Depreciation

Introduction

Financial statements are usually prepared by an entity to communicate information about its financial performance, position, cash flows, and movement of equity to users and help them make decision. A statement of accounting policies is specified with these statements to help users understand how the information is collected and make it understandable and useful. In this essay, the author will attempt to explain the importance of understanding which accounting policies have been used in preparing a set of financial statements, mainly to which applied to property plant and equipment.

The Statement of Accounting Policies

There are various assumptions that are made to specific business enterprises. Each business can choose how it will clarify some of its activities. The policies it has followed in making such choices need to be disclosed. Some companies disclose compliance with IAS but with certain specified exceptions. For instance, Oerlikon-Buehrle, the Swiss defence group, complies with all standards except those on business segment information and development costs.

English: Real estate economics - with depreciation

4 Depreciation methods (1:Straight-Line method, 2:...

Assets

Nokia, however, the Finnish mobile phone maker, claims full compliance with IAS in its statement of accounting policies, but does not disclose geographical segment information or many of the required disclosures about retirement benefit costs. Under the FRS-1, general purpose financial reports shall include a clear and concise statement of all accounting policies adopted by an entity in the preparation of its financial reports, where such accounting policies are material to those financial reports. Providing information about these policies enables users to determine whether the reports are relevant and reliable and whether they can be used to compare with past year's or other entities' results. A good example could be found in Hallenstein Glasson Holdings Limited's annual report 2003. From Hallenstein annual report 2003 we can easily find that a statement of accounting policies was including under...