Advanced Financial Accounting: IAS Application Report - Maldives Ports

This report provides an in-depth analysis of the application of International Accounting Standards (IAS) to the financial statements of Maldives Ports Limited. The report focuses on four key standards: IAS 16 (Property, Plant, and Equipment), IAS 12 (Income Taxes), IAS 38 (Intangible Assets), and explores the application of these standards within the context of the company's operations. The introduction provides a brief overview of Maldives Ports Limited, its industry, and nature of business. The report then explains each accounting standard, followed by a detailed explanation of how each standard is applied to the company's financial reporting, including examples. The report analyzes how the company accounts for property, plant, and equipment, and how it addresses current and deferred income taxes. It also addresses the company's treatment of intangible assets, including goodwill and amortization. The report concludes with a summary of findings and a reflection on the company's compliance with accounting regulations and standards.

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student:
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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Explanation of Accounting Standards.........................................................................................2
Application of Accounting Standards..........................................................................................3
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
The Maldives Ports Limited is a State Corporation operating in the Maldives, which is
created for being a sole proprietor authority of port in Maldives. The government on a 100%
ownership basis owns the ownership structure of the company. The company was founded in the
year 1986 and is headquartered in the Maldives. The company manages the port business with
the various port facilities like Berths, Storage Areas, Reefer Points, Pilotage and various other
Port Services.
Discussion
Explanation of Accounting Standards
IAS 16: IAS Property Plant and Equipment’s as a measure sets out the principle for recognising
the property, plant and equipment as an assets, measuring their carrying amounts and measuring
the depreciation charges and impairment losses which is to be recognised in the same context.
According to the standards and policy, the recognition and reporting of the asset will be at cost
values. Property plant and equipment’s are the assets that are held for the production of the
goods and services for rental purpose and for other administrative purposes (IFRS, 2019).
IAS 12: The IAS 12 reflects the accounting treatment that will be undertaken by the company for
the purpose of the treatment of income taxes. Income taxes can be in the form of domestic or
foreign taxes, which the company is liable for paying. Current Tax that will be paid by the
company will be recognised as a part of current liability for the company and overpaid taxes than
the defined level will be treated as an asset (IFRS, 2019).
IAS 38: The IAS 38 reflects the accounting criteria for recognising and measuring the intangible
assets of the company and necessary disclosures that the company has to make. According to the

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standards the IAS 38, shows the criteria for the method of recognising the value of identifiable
non-monetary assets without any physical substance. Computer Software’s, licenses, trademarks,
patents, films, and copyrights are some of the common examples of the Intangible Assets (IFRS,
2019). The accounting policy that needs to be followed by the company in the case of
recognition and valuation of the intangible asset is well guided by the IAS 38.
IAS 36: The IAS 36 reflects that assets must be carried in the financial statements at the highest
amount, which will be recovered through the value in use process or sale of the assets. An asset
is said to be impaired when the carrying amount of the assets exceed the recoverable amount
from the assets then an asset is said to impaired. According to the principles and policies, it is
necessary that an impairment loss is recognised in contrast to the same. The application of IAS
36 is applied in various group of assets that do not generate cash flows on an individual basis
(IFRS, 2019).
Application of Accounting Standards
Property Plant and Equipment
Items in the Property Plant and Equipment are measured at the initial cost less any
accumulated depreciation associated with the assets and accounting for any impairment losses
associated with the account. The accounting principles policy followed by the company were in
well contrast to the IAS 16 where property recognition and measurement was followed
accordingly. General Costs or related expenditure associated with the company with plant and
equipment of the company will be treated in the income statement of the company (IFRS, 2019).
The accounting policy of the company were prepared in comparison the relevant accounting
standards/ Accounting of Property, Plant and Equipment by the company in terms of recognition
of expenses and depreciation of assets were done according to IAS 16.

