FINANCIAL STATEMENT ANALYSIS

(ACC 2642)

TOPIC 2 : PRESENTATION OF FINANCIAL STATEMENTS

STUDENTS’ NAME: ID:

KHAIRUNNISA BINTI ZAINI PDA 1701-022

NORMAIZURAH BINTI JOHAN PDA 1701-019

FARAH IZZATI BINTI ABD WAHAB PDA 1607-074

NOOR ADLIENATUL ADILLA BINTI ABDUL RAUF PDA 1701-009

CLASS: DIA 6A

LECTURER NAME

MADAM WAN ARLIZA BINTI WAN ZAINAL

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 ACKNOWLEDGEMENT

We would like to express our thanks of gratitude to our lecturer, Madam Wan Arliza Binti
Wan Zainal for her guidance on completing this report on Topic 2 which is about Presentation of
Financial Statements which also helped us in doing a lot of research on the MFRS that we have
chosen, companies Annual Report and internet.

We are also extremely grateful to our group members, Farah Izzati Binti Abd Wahab,
Noor Adlienatul Adilla Binti Abdul Rauf, Normaizurah Binti Johan and Khairunnisa Binti Zaini who
have given valuable suggestions and cooperation towards completion of this report. The
cooperation and valuable suggestions came handy and useful with us.

Finally, we would like to express our thanks to the other groups who have helped us on
giving useful information regarding this assignment.

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 TABLE OF CONTENT

NO. CONTENT PAGE

1 Acknowledgement 2

Accounting Policies 4
Accounting Concept 4
2 Accounting Basis 4
Accounting Estimates 5

MFRS 101
Scope 6
3 Measurement 6
Purpose 6
Disclosure 7
Figure 1 8-12
Figure 2 13-16

MFRS 102
Scope 17
4 Measurement 17
Recognition 17
Disclosure 17-18

MFRS 116
Scope 19
5 Recognition 19
Measurement 19-20
Disclosure 20-21
Figure 3 22
Figure 4 23-24

6 References 25

7 Appendix 26

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1.0 Introduction of Financial Statement
Financial statement is a formal record of the financial activities and position of a
business person or other entity.

1.1 Accounting Policies

 Definition:
 Specific principles and procedures implemented by company’s management team
and used to prepare its financial statements
 Any methods, measurement systems and procedures for presenting disclosures
are included
 Example:
 Many companies allowed to report inventory using either First-In, First Out
(FIFO) or Last-in, First-Out (LIFO) method of accounting.

1.2 Accounting Concept

 Definition:
 The accounting rule that should be follow while preparing the financial
statements and accounts.
 Example:
 Going concern
 Historical cost

1.3 Accounting Basis

 Definition:
 Method used to determine when revenues and expenses (assets and liabilities)
are recognized in the accounts of the firm and reported in its financial statements
 Example:
 Accrual basis
 Cash basis

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1.4 Accounting Estimates
 Definition:
 An approximation in financial statement of the amount to be credited/debited on
items
 Example:
 Depreciable asset
 Provision of a loss

ACCOUNTING PADINI HOLDING BERHAD CHEETAH HLDING BERHAD

ESTIMATES
Depreciation Straight-line method Straight-line method

Impairment loss of non- PPE except for freehold land and PPE are stated at cost less
current assets capital work in progress are stated at accumulated depreciation and any
cost less any accumulated impairment impairment loss.
losses.

Useful life of non-current Based on years: Based on annual rates:

assets  Freehold buildings  Leasehold building
(50 years) (2%)
 Leasehold buildings  Furniture and
(25 years) fittings
 Motor vehicles (5 (5%-20%)
years)  Motor vehicles
 Furniture and fixtures (20%)
(3-5 years)  Office equipment
 Office equipment and (10%)
tools (4-5 years)  Renovations (10%)
 Shop lot (2%)

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2.0 MFRS 101 (PRESENTATION OF FINANCIAL STATEMENTS)

2.1 SCOPE (refer para 2, page 496)

 An entity shall apply this standard in preparing and presenting general purpose
financial statements in accordance with Malaysian Financial Reporting Standard
(MFRS).

