Approaches for Financial Accounting Transactions - Case Study of Agrico plc

ACCOUNTING FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial accounting refers to the specialised branch in accounting which is used for
having track record of the financial transactions carried out by business. Financial accounting
involves use of standard guidelines and for recording of transactions and properly representing
these financial data in the form of financial statements for the stakeholders. It is used by
enterprise for making strategic decisions that are essential for the growth of company (Fujimoto,
2018). Present report is based on the case study of Agrico plc. This is focused over providing
approaches for the transactions set by the business organisation and its impacts over the financial
statements of company. Study will enhance the concepts of financial accounting transactions.
MAIN BODY
The company has made some transactions related to the transactions carried out by the
business. It had some transactions related to the share based payments of company. It is having
the current operations for business. Company had entered two big transactions during the year. In
the first transaction company has issued share options to the suppliers against the goods. The
value of share options was 8 millions. They are issued by the business enterprise against the
shares (Safran, 2019). However the justification regarding the non recording of goods is not
correct company is required to record the entry as goods as received by company against the
shares though they are being exercisable after two years by the enterprise.
Transaction 1
Journal entry for recording the inventory will be :
Purchases a/c dr. 8
To Share based Payment Reserve 8
Above entry will be passed for recording the business transactions. Company will create reserve
account for share based payments for the goods received from suppliers against the share
options. Reserve account will be maintained till the options are exercised by the suppliers. They
are recorded at the fair value of share options that are prevailing in the market. The inventory is
not recorded as its original cost as they are received by the company at costs that are not high
(Izguttinov and et.al., 2020). Against the reserve created in the balance sheet company will be
required to create Share options asset account as non current liabilities. The reserve will be set
off against the share options assets account created by company in the vesting years.
Transaction 2
1