Analysis of Wave's Final Accounts and ITV's Revenue Recognition

This document presents a comprehensive financial accounting assignment solution. It begins with the preparation of Wave's final accounts, including journal entries, ledgers, and a trial balance, providing a detailed view of its financial transactions. The assignment then delves into the analysis of reve...Read More

INTRODUCTION TO
FINANCIAL ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
1. final accounts of Wave ...........................................................................................................3
2. Explaining usefulness of an information facilitated on the revenue in respect of conceptual
framework.................................................................................................................................12
3. Presenting concept of consistency in determining an application of concept by the ITV to
report of an assets......................................................................................................................14
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Financial accounting is referred as an area of an accounting that focuses on keeping the
track of the financial transaction of the firm. It is counted as the way of reporting the business
activity and the financial information to all the stakeholders. By making use of the standardised
guidelines, transactions are been recorded, presented an summarised in the financial report like
income statement and the balance sheet. The present study is based on preparing the financial
statements of Wave and making an analysis of the revenue of ITV. Furthermore, it involves
analysing an application of accounting concept as consistency principle in framing of the final
report of ITV and in its reporting.
1. final accounts of Wave
Journal for wave
Sr no. Particulars Debit Credit
02/12/19 Purchase A/c Dr. 5000
To Shyam A/c 5000
04/12/19 Purchase A/c Dr. 15000
To ram A/c 15000
05/12/19 Purchase A/c Dr. 7000
To John A/c 7000
06/12/19 Purchase A/c Dr. 25000
To ABC A/c 25000
07/12/19 Purchase A/c Dr. 12000
To XYZ A/c 12000
09/12/19 Rent a/c Dr. 1000
To cash A/c 1000
10/12/19 Insurance Exp a/c Dr. 800
To cash A/c 800
11/12/19 Electricity exp a/c Dr. 1500
To cash A/c 1500
12/12/19 John A/c Dr. 5000

To Purchase return A/c 5000
12/12/19 ABC A/c Dr. 15000
To Purchase return A/c 15000
13/12/19 XYZ A/c Dr. 12000
To Discount Received
A/c Dr. 600
To cash A/c 11400
14/12/19 Shyam A/c Dr. 5000
To cash A/c 5000
15/12/19 Vijay A/c Dr 21000
To sales A/c 21000
16/12/19 James A/c 32000
To sales A/c 32000
17/12/19 Roy A/c Dr. 11000
To sales A/c 11000
18/12/19 Jacob A/c Dr. 42000
To sales A/c 42000
19/12/19 Mark A/c Dr. 10800
To sales A/c 10800
20/12/19 Cash A/c Dr. 50000
To sales A/c 50000
21/12/19 Cash A/c Dr. 25000
To sales A/c 25000
22/12/19 Cash A/c Dr. 35000
To sales A/c 35000
23/12/19 Sales Return A/c Dr. 7000
To Roy A/c 7000
24/12/19 Sales Return A/c Dr. 28000
To Jacob A/c 28000
25/12/19 Cash A/c Dr. 10584
Discount Allowed A/c 216

Dr.
To Mark A/c 10800
26/12/19 Cash A/c Dr. 32000
To James A/c 32000
27/12/19 Drawings A/c Dr. 8000
To cash A/c 8000
28/12/19
Loan repayment A/c
Dr. 10000
To cash A/c 10000
29/12/19
Accumulated
Depreciation A/c Dr 4000
Cash A/c Dr. 30000
To Equipment 34000
30/12/19
Wages Expense A/c
Dr. 6000
To accrued wages A/c 6000
31/12/19 Depreciation A/c Dr. 36000
To equipment A/c 36000
31/12/19
Bad debt expense A/c
Dr. 1836
To Allowance for
doubtful debts A/c 1836
504736 504736
Ledger accounts
Dr. Purchase A/c Cr.
Date Particulars Amount Date Particulars Amount
02/12/19 To shyam A/c 5000 31/12/19 By bal c/d 64000
04/12/19 To ram A/c 15000
05/12/19 To John A/c 7000
06/12/19 To ABC A/c 25000

