Intermediate Financial Accounting Assignment (Doc)
Added on 2020-10-05
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Intermediate FinancialAccounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Point 1 – Explaining five items of MFRS 136 requirements for disclosure in annual report ofcompany.................................................................................................................................2Point 2 – MFRS 136 disclosure compliance and format presented by organisation..............3Point 3 – Discussing recognition and measurement requirements in MFRS 136 standard....5SUMMARY.....................................................................................................................................6REFERENCES................................................................................................................................7
INTRODUCTIONFavello Favco Berhad is a private investment holding organization working inmanufacturing, supply and sevice, designing industry. The company was founded in 1962 and itsmain branch of the company is located in Senawang, Malaysia. It is a subsidiary of MuhibbahEngineering Berhad. It operates through inside and outside Malaysia segments. The product lineof this company includes, heavy lift offshore, tower, wharf and crawler cranes. It consists ofmainly 2 international brands working together, i.e. Favelle Favco and Kroll. Tower craneswhich include Kroll cranes are basically heavy lifting electric hammerhead cranes and FavelleFavco cranes are high speed diesel hydraulic luffing cranes. The company offers two main series to their customers, which include rope luffing andram luffing set-ups. Their crawler cranes has lattice boom and telescopic boom present in it.Wharf cranes of this company includes level luffing bulk handling cranes. Wharf cranes offersboth luffing and hammerhead cranes with diesel hydraulic and electric setups with it. FavelleFavco Berhad company's subsidiaries includes Favelle Favco Cranes (M) Sdn. Bhd., whichprovide services related to designing, manufacturing, supply, servicing, trading and renting ofcranes, and FES Equipment Services Sdn. Bhd., which works basically in supply of spare partsrelated to cranes, provision of crane maintenance services and renting of cranes. Apart from thisFavello Favco includes up-to-date and well maintained equipment to their clients and delivertheir service on time. The main activity of this company is to manufacture unique and differentcranes which can be used for the purpose of construction.Financial accounting plays crucial role in the business in getting clarity in the businesstransactions accounted for. Present report deals with Favelle Favco Berhad which is engaged inmanufacturing industry and engaged in constructing cranes in effective manner. Adequate profitsare being attained by company as financial report clarifies that turnover in 2017 was 526,484.Profit Before Interest and Tax were 83,277 in 2017 in comparison to 79,782 in previous year.Profit attributable to shareholders in the same year was 63,097 while, total equity to investorswere amounting to 629,509. Share capital was 155,170 and EPS (Earnings Per Share) was 28.50and net assets per share was 2.84. This means that profit is increased in 2017 financial year.1
Point 1 – Explaining five items of MFRS 136 requirements for disclosure in annual report ofcompanyThere are five items which are required to be included in an annual report as it ismandatory to be included so that financials may be presented in accordance to MFRS (MalaysianFinancial Reporting Standards) 136 which is dedicated to impairment of assets. These assetsinclude tangible as well as intangible assets and as such, these should be showed in annual reportof the business quite effectually. The items included in annual report are listed below-1. Property, Plant and Equipment (PPE)-The PPE is an fixed asset which should be disclosed in annual report along withimpairment on it. There are various assets of fixed nature used in the business and economicbenefits are aroused in the future course of action (Rahman, & Mohamed 2018). It is requiredthat it should be disclosed so that impairment amount can be deducted for which damage isoccurred or because of time, fixed assets have lost their value. This will help in correctascertainment of profits as depreciation will be charged on it along with carrying amountdisclosed in financial report in the best possible manner. 2. Goodwill-Goodwill is an intangible asset which builds because of brand image of organisation inthe market as customers are satisfied in effectual manner. This should be increased up to a highextent as it shows that firm provides quality goods and services to customers and as such, marketvalue of organisation enhances in a better way. Goodwill should be disclosed at cost bydeducting impairment losses. The amount of goodwill is included in carrying amount and as aresult, it is made in relation to impairment if any. 3. Investment in associates-The investment if made in associate firm should be included in the annual report so thatcorrect ascertainment may be made in the best possible manner. This means that investor has aninfluence over other company and as a result, he can take participation in operating and financialdecisions. The information related to the company must be disclosed as required by MFRS 136and impairment losses if any found must be shown as well. This will provide with usefulinformation to external parties and they will be benefited up to a high extent.2
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