Accounting Analysis of Clinuvel Pharmaceuticals’ Operations

ACCOUNTING ANALYSIS OF CLINUVEL PHARMACEUTICALS’ OPERATIONS

Table of Contents
1.0 IDENTIFICATIONS OF KEY ACCOUNTING POLICIES....................................................3
1.1 Research and development.....................................................................................................3
1.2 Intangible Assets....................................................................................................................3
1.3 Depreciation of plant, property, and equipment....................................................................3
2.0 Assess accounting flexibility.....................................................................................................4
2.1 Capitalisation of Research and Development costing............................................................4
2.2 Valuation and estimations of the useful life of intangible assets...........................................4
2.3 The depreciation method of property, plant and equipment adopted....................................4
3.0 Potential Red Flag......................................................................................................................5
3.1 Changes in methods of depreciation for property, plant and equipment...............................5
4.0 Evaluation of accounting disclosure procedures.......................................................................5
5.0 Undo Accounting Distortion......................................................................................................5
6.0 Conclusion.................................................................................................................................5
References........................................................................................................................................6
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1.0 IDENTIFICATIONS OF KEY ACCOUNTING POLICIES
1.1 Research and development
Research and development and commercialization spending accounted for 45% of the total
expenditure of the cluster for the fiscal year 2017/2018, compared to 40% for the financial year
2016/2017. This costs that are comprised of study costs for the clinic, drug formation research
and manufacture and distribution fee, regulatory and research fee, and development and
commercialization overheads. (Clinuvel Pharmaceuticals’ ,2018)
The increase in these expenditures reflects the further investments throughout the years in the
commercial roll out in a bid to secure revenues the, was prepared on the NDA regulations that
meet the FDA’s expectations. Innovation has been distinct as the outlined of new or better-
quality changes in goods and services, procedures and means that organizations use to improve
on products and new marketing methods (OECD/Eurostat 2005).
1.2 Intangible Assets
Clinuvel Pharmaceuticals’ operations deals with creating medicinal products and therefore the
intangible assets compose of various portions of Clinuvel Pharmaceuticals’ operations.
Intangible assets such as trademarks, patents, and licenses have a fixed beneficial life and are
recorded at a costless amassed amortization and impairments losses, the amortization is done on
a straight-line basis over a shorter valuable life that is reviewed annual reporting periods. The
subject of amortization and capitalization of expenses on intangible assets is abundant and lively,
thus by developing amortization plans that will progress rather than harm earnings are a huge
task, the focus on fiscal report examination – the examination of statement of financial position
and statement of income mark matters – and merging that examination with other non-
accounting data to predict incomes progress. Benefit from and amortization is an issue in
accounting, and not an issue of analysis. (Lev, Radhakrishnan, and Zhang, 2009).
1.3 Depreciation of plant, property, and equipment
The assets of Clinuvel Pharmaceuticals’ are specified at a cost less accrued depreciation and
diminishing, the cost includes spending that is straight credited to the acquired item. The
depreciation is calculated on value diminishing to write off the net cost of each asset over the
expected useful life to be able to estimate its residual value. The management reviews the
method of depreciation and end of each annual reporting time and can be adjusted if appropriate.
The present rules for the measurement of PPE are providing under IAS 16 (IASC, 2003). The
rules permit two models of accounting for the determining the value of property, plant, and
equipment that is succeeding to original acknowledgment. Reappraisals should be completed
frequently enough so that the carrying amount does not significantly contrast from fair value at
the statement of financial position date. Thus, in a case of impairment loss arising it ought to be
known every time the sum of an asset to be recovered is fewer than the amount carried. (Clinuvel
Pharmaceuticals’ ,2018)
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