Financial Accounting: Accounting Policies and Findings of 20 Companies

This report discusses accounting policies and findings of 20 companies in financial accounting. It covers topics such as subsequent measurement of property, plant and equipment, method of depreciation, subsequent measurement of intangible assets, method of amortization, subsequent measurement of investment property, and cost formulas for inventories.

Financial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
Accounting policies.....................................................................................................................3
List of 20 companies....................................................................................................................3
Findings in the form of a table including.....................................................................................4
1. Subsequent measurement of Property, plant and equipment (IAS 16)....................................6
2. Method of depreciation (IAS 16).............................................................................................7
3. Subsequent measurement of intangible assets (IAS 38)..........................................................8
4. Method of amortization Intangible assets with finite useful lives (IAS 38)............................9
5. Subsequent measurement of Investment property (IAS 40)..................................................10
6. Cost formulas for inventories (IAS 2)...................................................................................11
7. Initial measurement of Non-controlling interest (IFRS 3)....................................................12
8. The form of the income statement (expenses by the nature or by the function, IAS 1)........13
9. The form of statement of comprehensive income (single statement or two statements IAS 1)
...................................................................................................................................................14
CONCLUSION..............................................................................................................................15
REEFRENCES..............................................................................................................................16

INTRODUCTION
Financial accounting is the method of presenting financial reports that are used by
businesses to demonstrate their financial results and status to those outside the business,
including stakeholders, stakeholders, vendors and clients. This informs business owners of
the net income and the profitability of the company. In certain words, financial reporting is
being used in a manner suitable and able to adapt for all companies to communicate
financial statements to the creditors.
In this report, accounting policies consolidate statement of 20 companies and the
finding of accounting policies IAS 16 is discussed.
Accounting policies
Accounting policies were the basic standards and processes adopted by the executive
committee of an organization and are used in planning its financial reports. Those include all
accounting processes, measuring systems and report reporting techniques. Accounting
practices vary from reporting standards in that regulations are the laws and regulations are
the ways an organization adheres to those rules. IFRS 9 IFRS9 is a publication by the
International Accounting Standards Board of the International Financial Reporting Standard
(IFRS). It deals with financial products transparency. It covers three major subjects:
description and calculation of financial instruments, financial asset deficiency and hedge
accounting. IFRS 9 as updated has four different classification groups for financial assets
(such as an FVOCI category for credit instruments). The identification of subject to two
measures, one of the SPPI negotiated cash flow checks and one of the business strategy
assessments. If the asset fulfils all test conditions, it is calculated at market value in
compliance with all adjustments in benefit and loss fair market value reporting (FVPL). The
cash flows again from transaction will only include the interest and principal to satisfy the
statutory cash flow check.
List of 20 companies
Consolidated financial statement of listed companies on which prepare financial
statement as per the IFRS standard:
Unilever

HSBC Holding Plc
BP PLC
Royal Dutch Shell
GlaxoSmithKline
BHP Group PLC
British American Tobacco
Diageo
Rio Tinto
BAE Systems
Reckitt Benckiser
Tesco
RELAX group
Prudential
National Grid
Compass Group
CRH plc
Carnival plc
Associated British Foods
Findings in the form of a table including
Name of company Sector Accounting
policies
BP PLC Industry: Oil &
Gas
IAS 36, IAS 17
Unilever Household &
Personal Products
IAS 29, IAS 1,
IAS 17, IFRS 9.