2.2 MEASUREMENT (refer para 25, 26, 27 and 28, page 503)
 Going concern
 When preparing financial statements, managements shall make an assessment
of an entity’s ability to continue.
 In assessing whether the going concern assumption is appropriate, management
takes into account all available information about the future, which is at least, but it
is not limited to, twelve months from the end of the reporting period.
 Accrual basis of accounting
 An entity shall prepare its financial statements, excepts for cash flow
information.
 When the accrual basis of accounting is used, an entity recognizes items as
assets, liabilities, equity, income and expenses (elements of financial statements)
when they satisfy the definitions and recognition criteria for those elements in the
framework.

2.3 PURPOSE (refer para 9, page 499)

 Financial statements are structured representation of the financial position and
financial performance of an entity.
 The objective of financial statements is to provide information about the financial
position, financial performance and cash flows of an entity.
 To meet this objective, financial statements provide information about an entity’s:
a) Assets
b) Liabilities
c) Equity

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 d) Income and expenses, including gain and losses
e) Contributions by any distributions to owners in their capacity as owners and
f) Cash flows
2.4 DISCLOSURE (refer para 117, page 521)
 An entity shall disclose in the summary of significant accounting policies:
 The measurement basis (or bases) used in preparing the financial statements,
and
 The other accounting policies used that relevant to an understanding of the
financial statements.

PADINI HOLDING BERHAD CHEETAH HOLDING BERHAD

Financial statement (Figure 1) Financial statement (Figure 2)

The financial statements of the group and of
the company have been prepared under the
historical cost convention except as otherwise
stated in the financial statement.
(page 63)
Consolidated financial statements for the
financial year ended 30th June 2017 comprise financial year ended 30th June 2016 comprise
the company and its subsidiaries.
(page 63
The financial statements of the group and of
the company have been prepared under the
historical cost convention unless as otherwise
indicated in the accounting policies below.
Historical cost is generally based on the fair
value of consideration given in exchange for
asset.
(page 38)
Consolidated financial statements for the
the company and its subsidiaries.
(page 36)

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Figure 1
PADINI’S FINANCIAL STATEMENT

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Figure 2
CHEETAH’S FINANCIAL STATEMENT

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3.0 MFRS 102 (INVENTORIES)

3.1 SCOPE (refer para IN6, page 536)

 It clarifies that some of inventories are outside its scope while certain types of
inventories are exempted only from the measurement requirements.

3.2 MEASUREMENT (refer para 9 and 10, page 540)

 Inventories shall be measured at the lower of cost and net realizable value. The
cost of inventories shall comprise all cost of purchase, cost of conversion, and
other costs incurred in bringing the inventories to their present location and
condition.

3.3 RECOGNITION (refer para 34 and 35, page 545)

 When inventories are sold, the carrying amount of those inventories shall be
recognized as an expense in the period in which the related revenue is recognized.
 Some inventories may be allocated to other assets account, for example, inventory
used as a component of self-constructed property, plant or equipment. Inventories
allocated to another assets in this way are recognized as an expense during the
useful life of that asset.

3.4 DISCLOSURE (refer para 36, page 545)

The financial statement shall disclose:
 The accounting policies adopted in measuring inventories, including the cost
formula used.
 The total carrying amount of inventories and the carrying amount in classification
appropriate to the entity.
 The carrying amount of inventories carried at fair value less cost to sell.
 The amount of inventories recognized as an expense during the period
 The amount of any right-down of inventories recognized as an expense in the
period in accordance with paragraph 34.

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  The amount of any reversal of any right-down that is recognized as a reduction
in the amount inventories recognized as expense in the period in accordance in
paragraph 34.
 Circumstances or events that led to the reversal of a right-down of inventories in
accordance in paragraph 34.
 The carrying amount of inventories pledged as security for liabilities.

PADINI HOLDING BERHAD CHEETAH HOLDING BERHAD

Cost of inventories is determined on a Cost of inventories is determined on
weighted average basis. (Page 81) approximates actual cost. (Page 44)

Inventories and inventory losses recognized Consist mainly of trading merchandise are
as cost of sales. (Page 81) valued at the lower of cost and net realizable
Examples of inventories: value.
 Completed garments (Page 44)
 Shoes
 Accessories
 Raw Materials
 Manufacturing Accessories

Inventories written down when events or
changes in circumstances. (Page 81)
Valued at the lower of cost and net realizable
value. Net realizable value represents the
estimated selling price in the ordinary course
of business less selling and distribution costs.
Cost is determined on the weighted average
basis which approximates actual cost and
includes all costs in bringing the inventories
to their present location and condition. (Page
81)