07/12/19 To XYZ A/c 12000
64000 64000
Dr. Shyam A/c Cr.
Date Particulars Amount Date Particulars Amount
14/12/19 To cash A/c 5000 02/12/19
By purchase
a/c 5000
5000 5000
Dr. Ram A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 15000 04/12/19
By purchase
a/c 15000
15000 15000
Dr. John A/c Cr.
Date Particulars Amount Date Particulars Amount
12/12/19
To purchase
return A/c 5000 05/12/19
By purchase
a/c 7000
31/12/19 To bal c/d 2000
7000 7000
Dr. ABC A/c Cr.
Date Particulars Amount Date Particulars Amount
12/12/19 To purchase 15000 06/12/19 By purchase 25000

return A/c a/c
31/12/19 To bal c/d 10000
25000 25000
Dr. XYZ A/c Cr.
Date Particulars Amount Date Particulars Amount
13/12/19 To cash A/c 11400 07/12/19
By purchase
a/c 12000
13/12/19
To Discount
Received A/c
Dr. 600
12000 12000
Dr. Rent a/c Cr.
Date Particulars Amount Date Particulars Amount
09/12/19 To cash A/c 1000 31/12/19 By bal c/d 1000
1000 1000
Dr.
Insurance
Exp a/c Cr.
Date Particulars Amount Date Particulars Amount
10/12/19 To cash A/c 800 31/12/19 By bal c/d 800
800 800
Dr. Electricity exp Cr.

a/c
Date Particulars Amount Date Particulars Amount
11/12/19 To cash A/c 1500 31/12/19 By bal c/d 1500
1500 1500
Dr.
Purchase
return A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 20000 12/12/19 By John A/c 5000
12/12/19 By ABC A/c 15000
20000 20000
Dr.
Discount
Received A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 600 13/12/19 By XYZ A/C 600
600 600
Dr. Sales A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 226800 15/12/19 By Vijay A/c 21000
16/12/19 BY James A/c 32000
17/12/19 By Roy A/c 11000
18/12/19 By Jacob A/c 42000

19/12/19 By Mark A/c 10800
20/12/19 By Cash A/c 50000
21/12/19 By Cash A/c 25000
22/12/19 By Cash A/c 35000
226800 226800
Dr. Vijay A/c Cr.
Date Particulars Amount Date Particulars Amount
15/12/19 To Sales A/c 21000 31/12/19 By bal c/d 21000
21000 21000
Dr. James A/c Cr.
Date Particulars Amount Date Particulars Amount
16/12/19 To Sales A/c 32000 26/12/19 By Cash A/c 32000
32000 32000
Dr. Roy A/c Cr.
Date Particulars Amount Date Particulars Amount
17/12/19 To Sales A/c 11000 23/12/19
By Salesreturn
A/c 7000
31/12/19 By bal c/d 4000
11000 11000
Dr. Jacob A/c Cr.
Date Particulars Amount Date Particulars Amount
18/12/19 To Sales A/c 42000 24/12/19 By Salesreturn 28000

A/c
31/12/19 By bal c/d 14000
42000 42000
Dr. Mark A/c Cr.
Date Particulars Amount Date Particulars Amount
19/12/19 To Sales A/c 10800 25/12/19 By Cash A/c 10584
25/12/19
By Dicount
Allowed A/c 216
10800 10800
Dr.
Discount
Allowed A/c Cr.
Date Particulars Amount Date Particulars Amount
25/12/19 To Mark A/c 216 31/12/19 By bal c/d 216
216 216
Dr.
DRAWINGS
A/C Cr.
Date Particulars Amount Date Particulars Amount
27/12/19 To cash A/c 8000 31/12/19 By bal c/d 8000
8000 8000
Dr. Loan
repayment
Cr.