AstraZeneca Healthcare IAS 8, IAS 38
Royal Dutch Shell Industry: Oil &
Gas
IFRS 16, IAS 19
GlaxoSmithKline Healthcare IAS 39, IAS 19
BHP Group PLC Industrial Metals
& Mining
IAS 7, IAS 24,
British American Tobacco Consumer
Defensive
IAS 29, IAS 36,
IAS 19,
Diageo Beverages,
Wineries &
Distilleries
IAS 12, IAS 37
Tesco Industrial Metals
& Mining
IAS 7, IAS 24,
BAE Systems Aerospace &
Defense
IFRS 3, IFRS 19
Reckitt Benckiser
(https://www.rb.com/media/4116/rb-ar2018.pdf)
Consumer
Defensive
IFRS 16, IAS 38
Rio Tinto
(http://www.annualreports.com/HostedData/AnnualReports/PDF/
LSE_RIOA_2019.pdf)
Industrial Metals
&Mining
IFRS 3, IAS 1
RELAX group
(https://www.relx.com/~/media/Files/R/RELX-Group/documents/reports/
annual-reports/2018-annual-report.pdf)
Publishing IAS 1
Prudential
(https://www.prudentialplc.com/~/media/Files/P/Prudential-V3/reports/
2018/prudential-plc-ar-2018.pdf)
Life Insurance IFRS 3, IAS 1
National Grid
(https://investors.nationalgrid.com/~/media/Files/N/National-Grid-IR-V2/
reports/2017-18/annual-report-and-accounts.pdf)
Diversified
Utilities
IAS 40
Compass Group
(https://www.compass-group.com/content/dam/compass-group/corporate/
Investors/Annual-reports/CG%20Annual%20Report
%202018.pdf.downloadasset.pdf)
Restaurants IAS 1
Glencore
(https://www.glencore.com/dam/jcr:b4e6815b-3a2c-43ca-a9ef-
effe606bb3c1/glen-2018-annual-report.pdf)
Industrial Metals
& Mining
IFRS 16, IAS 1
CRHplc
(https://www.crh.com/media/1019/2018-annual-report-20-f.pdf)
Building
Materials
IFRS 3, IAS 1
Carnival plc
(https://www.carnivalcorp.com/static-files/9296f17e-0bbc-4d59-850c-
4d59b3fc8c57)
Leisure IAS 1, IAS 40
Associated British Foods
(https://www.abf.co.uk/documents/pdfs/2018/abf_ar18_web.pdf)
Packaged Foods IAS 16, IAS 1
Below is the discussion of all IAS of financial accounting:

1. Subsequent measurement of Property, plant and equipment (IAS 16)
IAS 16 Property, plant and equipment lays down the basic accounting process for most
properties, plant and infrastructure forms. Land, equipment and machinery are originally
calculated at its expense, and either assessed using an expense or revaluation formula and then
depreciated in such a manner that the depreciable value is distributed over its productive life on a
standardized basis. IAS 16 Property, equipment, and infrastructure involve disability assessment
and, where appropriate, land, service, and machinery identification. An element of land, product,
or machinery should not be held in excess of the sum recoverable. The recoverable sum is the
greater of the market value of such an item, less cost of sale and its value available on the
market. IAS 16 acknowledges that sections of such land, plant, and machinery pieces that need
periodic maintenance intervals. If the acknowledgment requirements (future advantages and
calculation reliability) are fulfilled, the carrying value of an item of land, facility and equipment
must cover the cost of repairing the component of that item until the expense is sustained. In
compliance with the de-recognition rules of IAS 16, the moving volume of those replacement
sections is de-recognized.
1 Subsequent measurement of Property, plant and equipment (IAS 16)
Revaluation method 1
Not Disclosed 10
Not Available 9
5%
50%
45%
IAS 16 Property, plant and equipment
Revaluation method Not Disclosed Not Available

IFRS 16- As of 1 January 2019, IFRS 16 will be effective. The norm updates the standards of
lease recognition, calculation, show and transparency. This excludes the distinction of tenants as
running expenses or servicing contracts and implements a standardized rental accounting
framework where the renter is forced to identify rental obligations and 'right to possession'
properties on the balance sheet, including provisions for short-term rentals and low-value rentals.
2. Method of depreciation (IAS 16)
Amortization method strategies are the means by which this element is used to allocate costs to
fixed resources in budget deficits in an orderly manner according to the allowed method. in
accordance with the relevant accounting standards. IAS 16- The aim of IAS 16 is to provide for
land, plant and equipment accounting service. The main problems include the identification of
properties, the measurement of their bearing sums and the identification of impairment costs and
claims for penalties.
2 Method of depreciation (IAS 16)
Straight line method 1
Not Disclosed 10
Not Available 9
5%
50%
45%
IAS 16 Depriciation
Straight line method Not Disclosed Not Available
The two most used US accounting measures are GAAP and IFRS.

