Financial Statements Case Study: Charlie's Toys and Equipment

This case study focuses on the preparation of annual financial statements for Charlie’s Toys and Equipment Limited for the year ended 31 March 2019, in accordance with the Companies Act 1993, the 2019 New Zealand Equivalents to International Financial Reporting Standards (NZ IFRSs), and FRS-44. The assignment requires an analysis of the company's accounting policies, including revenue recognition and taxation, and an examination of its operating segments. The financial statements are prepared using the indirect method for the cash flow statement and the double-entry system for recording transactions, with a focus on the manufacturing of toys as the primary business segment. The case study also considers the disclosure of the financial statements to the shareholders, ensuring compliance with relevant accounting standards.

Running Head: CHARLIE TOYS AND EQUIPMENT 1
CHARLIE TOYS AND EQUIPMENT

CHARLIE TOYS AND EQUIPMENT 2
Table of Contents
Summary of the Accounting policies...........................................................................................................3
Operating segment disclosures....................................................................................................................3
References...................................................................................................................................................4

CHARLIE TOYS AND EQUIPMENT 3
Summary of the Accounting policies
The accounting policies are found as a section in the annual report that majorly defines
the policies that are being used by the company in recording the transaction of the companies.
There are several accounting policies which are being followed by the Charlie Toys and
Equipment Company such as disclosure of the financial statements in the appropriate manner.
Secondly the company has also prepares the statements as per the guidelines of the New Zealand
using the following assumptions and the estimates. The cash flow statement has been prepared
using the indirect method and the reconciliation is prepares using the direct method of the cash
flows. The revenue recognition is done in the basis of the fixed price. Lastly the taxation policy
of the New Zealand is also made applicable while calculating the amount of the income tax
(Kieso, Weygandt & Warfield, 2016).
Operating segment disclosures
There are certain operating segment disclosures that are disclosed by the company for the
users of the financial statements which are as follows.
 The company is mainly involved in the business of the manufacturing of the toys and
generates the revenue from selling them.
 They are the single operating unit and follow the relevant guidelines as determined in the
accounting policies (André, Filip & Moldovan, 2016).
 The operating profit or loss is determined in the income statement.
 The company uses the system of the accrual accounting and the double entry system in
order to record the transactions of the revenue and the expenses.

CHARLIE TOYS AND EQUIPMENT 4

CHARLIE TOYS AND EQUIPMENT 5
References
André, P., Filip, A., & Moldovan, R. (2016). Segment disclosure quantity and quality under
IFRS 8: Determinants and the effect on financial analysts' earnings forecast errors. The
International Journal of Accounting, 51(4), 443-461.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate Accounting, Binder Ready
Version. John Wiley & Sons.