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Presentation and Disclosure of Assets in Balance Sheet We have studied the presentation and disclosure requirements of the asset side of the balance sheet according to Companies Ordinance 1984 and International Accounting Standards. Following IAS affect the recognition, presentation and disclosure of fixed assets in financial statements IAS 01 – Presentation of Financial Statements IAS [...]

Current Assets, Fourth Schedule – Companies Ordinance 1984 Current Assets According to the Fourth Schedule of Companies Ordinance 1984 the current assets categories are: Stocks / Inventory Raw Material Finished Goods Work in Process General Stores / Spares Tools Marketable Securities Loans and Advances Cash and Bank Balances Current assets shall be classified under sub-heads [...]

Valuation of Inventories Methods of Stock Valuation First in First Out (FIFO) Last in First Out (LIFO) Weighted Average Specific Identification Method The requirement of using these methods is that the units to which the assumption is applied should be homogeneous in nature-that is, nearly identical to each other. If each unit is unique, the [...]

Valuation of Inventories Methods of Stock Valuation First in First Out (FIFO) Last in First Out (LIFO) Weighted Average Specific Identification Method The requirement of using these methods is that the units to which the assumption is applied should be homogeneous in nature-that is, nearly identical to each other. If each unit is unique, the [...]

Inventories Inventories: • IAS 2 – Inventories are assets: Held for sale in the ordinary course of business; In the process of production for such sale; or • In the form of materials or supplies to be consumed in the production process or in the rendering of services IAS-2 lays out the required accounting treatment [...]

Other Non-Current Assets • The Fourth Schedule to the Companies Ordinance 1984 has prescribed following additional heads in case of non- current / long term assets. Long Term Loans and Advances Long Term Deposits, Prepayments and Deferred Costs. Long Term Loans and Advances Following information must be disclosed in the financial statements in case of [...]

Intangible Assets IAS 38 & Investment in Associates Disclosure Requirements • The financial statements should disclose the following for each class of intangible assets, distinguishing between internally generated assets and other intangible assets: The useful lives or the amortization rates used. The amortization method used. The gross carrying amount and the accumulated amortization at the [...]

Intangible Assets – Companies Ordinance 1984 Classification Fourth Schedule • Classification of intangible assets: Goodwill Patent, Copyrights, Trademarks and Designs Others (to be specified) Disclosure Requirements Fourth Schedule • Original cost or the amount of valuation • Additions thereto and deductions there from since the previous balance sheet date • Aggregate amount written off, or [...]

Property, Plant & Equipment and Borrowing Cost Disclosure Requirements for Property Plant & Equipment The financial statements should disclose, for each class of property, plant and equipment: Disclosure Requirements The measurement basis used for determining the gross carrying amount. When more than one basis has been used, the carrying amount for that basis in each [...]

Revaluation of Assets The market value of land and buildings usually represents fair value, assuming existing use and line of business. Such valuations are usually carried out by professionally qualified valuers. Most importantly, when an item of property, plant and equipment is revalued, the whole class of assets to which it belongs should be revalued. [...]

Property, Plant and Equipment Recording, Classification and Reporting of Property Plant and Equipment / Fixed Assets is governed by IAS 16 – Property Plant and Equipment IAS 16, Property Plant and Equipment This standard covers all aspects of accounting for property, plant and equipment. This represents the bulk of items which are “tangible” non-current assets. [...]

Preparation and Presentation of Financial Statements • Preparation and presentation of financial statements is governed by: Companies Ordinance 1984 (4th and 5th Schedule) International Accounting Standards (IAS) OR International Financial Reporting Standards (IFRS) Companies Ordinance 1984 • The Companies Ordinance 1984 is an Ordinance issued by Government of Pakistan and It regulates establishment and management [...]

Relationships between Companies Two or more companies may be interconnected or interrelated in one of the following manners: • They can have a business relationship of such a nature that they can be termed as Related Parties. • They can be Associated to each other. • One company can be a subsidiary of the other. [...]

Formation of Companies and Meetings • Types of Companies There are three major types of companies: Companies Limited by Shares Companies Limited by Guarantee Unlimited Companies Section 15 of the Companies Ordinance 1984 sates: (1) Any three or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association [...]

Types of Business Entities • Profit Oriented / Commercial Entities Profit oriented or commercial entities are those entities where the main aim of carrying out business is to earn profit for the owners of the business. Profit oriented entities are of following types: • Sole Proprietorship • Partnership • Companies Sole Proprietorship – Is the [...]