Coursework 2: Case Study (15%)
The objective of the case study is to assess understanding of complex business
environment and to analyse the financial and non financial data, exercise professional
and ethical judgment and develop conclusions and recommendations.
All companies make investment in non current assets. Accounting for these non
current assets is subjected to a number of protocols where revaluation, depreciation,
and disposal of them are also given consideration. IAS 16/MFRS 116 Property, Plant
and Equipment (PPE) prescribes the accounting treatment for property, plant and
equipment so that users of the financial statements can discern information about an
entity’s investment in its PPE and the changes in such investment. IAS 40/MFRS 140
Investment Property relates to ‘ property (land or buildings) held (by the owner or by
the lessee as a right of use asset) to earn rentals or for capital appreciation of both’
(IAS 40, para 5).
Both standards of IAS 16 and IAS 40 are very similar in nature and share certain
common guidelines as well. However, it should be noted that the differences between
IAS 16 and IAS 40 will be affecting the company’s performance reporting. To
determine the application of respective standards, depend on the nature, business
model and usage of the non current asset.
In accordance to the standards, the entities are permitted a choice in the subsequent
measurement for the non current assets to reduce the cost and burden of producing
financial statements. This often involves judgmental methodology throughout the
application of the respective standards and the information provided is crucial and
importance to the wider group of stakeholders.
Required:
Critically evaluate both accounting standards IAS 16 and IAS 40 together with the
impact on the company’s financial statements. (Note: You are required to select one
company that listed on Bursa Malaysia from any industry except financial sector in
writing a case study analysis).
Questions 1: (company: Genting group)
Introduction and background
1,
Identifies the key problems and issues in the case study
Uses own understanding of context and findings
Describes wider context
2,
—IAS about non-current assets
—IAS 16 and IAS 40