AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:

Expln Ihc 0b|ccIvcs 0I Inncl sIIcmcnIs.

UndcrsInd Ihc qulIIvc chrcIcrsIcs 0I Inncl sIIcmcnIs nd nI0rmI0n.
!dcnIIy Ihc dIIcrcnccs n Ihc Inncl sIIcmcnIs prcprcd undcr Ihc ccrul
bss, csh bss nd brckup bss.
UndcrsInd Ihc mcsurcmcnI bss nd rcc0gnI0n crIcr 0I Ihc clcmcnIs 0I
Inncl sIIcmcnIs.
Expln Ihc c0nccpI 0I cpIl nd cpIl mnIcnncc.
Fnncl sIIcmcnIs p0sscss ccrIn qulIIvc chrcIcrsIcs IhI cnhncc
Ihc uscIulncss 0I Ihc nI0rmI0n Ihcy c0nvcy I0 wdc rngc 0I uscrs. !n Ihs
chpIcr, wc shll l00k I Ihc clcmcnIs nd dcsrblc qulIcs 0I Inncl
sIIcmcnIs. wc shll ls0 l00k I Ihc c0nccpIs 0I cpIl nd cpIl
mnIcnncc, Ir0m Ihc p0nI 0I vcw 0I cc0unInIs. A numbcr 0I Ihcsc ssucs
rc c0vcrcd n Ihc
ssucd by Ihc !nIcrnI0nl Acc0unIng SIndrds 0rd (!AS).
!n 1uly 989, Ihc !nIcrnI0nl Acc0unIng SIndrds C0mmIIcc (!ASC), n0w
rcplccd by Ihc !nIcrnI0nl Acc0unIng SIndrds 0rd (!AS), pr0duccd
d0cumcnI IIlcd,
(0r smply Ihc Frmcw0rk). Ths d0cumcnI scIs 0uI Ihc
IhI dcIcrmnc h0w Inncl sIIcmcnIs rc prcprcd nd Ihc nI0rmI0n
Ihcy c0nIn. Ths s why Ihc !AS s ls0 cllcd Ihc
.
A c0nccpIul Irmcw0rk s clcrly dcIncd scI 0I 0b|ccIvcs nd prncplcs
IhI cn lcd I0 Ihc pr0ducI0n 0I c0nssIcnI cc0unIng sIndrds. Thc
s IhcrcI0rc Ihc c0nccpIul Irmcw0rk, Ihc Irmc 0I rcIcrcncc
Ir0m whch Ihc cc0unIng sIndrds ssucd by Ihc !AS rc c0nsIrucIcd.
2
Thc Irmcw0rk s cxpccIcd I0 scrvc Ihc I0ll0wng purp0scs:
() AsssI Ihc !AS n Ihc dcvcl0pmcnI 0I IuIurc cc0unIng sIndrds
nd n Ihc rcvcw 0I cxsIng sIndrds.
(b) AsssI Ihc !AS n pr0m0Ing hrm0nsI0n 0I rcgulI0ns,
cc0unIng sIndrds nd pr0ccdurcs, rclIng I0 Ihc prcscnII0n
0I Inncl sIIcmcnIs by pr0vdng bss I0r rcducng Ihc
numbcr 0I lIcrnIvc cc0unIng IrcImcnIs pcrmIIcd by
nIcrnI0nl cc0unIng sIndrds.
(c) AsssI nI0nl sIndrdscIIng b0dcs n dcvcl0png nI0nl
sIndrds.
(d) AsssI prcprcrs 0I Inncl sIIcmcnIs n pplyng nIcrnI0nl
cc0unIng sIndrds nd n dclng wIh ssucs n0I ycI c0vcrcd
by n !nIcrnI0nl Acc0unIng SIndrds (!AS).
(c) AsssI udI0rs n I0rmng n 0pn0n s I0 whcIhcr Inncl
sIIcmcnIs c0nI0rm I0 !ASs.
(I) AsssI uscrs 0I Inncl sIIcmcnIs n nIcrprcIng Ihc
nI0rmI0n c0nIncd n Inncl sIIcmcnIs IhI c0mply wIh
!ASs, nd
(g) Pr0vdc Ih0sc wh0 rc nIcrcsIcd n Ihc w0rk 0I Ihc !AS wIh
nI0rmI0n 0n Is ppr0ch I0 Ihc I0rmulI0n 0I cc0unIng
sIndrds.
As sIIcd b0vc, Ihc dcscrbcs Ihc bsc c0nccpIs IhI gudc
Ihc prcprI0n 0I Inncl sIIcmcnIs I0r prcscnII0n I0 wdc rngc
0I uscrs. Thc s n0I n cc0unIng sIndrd, ncIhcr d0cs I
0vcrrdc Ihc rcqurcmcnIs 0I ny spccIc SIndrd. Thus, n Ihc cvcnI 0I
c0nIlcI bcIwccn Ihc Frmcw0rk nd n !nIcrnI0nl Fnncl
Rcp0rIng SIndrd (!FRS), Ihc lIIcr wll prcvl. Such c0nIlcIs wll
grdully ccsc I0 cxsI s IuIurc cc0unIng sIndrds wll bc pr0duccd
n cc0rdncc wIh Ihc gudclncs scI by Ihc .
Thc Irmcw0rk dcls wIh Ihc I0ll0wng:
() Thc 0b|ccIvcs 0I Inncl sIIcmcnIs.
(b) Undcrlyng ssumpI0ns.
(c) ulIIvc chrcIcrsIcs 0I Inncl sIIcmcnIs.
(d) 0cInI0n, rcc0gnI0n nd mcsurcmcnI 0I Ihc clcmcnIs 0I
Inncl sIIcmcnIs, nd
(c) C0nccpIs 0I cpIl nd cpIl mnIcnncc.
Thc 0b|ccIvcs 0I Inncl sIIcmcnIs, rc I0 pr0vdc nI0rmI0n b0uI Ihc
Inncl p0sI0n, pcrI0rmncc nd chngcs n Inncl p0sI0n IhI wll sssI
3
wdc spccIrum 0I uscrs n mkng uscIul cc0n0mc dccs0ns. Thc
dcnIIcs Ihc I0ll0wng uscrs 0I Inncl nI0rmI0n: nvcsI0rs, cmpl0yccs,
lcndcrs, supplcrs, cusI0mcrs, g0vcrnmcnI nd Ihc publc.
!nI0rmI0n rclIng I0 Inncl p0sI0n s n0rmlly I0und n Ihc blncc shccI
0I n cnIIy, nd s IIccIcd by Ihc I0ll0wng:
by Ihc cnIIy. Ths nI0rmI0n wll cnblc
uscrs I0 prcdcI Ihc blIy 0I Ihc cnIIy I0 gcncrIc csh.
0I Ihc cnIIy. Uscrs cn prcdcI b0rr0wng nccds,
dsIrbuI0n 0I IuIurc pr0IIs nd Ihc blIy 0I Ihc cnIIy I0 rsc ncw
Inncc.
cnIIy. Uscrs nccd Ihs nI0rmI0n I0 prcdcI
Ihc blIy 0I Ihc cnIIy I0 mccI Is Inncl c0mmImcnIs s Ihcy Ill
duc.
!nI0rmI0n 0n Ihc Inncl 0I n cnIIy s bsclly pr0vdcd by
Ihc nc0mc sIIcmcnI. Such nI0rmI0n s uscIul n cvluIng Ihc rcIurns
0bIncd by n cnIIy Ir0m Ihc rcs0urccs vlblc I0 I.
!nI0rmI0n b0uI s c0nIncd n Ihc csh Il0w
sIIcmcnI nd s uscIul n sscssng n cnIIy's blIy I0 gcncrIc csh nd
h0w Ihc csh gcncrIcd s uIlscd.
Thc spccIcs nd cxplns Ihc Iw0 mn ssumpI0ns IhI undcrlc
Ihc prcprI0n 0I Inncl sIIcmcnIs. Thcsc ssumpI0ns rc Ihc
nd Ihc .
whcn Inncl sIIcmcnIs rc prcprcd undcr Ihc ccrul bss 0I
cc0unIng, Ihc cIIccIs 0I IrnscI0ns nd 0Ihcr cvcnIs rc rcc0gnzcd
whcn Ihcy 0ccur nd n0I s csh 0r Is cquvlcnI s rcccvcd 0r pd.
Thcy rc rcc0rdcd n Ihc cc0unIng rcc0rds nd rcp0rIcd n Ihc Inncl
sIIcmcnIs, 0I Ihc pcr0ds I0 whch Ihcy rclIc.
Undcr Ihc g0ng c0nccrn bss, Ihc cnIcrprsc s rcgrdcd s g0ng
c0nccrn, IhI s, s c0nInung n 0pcrI0n I0r Ihc I0rcsccblc IuIurc. !I
s ssumcd IhI Ihc cnIcrprsc hs ncIhcr Ihc nIcnI0n n0r Ihc ncccssIy
I0 lqudIc 0r rcducc mIcrlly Ihc sclc 0I Is 0pcrI0ns.
Ex0Ic FurnIurc Ng. LId rcc0rdcd Ihc I0ll0wng IrnscI0ns n Ihc IrsI wcck
0I 1nury 20x9:
() RcnIcd n 0IIcc spcc n P0rI Hrc0urI I0r mll0n pcr nnum nd
pd 5 mll0n, bcng rcnI I0r Ivc ycrs dcmndcd by Ihc lndl0rd.
4
(b) 0ughI n 0IIcc cqupmcnI I0r 240,000 0n crcdI Ir0m M0dcrn
usncss Mchncs LId. Thc cxpccIcd uscIul lIc 0I Ihc cqupmcnI s I0ur
ycrs.
(c) Rcccvcd chcquc 0I .3mll0n Ir0m Rvcrs SIIc P0lyIcchnc, 0r,
bcng Inl pymcnI I0r slcs mdc I0 Ihc nsIIuI0n n 20x7.
(d) S0ld IurnIurc Icms 0n crcdI I0 l0cl g0vcrnmcnI n Rvcrs SIIc I0r
4 mll0n. Thc l0cl g0vcrnmcnI dd n0I py unIl Ihc I0ll0wng ycr..
Y0u rc rcqurcd I0 prcprc cxIrcIs 0I Ihc nc0mc sIIcmcnI nd blncc shccI
0I Ihc c0mpny I0r Ihc ycr cndcd 3 0cccmbcr, 20x9, 0n Ihc ssumpI0n IhI
Inncl sIIcmcnIs rc prcprcd undcr () Ihc ccrul bss nd (b) Ihc csh
bss cc0unIng.
Accrul ss Csh ss
000 000
Slcs 4,000 ,300
RcnI ,000 5,000
0cprccI0n ( 240,000 x !/4 ) b0
Accrul ss Csh ss
'000 '000
Pr0pcrIy, plnI nd cqupmcnI 80
Undcr Ihc 0I cc0unIng, s cn bc rcdly sccn Ir0m Ihc suggcsIcd
s0luI0n I0 llusIrI0n ., Ihc cIIccIs 0I IrnscI0ns nd 0Ihcr cvcnIs rc
rcc0gnzcd whcn csh 0r Is cquvlcnI s rcccvcd 0r pd (nd n0I whcn Ihcy
0ccur), nd Ihcy rc rcc0rdcd n Ihc cc0unIng rcc0rds nd rcp0rIcd n Inncl
sIIcmcnIs 0I Ihc pcr0ds n whch csh 0r Is cquvlcnI s rcccvcd 0r pd.
Ths s why Ihc slcs 0I .3mll0n mdc n 20x7 ws n0I rcc0rdcd n IhI
ycr buI ws rcc0rdcd n 20x9, whcn Ihc csh ws rcccvcd.
Thc vlucs 0I Ihc I0ll0wng n0n currcnI sscIs hvc bccn prcscnIcd by Ihc
cc0unInI 0I AnIs Frms LId. Thc Igurcs rc n rcspccI 0I Ihc ycr cndcd 3
0cccmbcr 20x8.
NcI b00k vluc MrkcI vluc
m m
Lnd 24 42
PlnI nd mchncry 8 5
EqupmcnI 4 2
M0I0r vchclcs b 7
5
whI w0uld bc Ihc crryng vlucs 0I Ihc sscIs n Ihc lncc ShccI 0I AnIs
Frms LId, s I 3 0cccmbcr, 20x8, I:
() AnIs Frms LId s cxpccIcd I0 c0nInuc Is 0pcrI0n n Ihc I0rcsccblc
IuIurc!
(b) AnIs Frms LId wll bc lqudIcd 0n 3 1uly 20x9! Assumc IhI Ihc
lqudIng vlucs 0I Ihc c0mpny's sscIs rc cqul I0 Ihc mrkcI vlucs
gvcn b0vc.
whcrc g0ng c0nccrn prncplc whcrc g0ng c0nccrn prncplc
s pplcblc s n0I pplcblc
m m
Lnd 24 42
PlnI nd mchncry 8 5
EqupmcnI 4 2
M0I0r vchclcs b 7
N0Ic IhI I Ihc ssumpI0n s n0 l0ngcr pplcblc, Ihc sscIs
0I n cnIcrprsc wll bc crrcd I Ihcr lqudIng vlucs.
Acc0rdng I0 Ihc , qulIIvc chrcIcrsIcs rc Ihc IIrbuIcs
IhI mkc Ihc nI0rmI0n pr0vdcd n Inncl sIIcmcnIs uscIul I0
uscrs. Thc dcnIIcs I0ur prncpl qulIIvc
chrcIcrsIcs, nmcly: undcrsIndblIy, rclcvncc, rclblIy nd
c0mprblIy.
!nI0rmI0n n Inncl sIIcmcnIs sh0uld bc rcdly undcrsIndblc
by uscrs wh0 hvc busncss, cc0n0mcs nd cc0unIng kn0wlcdgc nd
wllngncss I0 sIudy Ihc nI0rmI0n crcIully. AlIh0ugh Inncl rcp0rIs
sh0uld bc undcrsIndblc, c0mplcx mIIcrs IhI rc rclcvnI I0
cc0n0mc dccs0nmkng sh0uld n0I bc cxcludcd mcrcly bccusc Ihcy
rc I00 dIIculI I0r uscrs I0 undcrsInd.
T0 bc uscIul, Inncl nI0rmI0n sh0uld bc rclcvnI I0 Ihc dccs0n
mkng nccds 0I uscrs. Acc0rdng I0 Ihc , nI0rmI0n hs
Ihc qulIy 0I rclcvncc whcn I nIlucnccs Ihc cc0n0mc dccs0ns 0I
uscrs by hclpng Ihcm cvluIc psI, prcscnI 0r IuIurc cvcnIs 0r
c0nIrmng, 0r c0rrccIng, Ihcr psI cvluI0ns. !nI0rmI0n my bc
c0nsdcrcd rclcvnI cIhcr bccusc 0I Is nIurc (c.g. cmpl0ycc bcncII
cxpcnsc) 0r bccusc I s mIcrl. Fnncl nI0rmI0n s mIcrl I
b
Is 0mss0n 0r mssIIcmcnI c0uld IIccI Ihc cc0n0mc dccs0ns 0I
uscrs. AlIh0ugh mIcrlIy s n0I clssIcd s qulIIvc
chrcIcrsIc, Ihc rcgrds mIcrlIy s Ihrcsh0ld 0r
cuI0II p0nI. Any nI0rmI0n IhI Ils Ihc IcsI 0I mIcrlIy nccd n0I
bc dscl0scd scprIcly n Ihc Inncl sIIcmcnIs.
Acc0rdng I0 Ihc , nI0rmI0n s sd I0 bc rclblc whcn
I s Ircc Ir0m mIcrl bs nd cn bc dcpcndcd up0n by uscrs I0
rcprcscnI IIhIully IhI whch I cIhcr purp0rIs I0 rcprcscnI 0r c0uld
rcs0nbly bc cxpccIcd I0 rcprcscnI. !n vcw 0I Ihc nhcrcnI dIIculIcs
n dcnIIyng ccrIn IrnscI0ns 0r n Indng ppr0prIc mcIh0ds 0I
mcsurcmcnI 0r prcscnII0n, Inncl sIIcmcnIs cnn0I bc pcrIccIly
ccurIc, hcncc IIhIul rcprcscnII0n mghI bc rcgrdcd s
dcscrbng Ihc cl0scsI IhI cc0unInIs cn c0mc I0wrds Ihc bs0luIc
0I I0Il ccurcy (Lcws nd Pcndrll, 99b).
RclblIy s cnhnccd whcn Ihc I0ll0wng prncplcs rc 0bscrvcd n
Ihc prcprI0n 0I Inncl sIIcmcnIs:
TrnscI0ns sh0uld bc cc0unIcd I0r
cc0rdng I0 Ihcr subsIncc nd cc0n0mc rclIy cvcn I Ihcr
lcgl I0rm s dIIcrcnI.
!nI0rmI0n sh0uld bc 0b|ccIvc nd Ircc Ir0m bs.
Rcs0nblc cII0rI sh0uld bc mdc I0 cnsurc IhI Ihc
p0sI0n, 0r dcgrcc 0I succcss 0I n cnIIy s n0I 0vcrsIIcd
(Alcxndcr nd rII0n, 99b), nd
. Fnncl nI0rmI0n musI bc c0mplcIc, I Ihc
nI0rmI0n s I0 bc rclblc.
() Uscrs sh0uld bc blc I0 c0mprc Ihc Inncl sIIcmcnIs 0I n
cnIIy Ihr0ugh Imc (IhI s, 0vcr pcr0d 0I Imc), I0 dcnIIy
Ircnds n Is Inncl p0sI0n nd pcrI0rmncc.
(b) Uscrs sh0uld ls0 bc blc I0 c0mprc Ihc Inncl sIIcmcnIs 0I
dIIcrcnI cnIIcs I0 dcIcrmnc Ihcr rclIvc Inncl p0sI0ns,
pcrI0rmncc nd chngcs n Inncl p0sI0ns.
T0 cIIccIvcly c0mprc n cnIIy's Inncl nI0rmI0n 0vcr Imc,
cc0unIng IrnscI0ns sh0uld bc c0nssIcnIly IrcIcd nd
c0rrcsp0ndngly, nI0rmI0n 0I prcccdng pcr0ds sh0uld bc dscl0scd.
Smlrly, I0 c0mprc Inncl nI0rmI0n cr0ss cnIIcs, Ihc Inncl
sIIcmcnIs 0I Ihc dIIcrcnI cnIIcs sh0uld c0mply wIh Ihc rcqurcmcnIs
0I scI 0I cc0unIng sIndrds nd Ihcr scprIc cc0unIng p0lccs
sh0uld bc dscl0scd.
7
Thcrc s usully Irdc0II bcIwccn Ihc dIIcrcnI qulIIvc
chrcIcrsIcs dscusscd b0vc. Emphss 0n 0nc 0I Ihc IIrbuIcs my
lcd I0 rcducI0n n Ihc pplcI0n 0I n0Ihcr dcsrblc qulIy. Undcr
such crcumsInccs, I s ncccssry I0 sIrvc I0 chcvc n ppr0prIc
blncc m0ng Ihc chrcIcrsIcs n 0rdcr I0 mccI Ihc 0b|ccIvcs 0I
Inncl sIIcmcnIs.
Exmplcs 0I Ihcsc Irdc0IIs rc s I0ll0ws:
() . !n s0mc cscs I my Ikc s0mc Imc I0r cvcry dcIl
0I IrnscI0n I0 bc dcIcrmncd. !n such cscs, Inncl
nI0rmI0n cnn0I bc prcscnIcd 0n Imcly bss I Inncl
sIIcmcnIs rc I0 bc rclblc. 0n Ihc 0Ihcr hnd, dcly n
prcscnIng Inncl sIIcmcnIs my IIccI Ihc rclcvncc 0I Ihc
nI0rmI0n. A blncc hs I0 bc sIruck bcIwccn Ihc bcncIIs 0I
rclblIy nd rclcvncc. Thc 0vcrrdng c0nsdcrI0n sh0uld
bc h0w bcsI Ihc nI0rmI0n sIsIcs dccs0nmkng nccds.
(b) .
Thcrc s ls0 Irdc0II bcIwccn c0sI nd bcncII 0I prcprng
nd prcscnIng Inncl nI0rmI0n. !n prncplc, Ihc bcncII
dcrvcd by uscrs sh0uld cxcccd Ihc c0sI 0I pr0vdng nd
prcscnIng Ihc nI0rmI0n.
(c)
Trdc0IIs my ls0 rsc bcIwccn Ihc qulIIvc chrcIcrsIcs
n 0Ihcr crcumsInccs. F0r nsIncc, mrkcI vlucs rc m0rc
rclcvnI buI lcss rclblc Ihn hsI0rcl c0sIs. 0n Ihc 0Ihcr hnd,
hsI0rcl c0sIs rc usully n0I rclcvnI I0r dccs0nmkng
purp0scs.
Fnncl sIIcmcnIs rc usully rcqurcd I0 gvc Iruc nd Ir vcw,
0r prcscnI Irly Ihc Inncl p0sI0n nd pcrI0rmncc 0I n cnIIy.
Thc d0cs n0I dcInc Ihcsc c0nccpIs buI I sIIcs IhI Ihc
pplcI0n 0I qulIIvc chrcIcrsIcs 0I Inncl nI0rmI0n nd
c0mplncc wIh ppr0prIc cc0unIng sIndrds wll lcd I0 Inncl
sIIcmcnIs IhI gvc Iruc nd Ir vcw.
Thc Inncl cIIccIs 0I IrnscI0ns nd cvcnIs rc gr0upcd nI0 br0d clsscs
n Ihc . Thcsc clsscs c0mprsc Ihc clcmcnIs 0I Inncl sIIcmcnIs.
Thc dcnIIcs Ivc clcmcnIs 0I Inncl sIIcmcnIs, nmcly: sscIs,
lblIcs, cquIy, nc0mc nd cxpcnscs. Thc IrsI Ihrcc clcmcnIs rc sh0wn n
Ihc lncc ShccI nd rc uscd n mcsurng Ihc Inncl p0sI0n 0I n cnIIy,
whlc Ihc lsI Iw0 clcmcnIs (nc0mc nd cxpcnscs) rc uscd I0 mcsurc Ihc
8
pcrI0rmncc 0I n cnIIy nd rc sh0wn n Ihc nc0mc sIIcmcnI, 0Ihcrwsc
kn0wn s Ihc Pr0II nd L0ss Acc0unI 0r !nc0mc nd ExpcndIurc Acc0unI. Thc
dcIncs Ihc clcmcnIs s I0ll0ws.
()
An sscI s s rcsulI 0I
nd Ir0m whch rc cxpccIcd I0 Il0w I0 Ihc
cnIIy.
N0Ic Ihc I0ll0wng kcy Icrms / phrscs uscd n Ihc b0vc dcInI0n:
()
An cnIIy hs c0nIr0l 0vcr rcs0urcc I I cn drccI Ihc usc 0I Ihc
rcs0urccs I0r Is bcncII.
()
Thc cvcnIs sh0uld hvc 0ccurrcd bcI0rc Ihc 0wncrshp 0I Ihc sscI.
()
Thc rcs0urcc c0nIr0llcd by Ihc cnIIy sh0uld hvc Ihc p0IcnIl I0
c0nIrbuIc drccIly 0r ndrccIly I0 Ihc rcccpI 0I csh nd csh
cquvlcnIs by Ihc cnIIy.
(b)
A lblIy s prcscnI 0blgI0n 0I Ihc cnIIy rsng Ir0m psI cvcnIs,
Ihc scIIlcmcnI 0I whch s cxpccIcd I0 rcsulI n n 0uIIl0w Ir0m Ihc cnIIy,
0I rcs0urccs cmb0dyng cc0n0mc bcncIIs. scd 0n Ihs dcInI0n,
lblIy s n0I mcrcly n 0blgI0n, I s . A prcscnI
0blgI0n s dIIcrcnI Ir0m IuIurc c0mmImcnI. 0Ihcr kcy Icrms ncludc
nd I0r cxmplc, IrnsIcr 0I
csh 0r 0Ihcr sscIs by Ihc cnIcrprsc.
(c)
EquIy s Ihc rcsdul nIcrcsI n Ihc sscIs 0I Ihc cnIIy IIcr dcducIng
ll Is lblIcs.
(d)
Thcsc hvc bccn dcIncd by Ihc s ncrcscs n cc0n0mc
bcncIIs durng Ihc cc0unIng pcr0d, n Ihc I0rm 0I nIl0ws 0r
cnhnccmcnIs 0I sscIs 0r dccrcsc 0I lblIcs IhI rcsulI n ncrcscs
n cquIy, 0Ihcr Ihn Ih0sc rclIng I0 c0nIrbuI0ns Ir0m cquIy
prIcpnIs
(c)
Thcsc rc dccrcscs n cc0n0mc bcncIIs durng n cc0unIng pcr0d
n Ihc I0rm 0I 0uIIl0ws 0r dcplcI0ns 0I sscIs 0r ncurrng 0I lblIcs
IhI rcsulI n dccrcscs n cquIy, 0Ihcr Ihn Ih0sc rclIng I0
dsIrbuI0ns I0 cquIy prIcpnIs.
9
Acc0rdng I0 Ihc , rcc0gnI0n s Ihc pr0ccss 0I nc0rp0rIng
n Ihc blncc shccI 0r nc0mc sIIcmcnI n Icm IhI mccIs Ihc dcInI0n
0I n clcmcnI nd sIsIcs Ihc I0ll0wng crIcr I0r rcc0gnI0n:
() !I s pr0bblc IhI ny IuIurc cc0n0mc bcncII ss0cIcd wIh
Ihc Icm wll Il0w I0 0r Ir0m Ihc cnIIy, nd
(b) Thc Icm hs c0sI 0r vluc IhI cn bc mcsurcd rclbly.
!I s ncccssry I0 n0Ic IhI Ihc IrsI rcc0gnI0n crIcr0n s IhI Ihc Icms
sh0uld mccI Ihc dcInI0n 0I n clcmcnI 0I Inncl sIIcmcnIs.
Undcr Ihc , Ihc rcc0gnI0n 0I sscIs nd lblIcs Ill undcr
Ihrcc sIgcs. Thcsc rc:
Ths 0ccurs whcn n Icm IrsI mccIs Ihc dcInI0n 0I n sscI 0r
lblIy (I0r nsIncc, Ihc cqusI0n 0I buldng).
(b)
Ths nv0lvcs chngng Ihc vluc I whch n sscI 0r lblIy
ws nIlly rcc0gnzcd (IhI s, I buldng s prIly dcsIr0ycd
0r whcn sscIs rc rcvlucd by pr0Icss0nl rcvlucrs, Ihc
crryng vlucs wll bc rcsIIcd).
(c)
Ths 0ccurs whcn n Icm n0 l0ngcr mccIs Ihc dcInI0n 0I n
sscI 0r lblIy (I0r nsIncc, I Ihc buldng s s0ld 0r c0mplcIcly
dcsIr0ycd).
Thc dcIncs mcsurcmcnI s Ihc pr0ccss 0I dcIcrmnng Ihc
m0ncIry m0unI I whch Ihc clcmcnIs 0I Inncl sIIcmcnIs rc I0 bc
rcc0gnzcd nd crrcd n Ihc blncc shccI nd nc0mc sIIcmcnI. !I dcnIIcs
I0ur bscs 0I mcsurcmcnI, nmcly: hsI0rcl c0sI, currcnI c0sI, rclsblc
(scIIlcmcnI) vluc nd prcscnI vluc.
()
AsscIs rc rcc0rdcd I Ihc m0unIs 0I csh nd csh cquvlcnIs pd
0r Ihc Ir vluc 0I Ihc c0nsdcrI0n gvcn n cxchngc I0r Ihcm I Ihc
Imc 0I cqusI0n. LblIcs rc rcc0rdcd I Ihc m0unIs 0I pr0cccds
rcccvcd n cxchngc I0r Ihc 0blgI0ns.
(b)
AsscIs rc crrcd I Ihc m0unIs 0I csh 0r csh cquvlcnIs rcqurcd
I0 cqurc Ihc smc 0r dcnIcl sscIs currcnIly. LblIcs, 0n Ihc 0Ihcr
hnd, rc crrcd I Ihc undsc0unIcd m0unI currcnIly rcqurcd I0 scIIlc
Ihc 0blgI0n.
0
(c)
Acc0rdng I0 Ihc , rclsblc vluc s Ihc m0unI 0I csh 0r
csh cquvlcnIs IhI wll currcnIly bc 0bIncd by scllng n sscI n
n 0rdcrly dsp0sl, whlc scIIlcmcnI vluc rcIcrs I0 Ihc undsc0unIcd
m0unI 0I csh nd csh cquvlcnIs cxpccIcd I0 bc pd I0 sIsIy Ihc
lblIcs n Ihc n0rml c0ursc 0I busncss.
(d)
Ths rcIcrs I0 currcnI csImIc 0I Ihc prcscnI dsc0unIcd vluc 0I Ihc
IuIurc ncI csh Il0w n Ihc n0rml c0ursc 0I busncss.
Thc d0cs n0I rcqurc Ihc pplcI0n 0I ny prIculr bss. !n
prcIcc, hsI0rcl c0sI s Ihc m0sI c0mm0n bss, Ihc 0Ihcr bscs rc pplcd
s ppr0prIc. F0r nsIncc, sI0ck s vlucd I Ihc l0wcr 0I c0sI nd ncI
rclsblc vluc, n cc0rdncc wIh Ihc prudcncc c0nccpI 0I n0I c0unIng
chckcns bcI0rc Ihcy rc hIchcd.
Thc dcnIIcs Iw0 c0nccpIs 0I cpIl: Inncl c0nccpI 0I
cpIl nd physcl c0nccpI 0I cpIl. Undcr Ihc Inncl c0nccpI,
cpIl s Ihc ncI sscI 0r cquIy 0I Ihc cnIcrprsc, buI undcr Ihc physcl
c0nccpI, cpIl s Ihc pr0ducIvc cpcIy 0I Ihc cnIcrprsc.
As wIh Ihc c0nccpIs 0I cpIl, Ihc dcnIIcs Iw0 Iypcs 0I
cpIl mnIcnncc c0nccpIs: nd
. 0cncrlly, cpIl s mnIncd whcn
n cnIcrprsc hs s much cpIl I Ihc cnd 0I Ihc ycr s I hd I Ihc
bcgnnng. Thus, Inncl cpIl s mnIncd whcn Ihc n0mnl
m0ncy cpIl I Ihc cnd 0I Ihc ycr s cqul I0 Ihc Igurc I Ihc
bcgnnng. Smlrly, physcl cpIl s mnIncd whcn Ihc physcl
pr0ducIvc cpcIy I Ihc ycr cnd s cqul I0 Ihc pr0ducIvc cpcIy
I Ihc bcgnnng. Fnncl cpIl mnIcnncc s s0mcImcs clssIcd
nI0 (lrcdy cxplncd b0vc)
nd whch s chcvcd whcn Ihc
purchsng p0wcr 0I n cnIIy's shrch0ldcrs' Iund s s much I Ihc
cnd 0I Ihc ycr s I Ihc bcgnnng.
An cnIcrprsc rcc0rds pr0II whcn Is cpIl I Ihc cnd 0I Ihc ycr
cxcccds Is cpIl I Ihc bcgnnng 0I Ihc smc ycr. Thc
dcIncs pr0II s Ihc rcsdul m0unI IhI rcmns IIcr cxpcnscs
(ncludng cpIl mnIcnncc d|usImcnIs, whcrc pplcblc) hvc
bccn dcducIcd Ir0m nc0mc. Any m0unI 0vcr nd b0vc IhI rcqurcd
I0 mnIn Ihc cpIl I Ihc bcgnnng 0I Ihc pcr0d s pr0II.

Ths chpIcr cxmncd Ihc bsc c0nccpIs IhI gudc Ihc pr0ducI0n nd
prcscnII0n 0I Inncl sIIcmcnIs. Thcsc c0nccpIs ncludc Ihc 0b|ccIvcs,
clcmcnIs, nd IIrbuIcs 0I Inncl sIIcmcnIs, Ihc c0nccpI 0I cpIl nd
cpIl mnIcnncc nd Ihc !AS . Fnncl rcp0rIs
IhI d0 n0I pply Ihc prncpl qulIIvc chrcIcrsIcs 0I Inncl sIIcmcnIs
wll n0I sh0w Iruc nd Ir vcw 0I Ihc Inncl p0sI0n nd pcrI0rmncc 0I
Ihc rcp0rIng cnIIy.
. Thc prncplc IhI dsc0urgcs cc0unInIs Ir0m rcc0gnsng pr0II 0I n
cnIcrprsc I Ihcrc s n0 rcs0nblc ccrInIy IhI I s rclsblc s kn0wn
s:
() Pr0IIblIy
(b) MIcrlIy
(c) EnIIy
(d) RclblIy
(c) Prudcncc.
2. 0nc 0I Ihc 0b|ccIvcs 0I Inncl sIIcmcnIs s I0:
() Sh0w Ihc rcplccmcnI vluc 0I Ihc sscIs nd lblIcs 0I
c0mpny.
(b) Enc0urgc Ihc shrch0ldcrs I0 rcc0mmcnd ppr0prIc dvdcnds
I0r Ihcmsclvcs.
(c) Ensurc IhI ll unrclscd h0ldng gns rc ncludcd n Ihc
Inncl sIIcmcnIs.
(d) Pr0vdc nI0rmI0n b0uI Ihc Inncl p0sI0n, pcrI0rmncc nd
chngcs n Inncl p0sI0n IhI s uscIul n mkng cc0n0mc
dccs0ns.
(c) Enblc c0mpncs cvdc pymcnI 0I Ix lblIcs.
3. whch 0I Ihcsc wll n0I sssI Ihc rclblIy 0I Inncl nI0rmI0n!
() Tmclncss 0I prcscnII0n
(b) SubsIncc 0vcr I0rm
(c) NcuIrlIy
(d) Prudcncc
(c) C0mplcIcncss.
4. whch 0I Ihc I0ll0wng rc Ihc undcrlyng ssumpI0ns 0I Inncl
sIIcmcnIs cc0rdng I0 Ihc !
() Accrul bss nd g0ng c0nccrn bss
(b) Csh bss nd brckup vluc bss
(c) Csh bss
(d) rckup bss
(c) RcplccmcnI vluc bss.
2
5. whch 0I Ihc I0ll0wng s n0I c0nccpI 0I cpIl nd cpIl mnIcnncc!
() Physcl cpIl
(b) CrculIng cpIl
(c) Fnncl cpIl
(d) Rcl Inncl cpIl
(c) M0ncIry Inncl cpIl.
(b) whI d0 y0u undcrsInd by Ihc Icrm c0nccpIul Irmcw0rk!
(7) Sc0lss LId pd N3 mll0n I0r Ihrcc ycrs' rcnI, I0r n 0IIcc prImcnI
I Awk 0n 2 1nury 200b. 0urng Ihc ycr I0 3 0cccmbcr 200b, Ihc
c0mpny s0ld g00ds vlucd I N25 mll0n, I0 0nc 0I Is cusI0mcrs, wh0
pd N mll0n mmcdIcly nd grccd I0 py Ihc blncc 0n 301nury,
2007.
Y0u rc rcqurcd I0 sh0w h0w Ihcsc IrnscI0ns w0uld ppcr n Ihc nc0mc
sIIcmcnI 0I Ihc c0mpny I0r Ihc ycr cndcd 3 0cccmbcr, 200b, usng Ihc
ccrul bss 0I cc0unIng.
(8) Mry1udc H0spIls LId hs bccn cxpcrcncng l0w pIr0ngc duc I0
ncrcsng prvIc mcdcl prcIcc. Thc 0rccI0rs 0I Ihc ccnIrc, 0r (Mrs)
Mry Adcsn nd 0r 1udc Adcsn, rc w0ndcrng whcIhcr Ihc busncss
sh0uld bc cl0scd pcrmncnIly. Thc cc0unInI 0I Ihc cnIcrprsc hs
pr0vdcd Ihc I0ll0wng sscI vlucs rclIng I0 Ihc ycr cndcd 3 0cccmbcr
2007.
(N'000) (N'000) (N'000)
PlnI nd cqupmcnI 0,000 4,000 5,000
FurnIurc nd IIIngs 2,000 ,800 2,200
M0I0r vchclcs 4,000 3,000 5,000
Y0u rc rcqurcd I0 sIIc Ihc crryng vlucs 0I Ihcsc sscIs n Ihc lncc
ShccI 0I Ihc h0spIl I 3 0cccmbcr, 2007, I Ihc g0ng c0nccrn ssumpI0n
cnn0I bc pplcd I0 Ihc c0mpny.
(9) SIIc 0nc sc0pc 0I !AS .
(0) rcIly cxpln Ihc Irdc0II bcIwccn Iw0 qulIIvc chrcIcrsIcs 0I
Inncl sIIcmcnIs. H0w cn blncc bc chcvcd!
3
!n Ihs chpIcr, Ihc rcdcrs wll bc blc I0 undcrsInd:
Pr0vs0ns 0I C0mpncs nd Allcd MIIcrs AcI (CAMA), CAP C20 LFN 2004, n
rcspccI 0I Ihc I0rmI nd c0nIcnIs 0I Inncl sIIcmcnIs.
sc nI0rmI0n nccds 0I Ihc vr0us uscrs 0I Inncl nI0rmI0n.
SccI0n 33 0I C0mpncs nd Allcd MIIcrs AcI (CAMA), Cp C20 LFN 2004,
sIIcs IhI:
() Evcry c0mpny shll cusc cc0unIng rcc0rds I0 bc kcpI.
(b) Thc cc0unIng rcc0rds shll bc suIIccnI I0 sh0w nd cxpln Ihc
IrnscI0ns 0I Ihc c0mpny nd shll bc such s I0:
() dscl0sc wIh rcs0nblc ccurcy, I nyImc, Ihc Inncl
p0sI0n 0I Ihc c0mpny, nd
() cnblc Ihc 0rccI0rs I0 cnsurc IhI Inncl sIIcmcnIs prcprcd
c0mply wIh Ihc rcqurcmcnIs 0I Ihc AcI wIh rcgrd I0 I0rm nd
c0nIcnI.
(c) Thc cc0unIng rcc0rds shll, n prIculr, c0nIn :
() cnIrcs Ir0m dyI0dy 0I ll sums 0I m0ncy rcccvcd nd
cxpcndcd by Ihc c0mpny, nd Ihc mIIcrs n rcspccI 0I whch
Ihc rcccpIs nd cxpcndIurc Ikc plcc, nd
() rcc0rd 0I sscIs nd lblIcs 0I Ihc c0mpny.
(d) !I Ihc busncss 0I Ihc c0mpny nv0lvcs dclng n g00ds, Ihc cc0unIng
rcc0rds shll c0nIn:
() sIIcmcnIs 0I sI0ck hcld by Ihc c0mpny I Ihc cnd 0I cch
cc0unIng ycr 0I Ihc c0mpny,
() ll sIIcmcnIs 0I sI0ck Ikngs Ir0m whch ny such sIIcmcnI 0I
sI0ck hs bccn 0r s I0 bc prcprcd, nd
() cxccpI n Ihc csc 0I g00ds s0ld by wy 0I 0rdnry rcIl Irdc,
sIIcmcnI 0I ll g00ds s0ld nd purchscd, sh0wng Ihc g00ds
nd Ihc buycrs nd scllcrs n suIIccnI dcIl I0 cnblc ll Ihcsc
I0 bc dcnIIcd.
4
SccI0n 334 0I CAMA IurIhcr sIIcs IhI
() !n Ihc csc 0I cvcry c0mpny, Ihc drccI0rs shll n rcspccI 0I cch ycr
0I Ihc c0mpny, prcprc Inncl sIIcmcnIs I0r Ihc ycr.
(b) Thc Inncl sIIcmcnIs rcqurcd shll ncludc :
() sIIcmcnI 0I cc0unIng p0lccs,
() Ihc blncc shccI s I Ihc lsI dy 0I Ihc c0mpny's
Inncl ycr,
() pr0II nd l0ss cc0unI 0r, n Ihc csc 0I c0mpny n0I Irdng
I0r pr0II, n nc0mc nd cxpcndIurc cc0unI I0r Ihc ycr,
(v) n0Ics I0 Ihc cc0unIs,
(v) Ihc udI0rs' rcp0rI,
(v) Ihc drccI0rs' rcp0rI,
(v) Ihc AudI C0mmIIcc's rcp0rI,
(v) Csh Il0w sIIcmcnI,
(x) vlucddcd sIIcmcnI I0r Ihc ycr,
(x) Ivcycr Inncl summry, nd
(x) n Ihc csc 0I h0ldng c0mpny, Ihc gr0up Inncl sIIcmcnIs.
(c) Thc Inncl sIIcmcnIs 0I prvIc c0mpny nccd n0I ncludc Ihc
mIIcrs sIIcd n prgrphs (), (v), (v), nd (x) n subsccI0n (b)
b0vc.
Acc0unIng nI0rmI0n s rcqurcd by wdc rngc 0I uscrs I0r vr0us rcs0ns.
Thcsc uscrs nd Ihcr nI0rmI0n nccds ncludc:
() !ndvduls, Inncl nsIIuI0ns 0r gr0up 0I nvcsI0rs wh0 nccd
cc0unIng nI0rmI0n I0 dcIcrmnc Ihc lqudIy, pr0IIblIy nd
vblIy 0I Ihc cnIcrprsc.
(b) Mngcrs n n cnIcrprsc rcqurc cc0unIng nI0rmI0n I0 mcsurc
pcrI0rmncc, pln nd c0nIr0l 0pcrI0ns.