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If parts of property, plant and equipment have different useful life than the same will be
treated and accounted as a separated items of the property plant and equipment. The company
compares subsequent profit or losses, which are incurred by the company in the form of sale of
assets with the actual carrying amount of the assets and the same is then treated as a profit or loss
arising from sales of asset (IFRS, 2019).
Income Taxes
Current Business Profit Taxes
Income taxes for the current period for the company are measured at the amount, which
the company is expected to pay or receive from the concerned tax authorities. The tax rates taken
by the company for the computation and reporting of the final profitability of the company will
be on the base of tax rate enacted by the authorities. The classification of the income taxes for
the company has been done in accordance with the IAS 12 reflecting the necessary accounting
treatment taken by the company for the purpose of recording income taxes.
Deferred taxes for the company is calculated by taking the liability method on the
temporary differences between the tax base of assets and liabilities and the reported carrying
amount for financial reporting purposes at end of every reporting period.
In terms of the sales tax for the company the revenue, expenses and assets are recognised
net of amount of the total sales tax.
Intangible Assets
The intangible assets of the company, which are acquired separately by the company in
the form of business combinations and mergers is initially recognised at the cost value. After the
initial recognition of the assets, assets are carried at the cost value less any accumulated

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impairment losses or amortisation that the company needs to account (MPL Ends 2017 with
Profits Of MVR 158.5 mln | Maldives Business Review, 2018).
Intangible Assets, which are having a finite life, are amortised for the purpose of
reflection of the fair value of the assets whenever there is an indication that the intangible assets
may be impaired. The amortisation period for the intangible the company for reflecting their true
and potential value is reviewing assets with the finite life periodically. Goodwill recognised in
the financial statement of the company as a part of the intangible asset of the company are
measured at the cost value and are periodically reviewed for the purpose of impairment by the
company according to IAS 38.
Impairment
The company assesses the fair value of the assets whether there is an indication of the
assets that may be impaired. The company impairs assets whenever there is an indication exist
when there is a change in the recoverable amount of assets. Asset recoverable amount is the
higher of an amount or from a cash generation unit fair value less any other cost of disposal in its
value in use (Hoyle, Schaefer & Doupnik, 2015). If the carrying value of the assets or the cash
generation unit exceed by the recoverable amount, then the asset is considered to be impaired
and is brought down or written down to its recoverable amount (Camfferman & Zeff, 2015).
While assessing the fair value of the assets, the estimated future cash flows for the assets
are discounted to their present values by applying the appropriate discount rate for the purpose of
computation of the fair value of the asset. While determining the fair value of the assets less cost
for disposal and by entering into recent market transactions undertaken by the company.

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Conclusion
The accounting principles and standards followed by the company in contrast to the
relevant IAS were taken into account for accounting. Relevant accounting standards and
principles were followed for the purpose of reporting and recognition of the assets and liabilities
of the company. The company has followed and mandated all the necessary accounting standard
and regulations for the purpose of complying with the accounting regulations and standards.

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References
Camfferman, K., & Zeff, S. A. (2015). Aiming for global accounting standards: the
International Accounting Standards Board, 2001-2011. Oxford University Press, USA.
Hoyle, J. B., Schaefer, T., & Doupnik, T. (2015). Advanced accounting. McGraw Hill.
IFRS . (2019). Ifrs.org. Retrieved 29 April 2019, from https://www.ifrs.org/issued-standards/list-
of-standards/ias-36-impairment-of-assets/
IFRS . (2019). Ifrs.org. Retrieved 29 April 2019, from https://www.ifrs.org/issued-standards/list-
of-standards/ias-38-intangible-assets/
IFRS . (2019). Ifrs.org. Retrieved 29 April 2019, from https://www.ifrs.org/issued-standards/list-
of-standards/ias-12-income-taxes/
IFRS . (2019). Ifrs.org. Retrieved 29 April 2019, from https://www.ifrs.org/issued-standards/list-
of-standards/ias-16-property-plant-and-equipment/