LKAS Standards Application: Bansei Royal Resort Hikkaduwa PLC Report

This report provides a comprehensive analysis of the financial statements of Bansei Royal Resort Hikkaduwa PLC, focusing on the application of various Sri Lanka Accounting Standards (LKAS). The analysis covers LKAS 01 (Presentation of Financial Statements), LKAS 16 (Property, Plant, and Equipment), LKAS 02 (Inventories), LKAS 37 (Provisions, Contingent Liabilities, and Contingent Assets), LKAS 10 (Events After the Reporting Period), and LKAS 08 (Accounting Policies, Changes in Accounting Estimates, and Errors). Each section of the report examines the scope, objectives, and qualitative characteristics of the relevant LKAS, along with examples from the company's financial statements and the benefits for various stakeholders, including government, company management, employees, lease companies, investors, shareholders, and suppliers. The report highlights the importance of each standard in providing accurate and reliable financial information for decision-making. The report uses the financial statements of Bansei Royal Resort Hikkaduwa PLC for the years 2017/2018. The report references supporting information from various sources to provide a robust analysis of financial accounting standards.

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Content
1) LKAS 01- Presentation of Financial Statement
2) LKAS 16- Property, plant and Equipment
3) LKAS 02- Inventories
4) LKAS 37-Provisions, Contingent Liabilities and Contingent Assets
5) LKAS 10-Events After the reporting Period
6) LKAS 08- Annual Policies, Changes in Accounting Estimates and Errors

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Executive Summary
The Bansei Royal Resort Hikkaduwa PLC presented their annual reports on 2017/2018
according to following LKAS
1) LKAS 01- Presentation of Financial Statement
2) LKAS 16- Property, plant and Equipment
3) LKAS 02- Inventories
4) LKAS 37-Provisions, Contingent Liabilities and Contingent Assets
5) LKAS 10-Events After the reporting Period
6) LKAS 08- Annual Policies, Changes in Accounting Estimates and Errors
According to this report included the characteristics of above Sri Lanka Accounting
Standards and how the stakeholders of the company benefited with the relevant examples.

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1) LKAS 01- Presentation of Financial Statement
1) Scope
2) Objectives
3) Qualitative characteristics
4) Users for Stake Holders
Scope
Summary report that shows how a firm has used the funds entrusted to its
stockholders and lenders and what is its current financial position. The five basic financial
statements are,
1) Statement of financial position. (Which shows firm’s assets, liabilities and
equity on a stated date)
2) Statement of comprehensive income. (Which shows how the net income of the
firm is arrived at over a stated period)
3) Statement of cash flows. (Which shows the inflows and outflows of cash
caused by the firm’s activities during a stated period)
4) Statement of changing equity. (Which shows the changes in equity during a
stated period)
5) Notes
Objectives
The responsibility of an individual who prepares a company’s financial
statements to ensure accurate information is provided to investors. These information
help to build a good financial frame before making a decision to invest in that
particular company.
Qualitative Characteristics

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• Understandability- The relevant information must be clearly presented,
with additional information supplied in the supporting footnotes. It must
be helpful to users for making decisions.
• Relevance- The information are relevant to user’s needs.
• Faithful representation - The information should faithfully represent
transactions and other events. They must be accurate and free of material
errors.
• Comparability- The information should be comparable. They should be
easily to compare with another company information, past company
information or estimated company information. Ex: The Bansei Royal
Resort Hikkaduwa PLC- Statement of financial position is presented on
2017 and 2018
Users for Stake holders
▪ Government- Government can charge the taxes on the assets.

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▪ Company management- Through using financial statements the company
management can get the frame of profitability, liquidity and cash flows of the
organization every month. Then it can make operational and financing decisions
about the business.
▪ Employees- They can get the idea regarding the company financial position. It can
be used to increase the level of employee involvement in and understanding of the
business.

