The company has a joint ownership with Lloyds Banking Group and also has joint ventures in properties with The British Land Company Plc and Land Securities Group Plc (Reuters, 2011). In financial year 2010 the main joint ventures of the Group were The Harvest Limited Partnership, BL Sainsbury Superstores Limited and Sainsbury Bank Plc. In all these ventures the company has a share of 50 percent. The Directors of the company are accountable for the preparation of Annual Report, Remuneration Report and relevant financial statements as per the applicable regulations. The financial statements of the Company and the Group are prepared in accordance with the International Financial Reporting Standards (IFRS) (J Sainsbury Plc, 2010). Analysis of accounting policies a) At the end of each financial year and also in the event of any impairment indication, there is a review of the carrying value of the tangible and intangible assets by the Group to identify any impairment losses. If such indication is revealed then the recoverable value of the asset is calculated to determine the amount of impairment loss. If the cash flows from the assets are not independent of the other assets the Group determines the recoverable amount of the cash-generating-unit (CGU). When there exists objective evidence regarding impairment loss on receivables and loans, then the carrying amount of the financial assets is reduced to the present value of the anticipated future cash flows which is obtained by discounting the financial asset using the original effective rate of interest. For 2010 the total impairment shown in the books of the company is ?23 million. This has been with respect to assets like land & buildings and fixtures &equipments. The depreciation on the assets is provided on the basis of straight line method based on the bases of 50 years or term of the lease in the case of leasehold properties and freehold building and period of 3 to 15 years for fixtures & equipments and vehicles. Good-will is shown as an asset in the balance sheet of the Group in the respective period. It is tested annually for impairment and in the event of an indication of impairment the value of good-will is carried forward at cost minus accumulated losses on impairment. The losses on impairment are shown in the income statement in the year in which it occurs. The impairment loss in respect of the “equity instruments are not reversed”. If in a following period there is a rise in the fair value of the debt instrument classified as “available for sale” and this rise can be attributed to the happening of an event, after such loss has been shown in the income statement, then it is reversed through the company’s income statement. As per IAS 36 relating to ‘Impairment of Assets’ for impairment testing each store is treated by the Group as a CGU (cash generating unit). Tesco Plc also applies the same accounting policy for the impairment losses. Like Sainsbury the tangible assets of Tesco such as plant & equipment and property are reviewed as per IAS 36 if indications are found that the carrying amount of the asset may not be realised (Tesco, 2010). b) Sainsbury reported “Derivative financial instruments” of ?20 million in its balance sheet. The business activities of the Group make it vulnerable to financial risks that may arise in the case of exchange rate fluctuations and adverse movement in the interest rates. These risks are managed by the company using derivative instruments
Sainsbury's Financial reporting Table of Contents Table of Contents 2 Overview 3 Analysis of accounting policies 3 Conclusion 8 Bibliography 11 Overview Sainsbury Plc is a UK based FTSE 100 listed company. The primary activities of the company include grocery, retail and financial services…
They are nonmonetary in nature. They are capable of being separated and arising out of contractual and other legal rights. Such rights need not be transferable and separable from the entity owning them or other rights and obligations of the entity (IFRS.org).
The accounting standards are however regulated in every country differently as in some these are set as rules whereas in some these are treated as principles. The accounting standards are aimed to form symmetry and harmony in the accounting treatments around the globe but there are restrictions so as to the extent of legislation.
Further to the concepts, there are other rules that guide the reporting that is known as the International Accounting standards which are slowly being replaced by the International Financial Reporting Standards. In the financial statements of Next PLC, sales increased by 3.1% as well as a growth in profit which grew by 9%.
It was not, after all, a game-ending home run.
As a result, financial executives won't face the most sweeping expansion f financial reporting requirements since 1933. Instead, the long-running contest between preparers f financial statements, who almost universally want to streamline disclosure, and the auditors and regulators, who have pushed for expanded standards piece by excruciating piece, appears certain to go.
It runs nearly 872 stores of which 537 are supermarkets and 335 are convenience stores. The company has a joint ownership with Lloyds Banking Group and also has joint ventures in properties with The British Land Company Plc and
l position primarily rely on financial ratios of which the most critical ratios that give a best opinion on the company’s financial health include liquidity ratios and profitability ratios as well as performance at the stock exchange. Therefore, the decision as to whether to
The IASB Conceptual Framework elaborates on the main typical concepts that underlie the design and preparation of statements. The main idea behind the introduction of the conceptual framework lies in the provision of the structure for creating accounting standards that act as the main center for resolving emergent accounting disputes.
The paper presents the three issues, in a report format, to the finance director describing the appropriate accounting treatment in the financial statement for the year ended 31 December 2014.
In light of the varying
6 pages (1500 words)Coursework
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