Tag: sample accounting policy

Sample Reports And Financial Statements (5 July 2011)

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Warning: You may use this template and modify for your own use and distribute it without modification but please do not sell it to others without my consent.

Use this template with your own judgment and care as there are frequent changes in adoption of new or revised standards and interpretation in Malaysia. Malaysia is on its path of full convergence with IFRSs by 2012.


This is a complete sample Reports and Financial Statements of a limited company with one subsidiary company prepared in accordance with Financial Reporting Standards in Malaysia and the Companies Act, 1965. It is in an excel template with the following items included:-

DIRECTORS’ REPORT

STATEMENT BY DIRECTORS AND STATUTORY DECLARATION

AUDITORS’ REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (THE GROUP)

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT (THE GROUP)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (THE GROUP)

CONSOLIDATED STATEMENT OF CASH FLOWS (THE GROUP)

STATEMENT OF FINANCIAL POSITION (THE COMPANY)

STATEMENT OF COMPREHENSIVE INCOME (THE COMPANY)

STATEMENT OF CHANGES IN EQUITY (THE COMPANY)

STATEMENT OF CASH FLOWS (THE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS (Comprising Significant Accounting Policies: Basis of Preparation, Standards and Interpretation, Basis of Consolidation & Goodwill, Investments, Property Plant and Equipment and Depreciation, Financial Assets, Financial Liabilities, Offsetting Financial Instruments, Impairment of Financial Assets, Impairment of Non-financial Assets, Income Taxes, Revenue Recognition, Foreign Currency Transactions and Balances, Employee Benefits, Leases, Segment Reporting, Contingencies, Financial Risk Management Policy, Critical Accounting Estimates Judgments and Key Sources Of Estimation Uncertainty)

NOTE ON PROPERTY, PLANT AND EQUIPMENT OF THE COMPANY

NOTE ON PROPERTY, PLANT AND EQUIPMENT OF THE GROUP

NOTE ON AVAILABLE-FOR-SALE FINANCIAL ASSETS, INVESTMENT IN ASSOCIATED COMPANY, INVESTMENT IN SUBSIDIARY COMPANY, TRADE RECEIVABLES, AMOUNT DUE FROM ASSOCIATED COMPANY, AMOUNT DUE FROM SUBSIDIARY COMPANY AND FIXED DEPOSITS WITH LICENSED BANKS, OTHER PAYABLES AND ACCRUALS, HIRE PURCHASE AND LEASE PAYABLES, BANK BORROWINGS, SHARE CAPITAL, DEFERRED TAX LIABILITIES, REVENUE, PROFIT BEFORE TAXATION, TAXATION, CONTINGENT LIABILITIES, FINANCIAL INSTRUMENTS BY CATEGORY AND RELATED PARTIES)

DETAILED INCOME STATEMENT (This does not form part of the Reports and Financial Statements but frequently included for management purposes and other means such as income tax submission)

Sample Disclosure – Accounting Policy Of Operating Segments Reporting (17 March 2011)

Operating Segments

In the previous financial years, the Group deemed a segment as a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments.

Following the adoption of FRS 8 Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the Chief Operating Officer (CEO), acting as the chief operating decisions maker of the Group. The CEO makes decisions about resources to be allocated to a segment of the Group, and assesses its performances, for which discrete financial information is available for him/her to make the decisions.

However, as the Group have remained dormant, the adoption of FRS 8 Operating Segments does not have any impact to the presentations and disclosures required to be made in the financial statements.

Sample Disclosure – Accounting Policy Of Biological Assets, Forest Replanting Expenditure (11 February 2011)

Biological Assets – Forest planting expenditure

All direct and related expenses incurred on the development of the Company’s Sustainable Forest Ecology and Management Project under the licensed agreement entered into with the State Government of Wonderland is stated at cost and capitalised as biological assets. The expenditure is amortised upon the commencement of log extraction on the basis of the volume of logs extracted during the financial year as a proportion of the total estimated volume of the entire forest area.

