  • Dividends
  • Provisions
    1. Where amounts transferred to any provision for liabilities and charges
    2. Where amounts are transferred from any provision for liabilities and charges except for purpose for which provision was established
    3. Other provisions where amounts are material
  • Guarantees and other financial commitments
  • Share capital
  • Reserves
  • Loans for acquisition of own shares
  • Government grants
  • Investment properties
  • Leasing and hire purchase
  • Post-balance sheet events

IT Jobs


Sunday, November 21, 2010

Profit and Loss Items Requiring Disclosures in Company Accounts
  • Turnover
    Analysis of turnover over, Substantial different business activities; substantial different geographical markets, Analysis of profit before tax between substantially different business activities
  • Depreciation
    The total depreciation provided. Additional provisions for depreciation and where assets revalued during current year, disclosure the effect, if material, on the depreciation charge
  • Expense items
    Charges for hire of plant and machinery, auditor’s remuneration, interest payable to bank loan and overdrafts, total amount of research and development expenditure charged in profit and loss analyzed between current year’s expenditure and amounts amortized from deferred expenditure, amortization charge for goodwill, particulars of staff, staff includes directors, average number of persons employed during year and analyzed within categories according to organization of company’s activities, staff costs disclosures.
  • Directors emoluments
  • Income items
    Income from listed investments, if a substantial part of company’s revenue, rents from lands.
  • Effecting and extraordinary items
  • Taxation
  • Other matters
    Amounts provided for the redemption of, share capital and loans.
  • Reporting financial performance

IT Jobs


Thursday, November 11, 2010

Principal Disclosures for Single Company Accounts

The principle disclosures are classified as follows’
  • Purpose of the checklist
  • Accounting policies
  • Profit and loss items requiring disclosure
  • Balance sheet disclosures
  • Cash flow statements
  • Directors’ report – Summary of matters to be disclosure

Purpose of the checklist

The aim of the following checklist is to provide a guide to disclosure requirements for the more common reporting arias. All principle companies act requirements for single companies are referred to. The basic requirements are listed below,

  1. Long term contracts
  2. Goodwill
  3. Pension costs
  4. Group accounts
  5. Earnings per share
  6. Cash flow statements
  7. Segmental reporting

Accounting policies

  1. General policies (Disclosure of significant accounting policies, this would cover all areas)
  2. Depreciation (For major class of depreciable assets method of used and useful lives or depreciation rates
  3. Developing expenditure
  4. Goodwill (explanation of accounting policy and where goodwill is capitalized and amortized, write off period for each major acquisition)
  5. Stocks and long term contracts (statement of accounting policies and particular reference to method of ascertaining turnover and attributable profit.
  6. Deferred taxation (description of method of calculation)
  7. Foreign currency translation
  8. Leasing – Lessees (policies for accounting for operating leases and financial leases)
  9. Leasing – Lessors (policies for operating leases)

IT Jobs


Thursday, November 4, 2010

Entries of Purchasing of a Business by a Company

The entries in the company’s books necessary to record the purchase of the business are as follows:
  • Assets acquired at acquisition values
    Debit – Assets
    Credit – Vendor’s account
  • Liabilities acquired at acquisition values
    Debit – Vendor’s account
    Credit – Liabilities
  • Purchase consideration
    Debit – Vendors account
    Credit – Share capital, share premium, debentures, and cash
  • Excess of purchase consideration over net assets required
    Debit – Goodwill
    Credit – Vendor’s account
  • Excess of net assets acquired over purchase consideration
    Debit – Vendor’s account
    Credit – Capital reserve

Any debtors taken over should be debited at book values and any provisions for doubtful or bad debts should be credited to a provision for bad debts account.

Some accountants prefer to pass the purchase of business account, which replaces the vendor’s account, being credited with the assets acquired and debited with the liabilities taken over and with the purchase consideration.

Where the purchase consideration is less than the value at which the net assets stood in the books of the vendor, but the values of the assets taken over are correctly stated, the surplus should be treated in the company’s books as a capital reserve. The surplus is not available for distribution to shareholders and cannot be credited to a revenue reserve account.
The absence of a goodwill account indicates that no payment has been made for goodwill; it does not indicate that it is nonexistent.

Where a partnership business is transferred to a limited company some difficulty may be experienced in capitalization the company so as to ensure that the rights of the partners are preserved. If the capitals of the partners are in the same ratio as that in which profits are shared, the problem is simplified, as the allotment to the partners of ordinary shares in that ratio will preserve the relationship as nearly as possible. Often, where the capitals are not held in profit-share ratio, the problem is complicated, particularly when taxation is considered.

IT Jobs


Wednesday, November 3, 2010

Purchase of a Business by a Limited Company

Several advantages may stem from the “conversion” of a private business into a limited company e g perpetual succession, whereby a member of a company can transfer his shares, or bequeath them by will at death, without describing the constitution of the company or its financial resources.

The “conversion” may take the from of the transfer to a private company of the assets and goodwill of the business in consideration of the allotment of shares in the company, which the sellers of the business will continue to hold, and through which they will retain the control of the business. Alternatively, a public company may be formed to acquire the business; a promoter or syndicate purchases the business from the original owners, and resells it to the company at a profit, the capital of the company being raised by public subscriptions. Or a public company may be formed to take over the business of a private company, the shareholders of the private company receiving shares or other interests in the public company in exchange for their existing holdings.

Accounting entries in the purchasing company’s books

In the purchasing company’s books, the assets acquired must be debited at acquisition values, which are often different from the book values shown in the vendors business’s books; when a business is hold, assets are frequently revalued. Sometimes the purchasing company assumes trade liabilities as part of the purchase consideration; sometimes the company discharges the trade liabilities and collects the book debts as agent for the sellers; interest may be allowed or changed until final settlement between the purchasing company and the sellers is effected. Book debts are usually acquired at book values less an agreed provision for bad or doubtful debt; any excess received over the book values less the provision for doubtful debts is a capital profit in the purchasing company’s books.

In addition to the purchase price of the tangible assets, a further sum is usually payable for goodwill. A company making a public issue for the purchase of acquiring a business must state in the prospectus the amount of the purchase consideration attributable to goodwill.
Goodwill is the excess of the total purchase consideration over the value of the other assets acquired, less the amount of any liabilities assumed by the company.

IT Jobs

About Me

My Photo
Management Consultant.
Financial management and business management specialist.
View my complete profile


WELCOME ALL.....................................................,

If you have any problems regarding accounting please comment in this site and let we know SURELLY WE ANSWERED...................................,