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2) LKAS 16- Property, plant and Equipment
Objective- To prescribe the accounting treatment for property, plant and equipment so that
uses of the financial statements can discern information about an entity’s property, plant and
equipment and the changes in such investment.
https://www.google.com

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The company’s property, plant and equipment presented in a table according to the LKAS 16
• Ex: According to Bansei Royal Resort Hikkaduwa PLC- Statement of
financial position, the property plan and equipment is performed under the
noncurrent assets which is under in assets.
• They show property, plant and equipment with the gross amounts,
depreciation, net book values and useful lives of the assets are estimated
Qualitative Characteristics
• Understandability- The Bansei Royal Resort Hikkaduwa PLC presented their relevant
information clearly regarding the property, plant and equity with the additional
information supplies in the supporting footnotes.
• Relevance- The Company presented their property, plant and equity details according to
LKAS 16. So it’s helpful to get future decisions to stakeholders.
• Faithful representation- The statement of financial position of Bansei Royal Resort
Hikkaduwa PLC is certify that financial statements comply with the requirement of
companies Acct no. 7 of 2007 by financial officer, The board of Directors is responsible
for these financial statements. So two of the director board certify it.

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• Comparability- The Company presented their Gross carrying amounts, Depreciations,
Net book values and the useful lives of the assets are estimated according to 2017 and
2018 accounting years.
• Timeliness- The Company presented their property, plants and equipment during the
specific time period.
Uses for stake holders
• Company Management and owners- According to Bansei Royal Resort Hikkaduw
PLC, The cost includes the cost of replacing parts of the property, Plant and
equipment borrowing costs for long term construction projects, All other repair and
maintenance cost recognized in the profit or loss as incurred. So these information
help to make future decisions to management and owners.
• Lease companies- The company shows their useful lives of the assets are estimated.
Then it helps to lease companies to get an idea regarding the company financial
position.
• Investors- When the compny shows their assets clearly and accurately the investors
can get some level of advanced figure about the company.

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3) LKAS 02- Inventories
Objective- The objective of this standard is to prescribe the accounting treatment for
inventories. This standard provides guidance on the determination of cost and its subsequent
recognition as an expense, including any write_down to net realisabale value. It also provides
guidance on the cost formulas that are used to assign cost to inventories.
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According to above table we can recognize that Basei Royal Resort Hikkaduwa PLC
presented their inventories according to LKAS 02.

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Basei Royal Resort Hikkaduwa PLC, performed their inventories as Rs.1, 180,057.00 on
2018 and Rs.1, 207,964.00 on 2017 under the current assets in the statement of financial
position according to LKAS 02.
They showed about their inventories under the note 2.4.6.
Qualitative characteristics
• Relevance- The company presented their inventories in the statement of financial
position and it helped to calculate the net profit of the company.
• Timeliness- The company presented their inventories in the two time durations as the
2017 and 2018.
1) 2018-Rs.1,180,057.00
2) 2017-Rs.1,207,964.00
• Understandability- The company showed their inventories on the statement of
financial position and they gives additional information in note no 2.4.6.
• Comparability- The company presented their inventories on 2017 and 2018
• Faithful representation - The company presented their inventories on their statement
of financial position. The financial position is certified by the financial officer,
director board and audited by the audit officer. So anybody can trust the information.
Users for stake holders
• Shareholders/ Company Management- Through the company inventories they can get
the idea about the cost and the loss/net profit. When the starting inventory is high,
then the net profit is low. When the last inventory is high, then the net profit is also
high.
• Suppliers- Suppliers can get the idea about the inventory. When the company shows
their method of calculating the cost of inventory (WAC, FIFO, LIFO).

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4) LKAS 37- Provisions, Contingent Liabilities and Contingent Assets
Objective- To ensure that appropriate recognition criteria and measurement bases are applied
to provisions, contingent liabilities and contingent assets and that sufficient information is
disclosed in the notes to enable users to understand their nature, timing and amount.
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The company presented their provisions, contingent liabilities and contingent assets
according to LKAS 37.
Qualitative Characteristics
• Understandability- Company presented necessary information about their provisions,
contingent liabilities and contingent assets clearly in note 2.6
• Timeliness- They presented the provision, contingent liabilities and contingent assets
on 31/03/2018.
• Faithful representation - The whole annual report of the company certified by the
financial officer, director board and audited by the audit officer. So company
information can make a belief.
• Relevance- The company details about provisions, contingent liabilities and
contingent assets helps to get future decisions to stakeholders.

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Users for stakeholders.
• Shareholders/ Company management- To get the idea regarding that how affect the
provisions, contingent liabilities and contingent assets to the company financial
position.