Presentation of Financial Statements for Hotel Grand Central Limited

Running Head: Presentation of Financial Statements
Hotel Grand Central Limited

Presentation of Financial Statements 1
Executive summary
This report covers the preparation of financial statements of Hotel Grand Central Limited.
The report also discusses the two key methods of calculating depreciation on the long term
operating assets of the entity. All the financial information relating to the company have been
presented in the Singapore currency as the company is headquartered in Singapore. Along
with the presentation of financial statements i.e. the balance sheet and trading Profit and Loss
Account, the report also covers the recommended manner of financial reporting to promote
the true and fair view of financial statements and to enhance the transparency in reporting
about the entity’s state of affairs.

Presentation of Financial Statements 2
Introduction
Hotel grand central Limited is engaged in the hotel business. It was incorporated in 1968
however it got listed on the Singapore stock exchange in 1978. It owns and manages the
hotels through its 5 segments located in 5 different countries. These countries are Singapore,
Malaysia, New Zealand, Australia and China. The hotel is also holding equity interests in
more than 10 hotels across Malaysia through its subsidiaries that are wholly owned by it. In
the entire Malaysian country, more than six hotel grand continental as well as hotel grand
crystal properties provides the range of facilities to the travellers. The hotel is also operating
under the group brand of grand hotel international in the entire Australia. The Australian
properties of the hotel are situated in many countries such as Melbourne, Adelaide, Hobart,
Brisbane and Launceston. The hotels of grand central limited in New Zealand are situated in
the business districts of Auckland as well as Wellington. The hotels offers additional facilities
like arranging conferences and other events of the corporate bodies along with restaurant
facilities. It has more than 5 venues catering for around 400 delegates (Reuters, 2017).

Presentation of Financial Statements 3
Objectives of financial statements
Financial statements are prepared and presented with the intention of meeting the information
needs of intended users. Intended users are the stakeholders of the company who directly or
indirectly maintains the business relationships with the company. As the company is indulged
in the hotel operations business it may have a range of stakeholders such as the employees,
managers, clients or customers, investors or shareholders, providers of finance such as banks
and other financial institutions, government etc. Financial statements are prepared and
presented as per the regulatory requirements applicable to the reporting entity.
In the present report financial statements i.e. the balance sheet and the trading, profit and loss
account of Hotel Grand Central Limited are presented in the prescribed format that is
applicable to the listed companies of Singapore. The financial statements for the year ending
31st December, 2016 are presented with the intention of adhering to the financial reporting
framework. The main objective of such financial statements is to provide necessary and
reliable information to the stakeholders of the business. The presentation of financial
statements of Hotel Grand Central Limited is intended to achieve the true and fair view of the
financial position of the company. The financial information that is shared with the
stakeholders through the means of financial reports is contained the financial statements such
as trading, profit and loss account and balance sheet (Fraser, Ormiston & Fraser, 2010).
The presentation of financial statements is done in such a way that it can help the intended
users in making sound economic decisions. These financial statements covers the summary of
all the necessary transactions that the company has entered into and also the impact of other
significant events that has occurred during the financial year ending on 31st December, 2016
(Annual report, 2016). The preparation and presentation of financial statement is aimed to

Presentation of Financial Statements 4
influence the reader’s decision by providing complete and true picture of company’s state of
affairs.
The preparation and presentation of financial statements is undertaken by keeping in mind the
interest various stakeholders such as providers of finance in the company. As the company
has borrowed significant amount of funds from various banks and other financial institutions,
they seek to inquire about the solvency position of the company. These financial statements
are intended to provide relevant information to those providers of finance so that they can
assess company’s credit worthiness (Costello, 2011).
Moreover, the potential investors of the company seeks the financial information of the
company to understand the financial position of the company so that they can invest their
funds in the company. The presentation of financial statements is intended to deliver to them
all the necessary and relevant information about the company such as its profitability,
solvency and liquidity position (Healy & Palepu, 2012).
The employees and managers are also taken into consideration while presenting the financial
statements of the company so that they can have the proper knowledge of company’s
financial performance which will enable them to function accordingly in future. Such reports
will help them in formulating the necessary strategies and policies to achieve the company’s
goals and objectives (Freeman, 2010).
The presentation of financial statements of the company is also undertaken with the motive of
satisfying the governmental rules and regulations so that any legal consequences of non-
compliances can be prevented.
The financial statements are also intended to provide the information of company’s clients
and customers so that they can review the situation and performance of the company’s

Presentation of Financial Statements 5
business before getting associated with the company in any kind of business
deals(Armstrong, Guay, Weber, 2010).
Depreciation is an accounting system that is used to allocate the historical cost of any fixed
asset over the useful time span of that asset. Historical cost is the cost at which the asset is
acquired. Such cost is systematically reduced till the time value of assets become negligible.
Fixed assets like furniture, buildings, plant and machineries, motor vehicles etc. are
depreciated over their useful lives using various methods of depreciation. The depreciation is
charged to the asset because of the factors like efflux of time and their wear and tear nature.
Moreover, these assets are subject to obsolescence. Depreciation is charged to the assets in
order to determine the true and clear picture of business and to carry the depreciable assets at
the appropriate values in the financial statements. The two most common methods used to
calculate the depreciation on any tangible fixed asset are: Straight Line Method and Reducing
Balance Method. These methods are discussed below:
Straight line method:
Under this method the cost of the tangible fixed asset is distributed uniformly over the entire
useful life of the asset. The cost of asset covers all the expenses that are incurred to bring the
asset in the workable position such as freight charges, carriage expenses and the cost of
installation. While calculating the depreciation on these assets, if there is an estimate of
residual value at the end of life of asset then such residual value is reduced from the cost of
asset and then the remaining amount is distributed to the overall estimated life span of the
asset. Straight line method of depreciation is suitable for those tangible fixed assets that can
generate constant benefits. This method is more realistic in nature and is quite simple to be
applied. It is mostly preferred due to the uniformity of depreciation charges throughout the
life of asset. However, it is sometimes criticised because it does not take into account the