(c) CusI0mcrs nd cmpl0yccs 0I n cnIcrprsc nccd cc0unIng nI0rmI0n
n 0rdcr I0 sscss Ihc blIy 0I Ihc cnIcrprsc I0 pr0ducc g00ds 0r rcndcr
scrvccs 0n c0nInu0us bss.
(d) 00vcrnmcnIs nd rcgulI0ry b0dcs, such s Ihc CcnIrl nk 0I Ngcr
(CN), SccurIcs nd Exchngc C0mmss0n (SEC), Ngcr SI0ck
Exchngc (NSE), Fcdcrl !nlnd Rcvcnuc Scrvcc (F!RS) nd SIIc
!nIcrnl Rcvcnuc Scrvccs (S!RS) nccd cc0unIng nI0rmI0n I0 rcgulIc
ccrIn busncsscs nd pln, cxccuIc nd cvluIc g0vcrnmcnI pr0|ccIs.
Thc Fcdcrl !nlnd Rcvcnuc Scrvcc (F!RS) nd SIIc !nIcrnl Rcvcnuc
Scrvccs (S!RS) nccd cc0unIng nI0rmI0n s0 s I0 mp0sc nd c0llccI
Ixcs.
(c) us - g0vcrnmcnI csIblshmcnIs nccd cc0unIng nI0rmI0n n
0rdcr I0 mccI Ihcr sIIuI0ry 0blgI0ns.
(I) C0mpcII0rs nccd cc0unIng nI0rmI0n I0 sssI n I0rmulIng
p0lccs I0 c0unIcr c0mpcII0n.
(g) CrcdI0rs nccd cc0unIng nI0rmI0n I0 sscss c0mpncs' lqudIy
nd blIy I0 mccI Ihcr 0blgI0ns I0 crcdI0rs s nd whcn duc.
5
(h) Fnncl AnlysIs nccd cc0unIng nI0rmI0n n 0rdcr I0 IclIIc
c0mprs0n 0I c0mpny's Inncl sIIcmcnIs Ir0m ycr I0 ycr,
cvluI0n 0I rcsulIs 0I c0mpncs wIhn Ihc smc ndusIry nd bcIwccn
0nc ndusIry nd Ihc 0Ihcr, s wcll s dcIcrmnng Ihc ndusIry vcrgc.
Thc nI0rmI0n cxpccIcd I0 bc pr0vdcd n Inncl sIIcmcnIs rc
Ih0sc IhI rc qunIIIvc nd qulIIvc n nIurc, I0 d Ihcr uscrs
n mkng nI0rmcd cc0n0mc dccs0ns. T0 mccI Ihc 0b|ccIvcs 0I Is
dvcrsc uscrs, s0mc 0I wh0m my n0I hvc cc0unIng kn0wlcdgc 0r
bckgr0und, Inncl sIIcmcnIs rc cxpccIcd I0 bc smplc, clcr nd
csy I0 undcrsInd.
Fnncl SIIcmcnIs rc cxpccIcd I0 bc drwn up:
() n c0nI0rmIy wIh 0cncrlly AcccpIcd Acc0unIng Prncplcs
(0AAP),
(b) n cc0rdncc wIh Ihc SIIcmcnI 0I Acc0unIng SIndrds (SAS)
ssucd upI0dIc by Ihc Ngcrn Acc0unIng SIndrds 0rd
(NAS),
(c) n grccmcnI wIh Ihc b00ks 0I cc0unIs 0I Ihc cnIIy, nd
(d) n cc0rdncc wIh Ihc C0mpncs nd Allcd MIIcrs AcI, Cp.
C 20 LFN 2004. TrcImcnI 0I cc0unIng mIIcrs IhI rc n0I I
prcscnI c0vcrcd by Ihc Ngcrn Acc0unIng SIndrds rc
cxpccIcd I0 c0nI0rm wIh Ihc pr0vs0ns 0I Ihc !nIcrnI0nl
Acc0unIng SIndrds (!AS). Ths s s0 bccusc Ihc !nsIIuIc 0I
ChrIcrcd Acc0unInIs 0I Ngcr (!CAN) s mcmbcr 0I
!nIcrnI0nl FcdcrI0n 0I Acc0unInIs (!FAC). C0nscqucnIly,
!CAN mcmbcrs rc 0blgcd I0 c0mply wIh Ihc pr0n0unccmcnIs
0I !FAC. csdcs, Inncl sIIcmcnIs prcprcd n Ngcr rc
cxpccIcd I0 bc uscd gl0blly wIh0uI ny pr0blcm n nIcrprcIng
Ihcr c0nIcnIs.
All Inncl sIIcmcnIs musI s mIIcr 0I sIIuI0ry
rcqurcmcnI, c0nIn Ihc c0mprIvc Igurcs I0r Ihc prcccdng
ycr (0r pcr0d), I0 IclIIc c0mprs0n 0I pcrI0rmncc 0I Ihc
cnIcrprsc.
Acc0unIng p0lccs rc Ih0sc bscs, rulcs, prncplcs, c0nvcnI0ns nd
pr0ccdurcs d0pIcd n prcprng nd prcscnIng Inncl sIIcmcnIs.
1udgcmcnI s rcqurcd n Ihc ch0cc 0I Ihc cc0unIng p0lccs whch
rc ppr0prIc I0 Ihc crcumsInccs 0I n cnIcrprsc nd wll bc bcsI
suIcd I0 prcscnI Ihc Iruc nd Ir vcw 0I Is rcsulIs nd Inncl
p0sI0n.
b
Ths hd bccn dclI wIh cxIcnsvcly n Ihc FundmcnIls 0I Fnncl
Acc0unIng sIudy pck. As I0rm 0I rcvs0n, Ihc hghlghI 0I sgnIcnI
cc0unIng p0lccs IhI hvc I0 bc sIIcd n Ihc Inncl sIIcmcnIs s
s I0ll0ws:
()
Thcrc sh0uld bc nI0rmI0n s I0 Ihc IcI IhI Ihc Inncl
sIIcmcnIs rc prcprcd 0n Ihc hsI0rcl c0sI bss, IhI s, n0
d|usImcnI I0r spccIc 0r gcncrl prcc lcvcl chngcs such s
nIlI0n. whcrc Ihcrc hs bccn rcvluI0n 0I s0mc 0r ll Ihc
sscIs, I sh0uld bc s0 sIIcd IhI Ihc hsI0rcl c0sI c0nccpI s
m0dIcd I0 ncludc Ihc rcvluI0ns.
(b)
0rccI0rs my dccdc Ihc mnmum cxpcndIurc I0 bc rcc0gnscd
s cpIl Icm. !I sh0uld ls0 bc sIIcd IhI Ixcd sscIs rc sIIcd
I c0sI 0r vluI0n, lcss ccumulIcd dcprccI0n.
(c)
() Thc bss 0I dcprccI0n 0I cch clss 0I Ixcd sscIs hs
I0 bc sIIcd. Thc mcIh0ds whch cn bc uscd ncludcd:
SIrghILnc, Rcducng lncc, Am0rIsI0n 0vcr lvcs
0I Ihc sscIs, Sum0IIhc ycrs dgI.
() Thc rIc 0I dcprccI0n I0r cch clss 0I Ixcd sscIs sh0uld
bc sIIcd.
(d)
0cbI0rs rc sIIcd IIcr Ihc dcducI0n 0I spccIc 0r gcncrl
pr0vs0n I0r ny dcbIs c0nsdcrcd d0ubIIul 0I rcc0vcry.
(c)
SI0cks rc sIIcd I Ihc l0wcr 0I c0sI nd ncI rclsblc vluc,
IIcr mkng pr0vs0n I0r 0bs0lcIc nd dmgcd Icms. F0r
mnuIcIurcd g00ds, 'c0sI' my ncludc pr0p0rI0n 0I IcI0ry
0vcrhcd.
(I)
!nvcsImcnIs rc sIIcd I c0sI. 0mnuI0n n vluc s n0I Ikcn
nI0 cc0unI unlcss I s c0nsdcrcd I0 bc pcrmncnI.
(g)
Turn0vcr rcprcscnIs Ihc ncI nv0ccd vluc 0I slcs I0 cxIcrnl
cusI0mcrs.
(h)
0cIcrrcd IxI0n s pr0vdcd I0r by Ihc lblIy mcIh0d whch
rcprcscnIs IxI0n I Ihc currcnI rIc 0I c0mpny nc0mc Ix,
nd Ihc dIIcrcncc bcIwccn Ihc ncI b00k vluc 0I Ihc sscIs
qulIyng I0r cpIl ll0wnccs nd Ihcr c0rrcsp0ndng Ix
wrIIcn d0wn vlucs.
7
()
TrnscI0ns n I0rcgn currcnccs rc IrnslIcd I0 Nr I Ihc
rIcs 0I cxchngc rulng 0n Ihc dIcs 0I Ihc IrnscI0ns.
M0ncIry sscIs nd lblIcs dcn0mnIcd n I0rcgn currcnccs
rc IrnslIcd I Ihc 0IIcl rIcs rulng I Ihc blncc shccI
dIc. Exchngc gns nd l0sscs rc ncludcd n Ihc pr0II nd
l0ss cc0unI 0I Ihc pcr0d n whch Ihcy rsc.
(|)
Thc c0mpny mkcs nnul pr0vs0n I0r rcIrcmcnI bcncIIs
undcr Is unIundcd pcns0n pln, usng Ihc ggrcgIc mcIh0d
bscd up0n cIul vluI0n. Undcr Ihs mcIh0d, c0sIs rclIcd I0
Ihc pln rc chrgcd 0vcr Ihc vcrgc scrvcc lvcs 0I cIvc
cmpl0yccs.
(k)
ExpcndIurc 0n rcscrch s chrgcd I0 Ihc pr0II nd l0ss cc0unI
n Ihc ycr I s ncurrcd, whlc dcvcl0pmcnI cxpcndIurc cn bc
cpIlscd I I mccIs ccrIn crIcr scI 0uI n !AS 38.
(l)
(F0r 0r0up / H0ldng c0mpny)
Thc gr0up Inncl sIIcmcnIs c0mprsc Ihc Inncl sIIcmcnIs
0I Ihc c0mpny nd Is subsdrcs. All nIcrc0mpny
IrnscI0ns rc n0rmlly clmnIcd.
Thc blncc shccI nd rclIcd n0Ics sh0uld dscl0sc Ihc I0ll0wng
nI0rmI0n:
()
() Lnd - Ircch0ld nd lcsch0ld.
() uldngs.
() PlnI nd EqupmcnI.
(v) 0Ihcr cIcg0rcs 0I sscIs, suIbly dcnIIcd, such s
m0I0r vchclcs, IurnIurc, IxIurcs nd IIIngs.
(v) AccumulIcd dcprccI0n I0r cch clss 0I sscIs.
ScprIc dscl0surc n n0Ic I0rm sh0uld bc mdc 0I
sscIs 0n lcsc nd sscIs cqurcd 0n nsIlmcnI
purchsc plns, IhI s, hrc purchsc. Such dscl0surc
sh0uld ncludc Ihc Iypcs 0I sscIs nv0lvcd, Ihcr m0unIs
nd Ihc pcr0ds c0vcrcd.
(b)
() L0ng - Icrm nvcsImcnIs (qu0Icd nd unqu0Icd)
dsIngushng bcIwccn:
!nvcsImcnIs n subsdrcs.
!nvcsImcnIs n ss0cIcd c0mpncs, nd
0Ihcr nvcsImcnIs.
8
() L0ng Tcrm 0cbIs
All l0ngIcrm dcbIs ncludng Ihcr Icnurc.
() !nIngblc sscIs lkc
g00dwll.
pIcnIs, Irdcmrks nd smlr sscIs.
dcIcrrcd chrgcs such s:
Prcnc0rp0rI0n nd I0rmI0n cxpcnscs, nd
Prcpr0ducI0n cxpcnscs nd rc0rgnsI0n
cxpcnscs.
Any wrIc0IIs durng Ihc pcr0d nd Ihc mrkcI vlucs
0I nvcsImcnIs sh0uld bc dscl0scd.
(c)
() SI0cks nd w0rknpr0grcss.
() CurrcnI p0rI0n 0I l0ngIcrm dcbIs.
() Trdc dcbIs.
(v) PrcpymcnIs nd Sundry dcbI0rs.
(v) 0rccI0rs dcbI blnccs.
(v) !nIcrc0mpny dcbI blnccs 0I subsdrcs nd
ss0cIcd c0mpncs.
(v) Sh0rIIcrm nvcsImcnIs (ncludng Trcsury lls,
CcrIIcIcs 0I 0cp0sIs nd C0mmcrcl N0Ics, lls 0I
Exchngc).
(v) F0rcgn Currcncy 0cp0sIs I0r mp0rIs.
(x) 0cp0sIs wIng rcmIInccs I0 0vcrscs crcdI0rs, nd
(x) Csh nd nk blnccs.
(d)
() Thc vrcIy 0I 0wncrshp nIcrcsIs such s dcIcrrcd shrcs,
0rdnry shrcs, prcIcrcncc shrcs, cumulIvc,
n0ncumulIvc, prIcpIng nd n0nprIcpIng
prcIcrcncc shrcs, sIIng:
Thc numbcr, n0mnl vluc nd m0unI 0I shrcs
uIh0rscd nd ssucd.
Thc rghIs, prcIcrcnccs nd rcsIrcI0ns wIh rcspccI
I0 Ihc dsIrbuI0n 0I dvdcnds nd I0 Ihc
rcpymcnI 0I cpIl.
CumulIvc PrcIcrcncc dvdcnd n rrcrs.
Shrcs rcscrvcd I0r IuIurc ssuc undcr 0pI0ns,
slcs c0nIrcIs nd 0pI0ns I0r c0nvcrs0n 0I l0ns
nd dcbcnIurcs nI0 shrcs, ncludng Ihc Icrms nd
m0unIs, nd
M0vcmcnIs n Ihc Shrc CpIl Acc0unIs durng
Ihc pcr0d.
() 0Ihcr shrch0ldcrs nIcrcsIs, ndcIng m0vcmcnIs durng
Ihc pcr0d nd ny rcsIrcI0ns 0n Ihcr cpIlsI0n by
9
wy 0I b0nus shrcs:
CpIl RcdcmpI0n Rcscrvc Fund.
Shrc prcmum 0r dsc0unI.
RcvluI0n surplus.
Rcvcnuc nd CpIl Rcscrvcs.
RcIncd Ernngs.
(c)
() L0ngIcrm lblIcs, dsIngushng bcIwccn:
Sccurcd L0ns.
Unsccurcd L0ns.
L0ns Ir0m h0ldng, subsdry nd ss0cIcd
c0mpncs.
0cIls 0I Ihc pplcblc nIcrcsI rIcs, rcpymcnI Icrms,
c0vcnnIs, sub0rdnI0ns, cIc, sh0uld bc dscl0scd.
() CurrcnI lblIcs, dscl0sng scprIcly:
Am0unIs duc I0 h0ldng, subsdry nd ss0cIcd
c0mpncs.
Trdc crcdI0rs.
0Ihcr crcdI0rs nd ccrucd cxpcnscs.
0vdcnds pyblc.
TxI0n.
CurrcnI p0rI0n 0I l0ngIcrm lblIcs.
nk l0ns nd 0vcrdrIIs.
(I)
() RcsIrcI0ns 0n Ihc IIlc I0 sscIs.
() RcsIrcI0ns 0n Ihc dsIrbuI0n 0I dvdcnds.
() SccurIcs gvcn n rcspccI 0I lblIcs.
(v) Thc mcIh0d 0I pr0vdng I0r pcns0n 0r rcIrcmcnI schcmc
I0gcIhcr wIh sIIcmcnI s I0 whcIhcr Ihc schcmc s Iundcd
0r unIundcd.
(v) C0nIngcnI sscIs nd c0nIngcnI lblIcs.
(v) Am0unIs ppr0vcd 0r c0mmIIcd I0r IuIurc cpIl
cxpcndIurc, nd
(v) EvcnIs IhI hvc 0ccurrcd IIcr Ihc blncc shccI dIc buI
bcI0rc Ihc Inncl sIIcmcnIs rc ppr0vcd by Ihc 0rd.
Thc pr0II nd l0ss cc0unI wIh rclIcd n0Ics 0r !nc0mc nd ExpcndIurc
Acc0unI (n Ihc csc 0I c0mpny 0r 0rgnsI0n, n0I Irdng I0r pr0II),
sh0uld dscl0sc Ihc I0ll0wng nI0rmI0n,
() Turn0vcr / Slcs dsIngushng bcIwccn l0cl nd cxp0rI slcs.
(b) 0Ihcr 0pcrIng Rcvcnuc - I0r cxmplc rcnIl nc0mc 0r
cxchngc gn.
(c) 0Ihcr Ernngs - dsIngushng bcIwccn nIcrcsI nc0mc, nc0mc
Ir0m nvcsImcnIs nd 0Ihcr s0urccs.
20
(d) C0sI 0I slcs.
(c) 0r0ss pr0II.
(I) Scllng nd dsIrbuI0n cxpcnscs.
(g) AdmnsIrI0n cxpcnscs.
(h) !nIcrcsI chrgcs.
() Txcs 0n nc0mc, nd
(|) Unusul chrgcs / crcdIs, 0Ihcrwsc kn0wn s bn0rml 0r
cxccpI0nl Icms.
Thcsc rc nc0mc Icms 0r cxpcndIurc, whch lIh0ugh unusully
lrgc, rc wIhn Ihc n0rml Irdng cIvIcs 0I Ihc busncss.
Exmplcs 0I cxccpI0nl Icms ncludc:
() bn0rml chrgcs I0r bd dcbIs nd wrIc0IIs 0I sI0cks,
() bn0rml pr0vs0n I0r l0sscs 0n l0ngIcrm c0nIrcIs,
() m0sI d|usImcnIs 0I pr0r ycr IxI0n pr0vs0ns, nd
(v) sh0rIIlls 0n cIurl vluI0n 0I grIuIy schcmc
lblIcs.
(k) ExIr - 0rdnry Icms - Ihcsc rc Icms dcrvng Ir0m cvcnIs 0r
IrnscI0ns 0uIsdc Ihc 0rdnry cIvIcs 0I Ihc busncss nd
whch rc b0Ih mIcrl nd cxpccIcd n0I I0 rccur IrcqucnIly 0r
rcgulrly. Exmplcs 0I cxIr0rdnry Icms rc pr0IIs 0r l0sscs
rsng Ir0m:
() Thc dsc0nInuncc 0I sgnIcnI prI 0I busncss.
() Thc slc 0I n nvcsImcnI n0I cqurcd wIh Ihc nIcnI0n
0I rcslc.
() wrIng 0II nIngblcs, such s g00dwll, bccusc 0I
unusul cvcnIs 0r dcvcl0pmcnI durng Ihc pcr0d, nd
(v) Thc cxpr0prI0n 0I sscIs.
(l) Pr0II bcI0rc IxI0n.
(m) Pr0p0scd 0vdcnd.
(n) Pr0II IIcr TxI0n.
(0) Ernngs pcr shrc.
(p) 0vdcnd pcr shrc.
Thc Inncl sIIcmcnIs sh0uld bc cc0mpncd by ppr0prIc
cxplnI0ry n0Ics I0 Ihc Igurcs n Ihc lncc ShccI, Pr0II nd L0ss
Acc0unI nd Csh Fl0w SIIcmcnI.
Thc C0mpncs nd Allcd MIIcrs AcI, Cp. C20 LFN 2004, spccIclly
rcqurcs Ihc dscl0surc 0I Ihc I0ll0wng nI0rmI0n n Ihc n0Ics I0 Ihc
cc0unIs:
() 0rccI0rs' cm0lumcnIs sIIng:
() Chrmn's cm0lumcnIs.
() HghcsI pd 0rccI0r's cm0lumcnIs.
() 0rccI0rs' Iccs.
(v) 0Ihcr cm0lumcnIs, nd
2
(v) Numbcr 0I drccI0rs crnng wIhn sIIcd bnd 0I
cm0lumcnIs.
(b) AudI0rs' RcmuncrI0n.
(c) 0cprccI0n chrgcd 0n Ixcd sscIs.
(d) Numbcr 0I cmpl0yccs nd rcmuncrI0n, sIIng:
() Avcrgc numbcr 0I cmpl0yccs durng Ihc pcr0d nd Ihc
rclIcd c0sIs, nd
() Numbcr 0I cmpl0yccs crnng wIhn sIIcd bnd 0I
cm0lumcnIs.
(c) CpIl c0mmImcnIs sIIng vluc 0I cpIl cxpcndIurc
uIh0rscd by Ihc 0rd buI n0I cxccuIcd s I blncc shccI
dIc. Am0unI c0mmIIcd 0uI 0I Ihc unspcnI m0unI sh0uld ls0
bc dscl0scd.
(I) C0nIngcnI lblIcs, sIIng nIurc 0I Ihc lblIcs, nd Ihc
0rccI0rs' 0pn0n 0n Ihc lkcly l0ss IhI my rsc Ir0m Ihc
lblIy.
(g) Tcchncl Scrvcc AgrccmcnI, sIIng m0unI pyblc I0r Ihc
pcr0d c0vcrcd by Ihc Inncl sIIcmcnIs.
(h) P0sI lncc ShccI cvcnIs, sIIng mIcrl cIIccI Ihc cvcnIs wll
hvc 0n Ihc Inncl sIIcmcnIs (I ny).
A scI 0I Inncl sIIcmcnIs musI c0nIn sgncd nd dIcd udI
rcp0rI ccrIIyng IhI:
() Thc c0mpny's b00ks 0I cc0unIs hvc bccn pr0pcrly kcpI nd
pr0pcr rcIurns I0r purp0sc 0I udI hvc bccn rcccvcd Ir0m
brnchcs n0I vsIcd.
(b) Thc Inncl sIIcmcnIs:
() rc n grccmcnI wIh Ihc b00ks 0I cc0unIs,
() gvc Iruc nd Ir vcw 0I Ihc c0mpny's IIrs,
() hvc bccn prcprcd n cc0rdncc wIh rclcvnI,
SIIcmcnIs 0I Acc0unIng SIndrds ssucd by Ihc Ngcrn
Acc0unIng SIndrds 0rd, nd
(v) hvc bccn pr0pcrly prcprcd n cc0rdncc wIh Ihc
C0mpncs nd Allcd MIIcrs AcI, Cp. C20 LFN 2004.
Fnncl sIIcmcnIs musI c0nIn sgncd nd dIcd rcp0rI 0I Ihc
0rd, hghlghIng Ihc I0ll0wng:
() 0rccI0rs' rcsp0nsblIcs n cc0rdncc wIh SccI0ns 334 nd
335 0I CAMA Cp. C20 LFN 2004.
(b) Prncpl cIvIcs 0I Ihc c0mpny.
(c) RcsulIs 0I Ihc c0mpny I0r Ihc pcr0d nd ppr0prI0n 0I Ihc
pr0IIs.
(d) Chngcs n Ihc 0rd 0I 0rccI0rs durng Ihc pcr0d.
(c) 0rccI0rs' nIcrcsI n Ihc c0mpny's shrcs.
22
(I) 0rccI0rs' nIcrcsI n Ihc c0mpny's c0nIrcIs.
(g) M|0r shrch0ldngs, dscl0sng shrcs hcld by ndvduls nd
0rgnsI0ns h0ldng m0rc Ihn 0 0I Ihc c0mpny's ssucd
shrc cpIl.
(h) Empl0ymcnI nd cmpl0yccs, hghlghIng c0mpny's p0lccs
rcgrdng:
() Empl0ymcnI 0I dsblcd pcrs0ns.
() Empl0yccs' hclIh, sIcIy nd wclIrc.
() Empl0yccs' nv0lvcmcnI nd Irnng.
() M|0r supplcrs nd dsIrbuI0rs 0I c0mpny's mIcrls nd
pr0ducIs rcspccIvcly.
(|) Rcscrch nd 0cvcl0pmcnI cII0rIs 0I Ihc c0mpny, nd
(k) 00nI0ns nd gIIs by Ihc c0mpny, sIIng 0rgnsI0ns I0
wh0m Ihc c0mpny d0nIcd nd m0unI mdc vlblc.
!n cc0rdncc wIh SccI0n 359 (b) 0I Ihc C0mpncs nd Allcd MIIcrs
AcI, Cp. C20 LFN 2004, cvcry publc c0mpny s rcqurcd I0 clccI
mxmum 0I sx mcmbcrs nI0 Ihc AudI C0mmIIcc I cvcry Annul
0cncrl MccIng I0 IuncI0n unIl Ihc ncxI Annul 0cncrl MccIng whcn
Ircsh clccI0n s c0nducIcd.
Thrcc 0I Ihc mcmbcrs rc clccIcd by Ihc shrch0ldcrs nd Ihc rcmnng
Ihrcc clccIcd by Ihc 0rd 0I 0rccI0rs, m0ng Ihcmsclvcs.
Thc AudI C0mmIIcc s rcqurcd I0:
() rcvcw Ihc cxIcrnl udI0rs' sc0pc nd plnnng 0I Ihc udI
rcqurcmcnIs,
(b) rcvcw Ihc cxIcrnl udI0rs' mcm0rndum 0I rcc0mmcndI0ns
0n cc0unIng p0lccs nd nIcrnl c0nIr0ls, I0gcIhcr wIh
mngcmcnI rcsp0nscs,
(c) sccrIn IhI Ihc cc0unIng nd rcp0rIng p0lccs 0I Ihc
c0mpny rc n cc0rdncc wIh lcgl rcqurcmcnIs nd grccd
cIhcl prcIccs,
(d) rcc0mmcnd I0 Ihc 0rd wIh rcgrd I0 Ihc pp0nImcnI, rcm0vl
nd rcmuncrI0n 0I Ihc cxIcrnl udI0rs 0I Ihc c0mpny, nd
(c) uIh0rsc Ihc nIcrnl udI0r I0 crry 0uI nvcsIgI0ns nI0 ny
cIvIcs 0I Ihc c0mpny whch my bc 0I nIcrcsI 0r c0nccrn I0
Ihc c0mmIIcc.
Thc AudI C0mmIIcc s rcqurcd I0 cxprcss n 0pn0n 0n Ihc dcqucy
0r 0Ihcrwsc 0I Ihc mIIcrs sIIcd b0vc nd IhI Ihcy rc sIsIcd wIh
Ihc mngcmcnI rcsp0nscs I0 Ihc cxIcrnl udI0rs' Indngs.
Ths pr0vdcs nI0rmI0n 0n Ihc dcrvI0n nd uIlsI0n 0I Iunds
durng Ihc pcr0d c0vcrcd by Ihc Inncl sIIcmcnIs. whcn csh Il0w
sIIcmcnI s Ikcn I0gcIhcr wIh Ihc lncc ShccI nd Pr0II nd L0ss
Acc0unI, bcIIcr nsghI s 0bIncd s I0 h0w Ihc cIvIcs 0I n cnIcrprsc
hvc bccn Innccd.
23
A csh Il0w sIIcmcnI sh0uld dscl0sc Ihc I0ll0wng:
()
Pr0II bcI0rc IxI0n I0r Ihc pcr0d c0vcrcd by Ihc Inncl
sIIcmcnIs s ppr0prIcly d|usIcd, I0r n0ncsh Icms such
s:
() 0cprccI0n nd m0rIsI0n chrgc 0n Ixcd sscIs,
() Pr0II 0r l0ss 0n dsp0sl 0I Ixcd sscIs, nd
() Pr0vs0n I0r unIundcd pcns0n pln.
(b)
!ncrcsc 0r dccrcsc n currcnI sscIs nd lblIcs whcn
c0mprcd I0 Ih0sc n Ihc prcccdng ycr s cc0unIcd I0r undcr
Ihs subhcd I0 rcIlccI:
() !ncrcsc 0r dccrcsc n sI0ck,
() !ncrcsc 0r dccrcsc n dcbI0rs nd prcpymcnIs,
() !ncrcsc 0r dccrcsc n crcdI0rs nd ccruls, nd
(v) !ncrcsc 0r dccrcsc n I0rcgn currcncy dcp0sI I0r
mp0rIs.
(c) PymcnIs n c0nnccI0n wIh 0pcrI0ns, such s nc0mc Ix nd
rcIrcmcnI bcncIIs pd durng Ihc pcr0d c0vcrcd by Ihc
Inncl sIIcmcnIs rc dcducIcd Ir0m Ihc ddI0n 0I () nd
(b) b0vc, bcI0rc rrvng I ncI csh nIl0w 0r 0uIIl0w Ir0m
0pcrIng cIvIcs.
(d)
AcIul csh 0uIIl0ws 0r nIl0ws 0I Ihc I0ll0wng, durng Ihc pcr0d
c0vcrcd by Ihc Inncl sIIcmcnIs, rc dscl0scd:
() Purchsc 0I Ixcd sscIs, nvcsImcnI 0r nIngblc sscIs.
() Pr0cccds Ir0m slc 0I sscIs, nvcsImcnI 0r nIngblc
sscIs, nd
() 0vdcnds nd nIcrcsIs rcccvcd 0n nvcsImcnIs.
(c)
AcIul csh nIl0ws 0r 0uIIl0ws 0n Ihc I0ll0wng durng Ihc pcr0d
c0vcrcd by Ihc Inncl sIIcmcnIs rc dscl0scd:
() 0vdcnds pd I0 shrch0ldcrs.
() RcpymcnI 0I 0cbcnIurc sI0ck, nd
() Pr0cccds Ir0m ssuc 0I shrcs nd 0cbcnIurc sI0ck.
(I)
Thc ncI Igurc rrvcd I by p00lng I0gcIhcr ll Ihc ncI Igurcs
0bIncd n () - (c) b0vc, rcprcscnIs ncI ncrcsc 0r dccrcsc
n csh nd csh cquvlcnIs. whcn csh nd csh cquvlcnIs
I Ihc bcgnnng 0I Ihc pcr0d c0vcrcd by Ihc Inncl sIIcmcnIs
rc ddcd I0 Ihc ncI ncrcsc 0r dccrcsc, wc rrvc I csh nd
csh cquvlcnIs I Ihc cnd 0I Ihc pcr0d c0vcrcd by Ihc Inncl
sIIcmcnIs whch my c0nssI 0I:
() Csh nd bnk blnccs,
24
() nk 0vcrdrIIs, nd
() !nvcsImcnIs n c0mmcrcl ppcrs nd 0Ihcr sh0rIIcrm
Inncl nsIrumcnIs.
\lucddcd sIIcmcnI rcp0rIs Ihc ddI0nl wclIh crcIcd by n
cnIcrprsc 0n Is 0wn nd by Is cmpl0yccs' cII0rIs durng Ihc pcr0d
c0vcrcd by Ihc Inncl sIIcmcnIs. !I usully sh0ws h0w Ihc wclIh
crcIcd s dsIrbuIcd m0ng vr0us nIcrcsI gr0ups (such s,
cmpl0yccs, g0vcrnmcnI, crcdI0rs, pr0vdcrs 0I cpIl nd IhI rcIncd
I0r Ihc IuIurc crcI0n 0I m0rc wclIh).
Thc c0nccpI hcrc s IhI Ihc dIIcrcncc bcIwccn Ihc c0sI 0I npuIs (b0ughI
n mIcrls nd scrvccs) nd vluc 0I 0uIpuIs (Iurn0vcr) s Ihc vluc
ddcd by Ihc 0pcrI0ns 0I Ihc busncss.
Thc vluc ddcd cn Ihcn bc nlyscd I0 sh0w h0w I hs bccn pplcd.
N0Ic IhI wgcs rc n0I ncludcd n c0sI 0I npuIs Ir0m Ihrd prIy
(0uIsdc Ihc busncss).
Thus, Ihc sIIcmcnI rcp0rIs Ihc clms 0I s0cl nd cc0n0mc gr0ups,
rcIIrmng Ihc c0nIcmp0rry bclcI IhI cnIcrprscs d0 n0I cxsI I0r
Ihc bcncII 0I Ihcr 0wncrs (shrch0ldcrs) 0nly, buI, ls0 I0r Ihc s0ccIy
I lrgc.
Thc sIIcmcnI sh0ws scprIcly, Ihc I0ll0wng:
() Slcs I0 0uIsdcrs (Ihrd prIcs 0uIsdc Ihc gr0up).
(b) Purchscs 0I g00ds nd scrvccs, dsIngushng bcIwccn
mp0rIcd nd l0cl Icms.
(c) () lcss (b) b0vc rcprcscnIs vluc ddcd, nd
(d) 0sIrbuI0n 0I \lucddcd I0 vr0us gr0ups such s:
() Empl0yccs - slrcs, wgcs nd Irngc bcncIIs,
() 00vcrnmcnI - c0mpny nc0mc nd cducI0n Ixcs,
cxcsc duIcs,
() Pr0vdcrs 0I Inncc - 0vdcnds, nIcrcsI, cIc,
(v) RcIncd I0r Ihc rcplccmcnI 0I sscIs nd
busncss gr0wIh,
I0 pr0vdc I0r dcprccI0n 0I Ixcd sscIs, nd
I0 ugmcnI rcscrvcs.
Thc Ivc-ycr Inncl summry cnblcs n nsInI c0mprs0n 0I n
cnIcrprsc's cIvIcs 0vcr Ihc Ivcycr pcr0d. !nI0rmI0n I0 bc
dscl0scd rc s I0ll0ws:
()
( ) Turn0vcr
() Pr0II bcI0rc Ix
() TxI0n
(v) Pr0II IIcr IxI0n
(v) 0vdcnd
(v) RcIncd crnngs
25
(b)
() Fxcd AsscIs
() !nIngblc AsscIs
() !nvcsImcnIs
(v) NcI CurrcnI AsscIs
(v) L0ng Icrm lblIcs nd 0cIcrrcd chrgcs
(c)
() !ssucd shrc cpIl
() Shrc prcmum
() RcvluI0n Rcscrvcs
(v) 0Ihcr Rcscrvcs - Rcvcnuc, 0nus ssuc.
(d)
() Shrc prcc I Ihc cnd 0I pcr0d
() Ernngs pcr shrc
() 0vdcnd pcr shrc
(v) 0vdcnd c0vcr
(v) NcI w0rIh pcr shrc
(v) RcIurn 0n cpIl cmpl0ycd
(v) CurrcnI AsscIs: CurrcnI LblIcs
Turn0vcr X X
C0sI 0I Slcs (X) (X)
0r0ss Pr0II X XX
0sIrbuI0n cxpcnscs (X) (X)
AdmnsIrIvc cxpcnscs (X) (X)
Trdng Pr0II XX XX
!nIcrcsI !nc0mc X X
XX XX
!nIcrcsI pyblc nd smlr chrgcs (X) (X)
Pr0II bcI0rc IxI0n 2 XX XX
TxI0n 3 (X) (X)
Pr0II IIcr IxI0n XX XX
Pr0p0scd 0vdcnd 4 (X) (X)
RcIncd Pr0II I0r Ihc ycr X X
TrnsIcr I0 0cncrl Rcscrvc 5 XX XX
Ernngs pcr shrc (k0b0) XX XX
0vdcnd pcr shrc (k0b0) X X
2b
Thc Acc0unIng P0lccs 0n pgc (lm) nd n0Ics 0n pgcs-I0-I0rm prI 0I Ihcsc
Inncl sIIcmcnIs.
Fxcd AsscIs b X X
!nvcsImcnIs 7 X X
SI0cks nd w0rknpr0grcss 8 X X
0cbI0rs nd PrcpymcnIs 9 X X
0cp0sIs I0r !mp0rIs X X
nk 0cp0sIs X X
Csh nd nk blnccs X X
XX XX
CrcdI0rs: 0uc wIhn 0nc
ycr 0I blncc shccI dIc:
CrcdI0rs nd ccruls 0 (X) (X)
nk 0vcrdrIIs (X) (X)
XXX XXX
CrcdI0rs: 0uc IIcr 0nc ycr 0I XXXX XXXX
lncc shccI dIc:
0rIuIy nd rcIrcmcnI bcncII X X
Pr0vs0n I0r 0cIcrrcd Tx 2 X X
(X) (X)
XXXX XXXX
RcprcscnIcd by:
CAP!TAL & RESER\ES:
Shrc CpIl 3 X X
CpIl Rcscrvc 4 X X
0cncrl Rcscrvc 5 X X
Thc Acc0unIng p0lccs 0n pgc nd n0Ics 0n pgcs I0 I0rm prI 0I Ihcsc
Inncl sIIcmcnIs.
Ths chpIcr cxpl0rcs Ihc sIIuI0ry Irmcw0rk gudng Ihc c0nIcnIs 0I Inncl
sIIcmcnIs s sIpulIcd n Ihc C0mpncs nd Allcd MIIcrs AcI, Cp C 20,
LFN 2004. !I s pcrIncnI I0 n0Ic IhI Inncl sIIcmcnIs rc cxpccIcd I0 bc
drwn up n c0nI0rmIy wIh Ihc 0cncrlly AcccpIcd Acc0unIng Prncplcs, n
cc0rdncc wIh Ihc SIIcmcnI 0I Acc0unIng SIndrds ssucd by Ihc Ngcrn
Acc0unIng SIndrds 0rd, nd n grccmcnI wIh Ihc b00ks 0I cc0unIs 0I
Ihc cnIIy. 0b|ccIvcs 0I Ihc vr0us uscrs 0I Inncl sIIcmcnIs wcrc rcvcwcd.
27
. !n cc0rdncc wIh SccI0n 334 0I CAMA, Cp. C20 LFN 2004, Ihc Inncl
sIIcmcnIs 0I prvIc c0mpny nccd N0T ncludc______________
(A) lncc ShccI
() AudI0rs' Rcp0rIs
(C) N0Ics 0n Ihc Acc0unIs
(0) AudI C0mmIIcc's Rcp0rI.
(E) 0rccI0rs' Rcp0rI.
2. Thc 0cncrlly AcccpIcd Acc0unIng Prncplc, whch sh0uld bc sIIcd n
C0mpny's Acc0unIng P0lccs s I rclIcs I0 nvcnI0ry, s IhI, sI0ck sh0uld
bc vlucd I -----------
(A) C0sI.
() Rclzblc \luc.
(C) Avcrgc c0sI 0vcr Ihc pcr0d c0vcrcd by Ihc Inncl sIIcmcnIs.
(0) RcplccmcnI c0sI.
(E) L0wcr 0I c0sI nd ncI rclzblc vluc.
3. whch 0I Ihc I0ll0wng sh0uld N0T bc clssIcd s currcnI lblIy n
Inncl sIIcmcnI!
(A) Trdc CrcdI0rs nd Accruls.
() Pr0vs0n I0r SIII 0rIuIy.
(C) 0vdcnds Pyblc.
(0) TxI0n Pyblc.
(E) nk 0vcrdrII.
4. whch 0I Ihc I0ll0wng Icms I0und n c0mpny's Pr0II nd L0ss Acc0unI,
s dcscrbcd s ExccpI0nl !Icm!
(A) 0sc0nInuncc 0I sgnIcnI prI 0I busncss.
() wrIng0II 0I 000dwll.
(C) SubsInIl L0ss SusIncd s rcsulI 0I r0bbcry IIck.
(0) Slc 0I n nvcsImcnI n0I cqurcd wIh Ihc nIcnI0n 0I rcslc.
(E) Thc cxpr0prI0n 0I sscIs.
5. 0rccI0rs' rcp0rI n Ihc Inncl sIIcmcnIs nccd N0T dscl0sc:
(A) RcsulIs 0I Ihc c0mpny I0r Ihc pcr0d.
() F0rccsI 0I IuIurc pr0IIblIy.
(C) Prncpl cIvIcs 0I Ihc c0mpny.
(0) Chngcs n Ihc 0rd 0I 0rccI0rs durng Ihc pcr0d.
(E) Rcscrch nd 0cvcl0pmcnI cII0rIs 0I Ihc c0mpny.
b. SIIc 0nc Icm hghlghIcd by Ihc Chrmn's SIIcmcnI n c0mpny's
Annul Rcp0rI.
7. HghlghI ny m|0r dIIcrcncc bcIwccn AudI0rs' rcp0rI nd AudI
C0mmIIcc's rcp0rI.
8. SIIc 0nc nI0rmI0n, usully dscl0scd n I0rm 0I n0Ics I0 Ihc Inncl
sIIcmcnIs, IhI my n0I IIccI Ihc Igurcs n Ihc cc0unIs.
28
9. SIIc 0nc usc 0I Ivcycr Inncl summry.
0. SIIc 0nc rcp0rI cxpccIcd I0 bc I0und n publshcd Inncl sIIcmcnIs 0I
publcly qu0Icd c0mpny.
29
AIIcr sIudyng Ihs chpIcr, Ihc rcdcrs wll bc blc I0 undcrsInd h0w I0 prcprc publshcd
Inncl sIIcmcnIs 0I:
LmIcd LblIy C0mpncs.
nks nd N0nnk Fnncl !nsIIuI0ns.
!nsurncc C0mpncs.
Hvng g0nc Ihr0ugh Ihc sIIuI0ry Irmcw0rk rcqurcd n prcprng Inncl
sIIcmcnIs, Ihc bcsI wy I0 dcm0nsIrIc Is prcIcl pplcI0n s by w0rkng
Ihr0ugh llusIrIvc cxmplcs.