Sample Disclosure – Accounting Policy Of Financial Guarantees Issued (7 January 2011)

Financial guarantees issued

Financial guarantees issued by the Company and those companies within the consolidated entity (“Group”) are recognised as financial liabilities at the date the guarantee is issued. Liabilities arising from financial guarantee contracts, including Company guarantees of subsidiaries through deeds of cross guarantee, are initially recognised at fair value and subsequently at the higher of the amount determined in accordance with the Group’s provisions accounting policy (please refer to Note XX) and the amount initially recognised less cumulative amortisation.

The fair value of the financial guarantee is determined by way of calculating the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligation.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment in the financial statements of the Company.

Sample Disclosure – Accounting Policy Of Concesssion Contracts (26 November 2010)

Concession contracts

A substantial portion of the Group’s assets are created and used due to concession contracts granted by public sector customers (‘grantors’) and/or by concession companies purchased by the Group on full or partial privatisation. The characteristics of these contracts vary significantly depending on the country and activity concerned. Nonetheless, they generally provide, directly or indirectly, for the grantors’ involvement in the determination of the service and its charges levied on users, and the return of the assets necessary to carry out the performance of the service at the end of the contract to the grantors concerned. In order to fall within the definition of concession contracts, a contract must satisfy the following two criteria:

  • the grantor controls or regulates what services the operator must provide with the type of the infrastructure required, the users of the services, and at an agreed price; and
  • the grantor controls the residual interest in the infrastructure at the end of the term of the arrangement.

Such infrastructure is not recognised in the balance sheet of the Group as property, plant and equipment but as financial assets (under ‘financial asset model’) and/or intangible assets (under ‘intangible asset model’) depending on the remuneration commitments given by the grantor.

Financial asset model

The financial asset model applies when the Group has an unconditional right to receive cash or another financial asset from the grantor.

In the case of concession services, the Group have such an unconditional right if the grantor contractually guarantees the payment of:

  • amounts specified or determined in the contract or
  • the shortfall, if any, between amounts received from users of the public service and amounts specified or determined in the contract.

Financial assets from the application of this policy are recorded in the balance sheet under the heading ‘Operating financial assets’ and recognised at amortised cost. Unless otherwise indicated in the contract, the effective interest rate is equal to the weighted average cost of capital of the entities carrying the assets concerned.

An impairment loss is recognised if the carrying amount of these assets exceeds the fair value, as estimated during impairment tests. Fair value is estimated based on the recoverable amount, calculated by discounting future cash flows (value in use method).

The portion falling due within less than one year is presented in the balance sheet as ‘Operating financial assets’ under current assets heading, while the portion falling due within more than one year is presented in the non-current assets heading.

Revenue associated with financial model includes:

  • revenue determined on completion basis in the case of construction operating financial assets;
  • the remuneration of the operating financial asset recorded in revenue from operating financial assets (excluding principal payments);
  • Remuneration from services rendered to users

Intangible asset model

The intangible asset model applies where the operator is paid by the users or where the concession grantor has not provided a contractual guarantee in respect of the amount recoverable. The intangible asset corresponds to the right granted by the concession grantor to the operator to charge users of the public service.

Intangible assets resulting from the application of this policy are recorded in the Balance Sheet under the heading ‘Concession intangible assets’ and are amortised, generally on a straight-line basis, over the contract term. However, fees paid to local authorities that are part of intangible costs are disclosed under item ‘Other intangible assets’.

Under the intangible asset model, Revenue includes:

  • revenue from the construction of the infrastructure;
  • operating revenue of the infrastructure.

Mixed model

The choice of the financial asset or intangible asset model depends on the existence of payment guarantees granted by the concession grantor. However, certain contracts may include a payment commitment on the part of the concession grantor covering only part of the investment, with the balance covered by royalties charged to users.

Where this is the case, the investment amount guaranteed by the concession grantor is recognised under the financial asset model and the residual balance is recognised under the intangible asset model.

Sample Disclosure – Accounting Policy Of Operating Segments Reporting (25 November 2010)

Operating Segments Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker of the Group. The chief operating decision-maker of the Group, who is responsible for allocating resources and assessing performance of the operating segments, is the Chief Operating Officer (“COO”) of the Group who has the authority to make strategic decisions on the operations of the Group.