A/c
Date Particulars Amount Date Particulars Amount
28/12/19 To cash A/c 10000 31/12/19 By bal c/d 10000
10000 10000
Dr.
Accumulated
Depreciation
A/c Cr.
Date Particulars Amount Date Particulars Amount
29/12/19
To Equipment
A/c 4000 31/12/19 By bal c/d 4000
4000 4000
Dr.
Equipment
A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 70000 29/12/19 By Cash A/c 30000
29/12/19
By
accumulated
Dep. A/c 4000
31/12/19
By
depreciation 36000
70000 70000
Dr. Wages A/c Cr.
Date Particulars Amount Date Particulars Amount
30/12/19 To wages 6000 31/12/19 By bal c/d 6000

accrued A/c
6000 6000
Dr.
Accrued
Wages A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 6000 30/12/19 By wages A/c 6000
6000 6000
Dr. Bad debt A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19
To allowance
for doubtful
debts 1836 31/12/19 By bal c/d 1836
1836 1836
Dr.
Allowances
A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To bal c/d 1836 31/12/19
By Bad Debt
A/c 1836
1836 1836
Dr. Cash A/c Cr.
Date Particulars Amount Date Particulars Amount
20/12/19 To sales A/c 50000 09/12/19 By Rent A/c 1000
21/12/19 To sales A/c 25000 10/12/19 By Insurance 800

A/c
22/12/19 To sales A/c 35000 11/12/19
By Electricity
A/c 1500
25/12/19 To Mark A/c 10584 13/12/19 By XYZ A/c 11400
26/12/19 To James A/c 32000 14/12/19 BY shyam A/c 5000
29/12/19 To Equipment 30000 27/12/19
By Drawings
A/c 8000
28/12/19
By Loan
Repayment
A/c 10000
31/12/19 By Bal c/d 144884
182584 182584
Dr.
Depreciation
A/c Cr.
Date Particulars Amount Date Particulars Amount
31/12/19 To Equipment 36000 31/12/19 By Bal c/d 36000
36000 36000
Dr.
Sales Return
A/c Cr.
Date Particulars Amount Date Particulars Amount
23/12/19 To roy A/c 7000 31/12/19 By Bal c/d 35000
24/12/19 To Jacob A/c 28000

35000 35000
Trial Balance
Particulars Debit Credit Debit Credit
Purchases 64000 189500
Ram 15000 15000
John 2000 2000
ABC 10000 10000
Rent 1000 37400
Insurance 800 800
Electricity 1500 13780
Purchase return 20000 20000
Discount Received 600 600
Sales 226800 507190
Vijay 21000 21000
Roy 4000 4000
Jacob 14000 14000
Discount Allowed 216 216
Drawings 8000 17000
Loan 40000 40000
Accumulated
Depreciation 40000 40000
Equipment 70000 250000
Wages 6000 47000
Accrued Wages 6000 6000
Bad debt 1836 1836
Allowance 1836 1836
Cash 144884 144884
Bank 15410
Advertising 12000

Trade receivables 36720
Trade Payables 20960
Depreciation 36000
Inventory 60140
Allowance for
receivables 7300
Sales Return 41200
Capital 140000
Total 942886 810886
2. Explaining usefulness of an information facilitated on the revenue in respect of conceptual
framework
Revenue of the company is seen as increasing in the annual report of ITV from one
period to another that is 2017 it resulted as £ 3130 and in the year 2018 it accounted as £3211.
This means that company is making higher sales in the year 2018 that resulted a gain in the
profitability. This reflects that the firm is performing in a better way over one period to other.
The group is mainly deriving its revenue from transfer of its goods and the services. Recognition
of its revenue is specifically based delivery of the performance obligations and an analysis
regarding when the control is been transferred to customers. The revenue is been recognised
either at the time when performance obligation is been performed or over the time as control of
performance obligation is been transferred to customer.
The revenue is considered or resulted exclusive of the VAT and an equivalent amount of
the sales tax. Criteria for the revenue recognition in terms of key classes of the group includes
revenue from the total advertising that is generated from the selling spot and is mainly
recognised at a point of the transmission. VOD that means video on demand is been generated
from the selling advertising on ITV hub and is been recognised at point of the delivery. It also
generates revenue from a sponsorship of the programmes around an ITV linear channels and an
online is been recognised over transmission period. Revenue from the pay is resulted from
provision of the HSD channels, licenses, catch up content to the ready made shows in form of the
set-top box. Moreover, revenue is also attained from a carriage fee or the capacity of a digital
multiplex. Through its studios it is generating revenues in different segments that is programme