Smb Ngcr PLC s n ElccIrcl C0mp0ncnIs sscmbly 0uIII wIh uIh0rscd
nd ssucd shrc cpIl 0I 200 mll0n, mdc up 0I 400 mll0n 0rdnry
shrcs 0I 50 k0b0 cch. Thc I0ll0wng s Ihc c0mpny's Irl blncc s I 30
Aprl 2008:
Frcch0ld Lnd 25,000
Sh0rIIcrm 0cp0sIs 50,000
Sundry 0cbI0rs b0,820
Csh nd nk 50,8b2
FurnIurc nd FIIngs - C0sI 44,720
AccumulIcd 0cprccI0n ,80
Mchncry nd cqupmcnI - C0sI b4,000
AccumulIcd 0cprccI0n 32,800
SI0ck I My 2003 27,b0
Sundry CrcdI0rs 39,420
nk 0vcrdrII 25,000
wgcs 97,280
30
P0sIgcs nd Tclcph0nc 2,00
0cncrl cxpcnscs b,0b0
d 0cbIs wrIIcn0II 5b0
AudI0rs' rcmuncrI0n 2,000
0sIrbuI0n cxpcnscs 2,40
!nsurncc 2,0b0
nk !nIcrcsI Pd & Rcccvcd 4,00 ,000
ElccIrcIy 3,800
Slrcs (ncludng drccI0rs'
rcmuncrI0n 2m) 7b,850
RIcs ,580
Purchscs 30b,832
Slcs b40,24
0vdcnds (nIcrm) 24,000
Pr0II & L0ss Acc0unI 2,400
Shrc CpIl _______ 200,000
95,924 95,924
Thc I0ll0wng d|usImcnIs rc ncccssry I0r Ihc ycr cndcd 30/4/2008:
() Thc drccI0rs rcc0mmcndcd IhI 5 0I dcbI0rs sh0uld bc scI sdc I0r
p0ssblc bd dcbIs.
(b) SI0ck ws vlucd I 28,b48,000 s I 30 Aprl, 2008
(c) wgcs 0uIsIndng I 30 Aprl, 2008 m0unIcd I0 2,400,000 nd
clccIrcIy ccrucd ws 280,000.
(d) 0cprccI0n s I0 bc wrIIcn 0II mchncry nd cqupmcnI I 0 pcr
nnum nd FurnIurc nd FIIngs I 5 pcr nnum.
(c) Thc Slcs Mngcr s cnIIlcd I0 slcs c0mmss0n 0I 2 0I gr0ss pr0II.
Thc c0mmss0n s pyblc 0n My, 2008.
(I) !nsurncc hs bccn pd n dvncc m0unIng I0 285,000
(g) Mchncry whch sI00d n Ihc b00ks I My, 2007 I 8mll0n hs
bccn s0ld I0r bmll0n n prI cxchngc I0r ncw mchncry c0sIng
2 mll0n. A ncI nv0cc I0r bmll0n hs bccn p0sIcd nI0 Ihc
Purchscs cc0unI. N0 0Ihcr cnIry hs bccn mdc n rcspccI 0I Ihs
IrnscI0n. Thc 0rgnl c0sI 0I Ihc 0ld mchncry ws 0mll0n. !I s
Ihc c0mpny's p0lcy I0 chrgc Iull ycr's dcprccI0n n Ihc ycr 0I
purchsc nd n0nc n Ihc ycr 0I slc.
(h) Thc 0rccI0rs pr0p0scd Inl dvdcnd 0I 8, mkng I0Il 0I 20
dvdcnd n rcspccI 0I Ihc ycr I0 30 Aprl, 2008.
() Pr0vs0n I0r c0mpny nc0mc Ix ws 35mll0n.
Y0u rc rcqurcd I0 prcprc Ihc pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 30
Aprl, 2008 nd blncc shccI s I 30 Aprl, 2008 n I0rm suIblc I0r
publcI0n. N0Ics I0 Ihc cc0unIs rc n0I rcqurcd buI y0u sh0uld sh0w y0ur
w0rkngs.
3
w0rkngs '000 '000
Turn0vcr b40,24
C0sI 0I Slcs (399,024)
0r0ss Pr0II 24,00
Scllng nd 0sIrbuI0n cxpcnscs 2 b,9b2
AdmnsIrI0n cxpcnscs 3 8,882 (25,844)
Trdng Pr0II 5,25b
!nIcrcsI !nc0mc ,000
b,25b
!nIcrcsI Pyblc nd Smlr Chrgcs (4,00)
Pr0II bcI0rc TxI0n 2,5b
TxI0n (35,000)
Pr0II IIcr Tx 77,5b
!nIcrm 0vdcnd pd 24,000
Fnl 0vdcnd Pr0p0scd (8 x 200,000) b,000 (40,000)
RcIncd Pr0II I0r Ihc ycr 37,5b
Ernngs pcr Shrc 0I 50 k0b0 4 9 k0b0
0vdcnd pcr Shrc 0I 50 k0b0 0 k0b0
w0rkngs '000 '000
5 74,904
SI0ck 28,b48
0cbI0rs & PrcpymcnIs b 58,0b4
Sh0rIIcrm 0cp0sIs 50,000
Csh nd nk blnccs 50,8b2
87,574
CrcdI0rs nd Accrul 7 (97,922)
nk 0vcrdrIIs (25,000)
(22,922)
NcI CurrcnI AsscIs (87,574 22,922) b4,b52
239,55b
Fnnccd by:
Shrc CpIl
400,000 0rdnry shrcs 0I 50k0b0 cch. 200,000
32
Rcvcnuc Rcscrvc 8 39,55b
239,55b
. C0sI 0I Slcs: '000
0pcnng SI0ck 27,b0
Purchscs ( 30b,832 - b000) 300,832
327,992
Lcss: Cl0sng SI0ck 28,b48
299,344
wgcs ( 97,280 + 2,400) 99,b80
399,024
2. Scllng nd 0sIrbuI0n cxpcnscs:
0sIrbuI0n cxpcnscs 2,40
Scllng cxpcnscs - Slcs Mngcr's C0mmss0n
(2 0I 0r0ss Pr0II 0I 24,00) 4,822
b,9b2
3. AdmnsIrI0n cxpcnscs:
Slrcs 7b,850
d dcbIs {b0,820 x 5) + 5b0} 3,b0
0cprccI0n chrgc -
PlnI & Mchncry
(b4,000 - 0,000) + 2,000} x 0 b,b00
FurnIurc & FIIngs (44,720 x 5) 2,23b
!nsurncc (2,0b0 - 285) ,775
L0ss 0n dsp0sl 0I mchncry (8,000 - b,000) 2,000
ElccIrcIy (3,800 + 280) 4,080
P0sIgcs & Tclcph0nc 2,00
0cncrl cxpcnscs b,0b0
RIcs ,580
AudI0rs' RcmuncrI0n 2,000
8,882
4. Ernngs pcr Shrc = Pr0II IIcr Tx = 77,5b x 00
N0. 0I !ssucd Shrcs 400,000
=9.29k0b0
5.
Frcch0ld FurnIurc Mchncry T0Il
Lnd & FIIngs & EqupmcnI
AI My 2007 25,000 44,720 b4,000 233,720
AddI0n 2,000 2,000
0sp0sl

(0,000) (0,000)
AI 30 Aprl 2008 () 25,000 44,720 bb,000 235,720
AI My 2007 ,80 32,800 43,980
Chrgc I0r Ihc ycr 2,23b b,b00 8,83b
33
L0ss 0n 0sp0sl (2,000) (2,000)
(b) 3,4b 47,400 b0,8b
AI 30 Aprl 2008 ( b) 25,000 3,304 8,b00 74,904
b. 0cbI0rs & PrcpymcnIs '000
Sundry 0cbI0rs b0,820
Lcss: Pr0vs0n I0r d 0cbIs 3,04
57,779
Prcpd !nsurncc 285
58,0b4
7. CrcdI0rs nd Accruls:
Sundry CrcdI0rs 39,420
Accrucd Slcs Mngcr's C0mmss0n 4,822
Accrucd wgcs 2,400
Accrucd ElccIrcIy 280
TxI0n 35,000
Pr0p0scd Fnl 0vdcnd b,000
97,922
8. Rcvcnuc Rcscrvc
lncc br0ughI I0rwrd 2,400
RcIncd Pr0II I0r Ihc ycr 37,5b
39,55b
Thc I0ll0wng sIgcs 0I s0lvng Ihc qucsI0n rc rcc0mmcndcd:
() Rcd Ihr0ugh Ihc qucsI0n nd n0Ic Ihc d|usImcnIs rcqurcd. !dcnIIy
Ihc Igurcs n Ihc Irl blncc IhI wll bc IIccIcd by Ihc d|usImcnIs
rcqurcd.
(b) 00 y0ur w0rkngs 0n scprIc shccI, cIIccIng ll d|usImcnIs lsIcd.
Thc w0rkngs sh0uld bc submIIcd s prI 0I y0ur nswcrs.
(c) Prcprc Ihc Pr0II nd L0ss Acc0unI nd lncc ShccI, usng Ihc
rcc0mmcndcd I0rmI, sl0IIng n Ihc Igurcs Ir0m Ihc Irl blncc nd
w0rkngs.
Exccl Plc s mnuIcIurng c0mpny. !Is Trl lncc s I 30 Aprl, 2008,
s s I0ll0ws:
000dwll 500
Lnd nd uldng 5,950
PlnI nd Mchncry b8,880
FurnIurc & FIIngs 44,530
AccumulIcd 0cprccI0n:
Lnd & uldng 2,700
PlnI & Mchncry 5,350
FurnIurc & FIIngs 33,500
34
!nvcsImcnIs u0Icd 2,370
Unqu0Icd 3,020
0rdnry Shrc CpIl @ 50k / shrc b3,000
0cncrl Rcscrvc 500
Pr0II nd L0ss cc0unI 750
Pr0vs0n I0r 0cIcrrcd Tx 3,040
SI0cks - Rw MIcrl 0,800
w0rknPr0grcss 9,780
Fnshcd 000ds ,530
Slcs 73,470
RcnI Rcccvcd 70
!nvcsImcnI !nc0mc 800
0Ihcr !nIcrcsI Rcccvcd b00
Pr0II 0n Slc 0I PlnI 3,b00
Purchsc 0I Rw MIcrls 28,b20
ExIcrnl chrgcs 0n rw mIcrls 80
wgcs nd Slrcs 9,0b0
Pcns0n c0sI 0n cmpl0yccs ,220
0cprccI0n chrgc I0r Ihc ycr:
Lnd & uldng 40
PlnI & Mchncry 5,940
FurnIurc & FIIngs 3,250
RcnI, rIcs nd !nsurncc 3,900
P0wcr nd LghIng b,940
0sIrbuI0n cxpcnscs 2,bb0
AudI Iccs 320
Sundry cxpcnscs 400
!nIcrcsI pd 0n bnk 0vcrdrII 200
lls 0I cxchngc pyblc 00
Trdc CrcdI0rs 2,850
0Ihcr CrcdI0rs 2,0b0
C0mpny !nc0mc Tx br0ughI I0rwrd 3,080
CrcdI0rs duc IIcr 0nc ycr :
b 0cbcnIurc 2004 - 2020 5,550
0Ihcrs b80
RI0nlzI0n C0sI 2,070
PrcpymcnIs 2,40
nk lncc 9,20
Trdc dcbI0rs 3,5b0
0Ihcr dcbI0rs 90 _______
257,800 257,800
Thc I0ll0wng ddI0nl nI0rmI0n rc ls0 rclcvnI: '000
. SI0cks I 30 Aprl 2008 Rw MIcrls 2,80
w0rknPr0grcss ,050
Fnshcd 000ds 2,580
35
2. 0urng Ihc ycr, ddI0ns I0 Ixcd sscIs wcrc s I0ll0ws:
PlnI & Mchncry 8,530
FurnIurc & FIIngs 780
0sp0sls wcrc mdc s I0ll0ws:
PlnI & Mchncry - I c0sI (Acc. 0cprccI0n 2,b70,000) 3,020
FurnIurc & FIIngs - I c0sI ( Acc. 0cprccI0n 90,000) ,250
3. Pr0p0scd dvdcnd s b k0b0 pcr shrc.
4. Pr0vs0n n Ihc cc0unIs I0r c0mpny nc0mc Ix 0I 2,400,000 nd
CpIl 0ns Ix 0n slc 0I plnI 0I 450,000 s mdc.
5. Undcrpr0vs0n I0r c0mpny nc0mc Ix n rcspccI 0I ycr cndcd
30/4/07 ws 250,000.
b. !ncludcd n slrcs nd wgcs rc 0rccI0rs' Iccs 0I 0.5mll0n nd
ExccuIvc 0rccI0rs' slrcs 0I 2.5mll0n.
Y0u rc rcqurcd I0 prcprc Ihc pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 30
Aprl 2008 nd blncc shccI s I IhI dIc n I0rm suIblc I0r publcI0n
n lnc wIh CAMA, 2004 I0r Exccl Plc. Sh0w ll w0rkngs.
Turn0vcr 73,470
C0sI 0I Slcs (w) (3,40)
0r0ss Pr0II 42,0b0
0sIrbuI0n cxpcnscs 2,bb0
AdmnsIrIvc cxpcnscs (w2) 24,500
(27,b0)
Trdng Pr0II 4,900
0Ihcr !nc0mc 2 ,570
b,470
!nIcrcsI pd 0n bnk 0vcrdrII ( 200)
Pr0II 0n 0rdnry cIvIcs bcI0rc IxI0n 3 b,270
Tx 0n 0rdnry cIvIcs 4 (2,b50)
Pr0II 0n 0rdnry cIvIcs IIcr TxI0n 3,b20
ExIr0rdnry Icm 5 3,50
ExccpI0nl Icm b (2,070)
,080
Unppr0prIcd Pr0II I0r Ihc ycr 4,700
APPR0PR!AT!0NS:
Pr0p0scd 0vdcnd (w3) (7,5b0)
RcIncd Pr0II I0r Ihc ycr 7,40
3b
7 4,80
!nvcsImcnIs 8 5,390
000dwll 500
SI0cks nd w0rknPr0grcss 9 3b,440
0cbI0rs nd PrcpymcnIs 0 b,0b0
nk 9,20
b,70
CrcdI0rs: 0uc wIhn 0nc ycr 0I
blncc shccI dIc 28,750
32,9b0
CrcdI0rs duc m0rc Ihn 0nc ycr 0I
lncc ShccI dIc: 2 (9,270)
7,390
CpIl nd Rcscrvcs:
Shrc CpIl 3 b3,000
Rcscrvcs 4 8,390
7,390
. Turn0vcr rcprcscnIs slcs 0I mnuIcIurcd pr0ducIs wIhn
Ngcr.
2. 0Ihcr nc0mc: '000
RcnI rcccvcd 70
!nvcsImcnI nc0mc 800
0Ihcr nIcrcsI rcccvcd b00
,570
3. Pr0II 0n 0rdnry cIvIcs bcI0rc Ix
s sIIcd IIcr chrgng
0rccI0rs' cm0lumcnIs:
Fccs 500
0Ihcrs 2,500
AudI0rs' rcmuncrI0n 320
0cprccI0n 0I Ixcd sscIs 9,b00
(40 + 5,940 + 3,250)
4. TxI0n:
Tx chrgcd I0r Ihc ycr 2,400
Undcr - pr0vs0n n prcccdng ycr 250
37
Pcr Pr0II nd L0ss cc0unI 2,b50
lncc br0ughI I0rwrd 3,080
CpIl 0ns Ix 450
Pcr lncc ShccI (n0Ic !!) b,80
5. ExIr0rdnry !Icms:
Pr0II 0n slc 0I plnI 3,b00
Lcss: CpIl 0ns Tx 450
3,50
b. ExccpI0nl !Icm:
RI0nlsI0n C0sI 2,070
7. Fxcd AsscIs Lnd & PlnI & FurnIurc T0Il
uldng Mchncry & FIIngs
'000 '000 '000 '000
AI /5/2007 5,950 b3,370 45,000 24,320
AddI0ns 8,530 780 9,30
0sp0sls ______ (3,020) (,250) (4,270)
AI 30/04/2008 () 5,950 b8,880 44,530 29,3b0
AI /5/2007 2,290 48,080 3,b0 8,530
Chrgc I0r Ihc ycr 40 5,940 3,250 9,b00
ElmnIcd 0n 0sp0sl (2,b70) (90) (3,580)
AI 30/04/2008 (b) 2,700 5,350 33,500 87,550
NcI 00k \luc:
AI 30/04/2008 ( b) 3,250 7,530 ,030 4,80
8. '000
u0Icd 2,370
Unqu0Icd 3,020
5,390
9.
Rw mIcrls 2,80
w0rknpr0grcss ,050
Fnshcd 000ds 2,580
3b,440
0.
Trdc dcbI0rs 3,5b0
0Ihcr dcbI0rs 90
PrcpymcnIs 2,40
b,0b0
.
Trdc crcdI0rs 2,850
0Ihcr crcdI0rs 2,0b0
TxI0n (n0Ic 4) b,80
lls pyblc 00
Pr0p0scd dvdcnd 7,5b0
28,750
38
2.
b 0cbcnIurc (2004 - 2020) 5,550
0Ihcr l0ngIcrm crcdI0rs b80
0cIcrrcd Ix 3,040
9,270
3.
AuIh0rscd, ssucd nd Iully pd:
2b,000,000 0rdnry shrcs 0I 50k cch b3,000
4.
0cncrl rcscrvc 500
Rcvcnuc rcscrvc:
lncc br0ughI I0rwrd 750
RcIncd pr0II I0r Ihc ycr 7,40 7,890
8,390
. C0sI 0I Slcs: '000 '000
0pcnng SI0ck - (0,800 + 9,780 + ,530) 32,0
Add: Purchscs 0I rw mIcrl 28,b20
ExIcrnl chrgcs 0n rw mIcrl 80
28,800
b0,90
Lcss: Cl0sng SI0ck - (2,80 + ,050 + 2,580) (3b,440)
24,470
P0wcr nd lghIng b,940
3,40
2. AdmnsIrIvc cxpcnscs c0nssI 0I:
0rccI0rs' cm0lumcnIs 3,000
wgcs & slrcs b,0b0
Pcns0n c0sI ,220
RcnI, rIcs & nsurncc 3,900
AudI Iccs 320
Sundry cxpcnscs 400
0cprccI0n chrgc 9,b00
24,500
3. Pr0p0scd 0vdcnd
bk0b0 pcr 2b,000,000 0rdnry shrcs
= 2b,000,000 x b
00 7,5b0
Thc qucsI0n n llusIrI0n 32 s n cxpndcd 0nc, mcrcly I0 Icch sIudcnIs.
39
3.2
SAS numbcrs 0 nd 5 pr0vdc gudc 0n Ihc cc0unIng p0lccs nd
mcIh0ds IhI sh0uld bc I0ll0wcd by bnks nd n0n - bnk Inncl
nsIIuI0ns n Ihc prcprI0n 0I Ihcr Inncl sIIcmcnIs.
Thcsc sIIcmcnIs I0cus 0n Ihrcc mn rcs 0I c0nccrn rclIng I0 Ihc
cc0unIng prcIccs whch sh0uld bc I0ll0wcd, nmcly:
() nc0mc rcc0gnI0n,
(b) l0ss rcc0gnI0n, nd
(c) blncc shccI clssIcI0ns nd dscl0surcs n Inncl
sIIcmcnIs.
nks ncludc:
() C0mmcrcl nd mcrchnI bnks (n0w mcrgcd undcr unvcrsl
bnkng gudclncs 0I CN).
(b) C0mmunIy nks.
(c) 0cvcl0pmcnI nks such s nk 0I !ndusIry nd Fcdcrl
M0rIggc nk.
N0n - bnk Inncl !nsIIuI0ns ncludc:
() Fnncc C0mpncs
(b) urcux dc Chngc
(c) M0rIggc !nsIIuI0ns
(d) 0sc0unI H0uscs
(c) SI0ck br0kng Irms
(I) 0Ihcr cpIl mrkcI 0pcrI0rs such s ssung h0uscs, cIc.
nks nd 0Ihcr Inncl nsIIuI0ns rc ls0 rcqurcd I0 c0mply wIh
Ihc cc0unIng rcqurcmcnIs 0I nks nd 0Ihcr Fnncl !nsIIuI0ns
AcI, 99 (s mcndcd), n prcprng Ihcr Inncl sIIcmcnIs.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0 2,
, nks
sh0uld ls0 dscl0sc Ihc I0ll0wng:
() Acc0unIng p0lccs n rcspccI 0I dcnIIcI0n nd
pr0vs0n I0r l0sscs 0I n0npcrI0rmng l0ns, nIurc 0I
0IIblncc shccI cnggcmcnIs, such s lcIIcrs 0I crcdIs,
b0nds, gurnIccs, ndcmnIcs, cccpInccs, nd Irdc
rclIcd c0nIngcnccs such s d0cumcnIry crcdIs nd
mcIh0ds uscd I0 rcc0gnsc nc0mc Ihcrc0n.
(b) !nc0mc sIIcmcnIs, sIIng cch prncpl rcvcnuc Icm:
() !nIcrcsI nc0mc, splI bcIwccn bnk nd n0nbnk
s0urccs.
40
() !nIcrcsI cxpcnscs, splI bcIwccn bnk nd n0nbnk
s0urccs.
() CrcdI rclIcd Icc nc0mc nd cxpcnscs.
A bnk sh0uld n0I 0IIscI 0nc Icm 0I rcvcnuc 0r cxpcnsc by
dcducIng I Ir0m n0Ihcr Icm 0I rcvcnuc 0r cxpcnsc.
(c) AsscIs nd lblIcs n Ihc blncc shccIs I0 bc gr0upcd
cc0rdng I0 Ihcr nIurc nd lsIcd n Ihc 0rdcr 0I Ihcr lqudIy
nd mIurIy. AsscIs sh0uld sIrI wIh csh nd sh0rIIcrm Iunds
whlc lblIcs wIh l0n sI0ck.
(d) A mIurIy pr0Ilc 0I rsk sscIs nd dcp0sI lblIcs clssIcd
nI0 Ihc I0ll0wng cIcg0rcs:
Undcr m0nIh
3 m0nIhs
3 b m0nIhs
b 2 m0nIhs
0vcr 2 m0nIhs
Thc b0vc mIurIy pr0Ilc sh0uld bc bscd 0n Ihc cxpccIcd
n0rml rcpymcnI pcr0ds 0I Ihc sscIs nd lblIcs.
(c) Thc m0unI 0I pr0vs0n I0r l0n l0sscs, scgrcgIcd bcIwccn
prncpl nd nIcrcsI. Pr0vs0n I0r l0sscs 0I 0IIblncc shccI
cnggcmcnIs sh0uld bc sh0wn scprIcly s c0mp0ncnI 0I 0Ihcr
lblIcs.
(I) An nlyss 0I Ihc m0vcmcnIs n Ihc vr0us cIcg0rcs 0I l0n
l0ss pr0vs0n sh0uld bc dscl0scd.
(g) 0nc Icm 0I sscI 0r lblIy sh0uld n0I bc 0IIscI by dcducIng
n0Ihcr sscI 0r lblIy unlcss lcgl rghI 0I 'scI0II' cxsIs.
(h) An nlyss 0I l0ns nd dvnccs bcIwccn pcrI0rmng nd
n0npcrI0rmng l0ns.
() Thc nIurc nd m0unI 0I c0nIngcnccs nd c0mmImcnIs
rsng Ir0m Ihc 0II blncc shccI cnggcmcnIs whch Ihc bnk
hs undcrIkcn nd nlyss bcIwccn Ihc dIIcrcnI clsscs 0I
c0nIngcnccs.
0II blncc shccI cnggcmcnIs sh0uld n0I I0rm prI 0I blncc
shccI I0Ils.
(|) Thc m|0r Icms IhI mkc up Is 0Ihcr sscIs nd 0Ihcr
lblIcs n I0rm 0I n0Ics I0 Ihc cc0unIs.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0 2, ll NF!s
sh0uld ls0 dscl0sc Ihc I0ll0wng:
() Acc0unIng p0lccs n rcspccI 0I:
() Thc mcIh0ds nd bscs by whch pr0vs0ns I0r
l0sscs 0n l0ns 0r sccurIcs rc mdc.
4
() Thc nIurc 0I 0IIblncc shccI cnggcmcnIs nd
Ihc mcIh0d uscd I0 rcc0gnsc nc0mc 0r l0ss Ihcrc0n.
(b) !nc0mc sIIcmcnI I0 ncludc ll mp0rInI rcvcnuc Icms nd
cxpcnscs s pplcblc I0 'NF!s'.
(c) 0r0upng 0I sscIs nd lblIcs n Ihc blncc shccI cc0rdng
I0 Ihcr nIurc, lqudIy nd mIurIy.
(d) 0IIblncc shccI cnggcmcnIs sh0uld n0I I0rm prI 0I
blncc shccI I0Ils.
(c) A l0n grnIng NF! sh0uld dscl0sc n nlyss 0I Ihc IclIcs
gvcn, dsIngushng bcIwccn pcrI0rmng nd n0npcrI0rmng,
nd Ihcr mIurIy pr0Ilcs.
!n ddI0n I0 Ihc b0vc dscl0surc rcqurcmcnIs, ll NF!s sh0uld
dscl0sc Ihc I0ll0wng, n Ihcr Inncl sIIcmcnIs, s Ihcy rclIc
I0 Ihcr spccIc cIvIcs:
()
() \luc 0I 0uIsIndng dclvcrcs I Ihc rulng mrkcI
prcc.
() \luc 0I shrc b0x l0d (IhI s, ggrcgIc vluc 0I
shrcs hcld n sI0ckbr0kcr's p0rII0l0) I Ihc rulng
mrkcI prcc.
() !nvcsImcnI pr0Ilc - IhI s, Ihc m0unI 0I m0ncy
mrkcI /cpIl mrkcI sscIs 0I Ihc c0mpny.
(v) lnccs 0n clcnIs' cc0unIs.
(b)
\luc 0I sccurIcs undcrwrIIcn buI n0I ycI dsp0scd 0I,
dsIngushng bcIwccn lsIcd nd Ih0sc wIng
lsIng.
(c)
() 0cp0sIs, splI bcIwccn cll nd Icrm dcp0sIs, wIh
Ihcr mIurIy pr0Ilcs.
() SccurIcs, nlyscd nI0 Ircsury blls nd
ccrIIcIcs, 0Ihcr g0vcrnmcnI sccurIcs nd prvIc
sccI0r sccurIcs.
() 0cp0sIs, splI bcIwccn cll nd Icrm dcp0sIs, wIh
Ihcr mIurIy pr0Ilcs.
(c)
() T0Il vluc 0I plccmcnIs wIh 0Ihcr Inncc h0uscs
wIh nlyss 0I Ihc pcr0d I0 mIurIy / pcr0d Ir0m
mIurIy.
() Schcdulc 0I sccI0rl ll0cI0n 0I rsk sscIs such
s Trdc Fnncc, Lcsc, M0ncy nd CpIl MrkcI
nsIrumcnIs.
42
() rckd0wn 0I Icms IhI c0nsIIuIc 0Ihcr sscIs
nd 0Ihcr lblIcs.
(I)
() 0C csIblshmcnIs sh0uld IrcI Ihcr I0rcgn
currcnccs s sI0cks. Thc sI0ck 0I I0rcgn
currcnccs hcld I Ihc blncc shccI dIc sh0uld
bc vlucd I Ihc l0wcr 0I c0sI nd mrkcI vluc.
() unIIy nd Nr cquvlcnI 0I Ihc dIIcrcnI
I0rcgn currcnccs Irdcd n, durng Ihc pcr0d.
() \luc 0I I0rcgn currcnccs hcld nd c0nvcrs0n
rIcs uscd I Ihc blncc shccI dIc.
(g)
() T0Il lblIcs I0 NI0nl H0usng Fund.
() T0Il vluc 0I m0rIggc sscIs nd m0vcmcnIs
Ihcrc0n, sh0wng:
AsscIs br0ughI I0rwrd
AddI0ns durng Ihc ycr / pcr0d
0sp0sls nd rclsI0ns durng Ihc ycr
lncc crrcd I0rwrd.
() 0Ihcr s0urccs 0I Iunds, prI Ir0m shrc cpIl nd
NI0nl H0usng Fund.
(v) ClssIcI0n 0I m0rIggc l0ns rcccvblc nd
m0rIggc bckcd sccurIcs nI0 Ih0sc I0r slc nd Ih0sc
I0r l0ngIcrm nvcsImcnIs.
(v) 0cIlcd brckd0wn 0I scrvcng rghIs cqurcd durng
Ihc ycr, sIIng Ihc:
Ihc m0unI cpIlscd,
Ihc mcIh0d 0I m0rIsI0n, nd
Ihc m0unI m0rIscd.
()
L0ns nd dvnccs rc sIIcd ncI 0I pr0vs0n I0r d0ubIIul
dcbIs. Ths pr0vs0n s dcIcrmncd Ir0m spccIc sscssmcnI
0I cch cusI0mcrs' cc0unI, n cc0rdncc wIh Ihc prudcnIl
gudclncs, s summrscd bcl0w:
() CrcdI IclIcs sh0uld bc clssIcd s cIhcr
pcrI0rmng 0r n0npcrI0rmng.
() A crcdI IclIy s dccmcd I0 bc pcrI0rmng I pymcnIs
0I b0Ih prncpl nd nIcrcsI rc upI0dIc n
cc0rdncc wIh Ihc grccd Icrms.
() A crcdI IclIy sh0uld bc dccmcd s n0npcrI0rmng
whcn nIcrcsI 0r prncpl s duc nd unpd I0r 90 dys
0r m0rc.
43
(v) N0npcrI0rmng crcdI IclIcs sh0uld bc clssIcd nI0
Ihrcc cIcg0rcs, nmcly: subsIndrd, d0ubIIul 0r l0sI
0n Ihc I0ll0wng crIcr:
- Unpd prncpl nd / 0r nIcrcsI rcmn
0uIsIndng I0r m0rc Ihn 90 dys, buI lcss Ihn 80 dys
IIcr duc dIc. 0 pr0vs0n s mdc I0r IclIcs n Ihs
cIcg0ry.
- Unpd prncpl nd / 0r nIcrcsI whch
rcmn 0uIsIndng I0r I lcsI 80 dys, buI lcss Ihn
3b0 dys, IIcr duc dIc nd rc n0I sccurcd by lcgl IIlc
I0 lcscd sscIs 0r pcrIccIcd rclsblc c0llIcrl n Ihc
pr0ccss 0I c0llccI0n 0r rclsI0n.
50 pr0vs0n s mdc I0r IclIcs n Ihs cIcg0ry.
Unpd prncpl nd / 0r nIcrcsI whch rcmn
0uIsIndng I0r 3b0 dys 0r m0rc nd rc n0I sccurcd by
lcgl IIlc I0 lcscd sscIs 0r pcrIccIcd rclsblc c0llIcrl
n Ihc c0ursc 0I c0llccI0n 0r rclsI0n.
00 pr0vs0n s mdc I0r IclIcs n Ihs cIcg0ry.
(v) A gcncrl pr0vs0n 0I I lcsI s mdc 0n rsk sscIs
n0I spccIclly pr0vdcd I0r.
(v) Ech mcr0Inncc bnk s cxpccIcd I0 rcvcw, I lcsI 0ncc
m0nIh, Is l0ns nd dvnccs, nd mkc ppr0prIc
pr0vs0ns I0r l0n l0sscs, s I0ll0ws,
0 PcrI0rmng
30 dys Pss nd wIch 5
3b0 dys SubsIndrd 20
b90 dys 00ubIIul 50
9 0r m0rc dys
nd/0r rcsIrucIurcd
l0ns L0sI 00
(b)
!nIcrcsI nc0mc s rcc0gnscd 0n ccrul bss. !nIcrcsI 0vcrduc
I0r m0rc Ihn 90 dys s suspcndcd nd rcc0gnscd 0n csh bss
0nly.
(c)
() TrnscI0ns n I0rcgn currcnccs rc IrnslIcd I0 Nr
I Ihc rIc 0I cxchngc rulng I Ihc dIc 0I Ihc IrnscI0n.
() lnccs n 0vcrscs brnchcs rc c0nvcrIcd I0 Nr I
Ihc rIc 0I cxchngc rulng I Ihc blncc shccI dIc.
44
0r0ss Ernngs X X
!nIcrcsI Expcnscs 2 (X) (X)
NcI !nc0mc Ir0m 0pcrI0ns. XX XX
0pcrIng cxpcnscs (X) (X)
Pr0vs0n I0r Rsk AsscIs 3 (X) (X)
0cprccI0n (X) (X)
(XX) (XX)
Pr0II bcI0rc IxI0n 4 XXX XXX
TxI0n 5 (X) (X)
Pr0II IIcr IxI0n XX XX
TrnsIcr I0 SIIuI0ry Rcscrvc b (X) (X)
TrnsIcr I0 Smll Sclc !ndusIrcs
Rcscrvc 7 (X) (X)
Pr0p0scd 0vdcnd 8 (X) (X)
RcIncd Pr0II I0r Ihc ycr X X
TrnsIcr I0 0cncrl Rcscrvc 9 X X
XX XX
Ernngs pcr shrc (k0b0) X X
0vdcnd pcr shrc (k0b0) X X
Thc cc0unIng p0lccs 0n pgc xx nd n0Ics 0n pgcs xx I0 xx I0rm prI 0I
Ihcsc Inncl sIIcmcnIs.
Csh nd sh0rIIcrm Iunds 0 X X
PlccmcnIs wIh 0Ihcr bnks X X
nd Fnncl !nsIIuI0ns X X
lls 0sc0unIcd 2 X X
0Ihcr !nvcsImcnIs 3 X X
L0ns nd Advnccs 4 X X
Advnccs undcr Inncc lcsc 5 X X
0Ihcr AsscIs b X X
EqupmcnI 0n Lcsc 7 X X
Fxcd AsscIs 8 X X
T0Il AsscIs XX XX
45
0cp0sIs, currcnI nd 0Ihcr cc0unIs 9 X X
TxI0n 20 X X
0cIcrrcd TxI0n 2 X X
0Ihcr LblIcs 22 X X
XX XX
Cllcdup Shrc CpIl 23 X X
Shrc Prcmum 24 X X
SIIuI0ry Rcscrvc 25 X X
Smll Sclc !ndusIrcs Rcscrvc 2b X X
Fxcd AsscIs RcvluI0n Surplus 27 X X
0cncrl Rcscrvc 28 X X
Shrch0ldcrs' Fund XX XX
T0Il LblIcs XX XX
AcccpInccs nd 0urnIccs 29 X X
Thc Acc0unIng p0lccs 0n pgc xx nd n0Ics 0n pgcs xx I0 xx I0rm prI 0I
Ihcsc Inncl sIIcmcnIs.
Thc I0ll0wng blnccs wcrc cxIrcIcd Ir0m Ihc b00ks 0I Rclblc nk PLC
s I 3 Mrch, 2008:
'000 '000
Lnd nd uldng 322,850
PlnI nd Mchncry 83,000
M0I0r \chclcs 20,000
FurnIurc & FIIngs 8,500
C0mpuIcr EqupmcnI 325,000
AccumulIcd 0cprccI0n:
uldng 99,020
PlnI & Mchncry 80,70
M0I0r \chclc 30,930
FurnIurc 55,3b0
C0mpuIcr cqupmcnI 3,540
!nIcrcsI pd 0n cll m0ncy 72,350
!nIcrcsI 0n sIII currcnI cc0unIs b8,270
!nIcrcsI 0n sh0rI Icrm Ixcd dcp0sIs 393,550
!nIcrcsI 0n svngs cc0unIs 98,820
!nIcrcsI 0n sundry 0pcrI0ns 0,800
d dcbIs 39,250
Slrcs & ll0wnccs 52,400
0cncrl SIIuI0ry cxpcnscs 43,240
C0mpuIcr sII0ncry cxpcnscs 204,40
4b
PrnIng 0I chcquc b00klcIs b2,00
Lcgl Iccs 3,70
Trnsp0rI & Trvcllng cxpcnscs 38,9b0
AdvcrIscmcnI & Publc RclI0ns 89,330
0cp0sI !nsurncc 24,840
Pr0pcrIy !nsurncc 39,720
L0ns & Advnccs 3,b82,b30
S0cl !nsurncc Chrgcs 4,990
Suspcnsc Acc0unI 20,b0
!nvcsImcnI n 0cbcnIurc SI0cks 350,000
!nvcsImcnI n C0mmcrcl Ppcrs 20,000
!nvcsImcnI n Ass0cIcd C0mpny b23,350
Csh !n Hnd 2,300
CN CurrcnI Acc0unI 3,958,390
Csh Rcscrvc I CN ,500,000
F0rcgn nk CurrcnI Acc0unI 5,500,000
Cll M0ncy wIh L0cl nks4,3,500
Trcsury lls 220,000
CN SIblzI0n SccurIcs 93,4b0
0rdnry Shrc CpIl 0I pcr Shrc 2,200,000
Rcscrvc I0r 0nus !ssuc 2,800,000
Pr0II nd L0ss cc0unI 750,bb0
SIIuI0ry Rcscrvc 82,20
SmllSclc !ndusIry Rcscrvc 220,500
00mclry Acc0unI 5,837,250
CusI0mcrs 0cp0sIs I0r F0rcgn Currcnccs 27,300
Svngs Acc0unI lnccs ,385,330
CurrcnI Acc0unI lnccs 3,285,40
0cp0sI Acc0unI lnccs b2,350
Cll M0ncy wIh L0cl nks ,428,840
C0mpny !nc0mc Tx 0vcrPr0vs0n 2,3b0
0cIcrrcd TxI0n 2,000
!nIcrcsI 0n Trcsury lls b8,b00
!nIcrcsI 0n Cll M0ncy 89b,020
!nIcrcsI 0n 0sc0unIcd ll 53,890
!nIcrcsI 0n Advnccs nd 0vcrdrII ,004,20
C0mmss0n 0n 0sc0unIcd ll 28,30
C0mmss0n 0n ll C0llccIcd 4,930
C0mmss0n 0n Turn0vcr 07,090
C0mmss0n 0n 0urnIccs / 0nuscs b,580
C0mmss0n 0n N!TEL lls C0llccIcd 2,20
F0rcx Ernngs b50,540
0Ihcr Sundry !nc0mc ,70
!nIcrcsI Suspcnsc cc0unI 3,720
d 0cbIs rcc0vcrcd 78,b0
Pr0vs0n I0r bd nd d0ubIIul dcbIs __________ 79,40
23,7b9,0b0 23,7b9,0b0
47
Thc I0ll0wng ddI0nl nI0rmI0n wcrc pr0vdcd:
. L0ns nd dvnccs wcrc mdc up 0I : '000
L0ns sccurcd gnsI Rcl EsIIc ,20,b50
0Ihcrwsc Sccurcd ,b4,320
Unsccurcd 920,bb0
3,b82,b30
2. PcrI0rmncc 0I l0ns nd dvnccs rc nlyscd s I0ll0ws:
PcrI0rmng l0ns 70.5
Sub - SIndrd IclIcs 2.0
00ubIIul IclIcs 8.0
L0sI IclIcs 0.5
00
Pr0vs0n I0r bd nd d0ubIIul dcbIs sh0uld bc mdc 0n l0ns nd
dvnccs n cc0rdncc wIh Ihc pr0vs0ns 0I Ihc prudcnIl gudclncs.
3. Slrcs nd ll0wnccs ncludc 0rccI0rs' cm0lumcnI 0I 25mll0n.
4. Thc blncc 0n rcscrvcs I0r b0nus ssuc sh0uld bc IrnsIcrrcd I0 0rdnry
shrc cpIl cc0unI.
5. Mkc Ihc ncccssry IrnsIcrs I0 SIIuI0ry nd SmllSclc !ndusIrcs
Rcscrvc.
b. A dvdcnd 0I 2k0b0 pcr shrc sh0uld bc pd, bscd 0n Ihc ncw shrc
cpIl.
7. Accruls ncludc Ihc I0ll0wng: Lcgl Iccs 2,290,000
AudI Iccs 2,000,000
8. Fxcd sscIs rc I0 bc dcprccIcd, pplyng Ihc I0ll0wng rIcs:
uldng 2
PlnI & Mchncry 0
M0I0r \chclcs 20
FurnIurc & FIIngs 2
C0mpuIcr EqupmcnI 5
9. A pr0vs0n 0I 330,b40,000 sh0uld bc mdc n Ihc Pr0II & L0ss Acc0unI
I0 c0vcr C0mpncs !nc0mc nd EducI0n Txcs whlc 20mll0n
sh0uld bc scI sdc I0r dcIcrrcd Ix.
0. 5mll0n 0uI 0I nIcrcsI 0n l0ns nd dvnccs sh0uld bc IrnsIcrrcd
I0 suspcnsc cc0unI.
Y0u rc rcqurcd I0 prcprc Ihc c0mpny's pr0II nd l0ss cc0unI I0r Ihc ycr
cndcd 3 Mrch 2008 nd blncc shccI s I IhI dIc, n I0rm suIblc I0r
publcI0n.