3. Subsequent measurement of intangible assets (IAS 38)
IAS 38 requires an enterprise to recognize an intangible asset (initially at cost) if, and only if,
they are
Two conditions are met:
a) It is probable that future economic benefits will flow to the company from the intangible asset;
b) The cost of the asset can be determined reliably.
The provision applies to both acquired and internally generated intangible assets.
3 Subsequent measurement of intangible assets (IAS 38)
Recognized as intangible assets 13
Recognized as costs 2
Not Disclosed 5
65%
10%
25%
IAS 38 Intangible assets
Recognized as intangible assets Recongnized as costs
Not Disclosed
If an activity cannot be defined in the aforementioned terms and if the two previous conditions
are not met for the recognition of an intangible asset, IAS 38 requires that the expenses incurred
for this item are accounted for as cost in the year in question. They must always be recognized as
costs and not as intangible assets, research expenses, expenses start-up of a business or company,
staff training costs, advertising costs. IAS 38- Production costs are paid in the year in which they

are recorded, although they fulfill the IAS 38 requirements for capitalization and amortization
over the productive life of the commodity produced.
4. Method of amortization Intangible assets with finite useful lives (IAS 38)
As regards the amortization of intangible assets; IAS 38 indicates a systematic criterion of
amortization over a period of time determined on the basis of an estimate of the useful life of the
business, with relative presumption that it does not exceed twenty years from the moment the
asset is available for use.
4
Method of amortization Intangible assets with finite useful lives (IAS
38)
Amortization over period of time 12
Take it as expenses 3
Not disclosed 5
60%
15%
25%
IAS 38 Amortization of Intangible
assets
Amortization over period of time Take it as expenses
Not disclosed
If an asset is revalued, any depreciation accumulated on the revaluation date is alternatively: -
re-entered in the balance sheet in proportion to the change in the gross book value of the asset -
eliminated against the gross book value of the asset and the net value of the asset the asset is re-
recorded in the financial statements based on the revalued value of the asset.

5. Subsequent measurement of Investment property (IAS 40)
The entity that previously applied IAS 40 (2000) and decides for the first time to classify and
account for some or all of the interests in real estate held through an operating lease as an
investment property must recognize the effect of that decision as an adjustment to the opening
balance of retained earnings for the year in which the decision was made.
5
Subsequent measurement of Investment property (IAS
40)
Valuation through fair value 2
Valuation through market value 10
N/A 8
10%
50%
40%
IAS 40 Investment property
Valuation through fair value Valuation through market value
N/A
In addition:
a) If the entity has previously disclosed publicly (in the financial statements or otherwise) the fair
value of these interests in properties in previous years (determined according to a criterion that
meets the definition of fair value of IFRS 13), the entity is encouraged but not obliged to:
i) Adjust the opening balance of the profits brought forward for the previous year for which this
fair value has been publicly indicated; and
ii) Correct the comparative data of the financial years concerned; and

b) If the entity has not previously publicly provided the information required in a), it must not
reformulate the comparative information and must indicate this fact.
6. Cost formulas for inventories (IAS 2)
The modified IAS 2 investments or the International Accounting Standard 2 investments became
IAS 2 investments in 1993. This guidance was implemented annually from January 1, 2005. It is
on the different cost formulas previously applied to SIC consistency 1 for investments.
6 Cost formulas for inventories (IAS 2)
Companies using LIFO 5
Companies using FIFO 10
Not disclosed 5
25%
50%
25%
IAS 2 Cost formulae for Inventories
Companies using LIFO Companies using FIFO Not disclosed
The International Accounting Standards Board (IASB) has amended IAS 2 to improve the
International Accounting Standards. The IASB boosted the company following investigations
and questions about standards by defense auditors, competent accountants and other interested
neighborhoods. The point was to reduce and eliminate alternatives, postponements and conflicts
between Standards and also overlook many related problems.
7. Initial measurement of Non-controlling interest (IFRS 3)
The research identified whether the transition from "minority engagement" to "minority
interests" had increased the level of tools to remember for the NCI. Some believe that when the
Board issued IFRS 3 (revised) it anticipated that the decision estimated in IFRS 3 (2008) .19