production in which revenue is ascertained from programmes that are produced fro the
broadcasters in UK and internationally depicted at point of the delivery of episode and an
acceptance by a customer. Programme of distribution rights under which revenue is been
recognised at a point when a contract is been signed. Revenue relating to licenses and the format
which are been recognised at the time time when license is been granted to customers.
Thus, by reviewing revenue generated from all the classes indicated an increasing trend
which in turn shows better performance. Majority of the revenue is attained through total
broadcast and an online channel values as 56% which deemed as the popular product of the
company. By assessing the timing of the revenue recognition it has been presented that the
'products that are transferred at the point in a time' total of an advertising revenue in the years
2018 accounted as £ 1802 million and programme production or distribution rights in 2018
evaluated as £ 1340 million. Similarly, products & the services that are transferred over the time
reflected revenue from total advertising as £ 294 million and from programme distribution
rights, production and digital archive as £ 199 million in 2018. In recognising revenue, the group
applies for a practical expedients in the IFRS 15 and hence do not disclose any kind of
information regarding the remaining obligation of performance that would have an original
duration expected of around less than the one year where prices are been known yet. The other
sources of the revenue are attained directly from the customer, SDN revenue and choice
subscription of ITV.
3. Presenting concept of consistency in determining an application of concept by the ITV to
report of an assets
Consistency concept refers to an accounting principle which states that once an
accounting method adopted by the company need to be applied constantly in future periods.
From the balance sheet of ITV it has been identified that it records its assets by following the
principle of consistency as the same method of depreciation is been applied on the fixed assets
every year in order to reflect consistency in the performance. Moreover, the asset of the company
seems as declining from 2017 to 2018 which stated that less focus was made on purchasing new
assets and making investment. At the end of 2018, an organization was in the financial debt
position with the positive gross balance of cash. The group is seen in the net current position of
an asset along with the solid b/s. The group focus on reviews forecast in respect of entire
advertising market in order to assess an effect on the liquidity position of ITV. It forecast and

estimated by taking into account reasonable changes in the trading performance by showing that
group would able to operate its business in level of its present available funding. It has been
shown that the assets of the group is ben utilised for generating its trading performance and
liabilities occurred as the result. Working capital is expressed as the assets & liabilities that an
enterprise generated through its own trading activity. Therefore, the company defines the
working capital as the distribution right, other receivables, trade payables. Managing working
capital is seen as crucial for the group as it ensures in meeting with the financial and the trading
obligations in its ordinary course of an operating cycle.
Trade receivables are been recognised at an invoice value which is been sent to customers
and at an amount that is considered as recoverable. In case where payments are not seen as due
for the period of more than a years then they are been shown in final reports at their NPV fro
reflecting an economic cost of the delayed payment. ITV facilitates the goods and the services to
mainly all of their customers on the credit terms. Property, equipment and the plant are been
reflected at the cost by reducing an accumulated depreciation and an impairment of the losses.
Certain items under this were been revalued to the fair value and are measured based on deemed
cost that is being revalued at an amount after deducting depreciation up-to a transition date. Long
term assets are been classified as held for the sale are been measured at lower of a carrying
amount and at the fair valued by reducing cost for selling. Asset is been held for the sale if the
carrying amount would be recovered by way of the sale transaction instead through making its
constant use. This condition is met only when an asset is present or available for making an
immediate sale.
CONCLUSION

REFERENCES
Books and Journals
Online