48
!nIcrcsI !nc0mc 2,730,b30
Lcss: !nIcrcsI cxpcnscs 2 743,790
NcI !nIcrcsI !nc0mc ,98b,840
Pr0vs0n I0r Rsk sscIs 3 (50,250)
,93b,590
0Ihcr !nc0mc 4 9,90
0pcrIng !nc0mc 2,847,780
0pcrIng cxpcnscs (w!) (,3b8,450)
Pr0II 0n 0rdnry cIvIcs bcI0rc Ix 5 ,479,330
Tx 0n Pr0II 0n 0rdnry cIvIcs b (348,280)
Pr0II 0n 0rdnry cIvIcs IIcr Ix ,3,050
TrnsIcr I0 SIIuI0ry Rcscrvc (30 x ,3,050) 7 339,35
TrnsIcr I0 SmllSclc !ndusIrcs Rcscrvc
(0 x ,479,330) 8 47,933
Pr0p0scd 0vdcnd (5,000,000,000 x 2 k0b0) 9 b00,000
,087,248
RcIncd Pr0II IrnsIcrrcd I0 0cncrl Rcscrvc 43,802
,3,050
Ernngs Pcr Shrc (d|usIcd) 0 22 k0b0
0vdcnd Pcr Shrc 2 k0b0
Csh nd Sh0rITcrm Funds 5,597,b50
!nvcsImcnIs 2 ,83,350
L0ns nd Advnccs 3 3,404,890
0Ihcr AsscIs 4 20,b0
Fxcd AsscIs 5 bb0,0b0
2,05b,5b0
0cp0sIs nd 0Ihcr cusI0mcrs' cc0unIs b 2,775,20
0Ihcr LblIcs 7 944,930
0cIcrrcd TxI0n 8 22,000
() 3,742,40
AuIh0rscd nd !ssucd Shrc CpIl 8 5,000,000
SIIuI0ry Rcscrvc 7 ,5,525
49
Smll sclc !ndusIrcs Rcscrvc 8 3b8,433
0cncrl Rcscrvc 9 794,4b2
Shrch0ldcrs' Fund (b) 7,34,420
( + b) 2,05b,5b0
. !nIcrcsI !nc0mc:
Advnccs nd 0vcrdrIIs ,004,20
Trcsury lls b8,b00
Cll m0ncy 89b,020
0sc0unIcd blls 53,890
2,735,b30
Lcss: TrnsIcr I0 Suspcnsc Acc0unI 5,000
2,730,b30
2. !nIcrcsI cxpcnscs:
Cll m0ncy 72,350
SIII CurrcnI cc0unI b8,270
Sh0rIIcrm Ixcd 0cp0sIs 393,550
Svngs cc0unIs 98,820
Sundry 0pcrI0ns 0,800
743,790
3. Pr0vs0n I0r rsk sscIs:
PcrI0rmng ( x 70.5 x 3,b82,b30) 25,9b0
SubsIndrd (0 x 2 x 3,b82,b30) 77,340
00ubIIul (50 x 8 x 3,b82,b30) 47,30
L0sI (00 x 0.5 x 3,b82,b30) 8,40
2b9,020
0ld Pr0vs0n r0ughI F0rwrd (79,40)
!ncrcsc n Pr0vs0n I0r Ihc ycr 89,b0
Add: d dcbIs wrIIcn 0II 39,250
Lcss: Rcc0vcrcs durng Ihc ycr (78,b0)
F0r P & L A/c. 50,250
4. 0Ihcr !nc0mc:
C0mmss0n 0n Turn0vcr 07,090
C0mmss0n 0n 0sc0unIcd lls 28,30
C0mmss0n 0n lls C0llccIcd 4,930
C0mmss0n 0n 0urnIccs & 0nds b,580
C0mmss0n 0n N!TEL blls c0llccIcd 2,20
F0rcgn cxchngc crnngs b50,540
0Ihcr Sundry !nc0mc ,70
9,90
5. Pr0II bcI0rc Ix s sIIcd IIcr chrgng:
0rccI0rs' cm0lumcnI 25,000
AudI0rs' rcmuncrI0n 2,000
50
!nsurncc Prcmum 0n dcp0sI lblIcs 24,840
0cprccI0n 0I Fxcd AsscIs ,730
b. TxI0n:
C0mpny !nc0mc & EducI0n Ixcs
bscd 0n pr0II I0r Ihc ycr 330,b40
Lcss: 0vcr pr0vs0n n prcv0us ycr 2,3b0
328,280
Add: 0cIcrrcd Tx pr0vs0n 20,000
348,280
7. SIIuI0ry Rcscrvc:
lncc r0ughI I0rwrd 82,20
TrnsIcr Ir0m Pr0II & L0ss Acc0unI 339,35
Pcr lncc ShccI. ,5,525
8. Smll Sclc !ndusIrcs Rcscrvc:
lncc r0ughI I0rwrd 220,500
TrnsIcr Ir0m Pr0II & L0ss Acc0unI 47,933
Pcr lncc ShccI 3b8,433
9. Pr0p0scd 0vdcnd:
Thc dvdcnd pr0p0scd s 2k0b0 pcr shrc, I0r
5 bll0n 0rdnry shrcs ssucd
0. Ernngs Pcr Shrc:
Ernngs pcr shrc s clculIcd usng pr0II IIcr Ix I0r Ihc ycr 0n Ihc
5 bll0n 0rdnry shrcs ssucd s I 3 Mrch 2008.
. Csh nd Sh0rITcrm Funds '000
Csh n Hnd 2,300
CN CurrcnI Acc0unI 3,958,390
Csh rcscrvc I CN ,500,000
F0rcgn nk CurrcnI cc0unI 5,500,000
Cll m0ncy wIh l0cl bnk 4,3,500
Trcsury lls 220,000
CN SIblzI0n SccurIcs 93,4b0
5,597,b50
2. !nvcsImcnIs:
0cbcnIurc SI0cks 350,000
C0mmcrcl Ppcrs 20,000
Ass0cIcd c0mpny b23,350
,83,350
3. L0ns nd Advnccs
() Anlyss by sccurIcs nd qulIy
Sccurcd gnsI rcl csIIc ,20,b50
0Ihcrwsc sccurcd ,b4,320
Unsccurcd 920,bb0
3,b82,b30
Lcss: Pr0vs0n I0r d0ubIIul cc0unIs (N0Ic 3) 2b9,020
5
3,43,b0
Lcss: !nIcrcsI n suspcnsc (3,720 + 5,000) 8,720
3,404,890
() Anlyss by pcrI0rmncc:
PcrI0rmng 2,59b,254
N0nPcrI0rmng:
Sub - SIndrd 773,352
00ubIIul 294,b0
L0sI 8,44
,08b,37b
3,b82,b30
4. 0Ihcr AsscIs
Suspcnsc Acc0unI 20,b0
5. Fxcd AsscIs Lnd& PlnI& M0I0r FurnIurc C0mpuIcr T0Il
uldng Mchncry \chclc & FIIngs EqupmcnI
C0sI: N'000 N'000 N'000 N'000 N'000 N'000
AI /4/2007 322,850 83,000 20,000 8,500 325,000 ,0b9,350
AddI0ns
0sp0sls _____ __ _______ _______ ___ ____ ___
AI 3/03/2008 () 322,850 83,000 20,000 8,500 325,000 ,0b9,350
0cprccI0n:
AI /4/2007 99,020 80,70 30,930 55,3b0 3,540 297,5b0
Chrgc I0r Ihc ycr b,4b0 8,300 24,000 4,220 48,750 ,730
AI 3/03/2008 (b) 05,480 99,00 54,930 b9,580 80,290 409,290
NcI 00k \luc:
AI 3/03/2008 ( b) 27,370 83,990 b5,070 48,920 244,70 bb0,0b0
b. 0cp0sIs
Svngs cc0unIs ,385,330
CurrcnI cc0unIs 3,285,40
0cp0sI cc0unIs b2,350
0cp0sIs I0r I0rcgn currcnccs 27,300
Cll m0ncy Ir0m l0cl bnk ,428,840
00mclry Acc0unIs 5,837,250
2,775,20
7. 0Ihcr lblIcs
Accrucd Chrgcs (2,000 + 2,290) 4,290
Tx pyblc 330,b40
Pr0p0scd 0vdcnd b00,000
944,930
8. AuIh0rscd nd !ssucd shrc cpIl:
() AI Aprl , 2007
2,200,000,000 0rdnry shrcs 0I cch 2,200,000
0nus !ssuc: TrnsIcr Ir0m b0nus ssuc rcscrvc
2,800,000,000 0rdnry shrcs 0I cch 2,800,000
5,000,000
52
(b) 0nus !ssuc Rcscrvc:
lncc br0ughI I0rwrd 2,800,000
TrnsIcr I0 ssucd shrc cpIl (2,800,000)

9. 0cncrl Rcscrvc:
lncc br0ughI I0rwrd 750,bb0
TrnsIcr Ir0m Pr0II & L0ss cc0unI 43,802
794,4b2
. 0pcrIng cxpcnscs c0mprscs:
Lcgl Iccs (3,70 + 2,290) b,000
AudI Iccs 2,000
0cprccI0n ,730
Slrcs nd All0wnccs 52,400
0cncrl SII0ncry cxpcnscs 43,240
C0mpuIcr SII0ncry cxpcnscs 204,40
PrnIng 0I chcquc b00klcIs b2,00
Trnsp0rI & Trvcllng cxpcnscs 38,9b0
AdvcrIscmcnI & Publc rclI0ns 89,330
0cp0sI !nsurncc 24,840
Pr0pcrly !nsurncc 39,720
S0cl !nsurncc chrgcs 4,990
,3b8,450
SAS N0 b csIblshcs Inncl cc0unIng nd rcp0rIng sIndrds I0r
Ihc Inncl sIIcmcnIs 0I n0nlIc nd lIc ssurncc undcrIkngs.
Ths sIndrd s pplcblc I0 0nly Inncl sIIcmcnIs prcprcd n
cc0rdncc wIh Ihc pr0vs0ns 0I Ihc !nsurncc AcI 2003 nd CAMA
2004.
() 0cncrl !nsurncc usncss: Ths s ls0 rcIcrrcd I0 s n0nlIc
busncss. !I ndcmnIcs Ihc p0lcy h0ldcr gnsI l0sscs, whch
my rcsulI Ir0m 0ccurrcncc 0I cvcnIs wIhn spccIcd pcr0ds
c0vcrcd by Ihc c0nIrcIs.
(b) LIc Assurncc usncss: !I s n nsurncc busncss n whch Ihc
bcncIIs duc I0 Ihc p0lcy h0ldcr bcc0mc pyblc 0n Ihc
IInmcnI 0I sIpulIcd gc, I dcIh 0r 0n Ihc 0ccurrcncc 0I
spccIcd cvcnI. !I s l0ngIcrm nsurncc busncss.
Thcrc rc scvcrl bscs 0I cc0unIng I0r nsurncc IrnscI0ns.
H0wcvcr, Ihrcc bscs c0mm0nly d0pIcd rc s I0ll0ws:
53
() : Ths s uscd whcrc I s p0ssblc I0
dcIcrmnc Ihc undcrwrIng rcsulI 0I n nsurncc busncss
wrIIcn n n cc0unIng pcr0d I Ihc cnd 0I IhI pcr0d.
Thc undcrwrIng rcsulIs IhI rc dscl0scd n Ihc Inncl
sIIcmcnIs, undcr Ihs bss, usully ncludc Ihc rcsulI 0I Ihc
currcnI cc0unIng pcr0d nd d|usImcnIs, I ny, mdc I0
csImIcs uscd n dcIcrmnng rcsulIs 0I Ihc prcv0us cc0unIng
pcr0d.
(b) : Ths s d0pIcd whcrc I s n0I p0ssblc I0
dcIcrmnc Ihc undcrwrIng rcsulI 0I n nsurncc busncss unIl
Ihc I0ll0wng cc0unIng pcr0d.
(c) : Ths s d0pIcd whcrc I Ikcs l0ng Imc I0
dcIcrmnc Ihc undcrwrIng rcsulI wIh rcs0nblc dcgrcc 0I
ccrInIy. Undcr Ihs bss, Iund s crcIcd I0r cch undcrwrIng
ycr. Prcmums 0r busncss wrIIcn durng Ihc ycr nd Ihc
rclIcd clms 0r cxpcnscs rc p0sIcd I0 Ihc Iund. Thc Iund I0r
cch undcrwrIng ycr wll rcmn 0pcn unIl Ihcrc s cn0ugh
nI0rmI0n I0 dcIcrmnc Ihc undcrwrIng rcsulI. N0 pr0II s
rcc0gnscd I0r '0pcn ycrs' buI pr0vs0n s usully mdc I0r ny
nIcpIcd l0sscs.
()
0cncrl nsurcrs sh0uld d0pI Ihc nnul bss 0I cc0unIng.
whcrc I s n0I p0ssblc I0 dcIcrmnc undcrwrIng rcsulIs wIh
rcs0nblc ccrInIy unIl Ihc I0ll0wng cc0unIng pcr0d, Ihc
dcIcrrcd nnul bss sh0uld bc d0pIcd. Thc cc0unIng bss
d0pIcd sh0uld bc dscl0scd. whcrc Ihc dcIcrrcd nnul bss s
uscd, Ihc clsscs 0I busncss nv0lvcd nd Ihc cxIcnI 0I Ihc
dcIcrrl I0r Ihc pr0II, sh0uld ls0 bc dscl0scd.
(b)
!n ddI0n I0 Ihc dscl0surc rcqurcmcnI 0I SAS N0 2, gcncrl
nsurcrs sh0uld dscl0sc Ihc I0ll0wng:
()
0r0ss !nc0mc.
0rccI Prcmums.
!nwrd rcnsurncc prcmums.
0r0ss wrIIcn prcmums.
NcI wrIIcn prcmums.
0ccrcsc n pr0vs0n I0r uncxprcd rsks, nd
C0mmss0n Rcccvcd.
()
0uIwrd rcnsurncc prcmum, nd
!ncrcsc n pr0vs0n I0r uncxprcd rsks.
54
()
0rccI clms pd.
!nwrd rcnsurncc clms pd.
!ncrcsc n pr0vs0n I0r 0uIsIndng clms.
(v)
0uIwrd rcnsurncc rcc0vcrcs, nd
0ccrcsc n pr0vs0n I0r 0uIsIndng clm
(v)
AcqusI0n, nd
MnIcnncc
0uIwrd rcnsurncc cxpcnscs sh0uld bc rcp0rIcd
scprIcly s dcducI0n Ir0m prcmum rcvcnuc, whlc
rcnsurncc nd 0Ihcr rcc0vcrcs sh0uld bc rcp0rIcd
scprIcly s dcducI0n Ir0m clms cxpcnsc.
(v)
Thc dscl0surc n Ihc pr0II nd l0ss cc0unI nd Ihc n0Ics
I0 Ihc Inncl sIIcmcnIs sh0uld ncludc Ihc I0ll0wng
nc0mc nd cxpcnsc cpI0ns (unlcss Ihcy hvc bccn
dscl0scd n Ihc Rcvcnuc Acc0unI):
0r0ss wrIIcn prcmums.
0uIwrd rcnsurncc prcmums.
Erncd prcmums.
NcI nvcsImcnI nc0mc.
C0mmss0ns rcccvcd.
UndcrwrIng cxpcnscs.
Clms ncurrcd.
MngcmcnI cxpcnscs.
Pr0vs0n I0r bd nd d0ubIIul dcbIs.
(v)
0cncrl nsurcrs sh0uld rrngc Ihcr blncc shccI Icms
n 0rdcr 0I lqudIy. Thc dscl0surc n Ihc blncc shccI
nd n0Ics I0 Ihc Inncl sIIcmcnIs sh0uld ncludc Ihc
I0ll0wng sscI nd lblIy cpI0ns:
Csh nd nk blnccs.
Sh0rITcrm !nvcsImcnIs.
0cbI0rs & PrcpymcnIs.
0cIcrrcd AcqusI0n Expcnsc.
L0ngTcrm !nvcsImcnIs.
SIIuI0ry 0cp0sIs.
Fxcd AsscIs.
CrcdI0rs nd ccruls
55
!nsurncc Iunds (ncludng pr0vs0n I0r uncrncd
prcmums, 0uIsIndng clms nd uncxprcd
rsks).
AuIh0rscd nd !ssucd Shrc CpIl.
SIIuI0ry C0nIngcncy Rcscrvcs.
CpIl Rcscrvc.
0cncrl Rcscrvc.
LIc ssurncc busncss IrnscI0ns sh0uld bc cc0unIcd I0r 0n Ihc
Iund cc0unIng bss.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0 2, lIc ssurcrs
sh0uld dscl0sc Ihc I0ll0wng:
()
() !nc0mc
0rccI prcmums.
!nwrd rcnsurncc prcmums.
0r0ss wrIIcn prcmums.
NcI wrIIcn prcmums.
C0mmss0n rcccvcd.
() 0cducI0n Ir0m !nc0mc
0uIwrd rcnsurncc prcmums.
() Clms !ncurrcd
0rccI clms.
!nwrd rcnsurncc clms.
Rcnsurncc rcc0vcrcs.
Surrcndcrs.
(v) UndcrwrIng Expcnscs
AcqusI0n.
MnIcnncc.
(b)
Thc I0ll0wng sh0uld bc dscl0scd n Ihc pr0II nd l0ss cc0unI,
unlcss Ihcy hvc bccn dscl0scd n Ihc Rcvcnuc cc0unI:
()
0r0ss wrIIcn prcmums.
Erncd Prcmums.
NcI !nvcsImcnI !nc0mc.
C0mmss0n rcccvcd.
Shrch0ldcrs' p0rI0n 0I lIc ssurncc surplus /
dcIcI.
0Ihcr nc0mc.
() 0cducI0ns Ir0m !nc0mc
0uIwrd rcnsurncc prcmums.
5b
()
Clms !ncurrcd.
UndcrwrIng Expcnscs.
MngcmcnI Expcnscs.
Pr0vs0n I0r bd nd d0ubIIul dcbIs.
(c)
lncc shccI Icms sh0uld bc rrngcd n Ihc 0rdcr 0I lqudIy
I0 ncludc Ihc I0ll0wng:
Csh nd nk lnccs.
Sh0rITcrm !nvcsImcnIs.
0cbI0rs & PrcpymcnIs.
L0ns I0 P0lcy h0ldcrs.
L0ngTcrm !nvcsImcnIs.
SIIuI0ry 0cp0sI.
Fxcd AsscIs.
CrcdI0rs nd Accruls.
0uIsIndng Clms.
!nsurncc Fund.
0cp0sI AdmnsIrI0n.
CllcdUp Shrc CpIl.
SIIuI0ry C0nIngcncy Rcscrvcs.
0cncrl Rcscrvcs.
RcIncd Ernngs / AccumulIcd L0sscs.
An nsurcr crryng 0n b0Ih lIc nd gcncrl busncsscs sh0uld I0ll0w
Ihc smc dscl0surc rcqurcmcnIs s scI 0uI n 3.4.5 b0vc.
!n ddI0n, Is Inncl sIIcmcnIs sh0uld ncludc scprIc lIc
busncss blncc shccI.
()
CrcdI s Ikcn I0r ll dvdcnds whcn rcccvcd whlc nIcrcsI
rcccvblc 0n unqu0Icd nvcsImcnIs rc crcdIcd I0 nc0mc whcn
duc I0r pymcnI. !nIcrcsIs 0n d0ubIIul nvcsImcnIs rc n0I
crcdIcd I0 Ihc Pr0II & L0ss cc0unI unIl Ihc nvcsImcnIs rc
rclscd.
(b)
() Rcscrvc I0r Uncxprcd rsks:
!n cc0rdncc wIh Ihc !nsurncc AcI, 2003, Ihc rcscrvc
I0r uncxprcd rsk I0r ll Ihc clsscs 0I gcncrl busncss s
pr0vdcd I Ihc rIc 0I 45 0I ncI prcmum.
() 0uIsIndng Clms:
Pr0vs0n s mdc I0r Ihc cxpccIcd l0ss I0 Ihc c0mpny up
I0 Ihc dIc 0I Ihc blncc shccI, plus ddI0nl pr0vs0n
57
0I 0 0I ncI 0uIsIndng clms, n cc0rdncc wIh
!nsurncc AcI, 2003.
() C0nIngcncy Rcscrvc:
Thc rcscrvc s clculIcd n cc0rdncc wIh Ihc !nsurncc
AcI, 2003 I Ihc hghcr 0I 3 0I I0Il prcmum 0r 20 0I
Ihc ncI pr0II.
(v) 0cncrl Rcscrvc I0r LIc usncss:
0cncrl rcscrvc s clculIcd s Ihc ncI lblIcs 0n
p0lccs n I0rcc I Ihc Imc 0I Ihc cIurl vluI0n.
(v) C0nIngcncy Rcscrvc I0r LIc usncss:
Thc rcscrvc s clculIcd n cc0rdncc wIh Ihc !nsurncc
AcI, 2003, I Ihc hghcr 0I 0I gr0ss prcmum 0r 0 0I
ncI pr0II.
(c)
AgcnIs / r0kcrs blnccs rc sIIcd ncI 0I c0mmss0ns IIcr dcducI0n
0I pr0vs0n I0r dcbIs c0nsdcrcd I0 bc d0ubIIul 0I c0llccI0n.
Csh nd nk lnccs X X
Sh0rIIcrm !nvcsImcnIs X X
0cbI0rs nd PrcpymcnIs 2 X X
L0ns I0 P0lcy H0ldcrs
L0ng Icrm !nvcsImcnIs 3 X X
SIIuI0ry 0cp0sI 4 X X
Fxcd AsscIs 5 X X
T0Il AsscIs () XXX XXX
LblIcs:
CrcdI0rs nd ccruls b X X
0uIsIndng clms 7 X X
!nsurncc Fund 8 X X
TxI0n 9 X X
0cIcrrcd TxI0n 0 X X
0vdcnd Pyblc X X
T0Il lblIcs (b) XX XX
NcI AsscIs () - (b) X X
CAP!TAL AN0 RESER\ES:
CllcdUp Shrc CpIl 2 X X
Shrc Prcmum 3 X X
58
C0nIngcncy Rcscrvc 4 X X
Fxcd AsscIs RcvluI0n Rcscrvc 5 X X
u0Icd !nvcsImcnI RcvluI0n Rcscrvc b X X
0cncrl Rcscrvc 7 X X
Shrch0ldcrs' Funds X X
Thc Acc0unIng P0lccs 0n pgc - nd n0Ics 0n pgcs - I0 - I0rm prI 0I Ihcsc
Inncl sIIcmcnIs.
Csh nd nk lnccs X X
Sh0rI Icrm !nvcsImcnIs X X
0cbI0rs nd PrcpymcnIs 2 X X
L0ns I0 P0lcy H0ldcrs
L0ng Icrm !nvcsImcnIs 3 X X
SIIuI0ry 0cp0sI 4 X X
Fxcd AsscIs 5 X X
XXX XXX
CrcdI0rs nd ccruls b X X
0uIsIndng clms 7 X X
!nsurncc Fund 8 X X
TxI0n 9 X X
0cIcrrcd TxI0n 0 X X
0vdcnd Pyblc X X
XX XX
X X
CllcdUp Shrc CpIl 2 X X
Shrc Prcmum 3 X X
C0nIngcncy Rcscrvc 4 X X
Fxcd AsscIs RcvluI0n Rcscrvc 5 X X
u0Icd !nvcsImcnI RcvluI0n Rcscrvc b X X
0cncrl Rcscrvc 7 X X
Shrch0ldcrs' Fund X X
Thc cc0unIng p0lccs 0n pgc - nd n0Ics 0n pgcs - I0 - I0rm prI 0I Ihcsc
Inncl sIIcmcnIs.
59
Prcmum X X
0cp0sI 8 X X
XX XX
!nvcsImcnI nd 0Ihcr !nc0mc 9 X X
XX XX
Rcnsurncc X X
MIurIcs, Surrcndcrs nd 0nuscs X X
Clms Pd nd AdmIIcd X X
NcI C0mmss0n X X
0urnIccd !nIcrcsI 0n Pcns0n X X
0Ihcr 0rccI Expcnscs X X
0vcrhcd cxpcnscs X X
!ncrcsc /(dccrcsc) n clms rcscrvc X X
(XX) (XX)
Pr0II bcI0rc TxI0n 20 X X
TxI0n (X) (X)
Pr0II IIcr TxI0n XX XX
TrnsIcr I0 C0nIngcncy Rcscrvc X X
0vdcnd X X
TrnsIcrrcd I0 0cncrl Rcscrvc X X
XX XX
Thc Acc0unIng p0lccs 0n pgc nd n0Ics 0n pgcs I0 I0rm prI 0I
Ihcsc Inncl sIIcmcnIs.
Prcmum X X
LIc rcnsurncc (X) (X)
XX XX
Lcss: 0rccI cxpcnscs:
Clms pd X X
MIurIcs, Surrcndcrs & 0nuscs X X
C0mmss0n X X
0Ihcr drccI cxpcnscs X X
!ncrcsc /{dccrcsc} n !nsurncc Iund X X
!ncrcsc /{dccrcsc} n 0uIsIndng clms X X
X X
TrnsIcr I0 Pr0II & L0ss Acc0unI X X
b0
N N N N N N N N
0r0ss Prcmum x x x x x x xx xx
0uIwrd Rcnsurncc x x x x x x xx xx
NcI Prcmum x x x x x x xx xx
C0mmss0n Rcccvcd x x x x x x xx xx
() x x x x x x xx xx
0rccI Expcnscs:
Clms pd lcss: Rcnsurncc x x x x x x xx xx
!ncrcsc / {0ccrcsc}
n Uncxprcd Prcmum x x x x x x xx xx
!ncrcsc / {0ccrcsc}
n 0uIsInd. Clms Rcs. x x x x x x xx xx
C0mmss0n pd x x x x x x xx xx
0Ihcr 0rccI cxpcnscs x x x x x x xx xx
(b) x x x x x x xx xx
TrnsIcr I0 Pr0II &
L0ss A/C (b) x x x x x x xx xx
s c0mpny n Ihc N0nlIc !nsurncc
busncss wIh AuIh0rscd 0rdnry Shrc CpIl 0I 80mll0n. Thc I0ll0wng
blnccs wcrc cxIrcIcd Ir0m Is lcdgcr s I 3 0cccmbcr 2008.
'000 '000
0rdnry Shrc CpIl 0I pcr shrc 80,000
0cncrl Rcscrvc 3,b25
C0nIngcncy Rcscrvc I //2008 ,287.5
Rcscrvc I0r 0uIsIndng clms I //2008 3,24b.b
Pr0vs0n I0r uncxprcd rsk I //2008 4,07.7
Prcmum b9,432
Rcnsurncc Prcmum 5,000
Clms 23,007.25
!nvcsImcnI !nc0mc 4,35b.5
!nIcrcsI 0n L0n 0rnIcd b,258.84
Sundry !nc0mc 5,238.b2
lnccs duc Ir0m / I0 AgcnIs 4,78.97 b,b83.24
C0mmss0n Rcccvblc 2,459.b7
Pr0vs0n I0r d dcbIs 4,3bb.50
Pr0pcrIy I C0sI 4,000
Pr0vs0n I0r dcprccI0n 0n Pr0pcrIy 4,500
AudI Fccs 535
AcIury C0nsulIng Fccs 2,358
C0mmss0n Pd 4,22.5
AdvcrIsng & PublcIy 2,500
EnIcrInmcnI 900
b
\chclc runnng cxpcnscs ,850
ElccIrcIy b25
Tclcph0nc & P0sIgcs 489
RcnI & RIcs 2,35b
Slrcs & wgcs 5,487.25
Trnsp0rI & Trvcllng ,b25
Rcprs & Rcncwls 875
SIIuI0ry 0cp0sI 25,000
0rccI0rs' Iccs & Expcnscs ,978
0cprccI0n 842
Lcgl & 0Ihcr Pr0Icss0nl Fccs 3,475
SIII Pcns0n ,b58
Fcd. 00vI. 0cvcl0pmcnI SI0ck 23,78.2
Trcsury lls & CcrIIcIcs 5,000
Csh I nk 8,725
L0ns 0n P0lccs b5,005 __________
225,472.7 225,472.7
Thc I0ll0wng ddI0nl nI0rmI0n wcrc pr0vdcd:
. Thc csImIcd nc0mc Ix lblIy 0I 2.5mll0n s I0 bc pr0vdcd I0r,,
0n Ihc pr0II 0I Ihc ycr.
2. Thc I0ll0wng nlyss ws pr0vdcd:
Frc M0I0r 0cncrl T0Il
AccdcnI
N N N N
Clms b,258,000 0,257,000 b,492,250 23,007,250
Prcmums 20,844,380 34,855,890 3,73,730 b9,432,000
AgcnI C0mmss0n 875,500 2,3b,000 ,030,000 4,22,500
Rcnsurncc Prcmum ,492,540 2,537,30 970,50 5,000,000
C0mmss0n Rcccvblc 2,b24,70 5,b2,380 4,23,580 2,459,b70
0uIsIndng Rcscrvcs - 3/2/2008:
C0nIngcncy 3,b24,000 5,b82,20 ,98,380 ,287,500
0uIsIndng Clms 855,b00 ,382,520 ,008,480 3,24b,b00
Uncxprcd Rsk 3,72b,700 7,580,b00 2,70,400 4,07,700
3. Pr0vs0n I0r d dcbIs s I0 bc ncrcscd I0 7,b4,300.
4. Unll0cIcd mngcmcnI cxpcnscs I0 bc pp0rI0ncd 0n Ihc bss 0I
prcmum rcccvcd.
5. 0vdcnd 0I 0k pcr 0rdnry shrc s pr0p0scd 0n Ihc 0rdnry shrc
cpIl.
b. Thc I0ll0wng IrnsIcrs rc I0 bc mdc:
Frc M0I0r 0cncrl T0Il
AccdcnI
C0nIngcncy ,875,000 3,724,500 824,000 b,423,500
0uIsIndng Clms 245,050 423,50 203,800 872,000
Uncxprcd Rsks ,872,000 2,b50,050 898,000 5,420,050
b2
Prcprc Pr0II nd L0ss cc0unI I0r Ihc ycr cndcd 3 0cccmbcr 2008 nd
lncc ShccI s I IhI dIc n I0rm suIblc I0r publcI0n.
N0TE '000 '000
Prcmum !nc0mc 59,0,95
C0mmss0n !nc0mc 2 2,459,b7
!nvcsImcnI !nc0mc 4,35b,50
0Ihcr !nc0mc 3 ,497,4b
87,325,58
Clms 4 23,879.25
C0mmss0n cxpcnscs 5 4,22.50
MngcmcnI cxpcnscs b 30,828.05 (58,928.80)
Pr0II bcI0rc TxI0n 7 28,39b.78
TxI0n (2,500)
Pr0II IIcr TxI0n 25,89b.78
APPR0PR!AT!0NS
Pr0p0scd 0vdcnd 8 8,000
TrnsIcr I0 C0nIngcncy Rcscrvc b,423.5
(4,423,50)
RcIncd Pr0II IrnsIcrrcd I0 0cncrl Rcscrvc ,473.28
Csh nd nk lnccs 8,725.00
Sh0rITcrm !nvcsImcnIs 9 5,000.00
0cbI0rs & PrcpymcnIs 0 b,537.b7
L0n I0 P0lcyh0ldcrs b5,005.00
L0ngTcrm !nvcsImcnI 23,78.20
SIIuI0ry 0cp0sI 25,000.00
Fxcd AsscIs 2 9,500.00
T0Il AsscIs () 53,548.87
L!A!L!T!ES
Am0unI duc I0 AgcnIs b,b83.24
TxI0n 2,500.00
Pr0p0scd 0vdcnd 8 8,000.00
!nsurncc Funds 3 4,2b7.35
(b) 58,450.59
NET ASSETS () (b) 95,098.25
b3
CAP!TAL AN0 RESER\E
CllUp Shrc CpIl 4 80,000.00
0cncrl Rcscrvc 5 5,098.28
95,098.28
. Prcmum !nc0mc: Frc M0I0r 0cncrl T0Il
N N N N
Prcmums Rcccvblc 20,844,380 34,855,890 3,73,730 b9,432,000
Rcnsurncc Prcmum Pyblc (,492,540) (2,537,30) (970,50) (5,000,000)
TrnsIcr I0 Uncxprcd Rsk (,872,000) (2,b50,050) (898,000) (5,420,050)
7,479,840 29,bb8,530 ,8b3,580 59,0,950
2. C0mmss0n Rcccvblc 2,b24,70 5,b2,380 4,23,580 2,459,b70
3. 0Ihcr !nc0mc
!nIcrcsI 0n L0n 0rnIcd b,258,840
Sundry !nc0mc 5,238,b20
,497,4b0
4. Clms:
Am0unI Pd b,258,000 0,257,000 b,492,250 23,007,250
TrnsIcr I0 0uIsIndng Clms 245,050 423,50 203,800 872,000
b,503,050 0,b80,50 b,b9b,050 23,879,250
5. AgcnIs' C0mmss0n 875,000 2,3b,000 ,030,000 4,22,500
b. MngcmcnI Expcnscs: '000
Pr0vs0n I0r bd dcbIs ( 7,b4,300 - 4,3bb,500) 3,274.8
AudI Fccs 535
AcIury c0nsulIng Iccs 2,358
AdvcrIsng & PublcIy 2,500
EnIcrInmcnI 900
\chclc runnng cxpcnscs ,850
Lcgl & 0Ihcr Pr0Icss0nl Iccs 3,475
ElccIrcIy b25
Tclcph0nc & P0sIgcs 489
RcnIs & RIcs 2,35b
Slrcs & wgcs 5,487.25
Trnsp0rI & Trvcllng ,b25
SIII Pcns0n ,b58
Rcprs & Rcncwls 875
0rccI0rs' Iccs & cxpcnscs ,978
0cprccI0n chrgc 842
30,828.05
7. PR0F!T EF0RE TAX s sIIcd IIcr chrgng:
0rccI0rs' Em0lumcnIs ,978
AudI0rs' RcmuncrI0n 535
0cprccI0n 0I Fxcd AsscIs 842
b4
8. Pr0p0scd 0vdcnd
0k0b0 0n 80,000,000 0rdnry shrcs 8,000
9. Sh0rITcrm !nvcsImcnI
Trcsury lls & CcrIIcIcs 5,000
0. 0cbI0rs & PrcpymcnIs
Am0unI duc Ir0m AgcnIs 4,78.97
Lcss: Pr0vs0n I0r d dcbIs 7,b4.30
b,537.b7
. L0ngTcrm !nvcsImcnI
Fcd. 00vI. 0cvcl0pmcnI SI0ck 23,78.2
2. Fxcd AsscIs:
Pr0pcrIy I C0sI 4,000
Lcss: AccumulIcd 0cprccI0n 4,500
9,500
3. !nsurncc Fund:
Uncxprcd 0uIsIndng C0nIngcncy T0Il
Rsk Clm Rcscrvc
l. /Iwd 4,07,700 3,24b,b00 ,287,500 28,55,800
TrnsIcr n Ihc ycr 5,420,050 872,000 b,423,500 2,75,550
l. c/Iwd 9,437,750 4,8,b00 7,7,000 4,2b7,350
4. Shrc CpIl
AuIh0rscd, !ssucd nd Iully pd
80,000,000 0rdnry Shrcs 0I cch 80,000,000
5. 0cncrl Rcscrvc
lncc /Iwd I 1nury , 2004 3,b25,000
TrnsIcr Ir0m Pr0II & L0ss Acc0unI ,473,280
5,098,280
() Annul rcp0rIs nd Inncl sIIcmcnIs rc Ihc mcns 0I
c0mmuncIng I0 Ihc shrch0ldcrs nd 0Ihcr nIcrcsIcd prIcs
nI0rmI0n 0n Ihc Inncl rcs0urccs, 0blgI0ns nd
pcrI0rmncc 0I rcp0rIng cnIIy 0r cnIcrprsc.
Annul rcp0rI rcIcrs I0 Ihc Chrmn's sIIcmcnI, 0rccI0rs' rcp0rI,
AudI0rs' Rcp0rI, AudI C0mmIIcc's Rcp0rI, nI0rmI0n
c0mmuncIcd 0n Acc0unIng P0lccs, lncc ShccI, Pr0II nd
L0ss Acc0unI (!nc0mc sIIcmcnI), Csh Il0w SIIcmcnI, \luc
Addcd SIIcmcnI, N0Ics 0n Ihc cc0unIs, Fvcycr Fnncl
Summry, nd N0Icc 0I Annul 0cncrl MccIng. Such rcp0rI
usully sssIs shrch0ldcrs nd 0Ihcr nIcrcsIcd prIcs n
sscssng Ihc Inncl, lqudIy, pr0IIblIy nd vblIy 0I
n cnIcrprsc.
b5
(b) !n rcccnI ycrs, Ihcrc hs bccn dcmnd by gr0ups 0I shrch0ldcrs
nd s0mc c0mpncs n Ngcr I0 rcducc Ihc szc 0I nnul rcp0rIs
nd Inncl sIIcmcnIs, s wcll s curIl Ihc hgh c0sI 0I
prnIng nd mlng Ihc gl0ssy nI0rmI0n.
(c) SccI0n 355 0I Ihc C0mpncs nd Allcd MIIcrs AcI, Cp. C20
LFN 2004 ll0ws c0mpncs I0 publsh brdgcd Inncl
sIIcmcnIs. Thc AcI, h0wcvcr, d0cs n0I spccIy ny mnmum
dscl0surc rcqurcmcnI 0I such sIIcmcnIs.
() Thc 0b|ccIvcs 0I SIIcmcnI 0I Acc0unIng SIndrd N0. 20 rc:
() T0 spccIy Ihc mnmum c0nIcnIs 0I brdgcd Inncl
sIIcmcnIs.
() T0 sIndrdzc I0rmIs I0r prcscnII0n 0I brdgcd
Inncl sIIcmcnIs, nd
() T0 mpr0vc c0mprblIy nd uscIulncss 0I brdgcd
Inncl sIIcmcnIs.
(b) Abrdgcd Inncl sIIcmcnIs sh0uld crry dcclrI0n IhI:
() Ihcy rc brdgcd Inncl sIIcmcnIs,
() Ihc Inncl sIIcmcnIs nd spccIc dscl0surcs ncludcd
n Ihcm hvc bccn dcrvcd Ir0m Ihc Inncl sIIcmcnIs
0I Ihc c0mpny,
() Ihc brdgcd Inncl sIIcmcnIs cnn0I bc cxpccIcd I0
pr0vdc undcrsIndng 0I Ihc Inncl pcrI0rmncc,
Inncl p0sI0n, Inncng nd nvcsIng cIvIcs 0I Ihc
0rgnsI0n s Ihc Iull Inncl sIIcmcnIs, nd
(v) c0pcs 0I Ihc Iull Inncl sIIcmcnIs cn bc 0bIncd Ir0m
Ihc RcgsIrrs 0I C0mpncs.
(c) Abrdgcd Inncl sIIcmcnIs sh0uld ncludc Ihc I0ll0wng, s
n Ihc Iull Inncl sIIcmcnIs:
() Acc0unIng p0lccs,
() Pr0II nd L0ss Acc0unI I0r Ihc Inncl ycr,
() lncc shccI s I cnd 0I Ihc Inncl ycr,
(v) SIIcmcnI 0I csh Il0ws I0r Ihc Inncl ycr,
(v) N0Ics n rclI0n I0 cxccpI0nl nd cxIr0rdnry Icms,
(v) Fvcycr Inncl summry, nd
(v) Any 0Ihcr nI0rmI0n ncccssry I0 cnsurc IhI Ihc
brdgcd Inncl sIIcmcnIs rc c0nssIcnI wIh Ihc Iull
cc0unIs nd rcp0rIs I0r Ihc ycr.
0Ihcr nI0rmI0n I0 bc ncludcd n brdgcd Inncl sIIcmcnIs
rc:
() N0Icc 0I Annul 0cncrl MccIng,
() Nmcs 0I 0rccI0rs durng Ihc ycr nd Ihcr shrch0ldng,
() Rcp0rI 0I Ihc udI c0mmIIcc, whch sh0uld c0nIrm IhI
Ihc udI0rs' rcp0rI s unqulIcd.
bb
(v) Fnncl HghlghIs (RcsulIs I glncc), nd
(v) 0vdcnds pd 0r pr0p0scd nd dIc 0I pymcnI.
(d) A c0mpny wh0sc udI0rs' rcp0rI 0n Ihc Inncl sIIcmcnI I0r
pcr0d rc qulIcd sh0uld n0I publsh brdgcd Inncl
sIIcmcnIs I0r IhI pcr0d.
Thc I0ll0wng nI0rmI0n sh0uld bc dscl0scd n brdgcd Inncl
sIIcmcnIs:
() MIcrl cvcnIs 0ccurrng IIcr Ihc blncc shccI dIc nd whcrc
Ihcrc s chngc n cc0unIng p0lccs 0r csImIcs Ir0m Ih0sc
uscd n Ihc prcccdng Inncl ycr 0r s cxpccIcd I0 hvc
mIcrl cIIccI n subscqucnI Inncl ycr, Ihc nI0rmI0n
b0uI such chngc n cc0rdncc wIh SAS N0 b, 0n cxIr 0rdnry
Icms nd pr0r ycr d|usImcnIs.
(b) whcrc c0mpny s prcnI c0mpny, Ihc sIIcmcnI n b0vc
pplcs I0 Ihc c0ns0ldIcd Inncl sIIcmcnIs 0I Ihc c0mpny
nd Ihc cc0mpnyng n0Ics, nd d0cs n0I rcqurc IhI Ihc prcnI
c0mpny's 0wn Inncl nI0rmI0n bc pr0vdcd nI0rmI0n
I0r Ihc prcccdng Inncl ycr, whch c0rrcsp0nds I0 Ihc
dscl0surcs mdc n cc0rdncc wIh Ihs sIndrd I0r Ihc currcnI
Inncl ycr, sh0uld bc dscl0scd.