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4.0 MFRS 116 (PROPERTY, PLANT AND EQUIPMENT)

4.1 SCOPE (refer para 2 and 3, page 673)

This standard shall be applied in accounting for property, plant and equipment except
when another Standard requires or permits a different accounting treatment. This
Standard does not apply to :-
a) Property, plant and equipment classified as held for sale in accordance with
MFRS 5 Non-Current Asset Held for Sale and Discontinued Operations;
b) Biological asset related to agricultural activity (see MFRS 141 Agriculture);
c) The recognition and measurement of exploration and evaluation asset (see MFRS
6 Exploration for and Evaluation of Mineral Resources);
d) Mineral rights and mineral reserves such as oil, natural gas, and similar non-
regenerative resources.
However, this standard applies to Property, Plant and Equipment used to develop or
maintain the assets describe in (b)-(d)

4.2 RECOGNITION (refer para 7 and 8, page 675)

The costs of an item of Property, Plant and Equipment shall be recognized as an asset if
and only if:
a) It is probable that future economic benefits associated with the item will flow to the
entity
b) The costs of the item can be measured reliably
Items such as spare parts, stand-by equipment and servicing equipment are recognized
in accordance with this MFRS when they meet the definition of Property, Plant and
Equipment. Otherwise, such items are classified as inventory.

4.3 MEASUREMENT (refer para IN7, IN8 and IN9, page 671
1. Measurement at recognition (asset dismantlement, removal and restoration cost )

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  the cost of the item of Property, Plant and Equipment includes the cost of its
dismantlement, removal or restoration, the obligation for which an entity incurs
as a consequence of installing the item.
 its cost also include the cost of its dismantlement, removal or restoration, the
obligation for which an entity incurs as consequence of using the item during a
particular period for purposes other than to produce inventories during that
period.
2. Measurement at recognition (asset exchange transaction)
 An entity is required to measure an item of Property, Plant and Equipment
acquired in exchange for a non-monetary asset or assets, or combination of
monetary and non-monetary assets, at fair value unless the exchange
transaction lacks commercial substance.
3. Measurement after recognition (revaluation model)
 it fair value can be measured reliably, an entity may carry all items of Property,
Plant and Equipment of a class at a revalued amount, which is the fair value of
the items at the date of the revaluation less any subsequent accumulated
depreciation and accumulated impairment losses.

4.4 DISCLOSURE (refer para 73, page 686)

For each class PPE, the financial statement shall disclose:
a) The measurement bases used for determining the gross carrying amount
b) The depreciation method used
c) The useful live or the depreciation rate used
d) The gross carrying amount and the accumulated depreciation at the beginning
and end of the period
e) The reconciliation of the carrying amount at the beginning and end of the period

PADINI HOLDING BERHAD CHEETAH HOLDING BERHAD

Stated at cost on Property, Plant and Stated at cost on Property, Plant and
Equipment accept Freehold Land and Capitol Equipment less any accumulated depreciation
Work in progress less accumulated and any accumulated impairment losses.
depreciation and accumulated impairment (Page 43)

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losses.(Page 71)
Depreciation is calculated based on straight
line method over estimated useful lives
represent common life expectancies applied
(years) (Figure 3)
Depreciation is calculated based on straight
line method over estimated useful lives
annual rates (%) (Figure 4)

Type of PPE Type of PPE

-Freehold land -Leasehold Building

-Leasehold buildings -Furniture and Fittings
-Motor vehicles -Motor Vehicles
-Furniture and Fixtures -Office Equipment
-Office Equipment and Tools -Renovations
(Page 71) (Page 43)

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Figure 3

DEPRECIATION OF PADINI

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Figure 4

DEPRECIATION CHEETAH

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 REFERENCES/CITATION

 [a] “Accounting Policies”. Investopedia.

https://www.investopedia.com/terms/a/accounting-policies.asp
 [b] “Basis of Accounting”. Business Dictionary. Retrieved from November 04, 2018.
http://www.businessdictionary.com/definition/basis-of-accounting.html
 [c] “Accounting Estimate”. International Financial Reporting Tool.
https://www.readyratios.com/reference/accounting/accounting_estimate.html

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APPENDIX

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