IFRS FSA Assignment-5

Rubber Industries:
Criticisms about the Balance sheet:

1. The format of the Balance sheet is not according to the guidelines of Company’s Act,
1956.
2. The booking of the entity’s assets and liabilities are not in a appropriate sequence
3. The liabilities should be at the top of the statement and assets at the bottom.
4. The fixed assets should be reported as NET BLOCK and not each items seperately is
to be booked.
5. Also the current liabilities should be deducted from current assets and then the NET
current assets should be arrived at which will reflect the increase or decrease in
Working Capital Requirement.
6. In case of Stockholders Equity the authorized capital should not be mentioned and
only the amount of capital should be mentioned.
7. Also the retained earnings should be shown as part of Shareholders’s Fund along with
Redeemable stock .

The correct treatment for criticized items are as follows:

1. Fixed assets: It should be: Gross Block- Depreciation/Amortisation

2. Net current Assets: Current Assets- Current Liabilities
3. The shareholders Fund= Common stock/Capital+Retained Earnings+Redeemable
Preferred stock.

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