As I0ll0wup I0 Ihc rcgulI0ry Irmcw0rk n Ihc crlcr chpIcr, Ihs chpIcr
llusIrIcs wIh Iypcl cxmnI0n qucsI0ns, prcIcl pplcI0n 0I Ihc
Ihc0rcIcl bckgr0und 0n Ihc prcprI0n 0I Inncl sIIcmcnIs 0I lmIcd
lblIy c0mpncs, nks nd n0nbnk Inncl nsIIuI0ns, nd !nsurncc
c0mpncs, ncludng rclcvnI n0Ics I0 Ihc Inncl sIIcmcnIs n Ihc
rcc0mmcndcd I0rmIs.
C0mpncs n Ngcr rc ll0wcd I0 publsh brdgcd Inncl sIIcmcnIs
undcr SccI0n 355 0I CAMA 2004 CAP C20 LFN. Such sIIcmcnIs sh0uld c0mply
wIh Ihc rcqurcmcnIs 0I SAS 20:
. Thc I0rmI n whch Ihc Inl cc0unIs 0I lmIcd lblIy c0mpny sh0uld bc
publshcd n Ngcr s prcscrbcd by:
() SIIcmcnI 0I Acc0unIng SIndrds (SAS)
(b) C0mpncs nd Allcd MIIcrs AcI Cp C20 LFN 2004
(c) !nIcrnI0nl Acc0unIng SIndrds (!AS)
(d) nkng nd 0Ihcr Fnncl !nsIIuI0ns AcI, (0F!A) 99
(c) Fnncl Rcp0rIng SIndrds (FRS).
b7
2. Thc AsscIs n Ihc lncc ShccI 0I bnk rc rrngcd n Ihc 0rdcr 0I
() LqudIy
(b) S0lvcncy
(c) rckup
(d) PcrI0rmncc
(c) SccurIy.
3. whch 0I Ihc I0ll0wng s N0nnk Fnncl !nsIIuI0n!
() C0mmcrcl nk
(b) 0cvcl0pmcnI nk
(c) M0rIggc !nsIIuI0n
(d) C0mmunIy nk
(c) McrchnI nk.
4. Undcr Ihc PrudcnIl 0udclncs, IclIcs clssIcd s d0ubIIul rcIcr I0 l0ns IhI
hvc rcmncd unpd:
() IIcr Ihcr duc dIcs
(b) I0r 9080 dys IIcr Ihcr duc dIcs.
(c) I0r 803b0 dys IIcr Ihcr duc dIcs.
(d) I0r 0vcr 3b0 dys IIcr Ihcr duc dIcs.
(c) 0vcr 2 ycrs IIcr Ihcr duc dIcs.
5. !n cc0rdncc wIh SccI0n 24(3) 0I Ihc !nsurncc AcI, 2003, C0nIngcncy Rcscrvc
I0r LIc usncss s clculIcd s I0ll0ws ---------
() 45 0I NcI Prcmum
(b) Thc hghcr 0I 3 0I gr0ss Prcmum 0r 20 0I ncI pr0II
(c) Thc hghcr 0I 0I gr0ss Prcmum 0I 0 0I ncI pr0II
(d) Thc hghcr 0I 3 0I I0Il !nc0mc 0r 20 0I ncI pr0II
(c) Thc hghcr 0I 0I I0Il !nc0mc 0I 0 0I ncI pr0II.
b. !n Ihc pr0ccss 0I prcprng Ihc Inncl sIIcmcnIs 0I y0ur clcnI, y0u wcrc
nI0rmcd IhI b0uI qurIcr 0I Ihc c0mpny's w0rkI0rcc wcrc ld 0II, rcsulIng
n pymcnI 0I subsInIl scvcrncc pckgc I0 Ihc sIII ld0II.
H0w w0uld y0u IrcI Ihc m0unI pd, n Ihc Inncl sIIcmcnIs I0r Ihc pcr0d!.
7. !n whI wy s cxIr0rdnry nd cxccpI0nl Icms dIIcrcnI!
8. LsI ny 0nc dscl0surc rcqurcd n n0Ics I0 Ihc Inncl sIIcmcnIs n rcspccI 0I
0rccI0rs' cm0lumcnI.
9. SIIc h0w c0nIngcncy rcscrvc I0r lIc ssurncc busncss s clculIcd.
0. 0n whI bss s nIcrcsI 0n l0n rcc0gnscd by bnks n Ihcr pr0II nd l0ss
cc0unIs!
b8
b9
AIIcr sIudyng Ihs chpIcr, Ihc rcdcrs wll bc blc I0 undcrsInd:
sc prncplcs nd I0rmIs 0I csh Il0w sIIcmcnIs.
PrcIcl llusIrI0n 0I csh Il0w sIIcmcnIs 0I lmIcd lblIy c0mpncs, nk
nd !nsurncc C0mpncs.
SIIcmcnI 0I Acc0unIng SIndrds N0. 8 (SAS) dcls wIh Ihc ppr0vcd
I0rmI I0r prcprng sIIcmcnI 0I csh Il0ws.
A sIIcmcnI 0I csh Il0ws pr0vdcs nI0rmI0n b0uI Ihc csh rcccpIs
nd pymcnIs 0I n cnIcrprsc 0vcr gvcn pcr0d. !I ndcIcs Ihc pIIcrn
0I csh gcncrI0n nd uIlzI0n. !I ls0 rcvcls h0w csh s gcncrIcd
Ir0m 0pcrI0ns Ihr0ugh ncw cpIl rscd nd h0w I s dsburscd I0r
cpIl cxpcndIurc, Ixcs, dvdcnds I0 nvcsI0rs, ncw nvcsImcnIs nd
dcbI rcpymcnIs. !I s dcsgncd I0 shcd lghI 0n n cnIcrprsc's Inncl
sIrcngIh nd llumnIc Ihc blncc shccI nd pr0II nd l0ss cc0unI.
Thc nI0rmI0n pr0vdcd n Ihs sIIcmcnI, I uscd wIh rclIcd
dscl0surc nd 0Ihcr nI0rmI0n n Ihc Inncl sIIcmcnIs, wll sssI
uscrs I0:
() Asscss Ihc mpcI 0I Is IrnscI0ns, IhI s, 0pcrIng, nvcsIng
nd Inncng cIvIcs 0I Is pcrI0rmncc nd Inncl p0sI0n,
(b) Asscss Ihc blIy 0I n cnIcrprsc I0 mccI Is dcbI 0blgI0ns,
py dvdcnds nd mccI 0Ihcr clms,
(c) Asscss Ihc blIy 0I n cnIcrprsc I0 Inncc 0ng0ng 0pcrI0ns
nd gr0wIh Ir0m nIcrnl s0urccs nd dcIcrmnc Ihc m0unI 0I
cxIcrnl Inncng rcqurcd,
(d) Rcc0nclc Pr0II 0r L0ss nd ncI csh Il0ws, nd
70
(c) Asscss Ihc blIy 0I Ihc cnIcrprsc I0 gcncrIc p0sIvc ncI IuIurc
csh Il0ws.
() A rcp0rIng cnIcrprsc sh0uld prcprc sIIcmcnI 0I csh Il0ws
n lnc wIh Ihc pr0vs0ns 0I Ihs SIndrd s n nIcgrl prI 0I
Is Inncl sIIcmcnIs.
(b) Thc sIIcmcnI 0I csh Il0ws sh0uld ncludc ll csh nIl0ws nd
0uIIl0ws 0I Ihc cnIcrprsc, durng rcp0rIng pcr0d. !I sh0uld,
h0wcvcr, cxcludc csh nIl0ws rsng Ir0m Ihc purchsc nd
lqudI0n 0I csh cquvlcnIs.
(c) An cnIcrprsc sh0uld rcp0rI Is csh Il0ws cc0rdng I0 Ihc cIvIy
whch gvc rsc I0 Ihcm nd Ihcy sh0uld bc gr0upcd undcr Ihc
br0d hcdngs 0I:
0pcrIng AcIvIcs
!nvcsIng AcIvIcs
Fnncng AcIvIcs
(d) An cnIcrprsc sh0uld d0pI cIhcr Ihc drccI 0r ndrccI mcIh0d
n prcprng Is sIIcmcnI 0I csh Il0w.
() 0rccI mcIh0d hghlghIs csh rcccvcd Ir0m cusI0mcrs,
pymcnIs mdc I0 supplcrs, cmpl0yccs, Ix uIh0rIy nd
0Ihcr scrvcc pr0vdcrs, I0 rrvc I csh nIl0w / 0uIIl0w
Ir0m 0pcrIng cIvIcs.
() !ndrccI mcIh0d rrvcs I csh nIl0w / 0uIIl0w Ir0m
0pcrIng cIvIcs by sIIng Ihc pr0II 0r l0ss bcI0rc
IxI0n, whch s d|usIcd I0r Icms n0I nv0lvng
m0vcmcnI 0I Iunds such s dcprccI0n chrgc, pr0vs0n
I0r d0ubIIul dcbIs, pr0II 0n slc 0I Ixcd sscIs, nd ncI
chngcs n w0rkng cpIl, dcbI0rs, crcdI0rs, sI0ck, cIc.
bcIwccn Ihc currcnI nd Ihc prcccdng ycrs.
(c) Thc sIIcmcnI 0I csh Il0ws sh0uld rcp0rI gr0ss csh Il0ws cxccpI
n Ihc nsInccs whcrc ncI csh Il0ws wll bc m0rc rclcvnI nd
mcnngIul, such s:
() whcrc Ihc cnIcrprsc s, n subsIncc, h0ldng 0r dsbursng
csh 0n bchlI 0I Is cusI0mcrs, nd
() whcrc Iurn0vcr 0I nvcsImcnIs nd l0ns s rcpd nd
Ihc I0Il v0lumc 0I IrnscI0ns s lrgc.
(I) !nIcrcsI Pd nd Rcccvcd
() !nIcrcsI pd sh0uld bc clssIcd s csh Il0w Ir0m
Inncng cIvIcs whlc nIcrcsI rcccvcd sh0uld bc
clssIcd s csh Il0w Ir0m nvcsIng cIvIcs, undcr
drccI mcIh0d. Thc nIcrcsI clcmcnI 0I Inncc lcsc rcnIl
pymcnIs sh0uld bc sh0wn scprIcly by Ihc lcssccs, nd
7
() !nIcrcsI rcccvcd 0r pd sh0uld bc rcp0rIcd gr0ss 0I Ixcs.
!nIcrcsI cpIlzcd sh0uld ls0 bc rcp0rIcd n Ihc
sIIcmcnI 0I csh Il0ws.
(g) 0vdcnds Pd nd Rcccvcd
() 0vdcnds rcccvcd sh0uld bc clssIcd s csh Il0ws Ir0m
nvcsIng cIvIcs cxccpI n cscs whcrc Ihc nvcsI0r
c0mpny hs sgnIcnI nIlucncc 0vcr Ihc nvcsIcc
c0mpny nd h0lds I lcsI 20 0I Ihc cquIy. !n such
cscs, dvdcnds rcccvcd sh0uld bc clssIcd s csh Il0w
Ir0m 0pcrIng cIvIcs.
() 0vdcnds pd nd 0Ihcr dsIrbuI0ns I0 0wncrs sh0uld
bc clssIcd s csh Il0ws Ir0m Inncng cIvIcs.
(h) F0rcgn Currcncy Csh Fl0ws
Csh Il0ws rcsulIng Ir0m I0rcgn currcncy IrnscI0ns sh0uld
bc IrnslIcd, usng Ihc rIcs pplcblc I Ihc Imc Ihcy 0ccurrcd.
A wcghIcd vcrgc cxchngc rIc I0r pcr0d sh0uld bc uscd
I0r IrnslI0n, I Ihc rcsulI s subsInIlly Ihc smc s I Ihc
rIcs pplcblc I Ihc dIcs 0I Ihc csh Il0w wcrc uscd:
() TxI0n
() Thc I0Il m0unI 0I nc0mc Ixcs pd sh0uld bc clssIcd
s 0pcrIng csh 0uIIl0w.
() Thc ncI m0unI pd 0r rcccvcd wIh rcspccI I0 vluc
ddcd Ix 0r 0Ihcr slcs Ixcs sh0uld bc sh0wn scprIcly
s csh Il0ws Ir0m 0pcrIng cIvIcs.
() Txcs pd 0r rcIunds rcccvcd n rcspccI 0I cpIl pr0IIs
such s cpIl gns Ix sh0uld bc rcp0rIcd n lnc wIh
Ihc undcrlyng IrnscI0ns gvng rsc I0 Ihcm.
. 0pcrIng AcIvIcs: Pr0II I0r Ihc ycr Txcs pd.
bcI0rc pr0vs0ns I0r Ix, dvdcnd
nd dcprccI0n.
2. 00wnwrd m0vcmcnI n currcnI sscIs Upwrd m0vcmcnI n currcnI sscIs
3. Upwrd m0vcmcnI n currcnI lblIcs 00wnwrd m0vcmcnI n currcnI lblIcs
4. Fnncng AcIvIcs:
Pr0cccds 0I Ircsh ssuc 0I shrcs 0r RcdcmpI0n 0I PrcIcrcncc shrcs nd
0cbcnIurc (ncI 0I c0sI 0I ssuc). dcbcnIurcs, 0vdcnds pd.
5. Ncw L0ns 0bIncd. L0ns nd !nIcrcsI rcpymcnIs.
b. !nvcsIng AcIvIcs: Fxcd sscIs purchscd.
!nvcsImcnI nc0mc rcccvcd
Pr0cccds Ir0m slc 0I Ixcd sscIs nd !nvcsImcnI Purchsc.
!nvcsImcnIs 0sp0scd 0I.
72
Csh nIl0w (0r s0urccs 0I csh gcncrIcd) s rcIlccIcd n p0sIvc Igurcs whlc
csh 0uIIl0w (0r uIlsI0n 0I Ihc csh gcncrIcd) s sh0wn s ncgIvc Igurc
n brckcIs.
CASH FL0wS FR0M 0PERAT!N0 ACT!\!T!ES
Pr0II bcI0rc IxI0n X X
0cprccI0n 0I Ixcd sscIs X X
Pr0II /{L0ss} 0n dsp0sl 0I Ixcd sscIs X X
NcI nIcrcsI Expcnsc / (!nc0mc) X X
Csh Il0w bcI0rc chngcs n w0rkng cpIl XX XX
CHAN0ES !N w0RK!N0 CAP!TAL:
(!ncrcsc) / 0ccrcsc n SI0ck & w0rknpr0grcss X X
(!ncrcsc) / 0ccrcsc n 0cbI0rs & PrcpymcnIs X X
!ncrcsc / (0ccrcsc) n CrcdI0rs & Accruls X X X X
!ncrcsc / (0ccrcsc) n 0rIuIcs & RcIrcmcnI bcncIIs X X
XX XX
Tx Pd (X) (X)
NcI Csh Il0ws Ir0m 0pcrIng cIvIcs XXX XXX
CASH FL0wS FR0M !N\EST!N0 ACT!\!T!ES
!nIcrcsI rcccvcd X X
Purchsc 0I Ixcd sscIs (X) (X)
Pr0cccds 0n dsp0sl 0I Ixcd sscIs X X X X
NcI csh uscd n nvcsIng cIvIcs XX XX
CASH FL0w FR0M F!NANC!N0 ACT!\!T!ES
Pr0cccds Ir0m slc 0I shrcs X X
0vdcnd Pd (X) (X)
!nIcrcsI Pd (X) X X X
NcI csh nIl0w /(0uIIl0w) n Fnncng cIvIcs XX XX
NcI ncrcsc /(0ccrcsc) n Csh nd Csh EquvlcnIs XX XXX
Csh nd Csh EquvlcnIs I 1nury , X X
Csh nd Csh EquvlcnIs I 0cccmbcr 3, XX XX
Csh nd Csh EquvlcnI c0mprscs 0I:
Csh nd nk lnccs X X
nk 0cp0sI X X
nk 0vcrdrII (X) (X)
XX XX
73
CASH FL0wS FR0M 0PERAT!N0 ACT!\!T!ES:
!nIcrcsI nd C0mmss0n Rcccvcd X X
!nIcrcsI Expcnscs (X) (X)
L0ss / (Pr0II) 0n 0sp0sl 0I Fxcd nd Lcscd AsscIs (X) (X)
Pr0vs0n I0r Rsk AsscIs (X) (X)
PymcnIs I0 Empl0yccs nd Supplcrs (X) (X)
0pcrIng Pr0II bcI0rc chngcs n:
0pcrIng AsscIs nd LblIcs X X
Chngcs n 0pcrIng AsscIs & LblIcs:
L0ns nd Advnccs X X
Advnccs Undcr Fnncc Lcsc X X
0Ihcr AsscIs X X
0cp0sIs X X
0Ihcr LblIcs X X
F0rcgn Currcncy 0cn0mnIcd LblIcs X X
X X
X X
!nc0mc & EducI0n Txcs Pd (X) (X)
NcI Csh Ir0m 0pcrIng AcIvIcs XX XX
CASH FL0wS FR0M !N\EST!N0 ACT!\!T!ES:
Purchsc 0I Fxcd / Lcscd AsscIs X X
Pr0cccds Ir0m Slc 0I Fxcd / Lcscd AsscIs X X
NcI AddI0ns I0 !nvcsImcnI X X
!nvcsImcnI !nc0mc X X
NcI Csh Uscd n !nvcsIng AcIvIcs (X) (X)
CASH FL0wS FR0M F!NANC!N0 ACT!\!T!ES:
Pr0cccds Ir0m Slc 0I Shrcs X X
0vdcnds (X) (X)
NcI csh !nIl0w/(0uIIl0w) n Fnncng AcIvIcs X X
NcI !ncrcsc n Csh nd Csh EquvlcnI X X
Csh nd Csh EquvlcnIs I 1nury X X
Csh nd Csh EquvlcnIs I 0cccmbcr 3 XX XX
74
2008 2007
CASH FL0wS FR0M 0PERAT!N0 ACT!\!T!ES:
Pr0II bcI0rc TxI0n X X
Ad|usImcnI I0r:
0cprccI0n X X
!ncrcsc / {0ccrcsc} n !nsurncc Funds X X
(Pr0II)/L0ss 0n 0sp0sl 0I !nvcsImcnIs X X
(Pr0II)/L0ss 0n Slc 0I Fxcd AsscIs X X
X X
CHAN0ES !N w0RK!N0 CAP!TAL:
(!ncrcsc) / 0ccrcsc n 0cbI0rs & PrcpymcnIs X X
(!ncrcsc) / 0ccrcsc n P0lcy L0ns X X
!ncrcsc / (0ccrcsc) n CrcdI0rs nd Accruls X X
!ncrcsc / (0ccrcsc) n 0uIsIndng Clms X X
X X
Csh nIl0w /{0uIIl0w} Ir0m 0pcrI0ns XX XX
!nc0mc & EducI0n Txcs Pd (X) (X)
NcI Csh 0cncrIcd Ir0m 0pcrI0ns XX XX
CASH FL0wS FR0M !N\EST!N0 ACT!\!T!ES
Pr0cccds 0I 0sp0sl 0I !nvcsImcnIs X X
Pr0cccds Ir0m Slc 0I Fxcd AsscIs X X
Purchsc 0I !nvcsImcnIs (X) (X)
Purchsc 0I Fxcd AsscIs (X) (X)
XX XX
CASH FL0wS FR0M F!NANC!N0 ACT!\!T!ES:
Pr0cccds Ir0m Slc 0I Shrcs X X
0vdcnds Pd (X) (X)
NcI csh !nIl0w/{0uIIl0w) n Fnncng AcIvIcs XX XX
NcI !ncrcsc n Csh nd Csh EquvlcnIs X X
Csh nd Csh EquvlcnIs I 1nury X X
Csh nd Csh EquvlcnIs I 0cccmbcr 3 XX XX
75
Thc lncc ShccIs 0I Chuks Plc s I 3 0cccmbcr 2007 nd 2008 rc gvcn
bcl0w:
2008 2007
'000 '000 '000 '000
Fxcd AsscIs:
Lnd nd buldngs 3,585 3,470
PlnI, EqupmcnI nd \chclcs 2,702 3,07
b,287 b,577
000dwll nd PIcnIs 852 785
7,39 7,3b2
CurrcnI AsscIs:
SI0cks & w0rknpr0grcss 5,77 5,735
0cbI0rs & PrcpymcnIs 4,935 4,b97
Csh nd nk lnccs 4b5 5
() ,7 0,547
0cducI: CurrcnI LblIcs:
CrcdI0rs nd ccruls 2,795 2,b72
CurrcnI TxI0n 895 985
nk 0vcrdrII 272 705
Pr0p0scd 0vdcnd b37 505
(b) 4,599 4,8b7
NcI CurrcnI AsscIs ( b) b,58 5,b80
0cIcrrcd TxI0n (,555) (,545)
2,02 ,497
RcprcscnIcd by:
CpIl nd Rcscrvcs:
0rdnry Shrc CpIl 4,400 4,400
Shrc prcmum cc0unI 57 57
0Ihcr CpIl Rcscrvcs ,00 ,00
Rcvcnuc Rcscrvcs b,085 5,480
2,02 ,497
N0Ics I0 Ihc cc0unIs sh0w IhI:
() 0cprccI0n hs bccn chrgcd I0r ycr 2008 s I0ll0ws:
Lnd & uldng 87,000
PlnI, Mchncry & \chclcs b00,000
000dwll nd PIcnIs 23,000
(b) PlnI s0ld durng ycr 2008 rclscd 40,000. !I ws ncludcd I c0sI
n Ihc lncc ShccI I0r ycr 2007 I 52,000, wIh dcprccI0n
ccumulIcd I 32,000. Thc dIIcrcncc bcIwccn rclsI0n nd
wrIIcn d0wn vluc 0I Ihc sscI ws n Ihc pr0II nd l0ss cc0unI.
7b
(c) Thc blncc 0I pr0II I0r ycr 2008 IIcr IxI0n chrgcd nd dvdcnd
ppr0prI0n hs bccn IrnsIcrrcd I0 Rcvcnuc Rcscrvc.
FurIhcr cnqurcs rcvclcd IhI durng ycr 2008, Ihc c0mpny mdc
csh pymcnI I0r I0Il dvdcnd m0unIng I0 927,000 nd !nc0mc
nd EducI0n Ixcs 0I ,30,000.
Y0u rc rcqurcd I0 prcprc csh Il0w SIIcmcnI I0r Ihc ycr cndcd 3
0cccmbcr 2008.
'000 '000
Pr0II bcI0rc TxI0n (w ) 2,74
0cprccI0n 0I Fxcd AsscIs (87 + b00 + 23) 70
(Pr0II)/ L0ss 0n 0sp0sl 0I Fxcd AsscIs (20)
Csh Il0ws bcI0rc chngcs n w0rkng cpIl 3,404
0ccrcsc n SI0ck 8
!ncrcsc n 0cbI0rs (238)
!ncrcsc n CrcdI0rs 23 (97)
Txcs Pd (w5) (,30)
2,77
Purchsc 0I Fxcd AsscIs |(202 + 22(w2, w3)| (47)
Purchsc 0I 000dwll nd PIcnIs (w4) (90)
Pr0cccds Ir0m dsp0sl 0I Fxcd AsscIs (w3b) 40
NcI csh uscd n !nvcsIng AcIvIcs (4b7)
0vdcnd Pd (wb) (927)
NcI !ncrcsc n Csh nd Csh cquvlcnIs 783
Csh nd Csh EquvlcnIs I 1nury, (5 - 705) (590)
Csh nd Csh EquvlcnIs I 0cccmbcr, 3 93
Csh nd Csh EquvlcnIs c0mprscs:
Csh nd nk blnccs 4b5
nk 0vcrdrII (272)
93
. PR0F!T EF0RE TAXAT!0N
'000
!ncrcsc n Rcvcnuc Rcscrvcs (b,085 - 5,480) b05
0cIcrrcd Ix chrgcd I0r 2008 wrIIcn bck
I0 P & L (555 - 545) 0
77
Tx chrgc I0r Ihc ycr - (scc w0rkngs 5.) ,040
0vdcnds chrgcd I0 P & L (scc w0rkngs b,) ,059
2,74
2.
'000 '000
0pcnng lncc 3,470 0cprccI0n chngc 87
lncc rcprcscnIng
AsscIs Purchscd 202 Cl0sng lncc 3,585
3,b72 3,b72
3()
'000 '000
0pcnng lncc 3,07 0cprccI0n chrgc b00
0sp0sl A/c.
(0cprccI0n) 32 0sp0sl A/c (C0sI 52
lncc - RcprcscnIng
Purchscs 25 Cl0sng lncc 2,702
3,454 3,454
3(b)
'000 '000
PlnI A/c. C0sI 52 PlnI A/c. 0cprccI0n 32
Pr0II 0n slc 20 Slcs Pr0cccds 40
72 72
4
'000 '000
0pcnng lncc 785 0cprccI0n Chrgc 23
lncc - 000dwll
Purchscd 90 Cl0sng lncc 852
875 875
5
'000 '000
Txcs Pd nk ,30 0pcnng lncc 985
Cl0sng lncc 895 Chrgcd I0 P & L A/c ,040
2,025 2,025
b
'000 '000
0vdcnds Pd nk 927 0pcnng lncc 505
Cl0sng lncc b37 Chrgcd I0 P & L A/c ,059
,5b4 ,5b4
ccusc 0I Imc c0nsIrnI undcr cxmnI0n c0ndI0n, y0u rc dvscd I0
ppr0ch Ihc qucsI0n, s I0ll0ws:
78
() Rcd Ihr0ugh Ihc qucsI0n, ncludng Ihc ddI0nl nI0rmI0n, n0Ing
0n Ihc qucsI0n ppcr, Ihc Igurcs 0n Ihc blncc shccI IhI wll bc
IIccIcd.
(b) 0pcn T - Acc0unIs I0r Ihc blncc shccI Icms IhI wll bc IIccIcd by
Ihc n0Ics nd IIlc Ihcm w0RK!N0S. Rcc0rd ncccssry cnIrcs n Ihc T
- Acc0unIs.
(c) Prcprc Ihc csh Il0w SIIcmcnI usng Ihc ppr0vcd I0rmI, IrsI sl0IIng
n Icms IhI rcqurc n0 d|usImcnI, by smply dcducIng 2007 Igurcs
Ir0m 2008 Igurcs, I0ll0wcd by Igurcs 0bIncd Ir0m y0ur w0RK!N0S
schcdulcs, whch musI bc IIchcd I0 y0ur nswcr.
w0rkngs s0mcImcs crry s much mrk s Ihc nswcr I0 Ihc qucsI0n,
s Ihc cxmncr wll bc nIcrcsIcd n kn0wng h0w y0u rrvcd I Ihc
Igurcs n y0ur s0luI0n.
Thc lncc ShccI nd Pr0II nd L0ss cc0unIs 0I ME0AANK PLC s I 3
0cccmbcr 2008, I0gcIhcr wIh Ihc c0mprIvc Igurcs I0r ycr 2007 rc s
I0ll0ws:
Csh nd Sh0rITcrm Fund 59,532,00 2b,750,8b0
lls dsc0unIcd 5,300,3b0 9,420,000
!nvcsImcnIs ,20b,980 ,b0,400
L0ns nd dvnccs 44,970,880 2b,900,0b0
0Ihcr AsscIs 9,59,8b0 5,bb8,520
EqupmcnI 0n Lcsc ,998,740 3,b87,920
Fxcd sscIs ,702,200 9,700,880
43,87,20 83,729,b40
0cp0sIs nd CurrcnI cc0unIs 9,498,bb0 5,23,320
TxI0n bb2,2b0 43,320
0vdcnd pyblc ,3b2,b0 ,2b7,340
0Ihcr LblIcs 34,050,980 5,48,400
27,574,0b0 b8,240,380
22 Il0Ing rIc rcdccmblc
0cbcnIurc SI0ck 522,920 597,b20
() 28,09b,980 b8,838,000
CllcdUp Shrc CpIl ,304,520 ,2b8,520
Shrc Prcmum 38,500 290,300
SIIuI0ry Rcscrvcs 3,29,7b0 2,b35,40
0cbcnIurc RcdcmpI0n Rcscrvc 522,920 3b4,840
0cncrl Rcscrvc 408,440 332,840
79
Shrch0ldcrs' Fund (b) 5,774,40 4,89,b40
( + b) 43,87,20 83,729,b40
AcccpInccs, gurnIccs & cnggcmcnIs 0n
bchlI 0I cusI0mcrs' & cusI0mcrs'
lblIcs Ihcrc0I 44,72,280 59,27,40
!nIcrcsI !nc0mc 8,422,5b0
!nIcrcsI cxpcnsc (9,728,840)
8,b93,720
0Ihcr !nc0mc - C0mmss0ns & Iccs 4,48b,9b0
23,80,b80
0cncrl & Admn 0vcrhcds 2,48,980
Pr0vs0n I0r Rsk AsscIs 4,0b4,420
0cprccI0n 0n Lcscd AsscIs 2,4,320
0cprccI0n 0n Fxcd AsscIs ,844,200
(20,53,920)
Pr0II bcI0rc TxI0n 2,b48,7b0
TxI0n (700,000)
Pr0II IIcr TxI0n ,948,7b0
TrnsIcr I0 SIIuI0ry Rcscrvc 584,b20
0cbcnIurc RcdcmpI0n Rcscrvc Fund 58,080
Pr0p0scd 0vdcnd ,30,4b0
(,873,b0)
RcIncd Pr0II IrnsIcrrcd I0 0cncrl Rcscrvc 75,b00
Thc I0ll0wng ddI0nl nI0rmI0n rc gvcn:
Thc Pr0II bcI0rc IxI0n s IIcr chrgng / (CrcdIng):
0cp0sI I0r !nsurncc Prcmum b33,220
0rccI0rs' Em0lumcnIs: Fccs 9,800
0Ihcrs 29,000
AudI0rs' RcmuncrI0n b0,000
0cbcnIurc !nIcrcsI 70,240
Pr0II 0n Slc 0I Fxcd AsscIs (bb,b00)
2. 0urng Ihc ycr, Ihc pr0vs0n mdc I0r rsk sscIs s rrvcd I s I0ll0ws:
'000
Pr0vs0n I0r L0ns & Advnccs 3,237,720
0Ihcr Pr0vs0ns 947,20
4,84,840
Lcss: Rcc0vcrcs durng Ihc ycr (20,420)
4,0b4,420
80
3. 0urng Ihc ycr, Ihc bnk purchscd Ixcd sscIs c0sIng N3,923,840,000
nd lcscd cqupmcnI I Ihc c0sI 0I 45b,020,000. Smlrly, Ixcd sscIs
nd lcscd cqupmcnI wIh NcI 00k \luc 0I 82,200,00 wcrcc
dsp0scd 0I I vluc 0I 48,800,000
4. 0cncrl nd dmnsIrI0n 0vcrhcds rc mdc 0I pymcnIs I0
cmpl0yccs nd supplcrs 0I Ihc bnk.
Y0u rc rcqurcd I0 prcprc Csh Il0w SIIcmcnI 0I ME0AANK PLC usng Ihc
drccI mcIh0d.
!nIcrcsI Rcccvcd 8,422,5b0
Fccs & C0mmss0n Rcccvcd 4,48b,9b0
!nIcrcsI cxpcnscs pd (9,728,840)
Pr0II 0n dsp0sl 0I Fxcd AsscIs
(48,800,000 82,200,000) (bb,b00)
Pr0vs0n I0r Rsk AsscIs (4,0b4,420)
Csh pymcnIs I0 cmpl0yccs & Supplcrs (2,48,980)
0pcrIng Pr0II bcI0rc chngcs n 0pcrIng AsscIs b,5b7,b80
L0ns nd Advnccs (8,070,820)
0Ihcr AsscIs (3,49,340)
0cp0sIs nd CurrcnI Acc0unIs 40,375,340
0Ihcr LblIcs 8,b32,580
37,445,7b0
NcI Csh Fl0ws Ir0m 0pcrIng AcIvIcs bcI0rc TxI0n 44,03,440
Tx Pd (w) (4b9,0b0)
43,544,380
Purchsc 0I Fxcd AsscIs (3,923,840)
Purchsc 0I Lcscd EqupmcnI (45b,020)
Pr0cccds Ir0m Slc 0I Fxcd AsscIs 48,800
NcI Chngc n nvcsImcnI 394,420
(3,83b,b40)
39,707,740
Pr0cccds Ir0m !ssuc 0I shrcs b4,200
RcdcmpI0n 0I 0cbcnIurc 74,700)
8
0vdcnds Pd (w2) (,035,b40)
(,04b,40)
NcI !ncrcsc n Csh nd Csh EquvlcnIs 38,bb,b00
Csh nd Csh EquvlcnIs I 1n , 2008
(2b,750,8b0+9,420,000) 3b,70,8b0
Csh nd Csh EquvlcnIs I 0cc 3, 2008
(59,532,00+5,300,3b0) 74,832,4b0
'000
0pcnng lncc //08 43,320
Chngc I0r Ihc ycr pcr P & L cc0unI 700,000
,3,320
Cl0sng lncc I 3/2/08 bb2,2b0
Tx pd 4b9,0b0
0pcnng lncc //08 ,2b7,340
Add: Pr0p0scd 0vdcnd pcr P & L cc0unI ,30,4b0
2,397,800
Lcss: Cl0sng lncc I 3/2/04 ,3b2,b0
0vdcnd Pd ,035,b40
Thc nI0rmI0n pr0vdcd bcl0w rc cxIrcIcd Ir0m Ihc b00ks nd rcc0rds 0I:
UndcrwrIng Pr0IIs 50,503,000
!nvcsImcnI !nc0mc 233,004,8b0
0Ihcr !nc0mc 2,40,000
Pr0II bcI0rc TxI0n 385,97,8b0
TxI0n 4,082,990
Pr0II IIcr TxI0n 344,834,870
AccrcI0n I0 C0nIngcncy rcscrvc 78,b77,920
2bb,5b,950
Rcscrvc I0r 0nus !ssuc (0,000,000)
Pr0p0scd 0vdcnd (50,000,000)
RcIncd Pr0II I0r Ihc ycr b,5b,950
82
Csh nd nk lncc 74,942,b30 3,995,420
Sh0rITcrm !nvcsImcnIs b2,097,90 452,088,770
Am0unI duc Ir0m gcnIs, br0kcrs &
0Ihcr dcbI0rs 875,837,570 877,270,30
L0ns I0 P0lcy h0ldcrs 27,825,20 34,37,800
L0ngIcrm !nvcsImcnIs ,54,942,430 ,233,5b5,440
SIIuI0ry 0cp0sI 05,000,000 05,000,000
Fxcd AsscIs 38,2b2,430 283,20,b70
() 3,528,907,4b0 3,099,439,40
CrcdI0rs nd Accruls 55b,90,30 582,203,5b0
!nsurncc Funds ,58,229,200 ,30,3b,380
TxI0n 78,522,2b0 b5,454,b50
(b) 2,53,b52,770 ,949,09,590
( b) ,375,254,b90 ,50,49,820
CllcdUp Shrc CpIl 880,490,b0 80,490,b0
Shrc Prcmum cc0unI 32,98,b70 22,98,b70
CpIl Rcscrvc 20,000,000 20,000,000
C0nIngcncy Rcscrvc 95,4b7,2b0 b,789,340
Rcscrvc I0r 0nus !ssuc 0,000,000 50,000,000
0cncrl Rcscrvc 3b,35,b00 30,58,b50
,375,254,b90 ,50,49,820
Thc I0ll0wng ddI0nl nI0rmI0n rc rclcvnI:
() Fxcd AsscIs : C0sI I //08 553,085,590
C0sI I 3/2/08 b74,239,380
AccumulIcd 0cprccI0n I //08 2b9,880,b50
AccumulIcd 0cprccI0n I 3/2/08 355,97b,950
(2) An Icm 0I Ixcd sscIs, whch c0sIs 0,850,000 nd hs bccn Iully
dcprccIcd, ws s0ld durng Ihc ycr I0r 2,40,000.
(3) CrcdI0rs nd ccruls rc mdc up 0I:
Rcnsurncc pyblc 294,324,b80
C0mmss0n pyblc 5,279,0b0
0blgI0ns undcr Inncc lcsc 4,824,020
0vdcnds pyblc 50,000,000
Accruls b5,882,230
0Ihcr pyblcs b,59,320
55b,90,30
83
0vdcnds pyblc I0r Ihc ycr cndcd 3 0cccmbcr, 2007 nd pd n 2008
ws 24,7b0,400.
Y0u rc rcqurcd I0 prcprc csh Il0w sIIcmcnI I0r Ihc ycr cndcd 3 0cccmbcr
2008.
Pr0II bcI0rc TxI0n 385,97,8b0
0cprccI0n (w) 9b,94b,300
Pr0II 0n slc 0I Fxcd AsscIs (2,40,000)
!ncrcsc n !nsurncc Funds 2b,8b7,820
3,404,20
Csh Il0ws Ir0m 0pcrIng cIvIcs bcI0rc
chngcs n w0rkng cpIl b79,32,980
Chngcs !n 0pcrIng AsscIs/LblIcs
0ccrcsc n AgcnIs, br0kcrs & dcbI0rs blnccs
,432,740
0ccrcsc n P0lcy L0ns b,492,590
0ccrcsc n CrcdI0rs & Accruls (w2) (50,545,20)
(42,b9,790)
b54,702,90
!nc0mc Tx Pd (w3) (28,05,380)
NcI Csh gcncrIcd Ir0m 0pcrI0ns b2b,b8b,80
Csh Il0ws Ir0m !nvcsIng AcIvIcs:
Purchsc 0I Fxcd AsscIs (w4) (32,003,790)
Pr0cccds Ir0m slc 0I Fxcd AsscIs 2,40,000
Purchsc 0I !nvcsImcnIs (w5) (44,385,40)
(570,979,200)
Csh Il0ws Ir0m Fnncng AcIvIcs:
!ssuc 0I shrcs (wb) 30,000,000
0vdcnds Pd (24,7b0,400)
(94,7b0,400)
NcI dccrcsc n csh nd csh cquvlcnIs (39,052,790)
Csh nd csh cquvlcnIs I 1n , 2008 3,995,420
Csh nd csh cquvlcnIs I 0cc 3, 2008 74,942,b30
0cprccI0n :0pcnng lncc 2b9,880,b50
Lcss: 0sp0sl 0,850,000
259,030,b50
Cl0sng lncc 355,97b,950
Chrgc I0r Ihc ycr 9b,94b,300
84
2. CrcdI0rs & Accruls 2008 2007 0IIcrcncc
T0Il CrcdI0rs 55b,90,30 532,202,550
Lcss: 0vdcnds (50,000,000) (24,757,30)
40b,90,30 457,44b,420 (50,548,390)
3.
nkpymcnI 28,05,380 // lncc /Iwd b5,454,b50
3/2/ lncc C/Iwd 78,522,2b0 P & L cc0unI 4,082,990
0b,537,b40 0b,537,b40
4.
// nk /Iwd 553,085,590 0sp0sl 0,850,000
nkAddI0ns 32,003,790 lncc C/Iwd b74,239,380
b85,089,380 b85,089,380
5.
l. /I-Sh0rI Icrm 452,088,770 lC/Iwd-Sh0rI Icrm b2,097,90
L0ngIcrm ,233,5b5,440 L0ngIcrm ,58,229,200
nk 44,385,40
2,27,039,b20 2,27,039,b20
b.
l C/IwdShrc CpIl 880,490,b0 l /Iwd Shrc CpIl 80,490,b0
Shrc Prcmum 32,98,b70 Shrc Prcmum 22,98,b70
Rcscrvc I0r 0nus 50,000,000
___________ !ssuc 0I Shrc - nk 30,000,000
93,47,830 93,47,830
7.
nk 24,7b0,400 l /Iwd 24,7b0,400
l C/Iwd 50,000,000 Pr0II&L0ss cc0unI 50,000,000
274,7b0,400 274,7b0,400
Csh Il0w sIIcmcnIs pr0vdc nI0rmI0n b0uI Ihc csh rcccpIs nd csh
pymcnIs 0I n cnIcrprsc 0vcr gvcn pcr0d. Ths chpIcr dcIls Ihc
uscIulncss nd I0rmIs 0I csh Il0w sIIcmcnIs 0I lmIcd lblIy c0mpncs,
bnks nd nsurncc c0mpncs, n cc0rdncc wIh SAS N0 8.
PrcprI0n 0I csh Il0w sIIcmcnIs whch d0pI Ihc drccI nd ndrccI mcIh0ds
I0r c0mpncs, bnks nd nsurncc busncsscs wcrc llusIrIcd n Ihs chpIcr
85
wIh sIndrd cxmnI0n qucsI0ns, sh0wng dcIlcd w0rkngs 0I Ihc Igurcs
n Ihc csh Il0w sIIcmcnIs.
. Thc purp0sc 0I csh Il0w sIIcmcnI s I0 --------------
() Pr0vdc nI0rmI0n b0uI csh rcccpIs nd csh pymcnIs 0vcr gvcn
pcr0d
() !ndcIc Ihc pIIcrn 0I csh gcncrI0n nd uIlzI0n.
() Sh0w Ihc csh vlblc I ll Imcs
(v) Sh0w IhI Ihc pr0II 0I n cnIcrprsc s rclIcd I0 Is lqudIy.
() () 0nly
(b) (v) 0nly
(c) (), () & ()
(d) (), () & (v)
(c) (), () & (v).
