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Akuntansi B.inggris
Akuntansi B.inggris
What is “material”?
Conclusion:
Materiality is a key factor in the application of accounting standards. As a general
rule, if the inclusion or omission of an item would affect the decisions of those who use
financial statement, the item is material.
It is not simply a question of magnitude - £5 to a millionaire is not material, but is to
a four year old child. Rather, it is a question of significance to decision making. When
attempting to determine whether an item is or is not material, it should always be
considered from the perspective of the financial statement. It should not be assumed that
merely because an item is of small value, it will be immaterial in the context of the financial
statements. For example, the sale of £10.000 of goods to Iraq would not seem important in
the context of a company’s total turnover of £20m. However, many user of the
undertaking’s financial statements would make different decisions were information
included rather than excluded from those statement.
Conclusion:
The broad terminology used in SSAP 13 gives rise to problems and in many instances
could lead to the adoption of widely differing treatments by different companies faced with
the same conditions and expenditure. However, in a survey of 300 UK companies, only 1%
of the 171 companies identified as having some R&D activity elected to capitalize it. If this is
representative of the overall treatment of R&D expenditure as research or as development.
Nevertheless, there remains the problem that the distinction between development and
non-R&D expenditure is imprecise and open to manipulation, if there is any benefit to be
gained by doing so.
Finally, the partial exemption from disclosure is difficult to justify. If the information
is regarded as unimportant for the majority of companies, what is so special about the
others that it suddenly takes on an important role? It is hard to see why the shareholders of
non-public limited companies would be any less interested the the shareholders of public
limited companies in knowing the total R&D expenditure charged to profit and loss, and the
proportion of it which related to the amortization of deferred development expenditure.
8 SSAP 19 : ACCOUNTING FOR INVESTMENT PROPERTIES
Conclusion:
This standard was issued in response to pressure from the property industry both
before and after the issue of the original version of SSAP 12 in 1977. It deals with a very
specific topic and, unlike most of the other accounting standards, it will not be applicable to
the vast majority of companies. Even when it is applicable, it will not usually apply to all the
property assets pf the company concerned.
While there is an obvious justification for its depreciation exemption being
applicable only to a specific class of property, it is unfortunate that the requirement to
revalue investment properties annually is not applicable to non-investment properties
under SSAP 12. There is no doubt that the use of current market property values provides a
more true and fair view than the use of historical cost property values. The fact that the
balance sheets of companies with investment properties will contain a mixture of property
at market value, at historic revaluation, and at historical cos, does nothing for the clarity of
that true and fair view.
11 SSAP 24 : ACCOUNTING FOR PENSION COSTS
Conclusion:
SSAP 24 has been described as a disclosure standard. It certainly emphasizes the
need for detailed disclosure. However, it cloud be argued that is does not go far enough: for
example, there is no requirement to disclose on what basis an variation is being eliminated.
It cloud also be argued that some of the disclosure requirements are more likely to confuse
than to clarify: for example, the requirement in paragraph 88(h) to disclose the actuarial
method used.
The standard provides a framework within which pension costs are to be
determined, but is not a measurement standard. For example, average service periods may
or may not be used; discretionary increases may or may not be recognized in the actuarial
assumptions; interest may or may not be provided on balance sheet balances; and there are
many possible bases which can be adopted for spreading variations, etc. Even greater is the
degree of flexibility given to the actuarial calculations: for example, actuarial valuation of
assets may be done using whatever approach the actuary believes to be appropriate, so
long as it complies with the general requirements of the standard; the actuarial method
used may be one of several; and the assumptions made involve a high degree of personal
judgement.
WORKBOOK OF ACCOUNTING
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