would apply only those parts of the ICN that has the detail equivalent (MI) as specified in IAS 27
(2003). IFRS 3-In order to change the concept of a corporation, IFRS 3 "Market Variations" has
been changed. In general, an established relationship needs to provide an origin and an essential
mechanism that leads greatly to the potential to generate outcomes. IAS 38- Production costs are
paid in the year in which they are recorded, although they fulfill the IAS 38 requirements for
capitalization and amortization over the productive life of the commodity produced.
7
Initial measurement of Non-controlling interest (IFRS
3)
Minority interest compared at fair value 4
N/A 9
Not disclosed 7
20%
45%
35%
IFRS 3 Non controlling interest
Minority interest compared at fair value N/A
Not disclosed

8. The form of the income statement (expenses by the nature or by the
function, IAS 1)
IAS 1 Financial Reporting Presentation establishes general requirements for financial reporting,
including how they should be organized, the basic prerequisites for their content and the retrieval
of ideas, such as business continuity, the basis of account collection and the current / custom
differentiation. The standard requires full reconciliation of the financial statements which involve
disclosure of the financial position, disclosure of benefit or misfortune and other extended
salaries, disclosure of changes in value and disclosure of income.
8
The form of the income statement (expenses by the
nature or by the function, IAS 1)
Record transactions in Income statement on accrual
bases 9
Record transactions in Income statement on real bases 6
Not disclosed 5
45%
30%
25%
IAS 1 Income statement
Record tensactions in Income statement on accrual bases
Record tensactions in Income statement on real bases
Not disclosed
The financial statements will reasonably include budgeting, cash performance and itemized
earnings. Reasonable forecasts require a consistent representation of the effects of different
exchanges, times and conditions in accordance with the definitions and identification measures
for structures, liabilities, remunerations and expenses established in the IASB Framework for the
preparation and presentation of the financial statements. The use of IFRS, with greater

transparency within it, has been attempted to produce financial statements that satisfy a
reasonable forecast.
9. The form of statement of comprehensive income (single statement or two
statements IAS 1)
Monetary status, profits or misfortunes exist despite input into bank statements and other full
payment announcements, indicating changes in the definition of value and income. The notes
provide photographs of the account or uncollected articles of these statements and data that do
not fit the acknowledgment invoice in such advertisements.
9
The form of statement of comprehensive income
(single statement or two statements IAS 1)
Showing adjustments separately 9
Showing income without adjustments 5
Not disclosed 6
45%
25%
30%
IAS 1 Comprehensive income
Showing adjustments separately Showing income without adjustments
Not disclosed
CONCLUSION
In the end of the report, it has been concluded that financial accounting is the method of
filing financial reports where the financial performance of the business is reported and the
worker information to be included owners, borrowers, suppliers and consumers.

REEFRENCES
Books and Journals
Online
About IAS 16 Properties, Plant and Equipment. 2020. [Online] Available Through:
<https://www.iasplus.com/en-gb/standards/ias/ias16>.
Unilever.2020. [Online] Available Through:
<https://www.unilever.com/Images/unilever-annual-report-and-accounts-2018_tcm244-
534881_en.pdf>.
BHP group Plc. 2020. [Online] Available Through:
<https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf>.
Royal Dutch Shell. 2020. [Online] Available Through:
<file:///C:/Users/Administrator/Downloads/cons_financial_statements_shell_ar18.pdf>.
AstraZeneca. 2020. [Online] Available Through:
<https://www.astrazeneca.com/investor-relations/annual-reports/annual-report-2018.html>
BP PLC. 2020.[Online] Available Through:
<https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-
annual-report-and-form-20f-2018.pdf>
GlaxoSmithKline.2020.[Online] Available Through:
<https://www.gsk.com/media/5349/annual-report-2018.pdf>
British American Tobacco. 2020. [Online] Available
Through:<https://www.bat.com/ar/2018/assets/pdf/BAT-full-annual-report-and-Form-20-
F-2018.pdf>.
BAE Systems. 2020.[Online] Available
Through:<http://www.annualreports.com/HostedData/AnnualReportArchive/b/
LSE_BA_2018.pdf>