2. T0 rrvc I csh nIl0w / 0uIIl0w Ir0m 0pcrIng cIvIcs whcn prcprng csh
Il0w sIIcmcnI usng 0rccI mcIh0d, Ihc dI I0 usc rc -----------
() Csh rcccvcd Ir0m cusI0mcrs nd 0Ihcr s0urccs
() Pr0II bcI0rc Tx
() PymcnIs I0 supplcrs nd I0r 0Ihcr scrvccs
(v) 0cprccI0n chrgc
() () 0nly
(b) () & ()
(c) () 0nly
(d) () & (v)
(c) (), () & (v).
3. A c0mpny s0ld buldng durng Ihc ycr nd pd cpIl gns Ix 0n Ihc
m0unI rclzcd 0n dsp0sl. H0w w0uld Ihc Ix pd bc IrcIcd n Ihc csh Il0w
sIIcmcnI!
() PrI 0I !nc0mc Tx clssIcd s 0pcrIng csh 0uIIl0w
(b) PrI 0I Inncng cIvIcs
(c) 0cducIcd Ir0m slcs pr0cccds undcr nvcsIng cIvIcs
(d) 0cducIcd Ir0m pr0II 0n 0sp0sl
(c) 0scl0scd scprIcly.
4. !n prcprng csh Il0w sIIcmcnI 0I bnk, pr0vs0n I0r rsk sscIs sh0uld bc
dscl0scd undcr drccI mcIh0d. H0w sh0uld Ihc dscl0surc bc mdc!
() As n 0uIIl0w undcr 0pcrIng AcIvIcs.
(b) As dcducI0n Ir0m l0ns nd dvnccs undcr chngcs n 0pcrIng
sscIs nd lblIcs.
(c) As n nIl0w undcr !nvcsIng AcIvIcs
(d) As n 0uIIl0w undcr Fnncng AcIvIcs
(c) As n ddI0n I0 L0ns nd Advnccs undcr chngcs n 0pcrIng sscIs
nd lblIcs.
8b
5. H0w sh0uld dvdcnds rcccvcd Ir0m nvcsImcnIs 0uIsdc Ihc gr0up bc rcIlccIcd
n Ihc csh Il0w sIIcmcnI 0I h0ldng c0mpny!
() As csh nIl0w Ir0m 0pcrIng cIvIcs.
(b) As csh nIl0w Ir0m nvcsIng cIvIcs.
(c) As csh nIl0w Ir0m Inncng cIvIcs.
(d) NcIIcd 0II Ir0m csh 0uIIl0w 0n nvcsImcnIs.
(c) As n ddI0n I0 pr0II bcI0rc Ix.
b. LsI 0nc 0b|ccIvc 0I prcprng csh Il0w sIIcmcnIs.
7. SIIc br0d hcdng undcr whch csh Il0w sIIcmcnIs rc prcprcd.
8. SIIc 0nc s0urcc 0I csh gcncrIcd Ir0m 0pcrIng cIvIcs.
9. H0w w0uld y0u IrcI cxpcndIurc 0n lcscd cqupmcnI n Ihc csh Il0w
sIIcmcnI 0I nk!
0 . H0w w0uld y0u IrcI ncrcsc 0r dccrcsc n nsurncc Iunds n Ihc csh
Il0w sIIcmcnI 0I n !nsurncc c0mpny!
87
AIIcr sIudyng Ihs chpIcr, Ihc rcdcrs wll bc blc I0 undcrsInd:
0cIlcd nlyss, uscIulncss nd lmII0ns 0I sgnIcnI cc0unIng rI0s.
!nIcrprcII0n 0I rI0s c0mpuIcd.
Rcp0rI wrIng.
An Acc0unIng rI0 s pr0p0rI0n 0r IrcI0n 0r pcrccnIgc, cxprcssng
rclI0nshp bcIwccn 0nc Icm n scI 0I Inncl sIIcmcnIs nd n0Ihcr
Icm n Ihc smc Inncl sIIcmcnIs.
F0r cxmplc, Ihc rclI0nshp bcIwccn gr0ss pr0II nd slcs s cxprcsscd by
Ihc cc0unIng rI0 kn0wn s gr0ss pr0II 0r gr0ss mrgn, whch s,
c0mpuIcd s I0ll0ws:
0r0ss Pr0II = 0r0ss Pr0II x 00 = y
Slcs
whcn prcprng Inncl sIIcmcnIs, Ihc 0b|ccIvc s I0 c0nvcy nI0rmI0n I0
Ihc rcdcrs nd 0Ihcrs wh0 rc nIcrcsIcd prIcs wIh dvcrsc nIcrcsIs, whch
my ncludc:
() C0mpny mngcmcnI,
(b) PrcscnI nd p0IcnIl shrch0ldcrs,
(c) PrcscnI nd p0IcnIl l0n crcdI0rs,
(d) Trdc supplcrs nd cusI0mcrs,
(c) Empl0yccs,
(I) Fnncl nlysIs nd |0urnlsIs, nd
(g) 00vcrnmcnI gcnccs (!nlnd Rcvcnuc nd RcgulI0ry AuIh0rIcs lkc
CN, Ngcrn SI0ck Exchngc, SccurIcs nd Exchngc C0nvcrs0n).
Thc mIIcrs whch rc lkcly I0 c0nccrn Ihcsc prIcs, vryng cc0rdng I0
cmphss, rc:
() Pr0IIblIy
(b) LqudIy
(c) MngcmcnI cIIccncy
88
(d) 0crng
(c) Fnncl sIblIy
(I) !nvcsImcnI pprsl.
Thc csscncc 0I ny nIcrprcII0n 0I Inncl sIIcmcnIs s c0mprs0n.
C0mprs0n 0I Ihc currcnI Igurcs 0I c0mpny wIh Is 0wn psI pcrI0rmncc
nd wIh Is budgcI 0r I0rccsI, nd c0mprs0n wIh Ihc pcrI0rmncc 0I 0Ihcr
c0mpncs n smlr Irdcs 0r ndusIrcs. F0r p0IcnIl shrch0ldcr, br0dcr
c0mprs0n bcIwccn c0mpncs nv0lvcd n c0mplcIcly dIIcrcnI Irdcs my
bc ncccssry.
!n 0rdcr I0 IclIIc Ihs c0mprs0n, I s cusI0mry I0 cxprcss Igurcs n rI0s
0r pcrccnIgcs, s0 IhI dsprIy n szc bcIwccn Iw0 busncsscs d0cs n0I
prcvcnI c0mprs0n 0I Ihcr rcsulIs.
RI0 Anlyss s m0sI mp0rInI dcvcc I0r nIcrprcIng Ihc pcrI0rmnccs 0I
c0mpncs Ir0m Ihcr Inncl sIIcmcnIs. 0Ihcr I00ls uscd n Ihc nlyss
nd nIcrprcII0n 0I Inncl sIIcmcnIs ncludc:
() Csh Il0w sIIcmcnIs
(b) \luc ddcd sIIcmcnI.
Ech 0I Ihc rcs 0I nIcrcsI hghlghIcd n 5. b0vc, wll n0w bc cxmncd n
dcIl, usng, whcrc p0ssblc, Ihc I0ll0wng spccmcn scI 0I cc0unIs:
'000 '000 '000
(I C0sI Lcss 0cprccI0n) 2b0,000
SI0ck (0pcnng SI0ck N50mll0n) b0,000
0cbI0rs 90,000
Csh 0,000
b0,000
Trdc CrcdI0rs 40,000
0Ihcr LblIcs 40,000 80,000
80,000
340,000
00 mll0n 0rdnry shrcs 0I cch 00,000
20 mll0n prcIcrcncc shrcs 0I cch 20,000
20,000
89
80,000
200,000
0cbcnIurc SI0ck 40,000
340,000
Turn0vcr b00,000
C0sI 0I Slcs (450,000)
0r0ss Pr0II 50,000
AdmnsIrIvc & 0sIrbuI0n Expcnscs (b,000)
Pr0II bcI0rc nIcrcsI nd TxI0n 34,000
0cbcnIurc !nIcrcsI pyblc ( 7,400)
Pr0II bcI0rc Tx 2b,b00
TxI0n (0,b00)
Pr0II IIcr Tx b,000
PrcIcrcncc 0vdcnd ( ,000)
5,000
0rdnry 0vdcnd (0,000)
RcIncd Pr0II 5,000
Pr0IIblIy my bc cxprcsscd n rclI0n I0 cpIl cmpl0ycd (pr0II s
pcrccnIgc 0I sscIs uscd I0 crn IhI I) 0r n rclI0n I0 slcs (gr0ss
0r ncI pr0II s pcrccnIgc 0I slcs).
() RcIurn 0n CpIl Empl0ycd (R0CE)
Ths s pcrhps Ihc m0sI mp0rInI rI0 n sscssng c0mpny's
pcrI0rmncc. !I s smply pr0II, cxprcsscd s pcrccnIgc 0I
cpIl cmpl0ycd.
!n rI0 nlyss, Ihc nlysI smply 0bIns Ihc pr0II Igurc Ir0m
Ihc Pr0II & L0ss Acc0unI nd Ihc cpIl cmpl0ycd Ir0m Ihc
lncc ShccI. Thcrc rc Iw0 m|0r pIIlls.
FrsI 0I ll, rcmcmbcrng IhI Ihc 0b|ccIvc 0I clculIng Ihc
rI0s s I0 c0mprc Igurcs I0r dIIcrcnI c0mpncs 0r I0r dIIcrcnI
pcr0ds, 0nc sh0uld cnsurc IhI Ihc Igurcs hvc bccn rrvcd I
0n c0nssIcnI bss, nd IhI sscI vlucs rc up I0 dIc. !I my
wcll bc ncccssry I0 clmnIc Ir0m Ihc cc0unIs n0nIrdng
nc0mc nd Ihc sscIs pr0ducng I.
Scc0ndly, c0mprc lkc wIh lkc. whcn cpIl cmpl0ycd mcns,
shrch0ldcrs' Iund plus l0ngIcrm l0ns, IhI sh0uld bc c0mprcd
wIh pr0II, bcI0rc dcducIng nIcrcsI pd 0n Ihcsc l0ns.
90
!I bnk b0rr0wngs bcc0mc m|0r s0urcc 0I l0ngIcrm Inncc, Ihcn
Ihcy sh0uld bc ncludcd n Ihc cpIl cmpl0ycd nd Ihc pr0II Igurc
uscd, sh0uld bc bcI0rc chrgng nIcrcsI pd 0n such b0rr0wngs. Ths
sh0uld bc csIblshcd Ir0m Ihc IcIs 0I Ihc csc.
R0CE cn bc clculIcd n scvcrl wys s sh0wn bcl0w
F0r cxmnI0n purp0scs, Ihc m0sI mp0rInI dcInI0ns rc pr0bbly ()
nd (v) b0vc. Usc () I l00kng I0r 0vcrll pr0IIblIy 0I Ihc c0mpny, nd
usc (v) I l00kng I Ihc p0sI0n Ir0m Ihc p0nI 0I vcw 0I pr0spccIvc
shrch0ldcr. N0Ic IhI Ihc dcInI0n 0I pr0II n (v) s IhI uscd I0r clculIng
Ernngs pcr shrc (EPS) nd Prcc / Ernngs (P/E) rI0s.
(b)
()
Thc pcrccnIgc 0I gr0ss pr0II 0n slcs cn bc clculIcd 0nly I
Irdng cc0unI s vlblc. FlucIuI0ns n I, cn bc vcry
nI0rmIvc, cspcclly I Ixcd mrkup 0n c0sI, s uscd I0 rrvc
I scllng prccs.
!llusIrI0ns 0I Ihc uscs 0I Ihc prmcIcr rc:
0cIccI0n 0I crr0rs nd Irud IIccIng Icms n Irdng
cc0unI.
Uscd by !nlnd Rcvcnuc 0IIcls I0 dcIccI supprcss0n 0I
slcs.
Hcd 0IIcc c0nIr0l 0vcr brnchcs.
F0r AC PLC, 0r0ss pr0II pcrccnIgc
= 50,000 = 25
b00,000
()
I0r AC PLC, NcI Pr0II PcrccnIgc = 34,000 = 5.7
b00,000
. Shrch0ldcrs' Iund plus
l0ngIcrm l0ns plus
currcnI lblIcs
Pr0II bcI0rc l0n
nIcrcsI nd bnk
0vcrdrII nIcrcsI
34,000 = 8.
420,000
. Shrch0ldcrs' Funds
plus l0ngIcrm l0ns
Pr0II bcI0rc L0n
!nIcrcsI
34,000 = 0
340,000
. Shrch0ldcrs' Iunds
0nly, IhI s, EquIy +
PrcIcrcncc Shrcs +
Rcscrvcs.
Pr0II IIcr Ix nd
bcI0rc PrcIcrcncc
dvdcnd
b,000 = 8
200,000
v. EquIy Shrch0ldcrs'
Iunds
Pr0II IIcr Ix nd
IIcr PrcIcrcncc
0vdcnd
5,000 = 8.3
80,000
9
Ths s uscIul yrdsIck I0r c0mprng rcsulIs 0I c0mpny
gnsI Is pcrI0rmncc n prcv0us ycrs 0r Ih0sc 0I 0Ihcr
c0mpncs n smlr Irdc.
Ths rI0 dscl0scs s0mcIhng b0uI Ihc c0mpny's slcs
phl0s0phy.
A c0mpny my Iry I0 mxmsc Is pr0II by cuIIng prccs nd
g0ng I0r slcs v0lumc, I0r cxmplc, m0I0r prIs sI0rcs - 0r by
puIIng 0n hghcr mrk up nd mng I0r Ihc luxury mrkcI
such s b0uIquc.
(c)
AsscI Turn0vcr = Slcs = b00,000 = .8 Imcs
CpIl Empl0ycd 340,000
A l0w sscI Iurn0vcr rIc sh0ws IhI c0mpny s n0I gcncrIng
suIIccnI v0lumc 0I busncss I0r Ihc szc 0I Ihc sscIs nvcsIcd.
Ths my bc rcndcrcd by IIcmpIng I0 ncrcsc slcs 0r by
dsp0sng 0I s0mc sscIs 0r b0Ih.
T0 pr0vc IhI Ihc Iw0 rI0s (b) nd (c) rc subdvs0n 0I rcIurn
0n cpIl cmpl0ycd, mulIply pr0II mrgn (IhI s, NcI Pr0II
) by AsscI Turn0vcr
(5.7 x .8 Imcs) = 0 ppr0xmIcly = rcIurn 0n cpIl
cmpl0ycd, (5.2. ()) Thc sscI Iurn0vcr rI0 my bc IurIhcr
subdvdcd nI0 Ixcd sscIs Iurn0vcr rI0 nd Ihc ncI currcnI
sscIs Iurn0vcr rI0 (0r w0rkng cpIl Iurn0vcr rI0). Thcsc
rI0s hclp I0 mcsurc cIIccncy n Ihc usc 0I cpIl, sncc Ihc
hghcr Ihc ndccs, Ihc grcIcr Ihc uIlzI0n 0I sscIs.
(Imcs pcr ycr)
= Slcs = b00,000 =2.3 Imcs
Fxcd AsscIs 2b0,000
Thc mp0rIncc 0I Ihc ncI currcnI sscI Iurn0vcr rI0 s IhI I
pr0vdcs n crly wrnng 0I sIrncd lqudIy, sncc vcry hgh
rI0 my mcn IhI Ihc c0mpny s sh0rI 0I Iunds nccdcd I0 py
crcdI0rs.
(Imcs pcr ycr) =
Slcs = b00,000 = 7.5 Imcs
NcI CurrcnI AsscIs 80,000
Thc sIndrd mcsurcs 0I lqudIy rc:
() = CurrcnI sscIs__
CurrcnI LblIcs
F0r AC PLC b0,000 = 2:
80,000
92
(b) = CurrcnI sscIs SI0ck =
(Acd IcsI 0r CurrcnI LblIcs
uck RI0)
I0r AC PLC 00,000 = .25:
80,000
whcn nIcrprcIng lqudIy rI0s, y0u sh0uld bcr Ihc I0ll0wng
p0nIs n mnd:
() C0mpncs nd Irdcs vry grcIly n Ihcr w0rkng cpIl
rcqurcmcnIs (w0rkng cpIl s currcnI sscIs lcss
currcnI lblIcs). A rcIl c0mpny wIh rpd sI0ck
Iurn0vcr wIh mnly csh slcs bss, d0cs n0I hvc I0
nvcsI cpIl n sI0cks nd dcbI0rs, n Ihc wy IhI
mnuIcIurng c0mpny pr0bbly d0cs.
Thc currcnI rI0 mghI bc nyIhng Ir0m b0uI .4: up
I0 my bc 3:, dcpcndng 0n Ihc Irdc. c wcry 0I Ihc
sIIcmcnI 0IIcn sccn n IcxIb00ks IhI Ihc dcl rI0 sh0uld
bc 2:. Thc lqud rI0 s, h0wcvcr, cxpccIcd I0 hvc
vluc n0I lcss Ihn :, 0Ihcrwsc Ihc c0mpny c0uld hvc
dIIculIy n mccIng Is dcbIs s Ihcy Ill duc.
() !I Ihc currcnI rI0 0r lqud rI0 s unncccssrly hgh,
hvng rcgrd I0 Ihc nIurc 0I Ihc busncss, Ihs my
ndcIc IhI Ihc c0mpny s n0I usng Is rcs0urccs s
cIIccnIly s I 0ughI I0 bc. FurIhcr cxplnI0n c0uld bc
IhI Ihc c0mpny hs bulI up Is currcnI sscIs I Ihc
blncc shccI dIc I0r m|0r pr0|ccI, 0r scs0nl slcs,
whch s I0 bcgn sh0rIly IIcrwrds.
() Mny bluc chp c0mpncs rcly 0n bnk 0vcrdrII s
pcrmncnI s0urcc 0I Inncc, lIh0ugh 0IIcn Imcs sIIcd
s prI 0I Ihcr currcnI lblIcs. Ths my wcll gvc rsc
I0 vcry l0w currcnI nd lqud rI0s, lIh0ugh n0
lqudIy pr0blcm s such cxsIs.
Thcrc s nccd I0 kn0w Ihc Icrms 0I Ihc 0vcrdrII nd Ihc
m0unI 0I Ihc IclIy, s0 IhI 0nc c0uld I0rm m0rc
rcs0ncd c0nclus0n.
(v) CurrcnI nd lqud rI0s mply n mmcdIc c0nvcrs0n
0I sscIs nI0 csh nd n mmcdIc scIIlcmcnI 0I currcnI
lblIcs. Ths my n0I bc Ihc rcl pr0blcm. 0nly csh
Il0w pr0|ccI0n w0uld pr0ducc n cxhusIvc nswcr I0
n nlyss 0I w0rkng cpIl.
H0wcvcr, lIh0ugh crcdI0rs nd dcbI0rs rc lkcly I0
chngc dly, Ix lblIy 0r pr0p0scd dvdcnd wll
bc pyblc I IuIurc dcIcrmncd dIc, whch wll bc
dscl0scd n Ihc cc0unIs. Thc mp0rIncc 0I Ihs, s IhI,
Ihc c0mpny my hvc pcr0d 0I crcdI, pr0bbly I0r
93
sgnIcnI lcngIh 0I Imc, n whch I0 chcvc Ihc csh 0r
crcdI ncccssry I0 mkc Ihc pymcnI.
Hcrc, Ihc sklls wIh whch mngcmcnI l00ks IIcr Ihc sscIs, undcr Is
c0nIr0l, cspcclly sI0ck, dcbI0rs, nd Ihc usc 0I csh I0 py Is crcdI0rs
rc nlyscd.
Thc I0ll0wng rI0s rc rclcvnI, nd rc IrcqucnIly cxprcsscd n Icrms
0I dys. F0r cxmplc, Ihc numbcr 0I dys crcdI gvcn s clculIcd s:
Trdc 0cbI0rs
x
3b5
CrcdI Slcs
()
() Rw MIcrls SI0ck h0ldng = Rw MIcrl SI0ck
x
3b5
Annul Rw MIcrl C0nsumpI0n
() Numbcr 0I dys w0rknpr0grcss = w0rknpr0grcss
x
3b5
Annul C0sI 0I Slcs
() Numbcr 0I dys Slcs c0vcrcd by Inshcd g00ds =
Fnshcd g00ds SI0ck
x
3b5
Annul C0sI 0I Slcs
!nI0rmI0n rc ndcquIc I0 clculIc Ihcsc Ihrcc rI0s
scprIcly I0r AC PLC, buI I my sIll bc rclcvnI I0 clculIc
Ihc 0vcrll sI0ck rI0, ls0 cllcd
SI0ck RI0 = SI0ck
x
3b5
C0sI 0I Slcs
F0r AC PLC b0,000 x 3b5 = 49dys
450,000
Thc sgnIcncc 0I Ihcsc rI0s s n Ihc dcIccI0n 0I undcsrblc
upwrd Ircnd n sI0ck lcvcls nd n cvluIng rclIvc
mngcmcnI cIIccncy by c0mprng Ihcm wIh Ih0sc n smlr
c0mpncs. 0bv0usly, Ihc 0pIml lcvcl s cnIrcly dcpcndcnI
up0n Ihc Irdc bcng crrcd 0n. SI0ck rI0 my ls0 bc cxprcsscd
n Icrms 0I Ihc numbcr 0I Imcs IhI sI0ck s Iurncd 0vcr n Ihc
ycr.
Usng AC Plc (!llusIrI0n 5):
SI0ck Turn0vcr RI0 = C0sI 0I Slcs = 450,000
=
7.5 Imcs
SI0ck b0,000
(b)
= Trdc 0cbI0rs
x
3b5
CrcdI Slcs
94
= 90,000
x
3b5 = 55 dys
b00,000
Trdc dcbI0rs sh0uld bc ncI 0I pr0vs0n I0r bd nd d0ubIIul
dcbIs, I Ihc Igurc s gvcn.Thcrc s ssumpI0n ll Ihc dcbI0rs
rc Irdc dcbI0rs nd IhI ll slcs rc crcdI slcs.
SIudcnIs rc dvscd I0 sIIc whIcvcr ssumpI0n s mdc, n
Ihc cxmnI0n cnvr0nmcnI.
An0Ihcr pr0blcm whch my ls0 IIccI Ihc sI0ck nd crcdI0rs
rI0 s IhI wc my bc dclng wIh scs0nl Irdc, nd IhI
dcbI0rs rc bn0rmlly hgh 0r bn0rmlly l0w I Ihc blncc
shccI dIc. !n Ihs csc, I my bc m0rc nI0rmIvc I0 Ikc Ihc
vcrgc dcbI0rs lcvcl, 0r bcIIcr sIll, c0mprc dcbI0rs I Ihc
blncc shccI dIc wIh cIul slcs 0I Ihc m0nIhs mmcdIcly,
I kn0wn.
Assumng n0 bn0rml IcI0rs, Igurc 0I b0uI b0 dys (2
m0nIhs crcdI) rc rcgrdcd s sIsIcI0ry I0r dcbI0rs rI0.
(c)
= Trdc CrcdI0rs
x
3b5
CrcdI Purchsc
F0r AC PLC 40,000
x
3b5 = 32dys
4b0,000
N0Ic: CrcdI Purchscs s rrvcd I Ihus:
C0sI 0I Slcs + Cl0sng sI0ck - 0pcnng sI0ck
= (450,000 + b0,000 - 50,000) = 4b0,000
Ths rI0 ppcrs I0 ndcIc vcry pr0mpI scIIlcmcnI 0I crcdI0rs,
sub|ccI I0 spccl IcI0rs dscusscd I0r dcbI0rs n 5.2.3.
CpIl 0crng s Ihc Icrm uscd I0 dcscrbc Ihc cxIcnI I0 whch
c0mpny's I0Il cpIl s pr0vdcd by Ixcd nIcrcsI sccurIcs, such s
dcbcnIurcs.
F0r cxmplc, 0rdnry Shrc CpIl 00,000
L0n CpIl 900,000
0crng rI0 s bc cxprcsscd s
() L0n cpIl :
9
/

0r 9:
EquIy cpIl
() L0n CpIl
x
00 : 9
x
00 = 90
T0Il CpIl 0
Ths s hgh gcrng sIuI0n n whch 00,000 w0rIh 0I cquIy
cpIl c0nIr0ls mll0n 0I I0Il cpIl.
95
!n Ihc csc 0I AC PLC, Ihc gcrng rI0 s:
() PrcIcrcncc shrcs + dcbcnIurcs = b0,000 = 0.9 :
0rdnry shrcs + rcscrvcs 80,000
() Fxcd nIcrcsI cpIl = b0,000 = 47
T0Il CpIl 340,000
Thc rI0 b0vc rcvcls m0dcrIc gcrng sIuI0n I0r mny
c0mpncs.
0crng rI0 s mp0rInI I0r Iw0 rcs0ns. FrsI, I s 0nc mcsurc 0I
rsk bcng Ikcn by n cquIy nvcsI0r. An 0rdnry shrch0ldcr n
hghly gcrcd c0mpny sInds I0 gn dspr0p0rI0nIcly n g00d Imcs
(bccusc Ihc nvcsI0r hs Ihc bcncII 0I ll Ihc pr0II n cxccss 0I Ixcd
nIcrcsI chrgcd), buI l0sscs dspr0p0rI0nIcly n bd Imcs (bccusc
Ihc Ixcd nIcrcsI musI bc pd rcgrdlcss 0I pr0II).
Scc0ndly, I sssIs pr0spccIvc lcndcr, wh0 my hcsIIc bcI0rc lcndng
c0mpny m0rc Ihn (sy) Iwcc Ihc cquIy sIkc n I.
Thc b0rr0wng p0wcrs 0I c0mpny rc IrcqucnIly rcsIrcIcd by Is
ArIclcs 0I Ass0cI0n.
Tngblc NcI AsscI vluc pcr shrc: IhI s NcI w0rIh pcr shrc. Ths s
clculIcd by dvdng Ihc ncI Ingblc sscIs by Ihc numbcr 0I 0rdnry
shrcs n ssuc. Crc hs I0 bc Ikcn I0 cxcludc g00dwll (n nIngblc
sscI) nd I0 dcducI Ihc prcIcrcncc shrcs bcI0rc rrvng I Ihc Igurc
0I ncI Ingblc sscIs IIrbuIblc I0 Ihc 0rdnry shrch0ldcrs.
Assumng n0 g00dwll n Ihc llusIrI0n, Ihc ncI Ingblc sscIs 0I AC
PLC rc:
'000 '000
Fxcd sscIs 2b0,000
NcI CurrcnI sscIs 80,000
340,000
Lcss: L0n CpIl 40,000
PrcIcrcncc CpIl 20,000
b0,000
NcI Ingblc sscIs 80,000
!n Ihs csc, Ihc ncI Ingblc sscI s Ihc smc s Ihc 0rdnry shrc
cpIl ( 00mll0n) plus Ihc rcscrvc ( 80mll0n), buI Ihs s
sh0rIcuI, whch wll n0I lwys w0rk n m0rc c0mplcx scI 0I Igurcs.
Thc sscI vluc pcr shrc s, IhcrcI0rc:
80,000,000 x 00 = 80 k0b0
00,000,000
Thc mp0rIncc 0I sscIs pcr shrc Igurc s IhI I pr0vdcs l0ng
sIcp IhI s, rclsblc vluc pcr shrc I Ihc c0mpny ccscs 0pcrI0ns.
!I s unlkcly IhI Ihc sscIs wll rclsc Ihcr blncc shccI vlucs cxcIly,
9b
IcI whch prIly cxplns Ihc dIIcrcnIls bcIwccn qu0Icd
c0mpny's ncI w0rIh pcr shrc nd Is shrc mrkcI prcc.
A pr0spccIvc 0r n cxsIng nvcsI0r wll l00k I Ihc I0ll0wng rI0s n
dccdng whcIhcr I0 buy 0r scll shrcs n c0mpny:
() Ernngs pcr shrc
(b) Prcc / Ernngs RI0 (P / E RI0)
(c) 0vdcnd ycld
(d) 0vdcnd c0vcr
Thc rI0s rc dscusscd, s I0ll0ws:
()
SIIcmcnI 0I Acc0unIng SIndrd N0.2 (SAS) ws ssucd I0
undcrlnc Is mp0rIncc nd cxpln Ihc vr0us IcI0rs nv0lvcd
n rrvng I crnngs pcr shrc.
() Ernngs pcr shrc (EPS) rcIcrs I0 crnngs pcr 0rdnry
shrc. sclly, EPS s clculIcd by dvdng Ihc
0pcrIng pr0II IIcr Ix 0I c0mpny I0r Inncl ycr
by Ihc numbcr 0I ssucd 0rdnry shrcs 0I Ihc c0mpny.
() 0pcrIng pr0II 0r l0ss IIcr nc0mc Ix s Ihc Igurc I0r
Ihc Inncl ycr bcI0rc cxIr 0rdnry Icms nd IIcr
pplcblc nc0mc Ix cxpcnsc. !I s n m0unI 0I pr0II
0r l0ss IhI ncludcs cxccpI0nl Icms buI cxcludcs cxIr
0rdnry Icms.
() EPS s pcrI0rmncc ndcI0r IhI s prmrly 0I nIcrcsI
I0 cxsIng nd p0IcnIl shrch0ldcrs, nd Ihcr dvscrs.
An ppr0prIc mcIh0d 0I clculIng EPS plys m|0r
r0lc n rrvng I crnngs gr0wIh 0vcr Imc, nd Ihc Prcc
/ Ernngs (P/E rI0). Thcsc rc crucl ndccs I0 Inncl
dccs0ns.
(v) SIIcmcnI 0I Acc0unIng SIndrds (SAS N0 2)
!n clculIng EPS, n cnIcrprsc sh0uld n0I ncludc
cxIr0rdnry Icms bcI0rc rrvng I pr0II IIcr
Ix.
P0IcnIl 0rdnry shrcs sh0uld bc IrcIcd s
dluIvc whcn, nd 0nly whcn, Ihcr c0nvcrs0n I0
0rdnry shrcs w0uld dccrcsc ncI pr0II pcr shrc
Ir0m c0nInung 0rdnry 0pcrI0ns.
Thc m0unI 0I ncI pr0II IIrbuIblc I0 prcIcrcncc
shrch0ldcrs ncludng prcIcrcncc dvdcnd I0r Ihc
pcr0d, sh0uld bc dcducIcd Ir0m Ihc ncI pr0II (0r
ddcd I0 Ihc ncI l0ss) n clculIng Ihc ncI pr0II
0r l0ss I0r Ihc pcr0d IIrbuIblc I0 0rdnry
shrcs.
97
!n 0rdcr I0 dcIcrmnc crnngs I0r EPS clculI0n,
Ihc Iull dvdcnd I0r Ihc ycr 0n cumulIvc
prcIcrcncc shrcs sh0uld bc dcducIcd (Ihc ncI
m0unI) Ir0m Ihc ncI pr0II 0r ddcd I0 Ihc ncI l0ss,
whcIhcr 0r n0I I hs bccn crncd 0r dcclrcd whlc
0nly Ihc cIul dvdcnd pd 0r pr0p0scd 0n n0n
cumulIvc prcIcrcncc shrcs, sh0uld bc dcducIcd
Ir0m Ihc ncI pr0II.
A wcghIcd vcrgc numbcr 0I shrcs 0uIsIndng
durng Ihc pcr0d sh0uld bc uscd s dcn0mnI0r
I0r Ihc EPS clculI0n. Shrcs ssucd durng Ihc
ycr ncludcd Ihc wcghIcd vcrgc numbcr 0I
shrcs whch sh0uld rcIlccI Ihc dIc Ihc
c0nsdcrI0n ws rcccvcd.
!n clculIng dluIcd crnngs pcr shrc (EPS), Ihc
numbcr 0I shrcs, sh0uld bc dcIcrmncd s Ihc I0Il
0I Ihc I0ll0wng:
Ihc wcghIcd vcrgc numbcr 0I 0rdnry
shrcs
p0IcnIl 0rdnry shrcs 0I Ihc cnIIy
0uIsIndng s I Ihc bcgnnng 0I Ihc
Inncl ycr IhI rcmn 0uIsIndng s
I Ihc rcp0rIng dIc IhI rc dluIvc.
p0IcnIl 0rdnry shrcs ssucd durng Ihc
Inncl ycr IhI rc dluIvc, wcghIcd by
rcIcrcncc I0 Ihc numbcr 0I dys Ir0m Ihc
dIc 0I ssuc 0I Ih0sc p0IcnIl 0rdnry
shrcs I0 Ihc rcp0rIng dIc s pr0p0rI0n 0I
Ihc I0Il numbcr 0I dys n Ihc Inncng
ycr.
p0IcnIl 0rdnry shrcs ssucd
0uIsIndng durng Ihc Inncl ycr IhI
rc dluIvc nd hvc bccn c0nvcrIcd 0r hvc
lpscd 0r cnccllcd durng Ihc Inncl
ycr, wcghIcd by rcIcrcncc I0 Ihc numbcr
0I dys Ir0m Ihc bcgnnng 0I Ihc Inncl
ycr I0 Ihc dIc 0I c0nvcrs0n, lpsc 0r
cnccllI0n.
Thc c0mpuII0n 0I c0nvcrIblc p0IcnIl 0rdnry
shrcs IhI rc dluIvc sh0uld ssurc Ihc m0sI
dvnIgcs c0nvcrs0n rIc 0r cxcrcsc prcc Ir0m
Ihc sIndp0nI 0I Ihc h0ldcrs 0I p0IcnIl 0rdnry
shrcs.
98
whcrc Ihc Inncl sIIcmcnIs hvc bccn d|usIcd s
rcsulI 0I Ihc nIr0ducI0n 0I Ircsh cpIl durng Ihc ycr
0r bcIwccn Ihc blncc shccI dIcs 0I publcI0n, n
cnIcrprsc sh0uld n0I d|usI Is EPS Igurcs I0r Ihc prcv0us
ycrs nd sh0uld n0I prcscnI d|usIcd EPS.
Thc wcghIcd vcrgc numbcr 0I 0rdnry shrcs
0uIsIndng durng Ihc pcr0d nd I0r Ihc mmcdIc
prcccdng ycr sh0uld bc d|usIcd 0nly whcn 0rdnry
shrcs 0uIsIndng s ncrcscd 0r rcduccd wIh0uI
c0rrcsp0ndng chngc n rcs0urccs.
(v) 0scl0surc RcqurcmcnIs
An cnIcrprsc sh0uld prcscnI bsc nd dluIcd EPS 0n Ihc
Icc 0I Ihc nc0mc sIIcmcnI, nd Ihc hsI0rcl Inncl
summry wIh cqul pr0mncncc.
An cnIcrprsc sh0uld prcscnI bsc nd dluIcd EPS, cvcn
I Ihc m0unI dscl0scd rc ncgIvc (.c. l0ss pcr shrc).
An cnIcrprsc sh0uld prcscnI bsc nd dluIcd EPS
sIIsIcs I0r EPS bcI0rc cxIr0rdnry Icms
An cnIcrprsc sh0uld dscl0sc Ihc I0ll0wng:
Thc m0unI uscd s Ihc numcrI0r n clculIng
bsc nd dluIcd EPS, nd rcc0nclI0n 0I Ih0sc
m0unIs I0 Ihc ncI pr0II 0r l0ss I0r Ihc pcr0d.
0scl0sc ny chngcs n Ihc numbcr 0I shrcs uscd
I0 c0mpuIc EPS.
Thc Inncl cIIccI 0n dluIcd EPS 0I ny
d|usImcnI rcsulIng Ir0m chngcs n cc0unIng
p0lcy pplcd n prcprng nd prcscnIng Ihc
Inncl rcp0rI.
Any c0nvcrs0n I0 cllng 0I, 0r subscrpI0n I0r,
0rdnry shrcs IhI 0ccurs bcIwccn Ihc rcp0rIng
dIc nd Ihc Imc 0I c0mplcI0n 0I Ihc Inncl
rcp0rI.
An cnIcrprsc sh0uld dscl0sc, by wy 0I n0Ics 0rdnry
shrc 0r p0IcnIl 0rdnry shrc IrnscI0ns IhI 0ccur
IIcr Ihc blncc shccI dIc whcn Ihcy rc 0I such
mp0rIncc IhI n0ndscl0surc w0uld IIccI Ihc blIy 0I
Ihc uscrs 0I Ihc Inncl sIIcmcnIs I0 mkc pr0pcr
cvluI0ns nd dccs0ns.
AC sc EPS = Pr0II IIcr Tx nd PrcIcrcncc dvdcnd
0rdnry Shrc CpIl
99
= 00 x 5,000 = 5k/ shrc
00,000
(b)
As Ihc nmc mplcs, Ihs rI0 mcsurcs Ihc rclI0nshp
bcIwccn crnngs pcr shrc nd Ihc mrkcI prcc pcr shrc.
!n AC PLC, Ihc mrkcI prcc s n0I gvcn, buI ssumc IhI Ihc
mrkcI vluc s Ihc smc s Ihc pr vluc 0I cch 0rdnry shrc.
P/E RI0 MrkcI vluc pcr shrc
sc EPS = 00k
5k = b.7 Imcs
Thc sgnIcncc 0I P/E rI0 0I prIculr c0mpny cn bc |udgcd
0nly n rclI0n I0 Ihc rI0s 0I 0Ihcr c0mpncs n Ihc smc knd
0I busncss. !I Ihc mcdn P/E rI0 0I gr0up 0I c0mpncs wIhn
n ndusIry s 0 nd c0mpny's P/E rI0 s lcss Ihn 7, I cn
bc dcduccd IhI Ihc nvcsIng mcmbcrs 0I Ihc publc d0 n0I Iv0ur
Ihc c0mpny, cIhcr bccusc 0I p00r psI pcrI0rmncc 0r gr0wIh
pr0spccIs.
A P/E rI0 hghcr Ihn IhI 0I 0Ihcr c0mprIvc c0mpncs, 0n
Ihc 0Ihcr hnd, ndcIcs grcIcr dcmnd I0r Ihc c0mpny's shrcs
prcsumbly bccusc rpd gr0wIh n crnngs s cxpccIcd.
(c)
Ths mcsurcs Ihc rcIurn I0 shrch0ldcr 0n Ihc m0unI 0I hs
nvcsImcnIs. !n Ihc csc 0I qu0Icd shrc, Ihc ycld s clculIcd
by rcIcrcncc I0 Ihc currcnI mrkcI vluc.
0vdcnd Ycld
= 0r0ss dvdcnd pcr shrc = 0 x 00 = 0
MrkcI vluc pcr shrc 00
Sncc nc0mc s n mp0rInI spccI 0I n nvcsImcnI I0r m0sI
nvcsI0rs, Ihc dvdcnd ycld s kcy crIcr0n.
(d)
Thc shrch0ldcr s nIcrcsIcd n kn0wng whcIhcr hs nvcsImcnI
wll c0nInuc I0 ycld hs rcqurcd rcIurn. F0r Ihs rcs0n, dvdcnd
c0vcr s ppr0prIc sncc I ndcIcs Ihc m0unI 0I pr0II c0vcr
I0r n 0rdnry dvdcnd nd Ihc m0unI 0I pr0II rcIncd n Ihc
busncss:
F0r A C PLC,
0vdcnd C0vcr wll bc:
NcI Pr0II I0r Ihc ycr IIcr nIcrcsI nd prcIcrcncc dvdcnd
0vdcnd 0n 0rdnry Shrcs
00
ThI s, = 5,000 = .5 Imcs
0,000
ThcrcI0rc, Ihc pr0II 0I Ihc c0mpny wll hvc I0 bc rcduccd by
m0rc Ihn hlI, bcI0rc Ihc 0rdnry shrch0ldcrs' dvdcnds wll
bc unc0vcrcd by currcnI crnngs.
!nspIc 0I Ihc 0bv0us bcncIIs 0I rI0 nlyss, Ihcrc rc s0mc lmII0ns I0
Ihc uscIulncss 0I rI0s. Thcy ncludc Ihc I0ll0wng:
() Thc m|0r lmII0n rscs Ir0m Ihc IcI IhI, Ihcy rc m0sIly c0mpuIcd
Ir0m hsI0rcl cc0unIs. C0nscqucnIly, Ihcy suIIcr Ir0m Ihc smc
lmII0ns whch hsI0rcl cc0unIs hvc, 0nc 0I whch s, Ihc IcI IhI
hsI0rcl nI0rmI0n s 0I lIIlc usc n sscssng IuIurc pr0spccIs 0I
c0mpny.
(b) An0Ihcr lmII0n s Ihc IcI IhI rI0s rc qunIIblc dI. Thcy
cnn0I pr0vdc n0nqunIIblc nI0rmI0n lkc c0mpcIcncc 0I
mngcmcnI nd sIII nd chngcs n Ihc 0pcrIng cnvr0nmcnI.
(c) S0mc 0I Ihc rI0s, I0r cxmplc, d0 n0I hvc unvcrslly cccpIcd unI0rm
prmcIcrs.
(d) whcn crryng 0uI nIcrc0mpny nlyss, dIIcrcnI cc0unIng p0lccs
d0pIcd by Ihc c0mpncs c0uld dsI0rI rI0s clculIcd.
F0r cxmplc, dIIcrcnI dcprccI0n p0lccs d0pIcd by dIIcrcnI
c0mpncs wll nIlucncc Ihc crryng m0unIs 0I Fxcd AsscIs whch
wll nIlucncc rI0s lkc R0CE. F0r nIcrc0mpny nlyss I0 bc
mcnngIul IhcrcI0rc, c0gnsncc musI bc Ikcn 0I Ihc dIIcrcnI
cc0unIng p0lccs s0 IhI ncccssry d|usImcnIs rc mdc whcrc Ihc
nccd rscs.
ExmnI0n qucsI0ns 0n nIcrprcII0n my bc:
() wrIIcn - skng I0r cxplnI0n 0I Icrms 0r rI0s uscd,
(b) C0mpuII0nl - rcqurcd I0 clculIc rI0s,
(c) RcqucsI I0 sIIc c0nclus0ns drwn Ir0m rI0s clculIcd, nd
(d) A c0mbnI0n 0I , b, nd c b0vc.
00n'I bc d0gmIc n whI y0u sy. Thcrc rc 0IIcn scvcrl p0ssblc rcs0ns I0r
ny dvcrgcncc Ir0m n0rml n rI0.
whcrc y0u Ind Ihc dcbI0rs rI0 sh0wng pcr0d 0I crcdI 0I 20dys, s0mc
cnddIcs wll |ump I0 Ihc c0nclus0n IhI, Ihc pcr0d 0I crcdI 0I 20dys s
I00 hgh ndcIng scr0us wckncss n crcdI c0nIr0l, whch my 0r my n0I
bc Iruc.
0
A wcllnI0rmcd cnddIc wll c0ncludc s I0ll0ws:
Usng Ihc Igurcs n Ihc publshcd cc0unIs, Ihc dcbI0rs rI0 sh0ws pcr0d 0I
crcdI 0I 20 dys, ndcIng p0ssblc wckncss n crcdI c0nIr0l,
Thc rI0 c0uld bc dsI0rIcd, h0wcvcr, by 0nc 0r m0rc 0I Ihc I0ll0wng IcI0rs:
() ExsIcncc 0I lrgc n0nIrdc dcbI0rs,
(b) Scs0nl Irdc, wIh hgh slcs n Ihc pcr0d mmcdIcly bcI0rc Ihc
blnccs shccI dIc,
(c) A spccl slc 0n l0ngIcrm pymcnI Icrms, nd
(d) Slcs I0 n ss0cIcd c0mpny 0n Iv0urblc crcdI Icrms.
FurIhcr nvcsIgI0n I0 clmnIc Ihcsc IcI0rs s ncccssry bcI0rc Irm
c0nclus0n cn bc drwn.
Tkng Ihc smc sIuI0n s n Ihc llusIrI0n 0n 0cbI0rs rI0, (HnI ) n
lIcrnIvc wy I0 nswcr w0uld bc:
0cbI0rs RI0 = Pcr0d 0I crcdI 0I 20dys.
0n Ihc ssumpI0n IhI n0 spccl IcI0r IIccIs Ihc Igurcs n Ihc publshcd
cc0unIs, IhI s, scs0nl Irdc, nclus0n 0I n0nIrdc dcbI0rs, spccl slcs
0n l0ngIcrm crcdI Icrms, Ihs rI0 ndcIcs scr0us wckncss n Ihc
c0mpny's crcdI c0nIr0l pr0ccdurcs nd Ihc cxsIcncc 0I p0IcnIl bd dcbI.
00 n0I cxpccI rcIlcr, wIh rpd sI0ck Iurn0vcr nd m0sI slcs I0r csh, I0
hvc Ihc smc currcnI rI0, s mnuIcIurcr wIh hgh sI0cks nd slcs,
n0rmlly 0n m0nIhly crcdI Icrms.
Thc lncc ShccI 0I FunIr LmIcd, I0y mnuIcIurcr, s I 3 0cccmbcr,
2008 ws s I0ll0ws:
'000 '000
(NcI) 2,000
!nvcsImcnIs 500
000dwll ,900
4,400
:
SI0cks & w0rknpr0grcss ,900
0cbI0rs ,700
nk nd Csh blnccs 300
23,900
02
CrcdI0rs 8,900
nk 0vcrdrII 7,200
Tx Pyblc 400
0vdcnds Pyblc 700
7,200
b,700
2,00
0rdnry Shrc CpIl - !ssucd & Fully Pd 0,000
Rcvcnuc Rcscrvcs 3,900
Shrch0ldcrs' Iund 3,900
0cIcrrcd Tx ,200
L0ngIcrm L0n b,000
2,00
Turn0vcr durng Ihc ycr 2007 ws 39mll0n, (200b 42mll0n) nd IhI
n Ihc IrsI hlI 0I 2008 ws 2mll0n (2007 3mll0n)
SI0ck I 0cccmbcr 3, 200b ws 2.mll0n. SI0ck s sIIcd I c0sI (ncludng
ppr0prIc pr0ducI0n 0vcrhcds), whch s ppr0xmIcly b0 0I scllng prcc.
Rcqurcd:
() C0mpuIc Ihc currcnI rI0 0I FunIr LId I 0cccmbcr 3, 2007
(b) rcIly cxpln Ihc purp0sc 0I currcnI rI0s nd h0w I my vry
wIh Ihc nIurc 0I Ihc busncss c0nccrncd.
(c) whI subsdry rI0s my uscIully bc c0mpuIcd whch wll
cnblc n nlysI I0 I0rm |udgcmcnI s I0 Ihc w0rkng cpIl
sIrucIurc! !llusIrIc Ihcr c0mpuII0n usng Ihc blncc shccI
nd 0Ihcr dI I0r FunIr LId.
(d) 0n Ihc bss IhI Iurn0vcr n 2007 ws 39mll0n nd dcbI0rs
wcrc .7mll0n, Ihc vcrgc c0llccI0n pcr0d I0r FunIr LId
ws 09.5dys, whch s clcrly cxccssvc, c0mmcnI 0n Ihs
nlyss.
(c) C0mmcnI 0n Ihc m|0r wckncss (prI Ir0m dcbI c0llccI0n)
pprcnI Ir0m Ihc cc0unIs 0I FunIr LId.
() = CurrcnI AsscIs
=
23.9 = .39:
CurrcnI LblIcs 7.2
(b) ()
Thc currcnI rI0 s n ndcI0r 0I Ihc Inncl s0undncss nd
sIblIy 0I busncss. Thc pr0rIy 0I busncss s survvl nd
I cnn0I survvc unlcss I s blc I0 mccI Is dcbIs s Ihcy bcc0mc
duc I0r pymcnI.
03
CurrcnI sscIs rc dcIncd s Ih0sc hcld I0r c0nvcrs0n nI0 csh
n Ihc 0rdnry c0ursc 0I busncss whlc currcnI lblIcs rc
0blgI0ns I0 py m0ncy I IuIurc dIc, usully wIhn 2
m0nIhs.
y rclIng Ihcsc Iw0 Igurcs I prIculr dIc, 0nc cn sscss
Ihc c0mpny's blIy I0 py dcbIs duc wIhn 2m0nIhs, 0uI 0I
sscIs whch rc I0 bc c0nvcrIcd I0 csh n ppr0xmIcly wIhn
Ihc smc Imc sclc.
CurrcnI sscIs ncludc sI0cks nd w0rknpr0grcss. Thcy rc
pcrhps Ihc m0sI dIIculI currcnI sscIs I0 c0nvcrI quckly I0 csh.
!I s, IhcrcI0rc, c0mm0n I0 mcsurc Ihc c0mpny's mmcdIc
blIy I0 py Is dcbIs by c0mpuIng Ihc lqudIy rI0 (0r cd
IcsI rI0 s I s 0Ihcrwsc kn0wn) s I0ll0ws:
CurrcnI sscIs Lcss SI0ck & w!P = 23.9 - .9 = 2__
CurrcnI LblIcs 7.2 7.2
= 0.7:
AIIcmpIs rc IrcqucnIly mdc I0 csIblsh n0rm I0r Ihcsc rI0s.
!I s dIIculI I0 sIIc n bs0luIc Igurc n s0lI0n, I0r cxmplc
sI0ck nd dcbI0rs lcvcls rcqurcd n 0nc ndusIry my bc quIc
dIIcrcnI Ir0m Ih0sc n n0Ihcr.
Thc rI0s sh0uld bc c0mprcd ycr by ycr wIhn Ihc smc
c0mpny nd 0nc w0uld l00k I0r c0nssIcnI pIIcrn. An ndusIry
vcrgc w0uld bc uscIul ndcI0r I0r c0mpny, s I w0uld
cnblc c0mprs0n I0 bc mdc wIh 0Ihcr c0mpncs n Ihc smc
sccI0r.
RI0s d0 n0I usully pr0vdc Inl nswcrs, Ihcy 0nly sssI n
Ihc bcIIcr undcrsIndng 0I Inncl rcp0rIs. !I s, IhcrcI0rc,
lwys ncccssry I0 rclIc Ihc Igurcs I0 prcv0us pcrI0rmncc
0r s0mc cxIcrnl sIndrds.
()
Thc crucl cIIccI 0I Ihc nIurc 0I Ihc busncss 0n Ihc currcnI rI0
cn bc llusIrIcd by rcIcrcncc I0 Iw0 clcmcnIs 0I w0rkng cpIl:
- MnuIcIurng c0mpncs h0ld sI0cks 0I rw mIcrls,
w0rknpr0grcss nd Inshcd g00ds, whcrcs scrvcc c0mpncs
Icnd n0I I0 d0 s0.
usncsscs whch scll I0r csh (such s SupcrmrkcIs)
wll n0I hvc mIcrl Igurcs I0r Irdc dcbI0rs c0mprcd wIh
busncsscs wh0sc slcs rc prncplly 0n crcdI Icrms, I0r
cxmplc, hcvy cngnccrng Irms.
Clcrly, Ihc currcnI rI0s n Ihcsc Iypcs 0I 0pcrI0n rc
sgnIcnIly IIccIcd by Ihc nIurc 0I Ihc busncss nd Ihs
04
cxplns why I s csscnIl I0 c0mprc currcnI rI0s Ir0m ycr
I0 ycr wIhn Ihc smc c0mpny 0r wIh 0Ihcr c0mpncs n Ihc
smc ndusIry.
(c)
!I s p0ssblc I0 Ikc n 0vcrll vcw 0I Ihc lcvcl 0I w0rkng cpIl by
c0mpuIng rI0s whch lnk w0rkng cpIl 0r Is c0nsIIucnI clcmcnIs
I0 0Ihcr spccIs 0I Ihc busncss. Hvng csIblshcd n0rml 0r dcsrcd
rclI0nshps, 0nc cn m0nI0r dcvI0ns Ir0m Ihc n0rm. Thc 0b|ccIvc
s I0 csIblsh Ihc cuscs nd cIIccIs 0I Ihcsc dcvI0ns (whch my bc
|usIIcd)
() w0rkng CpIl b.7 = 0.32:
CpIl Empl0ycd 2.
0r
w0rkng CpIl b.7 = 0.5b:
Fxcd AsscIs 2
Thc mplcI0n s IhI hgh pr0p0rI0n 0I w0rkng cpIl I0 I0Il cpIl
cmpl0ycd, gvcs Ihc busncss Irccd0m I0 dpI I0 chngng
crcumsInccs, I0r cxmplc, I mghI cnblc c0mpny I0 b00sI slcs
by Icmp0rry rcducI0n 0I lqudIy 0r I0 rclsc sscIs nd nvcsI Ihc
pr0cccds n Ihc m0sI pr0IIblc wy
() Slcs
=
39 =3.3Imcs 42 = 20 Imcs
SI0ck Turn0vcr RI0 = SI0ck & w!P .9 2.
y rclIng slcs I0 ycrcnd sI0cks nd w0rknpr0grcss, Ihc nlysI
wh0 0nly hs cccss I0 publshcd nI0rmI0n, IIcmpIs I0, sscss Ihc
cIIccIvcncss 0I Ihc c0mpny's c0nIr0l 0vcr Is sI0ck lcvcls nd Is blIy
I0 gcncrIc slcs n rclI0n I0 sI0cks hcld.
Publshcd nI0rmI0n n Ihs qucsI0n s dcIccnI n Iw0 prncpl
spccIs:
() N0 !nI0rmI0n s dscl0scd s I0 c0sI 0I g00ds s0ld. Such
nI0rmI0n w0uld bc uscIul n c0mpuIng sI0ck Iurn0vcr rI0,
bccusc slcs ncludc pr0II clcmcnI whcrcs sI0cks rc usully
sIIcd I c0sI. C0mprs0ns bcIwccn c0mpncs rc dsI0rIcd by
Ihc dscrcpncy bcIwccn gr0ss pr0II mrgn crncd by dIIcrcnI
busncsscs. !I w0uld IhcrcI0rc bc bcIIcr I0 rclIc sI0cks I0 c0sI 0I
g00ds s0ld.
() N0 nI0rmI0n s dscl0scd b0uI Ihc pIIcrn 0I slcs durng Ihc
ycr, 0r b0uI Ihc vcrgc lcvcls 0I sI0cks hcld 0r b0uI c0sI 0I
g00ds s0ld.
!n Ihc cxmplc, wc cn rcc0mpuIc Ihc rI0 usng c0sI 0I g00ds
s0ld s bcng b0 0I slcs.
05
C0sI 0I g00ds S0ld = 23.4 = .97Imcs 25.2 = 2 Imcs
SI0ck + w!P .9 2.
() Avcrgc C0llccI0n Pcr0d
Trdc 0cbI0rs = .7m = 09.5dys
Slcs pcr dy 0b,850
Slcs pcr dy = 0b,850 (3.9m/3b5)
Ths rI0, whcn c0mprcd wIh Ih0sc 0I prcv0us ycrs nd wIh
0Ihcr smlr c0mpncs, ndcIcs Ihc cIIccIvcncss 0I Ihc
c0mpny's crcdI c0nIr0l pr0ccdurcs nd dvcrsc m0vcmcnIs my
suggcsI Ihc nclus0n 0I bd nd d0ubIIul dcbIs n Ihc Irdc
dcbI0rs Igurc. whcn clculIcd 0n Ihc bss 0I publshcd
cc0unIs, Ihs rI0 rcqurcs qulIcI0n.
(d)
FunIr LId hs c0llccI0n pcr0d 0I 09.5 dys bscd 0n nnul
Iurn0vcr 0I 39mll0n nd ycrcnd Irdc dcbI0rs 0I
.7mll0n. Ths ppcrs I0 bc cxccssvc, buI lkc ll rI0s, I
musI bc rclIcd I0 0Ihcr nI0rmI0n. !I 0Ihcr I0y mnuIcIurcrs
hvc smlr c0llccI0n pcr0d, FunIr's 09.5 dys my ppcr
vcry l0ng, buI IhI my bc Ihc n0rm I0r IhI ndusIry.
Ths qucsI0n pr0vdcs nI0rmI0n b0uI Ihc scs0nl nIurc 0I Ihc
c0mpny's busncss, slcs n Ihc IrsI hlI 0I 2007 wcrc 3mll0n
nd d0ublcd n Ihc scc0nd hlI I0 2bmll0n ( 39m - 3mll0n).
F0r cxmplc, I I c0uld bc csIblshcd IhI Ihc c0mpny's n0rml Icrms
0I crcdI wcrc I0r 2m0nIhs nd IhI slcs I0r Ihc I0rIh qurIcr 0I 2007
wcrc 8mll0n, wc c0uld rcc0mpuIc Ihc rI0 s I0ll0ws:
Slcs pcr dy 0vcr Ihc lsI qurIcr = 8m
=
200.000 =
90
C0llccI0n pcr0d = .7m x 3b5 = 58.5dys
200,000
Ths clculI0n dcm0nsIrIcs IhI Ihc c0llccI0n pcr0d s lm0sI cxcIly
n lnc wIh Ihc c0mpny's p0lcy, whcrcs usng Ihc ycrcnd dcbI0r
nd nnul Iurn0vcr, Ihc c0llccI0n pcr0d cxIcnds I0 09.5dys. Ths
d0cs n0I mcn IhI crcdI c0nIr0l s n0I wck n FunIr LId, buI I s n0I
p0ssblc Ir0m Ihc publshcd cc0unIs 0I 0nc ycr, I0 mkc cIcg0rcl
sIIcmcnI b0uI crcdI c0nIr0l.
(c)
Thc c0mpny s I0y mnuIcIurcr nd 0nc w0uld hvc cxpccIcd Is
sI0ck lcvcls I0 bc rclIvcly l0w I Is ycrcnd, bccusc 0I Ihc scs0nl
nIurc 0I Ihc busncss. AI 3 0cccmbcr, 200b, sI0cks wcrc vlucd I
2.mll0n nd 0nc ycr lIcr, I hd rscn I0 .9mll0n..
0b
Ths 0ccurrcd n ycr whcn Iurn0vcr Icll Ir0m 42mll0n I0
39mll0n.
0nc mghI c0ncludc IhI Ihc c0mpny hd bccn 0vcrpr0ducng n 2007
nd Ihc SI0ck /Turn0vcr rI0 bscd 0n ycrcnd sI0cks nd c0sI 0I g00ds
s0ld, Icnds I0 gvc crcdcncc I0 IhI c0nclus0n.
0nc p0ssblc cxplnI0n I0r buldng sI0cks I Ihc ycrcnd, w0uld bc
I0 mccI cxpccIcd dcmnd n Ihc crly m0nIhs 0I Ihc I0ll0wng ycr,
pcrhps I0 c0ncdc wIh Ihc lunch 0I ncw pr0ducI 0r n dvcrIsng
cmpgn. H0wcvcr, I s unlkcly I0 bc Ihc csc wIh FunIr LId, bccusc
Is scs0nl pck 0I slcs w0uld Ill n Ihc lsI qurIcr 0I Ihc ycr nd
n0I n Ihc IrsI qurIcr.
Thc qucsI0n gvcs slcs Igurc 0I 2mll0n I0r Ihc IrsI b m0nIhs 0I
2008. Pr0vdcd IhI c0sI rcprcscnIs Ihc qu0Icd b0 0I scllng prcc, Ihc
c0sI 0I g00ds s0ld n Ihc pcr0d s 7.2mll0n. Ths suggcsIs IhI Ihc
sI0cks vlucd I .9mll0n wll csly lsI Ihc c0mpny unIl Ihc
scc0nd hlI 0I 2008.
ThcrcI0rc, I s lkcly IhI Ihc c0mpny wll hvc I0 rcducc pr0ducI0n
drsIclly n 2008, I0 v0d h0ldng cxccssvc sI0cks, whch rc
cxpcnsvc I0 Inncc n Icrms 0I nk 0vcrdrII nIcrcsI. Rcdundnccs
w0uld bc n ncvIblc c0nscqucncc 0I m|0r cuIs n pr0ducI0n nd
Ihs sIuI0n rcprcscnIs scr0us IhrcI I0 Ihc IuIurc 0I Ihc busncss.
Thc summrscd blncc shccIs nd 0pcrIng rcsulIs 0I Lndcrs Plc I0r Ihc
Iw0 ycrs cndcd 3 0cccmbcr 2007 nd 2008 wcrc s I0ll0ws:
'000 '000 '000 '000
Fxcd AsscIs (ncI) b2,220 b9,40
CURRENT ASSETS:
SI0ck & w0rknpr0grcss b22,940 52,9b0
0cbI0rs & PrcpymcnIs 548,590 500,520
nk & Csh lnccs 72,340 45,b50
,243,870 ,b8,30
CrcdI0rs & Accruls 470,550 428,850
TxI0n 4,540 32,90
0vdcnds 25,000 22,500
537,090 483,540
70b,780 b84,590
8b9,000 754,000
07
0rdnry Shrcs 0I cch 25,000 25,000
Rcvcnuc Rcscrvc 358,740 297,870
Shrch0ldcrs' Fund 483,740 422,870
0 0cbcnIurc SI0ck 200 -2 250,000 250,000
0cIcrrcd TxI0n 35,2b0 8,30
8b9,000 754,000
'000 '000
Slcs b,729,440 5,590,70
Pr0II bcI0rc !nIcrcsI nd TxI0n 234,20 208,820
!nIcrcsI Pyblc 25,000 25,000
TxI0n 05,0b0 87,470
0vdcnd 37,500 35,000
Thc shrcs 0I Ihc c0mpny wcrc qu0Icd I .20 I 3 0cccmbcr 2008.
Y0u rc rcqurcd I0:
() ClculIc () Tw0 rI0s 0I nIcrcsI I0 crcdI0rs
() Tw0 rI0s 0I nIcrcsI I0 mngcmcnI, nd
() Tw0 rI0s 0I nIcrcsI I0 shrch0ldcrs.
(b) C0mmcnI brcIly up0n Ihc chngcs bcIwccn 2007 nd 2008.
() () Tw0 RI0s 0I nIcrcsI I0 crcdI0rs:
CurrcnI 0r w0rkng CpIl RI0 ,243,870 ,b8,30
537,090 483,540
= 2.3: = 2.4:
Lqud 0r uck AsscI RI0 =,243,870-b22,940 ,b8,30- 52,9b0
537,090 483,540
= .2: = .3:
() Tw0 RI0s 0I nIcrcsI I0 mngcmcnI:
RcIurn 0n CpIl Empl0ycd 234,20 x 00 208,820 x 00
(R0CE) 8b9,000 754,000
= 2b.9 = 27.7
NcI Pr0II Mrgn 234,20 x 00 208,820 x 00
b,729,440 5,590,70
= 3.5 = 3.7
08
() Tw0 RI0s 0I nIcrcsI I0 shrch0ldcrs
Ernngs pcr Shrc
= 234,20 25,000 05,0b0 208,820 25,00087,470
25,000 25,000
= 83 k0b0 = 77 k0b0
0vdcnd C0vcr
= 234,20 25,000 05,0b0 208,820 25,00087,470
37,500 35,000
= 2.8 Imcs = 2.8 Imcs
(b) C0mmcnIs 0n chngcs n rI0s bcIwccn ycrs 2003 nd 2004.
() RI0s 0I nIcrcsI I0 crcdI0rs
0Ih currcnI nd lqud rI0s dr0ppcd slghIly. !n Ihc bscncc 0I
spccIc nI0rmI0n 0n Ihc ndusIry n whch Ihc c0mpny
0pcrIcs, wc cn 0nly c0mprc Ihcsc rI0s gnsI Ihc gcncrlly
cccpIcd dcl 0I 2: I0r currcnI rI0 nd : I0r lqud rI0.
whcn c0mprcd gnsI Ihcsc dcls, I cn bc sccn IhI Ihc
currcnI lqud rI0s 0I Ihc c0mpny (nspIc 0I slghI
dcIcr0rI0n) ndcIc IhI Ihc c0mpny's lqudIy s sIll
rclIvcly sIsIcI0ry.
()
RcIurn 0n cpIl cmpl0ycd dr0ppcd slghIly duc I0 Ihc slghI
rcducI0n n ncI pr0II mrgn Ir0m 3.7 I0 3.5. Thc dccrcsc n
pr0II mrgn, dcspIc Ihc ncrcsc n slcs nd pr0II, my hvc
bccn duc I0:
dr0p n scllng prcc s dcIIcd by Ihc mrkcI, 0r
ncrcsc n c0sIs whch c0uld n0I bc Iully psscd 0n I0
c0nsumcrs.
()
Ernngs pcr shrc ncrcscd bccusc, whlc Ihc numbcr 0I ssucd
0rdnry shrcs rcmncd Ihc smc, Ihc bs0luIc m0unI 0I
pr0IIs ncrcscd. Ths s n ndcI0n 0I gr0wIh, cvcn Ih0ugh
Ihc gr0wIh s n0I mIchcd by ncrcsc n pr0IIblIy.
Thc dvdcnd c0vcr rcmns unchngcd 0bv0usly bccusc Ihc
dvdcnd ncrcscd n pr0p0rI0n I0 Ihc ncrcsc n crnngs.
\lucAddcd SIIcmcnI rcprcscnIs Ihc ddI0nl wclIh whch n cnIIy hs
bccn blc I0 crcIc by Is 0wn nd Is cmpl0yccs' cII0rIs. Ths sIIcmcnI sh0ws
Ihc ll0cI0n 0I IhI wclIh m0ng cmpl0yccs, pr0vdcrs 0I Inncc,
g0vcrnmcnI nd IhI rcIncd n Ihc busncss I0r IuIurc crcI0n 0I m0rc wclIh.
09
ScI bcl0w s Ihc Pr0II nd L0ss Acc0unI 0I XYZ Plc, mnuIcIurng c0mpny,
I0r Ihc ycr cndcd 3 0cccmbcr 2008, I0gcIhcr wIh Is c0mprIvc Igurcs.
Turn0vcr 8,074,458 5,20,750
C0sI 0I Slcs (5,05,397) (3,02,24b)
0r0ss Pr0II 3,059,0b 2,80,53
0sIrbuI0n C0sIs 520,b2) (3b4,475)
AdmnsIrI0n C0sIs (,3bb,742) ( b8,787)
Trdng Pr0II ,72,57 ,34,25
!nIcrcsI Pyblc (NcI) (38b,079) (235,739)
Pr0II bcI0rc cxccpI0nl Icms &TxI0n 78b,078 898,52
ExccpI0nl Icms 3,b9 ___
b72,909 898,52
TxI0n (34,38) (335,520)
Pr0II IIcr TxI0n 358,77 5b2,992
Pr0p0scd 0vdcnd (35,000) (234,000)
RcIncd Pr0II 7,77 328,992
Thc I0ll0wng n0Ics rc rclcvnI:
. !ncludcd n c0sI 0I slcs s cxcsc duIy m0unIng I0 2,095,b3,000
(2007 ,028,900,000) chrgcd 0n Ihc mnuIcIurcd g00ds.
2. !ncludcd n 0sIrbuI0n nd dmnsIrI0n c0sIs rc sIII slrcs wgcs
nd Irngc bcncIIs I0Illng 495,872,000 (2007 30b,0b2,000) nd
dcprccI0n chrgcd 0n Ixcd sscIs 0I 200,2b4,000 (2007
32,397,000).
3. TxI0n C0mprscs:
!nc0mc Tx 34,982 34,479
EducI0n Tx 7,7 2,04
0cIcrrcd Tx 2b2,039
34,38 335,520
Prcprc Ihc sIIcmcnI 0I \luc Addcd 0I Ihc c0mpny I0r Ihc ycr cndcd 3
0cccmbcr, 2008 s I wll ppcr n Is publshcd Inncl sIIcmcnIs.
0
Turn0vcr 8,074,458 5,20,759
0ughInMIcrls nd Scrvccs (4,223,703) (2,b00,49)
\luc Addcd 3,850,755 00 2,b0,b0 00
0sIrbuI0n 0I \luc Addcd:
T0 00vcrnmcnI:
Excsc 0uIy 2,095,b3 54.4 ,028,900 39.b
Tx 0n C0mpny Pr0II 52,099 .4 335,520 2.9
Slrcs, wgcs & Frngc bcncIIs 495,872 2.9 30b,0b2 .8
:
0vdcnds I0 shrch0ldcrs 35,000 9. 234,000 9.0
!nIcrcsI 0n 0rr0wngs 38b,079 0.0 235,739 9.0
T0 mnIn nd rcplcc Ixcd sscIs 200,2b4 5.2 32,397 5.
T0 AugmcnI Rcscrvcs 7,77 0.2 328,992 2.b
0cIcrrcd TxI0n 2b2,039 b.8
3,850,755 00 2,b0,b0 00
SIudcnIs s0mcImcs prcsumc IhI Ihc nIcrprcII0n 0I Inncl
sIIcmcnIs mcrcly rcqurcs Ihc clculI0n 0I rI0s , nd c0nscqucnIly,
gn0rc Ihc spccI 0I rcp0rI wrIng. Thc nccd I0 chngc Ihs n0I0n,
c0uplcd wIh Ihc nccd I0 mpr0vc c0mmuncI0n sklls 0I w0uld bc
cc0unIng pcrs0nncl n prcIcc, ndusIry nd c0mmcrcc, nI0rms Ihc
spccIc nclus0n 0I Ihs I0pc I Ihs lcvcl 0I Ihc pr0Icss0nl
cxmnI0ns.
A rcp0rI usully c0nssIs 0I Ihc I0ll0wng clcmcnIs:
() Hcdngs
(b) Tcrms 0I RcIcrcncc
(c) Mn b0dy 0I Ihc Rcp0rI:
() FcIs
() Rcc0mmcndI0ns.
()
A c0nvcncnI I0rmI I0r cxmnI0n usc my bc n nIcrnl mcm0
I0rm:

T0 : Thc 0rccI0rs, XYZ LmIcd

Fr0m : Mr. Adc wz0b 0Ic:
Sub|ccI_____________________
Thc hcdng nccds I0 gvc:
( ) Ihc nmcs 0I Ihc rccpcnI nd Ihc wrIcr
() Ihc dIc, nd
() Ihc sub|ccI bcng rcp0rIcd 0n.
!I Ihc qucsI0n d0cs n0I c0nIn nmcs, nvcnI s0mc nmcs buI
v0d usc 0I nmcs 0r rcl c0mpncs 0r pcrs0ns. Ab0vc ll, d0
n0I usc y0ur 0wn nmc.
(
Tcrms 0I rcIcrcncc rc csly pckcd up by qu0Ing Ir0m Ihc qucsI0n.
Fccl Ircc I0 usc lIIlc c0nsIrucIvc mgnI0n by rcIcrrng I0 prcv0us
lcIIcrs 0r mccIngs.
(
()
!n n cc0unIng cxmnI0n, cnddIcs wll pr0bbly hvc I0
mkc s0mc clculI0ns pcrhps rI0s, pr0p0sls I0r
mlgmI0n 0r bs0rpI0n c.I.c, bcI0rc y0u kn0w whI y0u rc
g0ng I0 sy n y0ur rcp0rI. !nsIcd 0I wsIng Imc mkng Ihcsc
clculI0ns n w0rkng shccI nd lIcr rcc0py nI0 Ihc b0dy 0I
Ihc rcp0rI, I s dvsblc I0 IIch Ihc w0rkng shccI I0 y0ur rcp0rI
s n ppcndx, nd rcIcr I0 Ihc ppcndx n Ihc mn rcp0rI. !n
Ihc rcp0rI y0u wrIc:
0cIlcd clculI0ns 0I Ihc rI0s rc I0 bc I0und n Appcndx
I0 Ihs rcp0rI. Y0u Ihcn wrIc Appcndx I Ihc I0p 0I y0ur
w0rkng shccI, nd by Ihs chcvc Iw0 0b|ccIvcs:
svng 0I Imc
rcm0vl 0I dcIls Ir0m Ihc mn rcp0rI. Ths, n IsclI, s
g00d rcp0rIng sIylc.
()
!n wrIng rcp0rI, 0r ndccd n wrIng Ihc nswcr I0 ny n0n
c0mpuII0nl qucsI0n, Ihc pr0blcm lwys rscs s I0 whcIhcr
I0 IbulIc 0r n0I I0 IbulIc y IbulI0n, wc mcn Ihc
prcscnII0n 0I nI0rmI0n n Ibulr I0rm.
M0nIh N0. 0I Acc0unIs SIudcnIs Mrks Sc0rcd
1n
Fcb
Mrch
2
Thc b0vc sh0ws Ihc dcIls 0I mrks sc0rcd by cc0unIng
sIudcnIs n IcsIs c0nducIcd n 1nury, Fcbrury nd Mrch 0I
prIculr ycr.
Thc lIcrnIvc s I0 wrIc prgrph 0I pr0sc nc0rp0rIng
Ihc smc nI0rmI0n.
TbulI0n hs dvnIgcs nd dsdvnIgcs. !I s prIculrly
suIblc I0r usc whcn lsIng Irly lrgc numbcr 0I IcIs, cch
0I whch cn bc sIIcd brcIly.
!I s n0I s0 suIblc I0r qucsI0n, whch sks I0r dscuss0n. !I
cn bc uscd hcrc I0 sIIc Ihc rgumcnIs I0r nd gnsI c0ursc
0I cI0n.
Thc dvnIgcs 0I IbulI0n rc:
Englsh c0nsIrucI0n s smplIcd,
!I s csy I0 dd I0,
!I s csly mrkcd whcn numbcr 0I IcIul p0nIs hvc
I0 bc dclI wIh, nd
!I IclIIcs l0gcl Ih0ughI nd prcscnII0n.
Thc dsdvnIgcs 0I IbulI0n rc:
!I y0u cn wrIc g00d Englsh, IbulI0n wll lmI y0ur
blIy I0 dcm0nsIrIc Ihs I0 Ihc cxmncr, nd
!I s n0I suIblc whcn n 0pcn qucsI0n s I0 bc dscusscd.
A rcs0nblc c0mpr0msc s pr0bbly I0 usc IbulI0n I0r
prcscnIng IcIs nd n0I 0pn0ns. Y0u sh0uld cnsurc IhI Ihc
I0rm 0I cch Icm n Ihc IbulI0n mkcs scnsc wIh Ihc
nIr0ducI0n.
An cxmplc 0I h0w n0I I0 d0 I s:
Ths c0ursc 0I cI0n s n0I rcc0mmcndcd I:
() Lb0ur unrcsI c0nInucs I Ihc prcscnI lcvcl,
(b) whcn nIlI0n rIc ncrcscs, nd
(c) !nIcrcsI rIc lIcrI0ns.
N0Icc IhI () IIs n sIsIcI0rly wIh Ihc nIr0ducI0ry I buI
(b) nd (c) d0 n0I. T0 c0rrccI, 0mI Ihc whcn Ir0m b nd
rcphrsc (c) s nIcrcsI rIcs rc cxpccIcd I0 lIcr sgnIcnIly.
() Englsh SIylc
A rcp0rI sh0uld bc wrIIcn n clcr, Irly I0rml Englsh. Av0d
p0mp0us busncss |rg0n, buI 0n Ihc 0Ihcr hnd, v0d Ihc 0vcr
- c0ll0qul ppr0ch.
Usc sh0rI nd smplc scnIcnccs.
!I s pr0bbly bcIIcr I0 rcp0rI n Ihc Ihrd pcrs0n, I0r cxmplc,
I s Ih0ughI IhI ----- rIhcr Ihn ! Ihnk -----
--.
3
A g00d rcp0rI sh0uld hvc sx qulIcs:
() Fullncss,
(b) Accurcy,
(c) LIcrcy,
(d) Lcvcl / c0nsc0usncss 0I uscrs,
(c) !nIcrcsI 0I Ihc uscrs, nd
(I) ClrIy 0I purp0sc.
()
All spccIs 0I Ihc sub|ccI musI bc c0vcrcd. !I, I0r cxmplc, rcp0rI
s drIIcd rcc0mmcndng IhI ll cmpl0yccs sh0uld bc
dscnggcd, I sh0uld c0nIn:
() nmcs 0I cmpl0yccs, p0sI0ns n Ihc Irm, lcngIh 0I scrvcc
nd rcmuncrI0n,
() rcs0ns I0r dssIsIcI0n,
() suggcsIcd dIcs I0r dscnggcmcnI, pcr0ds 0I n0Icc
rcqurcd nd Icrmnl bcncIIs rrngcmcnIs,
(v) 0IIccrs wh0 wll Icll Ihc cmpl0yccs 0I Ihcr dsmssl,
(v) sIcps, I ny, Ikcn I0 hclp I0 Ind 0Ihcr |0bs I0r Ihc
cmpl0yccs,
(v) sIcps Ikcn I0 Ind rcplccmcnIs ncludng dcIls 0I ny
dvcrIscmcnI plccd,
(v) dIcs 0I Ihc rcp0rIs, nd
(v) sgnIurc(s) 0I Ihc wrIcr(s).
(b)
!nI0rmI0n sh0uld bc chcckcd I, I0r cxmplc, rcp0rIng
cc0unInI s I0ld by Ihc vcnd0rs 0I Irm undcr nvcsIgI0n
IhI Ihc prcmscs rc w0rIh 50mll0n, I lcsI hc musI
c0rr0b0rIc Ihs sIIcmcnI bcI0rc usng I n hs rcp0rI. AI Ihc
vcry w0rsI, hc mghI sy Ihc vcnd0r vlucs Ihc prcmscs I
50mll0n, buI wc rc I0ld Ihc prcmscs rc w0rIh
50mll0n, s dsh0ncsI sIIcmcnI.
(c)
Y0u rc n0I cxpccIcd 0r rcqurcd I0 wrIc n Ihc sIylc 0I grcI
wrIcr. Y0u musI, h0wcvcr, I0rm c0rrccI grmmIcl scnIcnccs
whch lcvc n0 r00m I0r mbguIy. Av0d splI nInIvcs,
nc0rrccI p0sI0nng 0I kcy w0rd such s 0nly, rcpcII0n,
unncccssry bbrcvI0ns nd slngs. c ccrIn IhI y0ur
cmphss Ills whcrc y0u nIcnd I.
(d)
A rcp0rI s wrIIcn I0r Ihc rcdcrs, n0I I0r Ihc wrIcrs. wrIcrs 0I
bd rcp0rIs 0IIcn scck I0 c0nIusc Ihcr rcdcrs, by usng Icrms
4
Ihcy kn0w wll n0I bc undcrsI00d, n msIkcn IIcmpI I0 crcIc
Iv0urblc mprcss0n. Ths usc 0I unncccssry |rg0n
cspcclly, ppcrs n sIudcnIs' scrpIs, buI m0rc c0mm0n IulI
s IhI 0I dcscrbng Imlr pr0ccss n 0vcr - smplIcd Icrms
n n IIcmpI I0 c0nccl Ihc wrIcrs' ndcquIc kn0wlcdgc by
wrIng v0lumcs.
Thc sc0pc 0I rcp0rI s 0IIcn dcIcrmncd by Ihc lcvcl 0I Ihc pcrs0n
0r pcrs0ns I0 wh0m I s drccIcd, nd grcI skll my bc rcqurcd
I I s ncccssry I0 dcscrbc Icchncl pr0ccss n ly Icrms.
An cc0unInI my nccd I0 submI dcIls 0I ncw pr0|ccI I0
dIIcrcnI gr0ups 0I pc0plc. !I s I0 bc cxpccIcd IhI hs rcp0rI I0
Ihc 0rd 0I drccI0rs wll dIIcr Ir0m rcp0rIs I0 0Ihcr mngcrl
lcvcls n Ihc 0rgnsI0n, b0Ih n sIylc, sc0pc nd ppr0ch.
0ull pc0plc Icnd I0 wrIc dull rcp0rIs. 000d cnglsh IsclI
c0mmnds nIcrcsI.
Hcrc s n IIcmpI I0 c0mmuncIc nI0rmI0n n Iw0 dIIcrcnI
wys:
() Thc busncss hs bccn Irdng I0r mny ycrs n Ihc lghI
cngnccrng Icld, nd hs Innccd IsclI cnIrcly 0uI 0I
nIcrnlly gcncrIcd pr0IIs. Thc mngcmcnI ppcrs I0
bc g00d, nd Ihc c0mpny hs mdc Ir pr0grcss n rcccnI
ycrs. wc d0 n0I c0nsdcr IhI Ihc prcc rcqurcd s
unrcs0nblc, nd I y0u nIcnd I0 ssumc Ihc duIcs 0I
cxccuIvc chrmn 0I Ihc c0mpny, y0u sh0uld Ind Ihc
purchsc 0I Ihc c0mpny s0und nvcsImcnI
Pcrhps, Ihs s rIhcr dIIculI cxIrcI I0 crIcsc, buI
sn'I Ihc I0ll0wng lIIlc m0rc nIcrcsIng!
() A rcmrkblc spccI 0I Ihc c0mpny s IhI Ihr0ugh0uI
Is 40ycrs hsI0ry, I hs ncvcr b0rr0wcd m0ncy, n0r mdc
dcmnds up0n Is shrch0ldcrs, bcy0nd Ihcr 0rgnl
cpIl. Ths IcI0r, whch s0mc w0uld c0nsdcr s0mcIhng
0I n chcvcmcnI, my wcll bc lrgcly rcsp0nsblc I0r
Ihc c0mpny's sl0w rIc 0I rcl gr0wIh.
!I, s wc bclcvc, y0u nIcnd I0 Ikc 0vcr s chrmn 0I
Ihc c0mpny, wc c0nsdcr IhI Ihc purchsc 0I Ihc wh0lc
0I Ihc cquIy cpIl, cvcn I Ihc Iull skng prcc, sh0uld
pr0vc b0Ih bs0rbngly nIcrcsIng nd Innclly
rcwrdng I0r y0u
(
T0 bc clcr, rcp0rI sh0uld:
() c0nIn n0 mbguIcs,
() bc dvdcd l0gclly nI0 prIs nd rrvc I c0nclus0n,
nd
5
() n0I ncccssrly bc rcsIrcIcd I0 nrrIvc mIIcr.
wrIIcn nI0rmI0n cn bc mprIcd n Ihrcc dIIcrcnI wys
nrrIvc
IbulI0n
dgrmmIc.
Thc dgrmmIc my bc IurIhcr nlyscd nI0:
() 0rphs,
() HsI0grms 0r dsIrbuI0n pIIcrns,
() Tmc Scrcs,
(v) r ChrIs,
(v) PcI0grms, nd
(v) Pc ChrIs.
!I s 0IIcn Ir cscr I0r Ihc rcdcr I0 bs0rb nI0rmI0n n 0nc 0I
Ihcsc I0rms Ihn I0 wdc Ihr0ugh pgcs 0I dcscrpI0n.
A g00d rcp0rIng sIylc dcmnds ppr0prIc sklls Ir0m qulIcd
cc0unInI. PrcIcc s csscnIl I0 cqurc I.
!I s mp0rInI I0, rcd nd sIudy Ihc c0nsIrucI0n 0I rcp0rIs IhI c0mc
y0ur wy n Ihc c0ursc 0I y0ur w0rk.
Y0u hvc bccn c0nsulIcd by y0ur clcnI, ChcI Rchrd lng, wh0 hs
ndcpcndcnI mcns. Hc wshcs I0 rcIrc nd scll hs busncss I0 Iw0
IrusIcd cmpl0yccs wh0 hvc mngcd Ihs busncss succcssIully n
rcccnI ycrs. Hc s prIculrly nx0us I0 rcIn s0mc clcmcnI 0I c0nIr0l
unIl Ihc purchsc c0nsdcrI0n s Iully pd.
Thc cpIl sIrucIurc 0I hs Imly busncss, lng LmIcd s s I0ll0ws:
AuIh0rscd CpIl 0 mll0n
!ssucd CpIl 5 mll0n 0rdnry shrcs 0I cch
Y0u rc rcqurcd I0 wrIc I0 y0ur clcnI scIIng 0uI dIIcrcnI mcns by
whch hs 0b|ccIvc c0uld bc chcvcd.
0cr ChcI lng,
Thnk y0u I0r y0ur lcIIcr dIcd 29 1uly 2008, n whch y0u s0ughI 0ur dvcc
0n h0w y0u c0uld rcIn n clcmcnI 0I c0nIr0l 0vcr y0ur c0mpny durng Ihc
pcr0d bcIwccn Ihc slc nd y0ur rcccpI 0I Ihc Iull c0nsdcrI0n duc.
As y0u wll ccrInly bc wrc, Ihcrc rc scvcrl mcIh0ds 0I chcvng y0ur
0b|ccIvc, Iw0 0I whch wc lsI bcl0w:
b
() Rclcsc 0I y0ur shrcs s nd whcn y0u rcccvc such nsIlmcnI.
(b) Plcng Ihc shrcs n n0mncc's nmc, I0r cxmplc, y0ur sI0ckbr0kcrs
wh0 h0ld Ihcm n lcn, unIl y0u rc pd nd Ihcn rclcscs Ihcm I0 Ihc
buycrs. Any dvdcnd c0uld mcnwhlc bc plccd n Ihc n0mncc's nmc
unIl Ihc c0mplcI0n 0I Ihc c0nIrcI 0I slc.
0ur IrsI suggcsI0n suIIcrs Ir0m Ihc dsdvnIgc IhI 0ncc c0nIr0l hs psscd,
I my bc dIIculI I0r y0u I0 c0llccI y0ur m0ncy 0n Ihc rcmnng shrcs n Ihc
cvcnI 0I dcIulI:
wc bclcvc Ihc scc0nd 0pI0n 0I nIr0ducng IrusIw0rIhy n0mncc, w0uld bcIIcr
scrvc y0ur 0b|ccIvc nd gn Ihc c0nIdcncc 0I Ihc buycrs. An grccmcnI w0uld
bc drwn up bcIwccn y0ursclI, Ihc buycrs nd Ihc n0mncc c0mpny, lcdng
I0 Ihc rclcsc 0I Ihc IIlc by Ihc n0mncc c0mpny, whcn Ihc lsI nsIlmcnI s
pd. 0urng Ihc Icnurc 0I Ihc grccmcnI, Ihc n0mncc c0mpny w0uld
dsIrbuIc ny dvdcnds, cc0rdng I0 Ihc pr0p0rI0n 0I Ihc purchsc prcc pd
I Ihc Imc 0I rcccpI 0I Ihc dvdcnd.
!n c0nclus0n, wc suggcsI IhI Ihc pr0spccIvc buycrs nsurc Ihcr lvcs, I0r
sum, I lcsI cqul I0 Ihc purchsc prcc, s0 IhI Ihcr csIIcs w0uld bc rclcscd
Ir0m burdcn nd y0ur p0sI0n w0uld n0I bcc0mc nsccurc I cIhcr 0I Ihcm
wcrc I0 dc whlc Ihc grccmcnI s sIll n I0rcc.
Plcsc, lcI us kn0w I y0u rcqurc IurIhcr nI0rmI0n.
Thnk y0u.
Y0urs IIhIully
I0r: X Y Z & C0.
Ths chpIcr dcm0nsIrIcs h0w cc0unIng rI0s rc c0mpuIcd nd nIcrprcIcd.
!I s mp0rInI I0 n0Ic IhI whI s Icrmcd dcl rI0 vrcs Ir0m ndusIry I0
ndusIry nd s0mcImcs 0n Ihc szc 0I Ihc c0mpny.
Acc0unIng rI0s rc 0I Ircmcnd0us bcncII n nlysng nd nIcrprcIng
Inncl sIIcmcnIs. H0wcvcr, Ihcy hvc Ihcr 0wn lmII0ns, whch wcrc
dscusscd n Ihs chpIcr. Pr0pcr gudc I0 wrIng g00d rcp0rI s ls0 pr0vdcd.
. A c0mpny s sd I0 bc hghly gcrcd whcn Ihc c0mpny hs --------
() M0rc 0I cquIy cpIl n rclI0n I0 Ixcd nIcrcsI cpIl.
(b) M0rc 0I Ixcd nIcrcsI cpIl n rclI0n I0 cquIy cpIl.
(c) N0 Ixcd nIcrcsI cpIl.
(d) M0rc 0vcrdrII IclIcs.
(c) NcgIvc shrch0ldcrs' Iund.
7
2. A pr0spccIvc m|0r supplcr 0I mn rw mIcrls I0 mnuIcIurng c0mpny,
s b0uI I0 dccdc 0n Ihc lcvcl 0I crcdI IclIy I0 bc cxIcndcd I0 Ihc c0mpny. Thc
supplcr rcqucsIcd I0r Ihc c0mpny's Inncl sIIcmcnIs, m0ng 0Ihcr Ihngs.
whch 0I Ihc I0ll0wng rI0s wll bc 0I prIculr nIcrcsI I0 Ihc pr0spccIvc
supplcr!
() RcIurn 0n CpIl Empl0ycd
(b) AsscIs / Iurn0vcr rI0
(c) SI0ck Iurn0vcr rI0
(d) CrcdI0rs pymcnI pcr0d
(c) Prcc crnngs rI0.
3. Thc rclcvnI pr0II Igurc I0 bc uscd whcn c0mpuIng RcIurn 0n CpIl cmpl0ycd
whcrc cpIl cmpl0ycd s dcIncd s shrch0ldcrs' Iund plus l0ngIcrm l0ns s:
() Pr0II bcI0rc nIcrcsI nd Ix
(b) Pr0II IIcr Ix nd bcI0rc PrcIcrcncc dvdcnd
(c) Pr0II bcI0rc L0n !nIcrcsI nd bnk 0vcrdrII !nIcrcsI
(d) Pr0II IIcr Ix nd IIcr prcIcrcncc dvdcnd
(c) Pr0II bcI0rc cxccpI0nl Icms.
4. Prcc crnngs rI0 0I c0mpny mcsurcs ----------
() Thc mrkcI vluc 0I Ihc shrcs.
(b) !Is crnngs 0vcr Ihc pcr0d undcr rcvcw.
(c) Thc rclI0nshp bcIwccn crnngs pcr shrc nd mrkcI prcc pcr shrc.
(d) Thc rclI0nshp bcIwccn dvdcnds pcr shrc nd mrkcI prcc pcr shrc.
(c) Thc rclI0nshp bcIwccn Pr0II IIcr Ix nd MrkcI Prcc.
5. !dcnIIy whch 0I Ihc undcrlsIcd rI0s, mcsurcs c0mpny's lqudIy!
() CurrcnI RI0
() 0r0ss pr0II pcrccnIgc
() Acd TcsI
(v) 0cbI0rs RI0
() () & ()
(b) () & ()
(c) () & (v)
(d) () & (v)
(c) () & ().
b. SIIc ny prIy IhI s lwys nIcrcsIcd n Ihc nIcrprcII0n 0I Inncl sIIcmcnIs.
7. !n c0mpuIng rcIurns 0n cpIl cmpl0ycd, (R0CE), Ihc Icrm cpIl cmpl0ycd
c0uld bc dcIncd s n vr0us wys, dcpcndng 0n Ihc pr0II Igurc uscd s Ihc
numcrI0r. McnI0n 0nc vrnI wy 0I cpIl cmpl0ycd.
Thc I0ll0wng s Ihc blncc shccI 0I 0dd0 LId.
N'000 N'000
0rdnry Shrcs 0I CpIl @ N Iully pd 0,000 Fxcd AsscIs 2,000
Rcscrvcs 5,000 CurrcnI AsscIs 9,000
5,000
CurrcnI LblIcs b,000 ______
2,000 2,000
Thc c0mpny csImIcs Is IuIurc pr0IIs I N2,500 pcr nnum nd dvdcnds 0n
0rdnry shrcs I N,500 pcr nnum.
!nvcsIgI0n rcvcls IhI smlr shrcs sh0uld crn 7 pcrccnI nd hvc prcc
crnng rI0 0:.
8. C0mpuIc IuIurc dvdcnds pcr shrc.
9. C0mpuIc Ihc vluc 0I 0rdnry shrcs 0n dvdcnds ycld bss.
0. McnI0n 0nc lmII0n 0I rI0 nlyss.
8
9
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0,
ClculIc clms rsng Ir0m l0ss 0I sscIs c0vcrcd by n nsurncc p0lcy.
C0mpuIc c0nscqucnIl l0ss clms.
UndcrsInd Ihc bsc Acc0unIng cnIrcs.
!nsurncc clms rcIcr I0 Ihc m0unIs pyblc undcr c0nIrcI 0I nsurncc
0n Ihc 0ccurrcncc 0I n nsurcd cvcnI. !nsurncc clms my bc br0dly
cIcg0rzcd nI0:
() clms I0r l0ss 0I pr0II 0Ihcrwsc rcIcrrcd I0 s c0nscqucnIl l0ss,
(b) l0ss 0I sscIs, c.g sI0ck 0r Ixcd sscIs.
b..
Ths Iypc 0I nsurncc p0lcy ndcmnIcs Ihc nsurcd Ir0m l0sscs rsng
Ir0m Ihc suspcns0n, wh0lly 0r prIly, 0I Ihc cIvIcs 0I Ihc busncss,
cuscd by Irc 0r 0Ihcr mnmdc 0ccurrcnccs.
Thc Icrms 0I cch p0lcy vry cc0rdng I0 Ihc ndvdul nccds 0I Ihc
nsurcd. H0wcvcr, n0rml p0lcy pr0vdcs I0r ndcmnIy gnsI Ihc l0ss
0I pr0II duc I0:
() rcducI0n n Iurn0vcr,
(b) ncrcscd c0sI 0I w0rkng cpIl ncurrcd, n 0rdcr I0 v0d
rcducI0n n Iurn0vcr.
!n 0rdcr I0 hvc bcIIcr undcrsIndng 0I p0lcy 0n c0nscqucnIl l0ss,
Ihc I0ll0wng Icrms nccd I0 bc dcIncd:
() Ths rcIcrs I0 Ihc pcr0d 0I dsl0cI0n,
I0r whch Ihc p0lcy ws cIIccIcd nd s n0rmlly sIIcd Ihcrcn,
I0r cxmplc, 4 m0nIhs.
Thc bss 0I c0mpcnsI0n s c0mpuIcd by rcIcrcncc I0
pcrccnIgc, whch Ihc Iurn0vcr s supp0scd I0 crn. Ths
pcrccnIgc, mulIplcd by Ihc m0unI 0I Iurn0vcr rcduccd 0r l0ss
s rcsulI 0I Irc, gvcs Ihc m0unI 0I clm, sub|ccI I0 ccrIn
mcndmcnI nd lmII0ns, rsng 0uI 0I Ihc spccl
crcumsInccs clusc nd Ihc vcrgc pr0vs0.
20
(b) () Ths s clculIcd 0n Ihc Irdng
rcsulIs 0I Ihc lsI cc0unIng pcr0d s I0ll0ws:
NcI pr0II + nsurcd sIndng chrgcs x 00
Turn0vcr
() Als0 clculIcd 0n Ihc Irdng rcsulIs
0I Ihc lsI cc0unIng pcr0d s I0ll0ws:
!nsurcd SIndng chrgcs - NcI l0ss x 00
Turn0vcr
(c)
Thcsc rcIcr I0 Ixcd c0sIs 0r cxpcndIurc spccIcd by Ihc busncss
nd sIIcd n Ihc p0lcy, such s rcnI nd slrcs whch Ihc
nsurcd wshcs I0 rcc0vcr n Ihc cvcnI 0I dmgc.
(d)
Ths s Ihc cxpcndIurc whch vrcs drccIly wIh pr0ducI0n, IhI
s, ncrcsc 0I nsurcd sIndng chrgcs duc I0 Irc I0r Ihc s0lc
purp0sc 0I v0dng 0r rcducng Ihc rcducI0n n Iurn0vcr.
(c)
Ths s Ihc cIul pcr0d durng whch Ihc busncss 0I Ihc nsurcd
s dvcrscly IIccIcd.
(I)
Ths s Ihc Iurn0vcr 0I Ihc pcr0d 0I 2 m0nIhs mmcdIcly bcI0rc
Ihc dIc 0I dmgc 0r Irc.
(g)
Ths s Ihc Iurn0vcr 0I pcr0d n Ihc prcccdng ycr
c0rrcsp0ndng I0 Ihc pcr0d 0I dmgc.
(h)
Ths s Ihc Iurn0vcr dcrvcd durng Ihc pcr0d 0I dmgc.
()
Thc vcrgc clusc pr0vdcs IhI, I Ihc sum nsurcd by Ihc p0lcy
h0ldcr s lcss Ihn Ihc sum pr0duccd by pplyng Ihc rIc 0I gr0ss
pr0II I0 Ihc nnul Iurn0vcr, Ihcn Ihc m0unI pyblc shll bc
pr0p0rI0nIcly rcduccd, IhI s:
Am0unI nsurcd____
x
Clm
0r0ss pr0II x Iurn0vcr
Thc vcrgc clusc s pplcblc whcn Ihc sum nsurcd s lcss
Ihn cxpccIcd nsurblc sum ( IhI s, 0r0ss pr0II x nnul
Iurn0vcr).
2
(|)
C0nscqucnIl l0ss p0lcy usully c0nIns spccl crcumsInccs
clusc, I0 pr0vdc I0r Ihc Ircnd 0I busncss 0r I0r spccl
crcumsInccs IIccIng Ihc busncss cIhcr bcI0rc 0r IIcr Ihc
dmgc. !I wll IIccI Ihc clculI0n 0I Ihc I0ll0wng:
() rIc 0I gr0ss pr0II,
(b) rcducI0n n Iurn0vcr,
(c) ncrcscs n c0sI 0I w0rkngs, nd
(d) svngs n nsurcd sIndng chrgcs.
() Fxng Ihc pcr0d 0I clm by Ikng Ihc pcr0d 0I ndcmnIy 0r
Ihc pcr0d 0I nIcrprcII0n, whchcvcr s smllcr.
(b) AsccrIn Ihc 'sh0rI' 0r rcduccd Iurn0vcr. ThI s
SIndng chrgcs xx
Add ny cxpccIcd ncrcsc (I ny) xx
xxx
Lcss cIul Iurn0vcr _xx
RcducI0n n Iurn0vcr xxx
(c) ClculIc Ihc rIc 0I gr0ss pr0II bscd 0n Ihc cc0unIng ycr
prcccdng Ihc Irc.
(d) C0mpuIc gr0ss pr0II by pplyng (c) I0 (b).
(c) Add I0 (d) b0vc, Ihc ncrcsc n c0sI 0I w0rkng, bcrng n mnd
Ihc I0ll0wng rcsIrcI0ns:
() whcrc ll Ihc nsurblc sIndng chrgcs rc n0I c0vcrcd
by Ihc p0lcy, Ihcn 0nly pr0p0rI0n 0I Ihc ncrcscd c0sI
0I w0rkng wll bc ll0wcd, IhI s:
NcI pr0II + nsurcd sIndng chrgcs x !ncrcsc c0sI 0I w0rkng
NcI pr0II +I0Il nsurblc sIndng chrgcs
() l0ss 0I pr0II v0dcd duc I0 ncrcscd c0sI 0I w0rkng IhI
s rIc 0I 0r0ss pr0II x sh0rIgc 0I Iurn0vcr v0dcd.
(I) 0cducI ny svngs n nsurcd sIndng chrgcs I0 rrvc I
clms, whch s sub|ccI I0 vcrgc pr0vs0.
(g) Apply, I rcqurcd, ny mcndmcnI rsng 0uI 0I spccl
crcumsInccs.
(h) 0cIcrmnc whcIhcr Ihc vcrgc clusc s pplcblc 0r n0I nd
pply I I0 rrvc I Ihc cIul clms.
22
Fr0m Ihc I0ll0wng nI0rmI0n, c0mpuIc c0nscqucnIl l0ss clm:
Fnncl ycr cndcd 3 0cccmbcr 200b wIh Iurn0vcr 0I 200,000.
Frc Ikcs plcc 1unc 2007.
Pcr0d 0I nIcrrupI0n 1unc - N0vcmbcr.
Pcr0d 0I ndcmnIy s b m0nIhs
NcI pr0II 2,000, plus nsurcd chrgcs 24,000.
Sum nsurcd 3b,300
Unnsurcd sIndng chrgcs 2000
SIndng Turn0vcr, IhI s, c0rrcsp0ndng m0nIhs ( 1unc - N0vcmbcr 200b
s 75,000).
Turn0vcr n Ihc pcr0d 0I nIcrrupI0n 22,500.
Annul Turn0vcr I0r Iwclvc m0nIhs prcccdng Ihc Irc ( 1unc - 3 My 2007)
220,000.
!ncrcsc n c0sI 0I w0rkng 4,000, durng Ihc pcr0d 0I nIcrrupI0n (wIh
svng 0I nsurcd sIndng chrgcs ,500).
Rcduccd Turn0vcr v0dcd, Ihr0ugh ncrcsc n c0sI 0I w0rkng 0,000 (IhI
s) buI I0r Ihs cxpcndIurc, Ihc Iurn0vcr IIcr Ihc Irc w0uld hvc bccn 0nly
2,500.
0wng I0 rcscrvcs cccpIblc I0 Ihc nsurcr, Ihc spccl crcumsInccs
clusc sIpulIcs I0r:
() !ncrcsc 0I Iurn0vcr (sIndrd & nnul ) by 0
() !ncrcsc 0I rIc 0I 0r0ss pr0II by 2.
Y0u rc rcqurcd I0 c0mpuIc Ihc c0nscqucnIl l0ss clm.
() L0ss 0I 0r0ss pr0II:
Turn0vcr n sIndrd pcr0d 75,000
Add grccd ncrcsc 0I 0 7,500
Ad|usIcd sIndrd Iurn0vcr 82,500
AcIul Iurn0vcr durng ( 1unc N0v) (22,500)
Rcduccd Iurn0vcr b0,000
0r0ss pr0II 0n Rcduccd Turn0vcr 2,000
(20 x b0,000)
(b) Clm I0r !ncrcsc n C0sI 0I w0rkng:
!ncrcsc n c0sI 0I w0rkng 4,000
Sub|ccI I0 Ihc l0wcr 0I:
() App0rI0nmcnI, bscd 0n Ihc nsurcd
sIndng chrgcs:
2,000 + 24,000 x 4,000
2,000 + (24,000 + 2,000) : 3,789
23
() 0P 0I !ncrcscd Iurn0vcr,
IhI s, 0,000 = 2,000
(22,500 - 2,500)
L0wcr 0I () & () = 2000
4,000
Svngs n !nsurcd sIndng chrgcs (,500)
Clms 2,500
Sub|ccI I0 Ihc Avcrgc pr0vs0 clusc:
() Am0unI !nsurcd 3b,300
() 0P 0I Annul Turn0vcr 48,400
(20 x 220,000 + 0 x 220,000)
Sncc Ihc m0unI nsurcd s l0wcr, Ihc vcrgc clusc pplcs.
w0rkngs:
() 0r0ss Pr0II = NP + !nsurcd chrgcs
Turn0vcr
= 2,000 + 24,000 = 8
200,000
= All0wcd !ncrcsc = 2
20
() SIndrd Pcr0d:
I0r pcr0d ( 1unc - N0v) = bm0nIhs
c0vcrcd by Ihc nsurncc pcr0d.
ApplcI0n 0I Ihc Avcrgc Pr0vs0 clusc:
Am0unI !nsurcd x Clms
0P x Annul Turn0vcr
= 3b,300 x 2,500
48,400
= 3 x 2,500
4
= 9,375 (Inl clm I0r c0nscqucnIl l0ss)
whcn Irdcr l0scs sI0ck s rcsulI 0I Irc, hc sh0uld mkc clm I0r l0ss 0I
sI0ck, pr0vdcd hc kn0ws Ihc vluc 0I sI0ck l0ss. whcrc Ihc cxcI vluc 0I sI0ck
n Irdc dcsIr0ycd by Irc s unkn0wn, Ihc usul mcIh0d 0I sccrInng I, s
rrvcd I s I0ll0ws:
() 0cIcrmnng Ihc bss 0I sI0ck Ikng, prIculrly wIh rcgrd I0
c0nssIcncy 0I vluI0n nd d|usI I0r ny nc0nssIcncy n prcc.
(b) AsccrIn Ihc vluc 0I sI0ck I Ihc bcgnnng 0I cc0unIng pcr0d, IhI
s, dIc 0I lsI blncc shccI.
24
(c) 0cIcrmnc Ihc vluc 0I g00ds purchscd Ir0m Ihc bcgnnng 0I Ihc pcr0d
I0 Ihc dIc 0I dmgc cxcludng g00ds purchscd buI n0I ycI dclvcrcd
I0 Ihc c0mpny wrch0usc, whcrc Irc 0ccurrcd.
(d) 0cIcrmnc I0Il slcs 0I g00ds Ir0m Ihc bcgnnng 0I Ihc pcr0d I0 Ihc
dIc 0I dmgc cxcludng g00ds s0ld buI n0I ycI dclvcrcd I0 cusI0mcrs.
(c) AsccrIn Ihc vluc 0I sI0ck slvgcd/svcd Ir0m Ihc burnI prcmscs.
(I) ClculIc Ihc vcrgc rIc 0I gr0ss pr0II mdc, n Ihc prcv0us
cc0unIng pcr0d, hvng rcgrd I0 Ihc IcI0rs lkcly I0 dsI0rI such
vcrgc rIc 0I gr0ss pr0II such s:
() Ycrcnd slcs I rcqurcd prccs.
() Pcrshblc g00ds s0ld I rcduccd prccs.
() Abn0rml g00ds Ikcn nI0 sI0ck I prcc 0Ihcr Ihn I c0sI
prcc.
(v) SI0ck qunIIy sh0rIgc.
() Prcprc prcv0us ycr's Irdng cc0unI.
(b) ClculIc Ihc vcrgc rIc 0I gr0ss pr0II, usng Ihc gr0ss pr0II dcrvcd
n () b0vc.
(c) ClculIc Ihc vluc 0I sI0ck n wrch0usc I Ihc dIc 0I dmgc.
(d) ClculIc Ihc vluc 0I sI0ck dcsIr0ycd n Ihc Irc.
(c) 0cIcrmnc whcIhcr Ihc vcrgc clusc s pplcblc 0r n0I, by c0mprng
sum nsurcd wIh Ihc vluc 0I sI0ck n Ihc wrch0usc I Ihc dIc 0I
dmgc.
(I) Apply Ihc vcrgc clusc I0 dcrvc Ihc Inl clm.
() whcrc 0pcnng sI0ck ncludcs g00ds wh0sc vluc hs bccn wrIIcn d0wn,
Ihc d|usImcnI rcqurcd s I0 dcducI Ihc wrIIcn d0wn vluc Ir0m Ihc
0pcnng sI0ck I0 gcI n0rml vluc I0r Ihc sI0ck.
(b) whcrc Ihc wrIIcn d0wn sI0ck rcIcrrcd I0 n () b0vc, ws s0ld durng
Ihc pcr0d, Ihc m0unI I0r whch I ws s0ld musI hvc bccn ncludcd n
Iurn0vcr, hcncc Ihc d|usImcnI rcqurcd s Ihc dcducI0n 0I Ihc Igurc
Ir0m slcs Igurc.
(c) As n Ihc csc 0I 0pcnng sI0ck, cl0sng sI0ck my ncludc g00ds wh0sc
vluc hs bccn wrIIcn d0wn. Thc vluc 0I sI0ck IhI hs bccn wrIIcn
d0wn, musI hvc bccn ncludcd n purchscs Igurc. whcrc such g00ds
rcmn uns0ld I Ihc ycr cnd, I I0ll0ws IhI Ihcy sh0uld bc dcducIcd
Ir0m Ihc g00ds vlblc I0r slc, I Ihc smc Iull c0sI, n 0rdcr IhI Ihc
Igurc 0r c0sI 0I g00ds s0ld, s n0I dsI0rIcd. Ad|usImcnI rcqurcd, s I0
dd bck I0 cl0sng sI0ck, n 0rdcr I0 brng Ihc cl0sng sI0ck bck I0 Is
Iull c0sI.
25
() EsImIc Ihc vluc 0I sI0ck dmgcd nd mkc Ihc I0ll0wng cc0unIng
cnIrcs:
0r. SI0ck Acc0unI }wIh Ihc m0unI c0mpuIcd
Cr. Trdng Acc0unI }
(b) wIh Ihc m0unI 0I grccd clm:
0r. !nsurncc clm} wIh Ihc m0unI 0I clm
Cr. SI0ck Acc0unI }
(c) wIh Ihc vluc 0I sI0ck l0ss whcn clm s n0I pyblc by nsurncc
c0mpny.
0r. Pr0II & l0ss Acc0unI
Cr. SI0ck Acc0unI.
0n 30Ih ScpIcmbcr 2008, Ihc prcmscs 0I Hghmn scuIs LId, ws scvcrcly
dmgcd by Irc nd Ihc c0mpny's busncss rcc0rds wcrc c0mplcIcly
dcsIr0ycd. H0wcvcr, Ihc cc0unInI 0I Ihc c0mpny hd bccn mnInng
bckup 0I Ihc c0mpny's cc0unIng IrnscI0ns n US 0rvc, Ir0m whch
Ihc I0ll0wng dI ws 0bIncd.
000
SI0ck I sI 1nury, 2007 0,b00
SI0ck I sI 1nury, 2008 8,200
Slcs n 2007 34,920
Purchscs n 2007 2,250
Slcs I0r nnc m0nIhs I0 30Ih ScpI. 2008 3,20
Purchscs I0r nnc m0nIhs I0 30Ih ScpI. 2008 ,800
Purchscs n ScpI. 2008 n0I ycI dclvcrcd I0 Ihc c0mpny 2,890
Thc cc0unIng dIc 0I Hghmn scuIs s 3 0cccmbcr.
0urng Ihc sI0ck vluI0n cxcrcsc c0nducIcd I 3 0cccmbcr 200b, 50,000
ws wrIIcn 0II prIculr brnd 0I bscuIs. Thcsc g00ds whch 0rgnlly
c0sI 50,000, wcrc s0ld n Fcbrury 2007 I0r 20,000.
Smlrly, n vlung Is cl0sng sI0ck I 3 0cccmbcr 2007, b0,000 ws
wrIIcn 0II Ir0m n0Ihcr brnd 0I bscuIs. Thcsc g00ds 0rgnlly c0sI b0,000.
Thcy wcrc subscqucnIly s0ld I0r 20,000 n My 2008.
SI0ck vlucd I .8mll0n ws slvgcd 0n Ihc dy 0I Ihc Irc ncdcnI. Y0u
rc rcqurcd I0 clculIc Ihc m0unI 0I clm duc, Ir0m Ihc nsurcrs n rcspccI
0I Ihc sI0ck.
N0rml SI0ck Abn0rml SI0ck T0Il
N'000 N'000 N'000 N'000 N'000 N'000
SI0ck I //2008 8,00 00 8,200
Purchscs: 1n. ScpI. 08 ,800 ,800
C0sI 0I g00ds vlblc I0r slc 9,900 00 20,000
2b
'000 '000 '000 '000
Slcs 1n. ScpI. 2008. 3,000 20 3,20
Lcss: 0r0ss Pr0II @32.5 4,225 4,225
Pr0II 0n bn0rml sI0ck (20) (20)
C0sI 0I g00ds s0ld (8,775) (00) (8,875)
EsImIcd vluc 0I sI0ck ,25 ,25
Lcss: vluc 0I slvgcd sI0ck ,800
SI0ck l0sI (Am0unI 0I Clm) 9,325
ClculI0n 0I 0r0ss Pr0II I0r Ihc ycr cndcd
3sI 0cccmbcr 2007 '000 '000
Slcs 34,920
Lcss: Slc 0I dcvlucd sI0ck 20
34,800
Lcss c0sI 0I slcs:
0pcnng SI0ck 0,b00
Lcss: Am0unI wrIIcn 0II sI0ck (5050) 00
0,500
Purchscs 2,250
3,750
Cl0sng sI0ck 8,200
Add sI0ck wrIIcn 0II b0 8,2b0
C0sI 0I g00ds s0ld (n0rml vluc) (23,490)
N0rml gr0ss pr0II ,30
N0rml gr0ss pr0II = ,30 x 00 = 32.5
34,800
() 0bscrvc IhI Ihc purchscs I0r ScpIcmbcr 2008 wcrc n0I ncludcd n
Ihc c0mpuII0ns b0vc bccusc Ihc g00ds wcrc ycI I0 bc dclvcrcd I0
Ihc c0mpny bcI0rc Ihc dIc 0I Ihc Irc ncdcnI.
() Abn0rml sI0ck I sI 1nury 2008, s 0bIncd by dcducIng b0,000
(Ihc m0unI wrIIcn 0II) Ir0m Ihc 0rgnl c0sI 0I b0,000.
() Pr0II 0n bn0rml sI0ck, s clculIcd by c0mprng Ihc bn0rml slc
0I 20,000 n 2008 wIh 00,000, Ihc crryng vluc 0I sI0ck wrIIcn
d0wn.
(v) !n Ihc w0rkngs, Ihc slcs vluc 0I wrIIcn d0wn sI0ck ( 20,000) ws
dcducIcd Ir0m Ihc 0vcrll slcs vluc I0 0bIn Ihc vluc 0I n0rml slc
(v) Smlrly, Ihc 0pcnng vluc 0I wrIIcnd0wn sI0ck, ws dcducIcd Ir0m
Ihc 0vcrll 0pcnng sI0ck, I0 cxcludc Ihc bn0rml sI0ck Ir0m Ihc Igurc
0I 0pcnng sI0ck.
Acc0unIng I0r nsurncc clm, nv0lvcs Ihc clculI0n 0I Ihc clms pyblc
by n nsurncc c0mpny, n Ihc cvcnI 0I sI0ck l0ss nd c0mpuIng Ihc l0ss 0I
27
pr0II 0ccs0ncd by nIcrrupI0ns n Ihc busncss 0pcrI0ns 0I n cnIIy, by
rcs0n 0I Irc dssIcr. Thcsc l0sscs rc nsurblc nd I s prudcnI I0r
busncss I0 Ikc 0uI n nsurncc p0lcy 0n such cvcnIulIcs.
b.9
b.9.
. whch 0I Ihcsc s n0I Icrmn0l0gy uscd n nsurncc clms cc0unIng!
() C0nscqucnIl l0ss.
(b) Avcrgc clusc.
(c) ArbIrgc
(d) SIndrd Iurn0vcr
(c) C0sI 0I w0rkng
2. whch 0I Ihc I0ll0wng s n0I ncccssry I0r Ihc purp0sc 0I c0mpuIng vcrgc
clusc!
() Am0unI nsurcd
(b) RcIr0ccss0n
(c) 0r0ss pr0II
(d) Turn0vcr
(c) Clm.
3. Thc I0rmul I0r c0mpuIng Ihc ll0wblc pr0p0rI0n 0I ncrcsc n c0sI 0I
w0rkng (whcn nsurblc sIndng chrgcs rc n0I c0vcrcd by Ihc p0lcy)
sh0uld n0I ncludc:
() NcI pr0II
(b) !nsurcd sIndng chrgcs
(c) Surrcndcr vluc
(d) !ncrcsc n c0sI 0I w0rkng
(c) !nsurblc sIndng chrgcs.
4. !n c0mpuIng clms I0r sI0ck l0ss, Ihc IcI0rs lkcly I0 dsI0rI vcrgc rIc
0I gr0ss pr0II sh0uld n0I ncludc:
() Ycrcnd slcs I rcqurcd prccs
(b) Pcrshblc g00ds I rcduccd prccs
(c) SI0ck qunIIy sh0rIgc
(d) Abn0rml g00ds Ikcn nI0 sI0ck I prcc 0Ihcr Ihn I c0sI prcc
(c) !nvcnI0ry p0lcy 0I Ihc cnIIy
5. !n cc0unIng I0r sI0ck l0ss Ihr0ugh Irc ncdcnI, d0ublc cnIrcs wll bc
ncccssry I0r Ihc I0ll0wng cxccpI:
() Thc m0unI 0I grccd clm
(b) \luc 0I sI0ck l0sI n rcspccI 0I whch clm s n0I pyblc by Ihc
nsurncc c0mpny.
(c) EsImIcd vluc 0I sI0ck dmgc.
(d) SI0ck plIcrcd by dsh0ncsI sIII.
(c) Clm rcccvcd Ir0m Ihc nsurncc c0mpny.
b.9.2
b. SIIc Ihc d0ublc cnIrcs I0r vluc 0I sI0ck l0ss whcn clm s n0I pyblc
by Ihc nsurncc c0mpny.
7 SIIc Ihc I0rmul I0r clculIng n0rml gr0ss pr0II.
28
8. whI d0 y0u undcrsInd by Spccl crcumsInccs clusc!
9. 0cInc c0sI 0I w0rkng s I rclIcs I0 nsurncc clms.
0. Expln Ihc phrsc pcr0d 0I ndcmnIy n Ihc c0nIcxI 0I nsurncc clm
cc0unIng.
29
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Prcprc Ihc cc0unIs 0I ndcpcndcnI brnchcs.
C0mpuIc unrclzcd pr0IIs n nIr c0mpny IrnsIcrs.
Expln mcIh0ds 0I IrnslIng Ihc cc0unIs 0I I0rcgn brnchcs.
TrnslIc Ihc Inncl sIIcmcnIs 0I I0rcgn brnch.
whcrc brnchcs rc scmuI0n0m0us, Ihcy rc usully rcsp0nsblc I0r Ihc
mnIcnncc 0I Ihcr rcc0rds. Ths rrngcmcnI s usully c0mm0n n brnchcs
wIh lrgcsclc 0pcrI0ns.
AI Ihc cnd 0I cch pcr0d, Ihc brnch scnds Is Irl blncc I0 Ihc hcd 0IIcc,
whch wll gcncrlly c0nIn sscIs, lblIcs, nc0mc nd cxpcndIurc 0I Ihc
brnch nd Is dclngs wIh 0Ihcr brnchcs nd hcd 0IIcc. TrnscI0ns
bcIwccn Ihc brnch nd hcd 0IIcc s wcll s 0Ihcr brnchcs rc rcc0rdcd n
whch scrvc s lnk bcIwccn Ihc Iw0 unIs nd ny blncc
n Ihc cc0unI, rcprcscnIs Ihc m0unI 0I nvcsImcnI by Ihc hcd 0IIcc n Ihc
brnch.
!I g00ds rc IrnsIcrrcd bcIwccn brnchcs nd hcd 0IIcc (0r 0Ihcr brnchcs)
I prccs 0Ihcr Ihn Ihc c0sI, Ihcrc wll rsc n unrclzcd pr0II I0r uns0ld
sI0cks I Ihc cnd 0I Ihc pcr0d. Ths w0uld bc dclI wIh by mkng pr0vs0n
I0r unrclzcd pr0II whch s dcbIcd I0 Ihc pr0II nd l0ss cc0unI nd dcducIcd
Ir0m sI0cks n Ihc blncc shccI.
10hns0n EnIcrprscs LId, bscd n Lg0s hs brnch n Kn0. Thc Irl s I
3 0cccmbcr 2008, I0r Ihc brnch nd hcd 0IIcc rc s I0ll0ws:
30
Fxcd AsscIs (N\) 7b,000 30,800
SI0cks I 1nury 2008:
Hcd 0IIcc I c0sI 5b,000
rnch I scllng prcc 34,000
0cbI0rs 34,89b 7,808
nk nd csh bb,328 ,53b
Purchscs 39,800
rnch rcmIIncc I0 H0 225,720
000ds scnI I0 brnch 39,880
0cncrl cxpcnscs b8,000 40,000
rnch currcnI cc0unI 253,0b4 ________
000ds scnI I0 brnch 43,080
nk rcmIIncc Ir0m brnch 224,7b0
Slcs 388,040 238,800
CrcdI0rs 32,4b8 ,080
CurrcnI cc0unI 249,8b4
CpIl I Aprl 49,240
Pr0vs0n I0r unrclzcd pr0II
0n sI0ck 1nury 8,500 ________
() AI 3 0cccmbcr 2008
SI0cks I H0 (I c0sI) 50,800
SI0cks I rnch (IrnsIcr prcc) 9,200
SI0cks n IrnsI (IrnsIcr prcc) 3,200
Csh n IrnsI I0 H0 9b0
() 000ds rc nv0ccd I0 brnch I c0sI plus 33

/
3

() Pr0vdc I0r dcprccI0n 0n Ixcd sscIs I 20 pcr nnum 0n rcducng
blncc.
Y0u rc rcqurcd I0 prcprc Irdng nd pr0II nd l0ss cc0unI I0r Ihc ycr
cndcd 3 0cccmbcr 2008 nd blncc shccI s I IhI dIc I0r Ihc brnch,
hcd 0IIcc nd Ihc busncss s wh0lc.
3
Hcd 0IIcc rnch Ad|. by H0 usncss
N N N N N N N
Slcs 388,040 238,800 b2b,840
000ds scnI I0 brnch 43,080 (43080)
53,20 238,800 (43,080)
Lcss C0sI 0I Slcs:
0pcnng sI0ck 5b,000 34,000 (8,500)
*
8,500
Purchscs 39,800 39,800
Pr0v I0r u/p
000ds Ir0m H0 ___ 39,880 (39,880) ___
447, 800 73,880 (48,380) 473,300
Lcss cl0sng sI0ck 50,800 9,200 (4,800)
**
b8,400
C0sI 0I slcs 397,000 54,b80 (404,900)
SI0ck n IrnsI 3,200 ____ _________
0r0ss Pr0II 34,20 84,20 3,700 22,940
Lcss:
0cncrl cxpcnscs b8,000 40,000 08,000
0cprccI0n 5,200 b,b0 2,3b0
83,200 4b,b0 ______ 29,3b0
NcI pr0II 50,920 37,9b0 3,700 92,580
* SI0ck n IrnsI 3,200 s ncludcd n Ihc cl0sng sI0ck vluI0n
() 0pcnng sI0ck 1nury 2008
Hcd 0IIcc (I c0sI) 5b,000
rnch 34,000
lcss: unrclzcd pr0II 8,500 25,500
30,500
SI0ck vluI0n 33

/
3
= 0I 34,000 = 8,500
() Cl0sng SI0ck 3 0cccmbcr 2008
Hcd 0IIcc 50,800
rnch 9,200
!n IrnsI 3,200
22,400
Lcss unrclzcd pr0II 4,800 7,b00
b8,400
SI0ck n IrnsI 43,080 - 39,880 = 3,200
Hcd 0IIcc rnch Ad|. T0Il
N N N N N N N
Fxcd sscIs b0,800 24,b40 85,440
CurrcnI sscIs:
SI0cks 50,800 9,200 Pr0v I0r b8,400
0cbI0rs 34,89b 7,808 u/p (4,800) 42,704
nk nd csh bb,328 ,53b sI0ck n IrnsI 78,824
52,024 38,544 3200 89,928
32
Lcss:
Csh n IrnsI
CrcdI0rs 32,4b8 ,080 9b0
9,55b 37,4b4 33,548
5b,380
80,35b b2,04 (b40) 24,820
CpIl 49,240
NcI pr0II 92,580
24,820
() Fxcd AsscIs
C0sI //04 7b,000 30,800
0cprccI0n 5,200 b,b0
NcI 00k \luc 3/2/04 b0,800 24,b40
() Csh n IrnsI 9b0
F0rcgn brnchcs rc Ih0sc sIuIcd 0uIsdc Ihc c0unIry whcrc Ihc hcd 0IIcc
s l0cIcd. Thcy rc usully sclIcc0unIng nd IrnscI0ns rc dcn0mnIcd
n Ihc currcncy 0I Ihc h0sI NI0n. Ths wll ncccssIIc Ihc IrnslI0n 0I Ihc
I0rcgn currcncy nI0 Ihc hcd 0IIcc currcncy (usng cxchngc rIcs), bcI0rc
Ihc c0mbncd Irl blncc nd Inl cc0unIs cn bc prcprcd.
!n IrnslIng Ihc Irl blncc 0I Ihc I0rcgn brnch nI0 Ihc hcd 0IIcc's
currcncy, wc cn pply Ihc Icmp0rl mcIh0d 0r Ihc cl0sng rIc mcIh0d. Thc
cxchngc rIcs I0 usc I0r cch IrnscI0n undcr Ihc Iw0 mcIh0ds rc IbulIcd
bcl0w:
SI0cks Ihc cIul rIc rulng 0n Ihc Ihc cl0sng rIc, I cqurcd
cqurcd dIc 0I purchsc 0r by brnch 0r I cIul vluc,
IrnsIcr. !I cqurcd by hcd 0IIcc
Fxcd AsscIs I cIul rIc rulng 0n Ihc rIc rulng 0n Ihc blncc
dIc 0I purchsc 0r IrnsIcr. shccI dIc.
CurrcnI AsscIs & rIc rulng 0n Ihc blncc rIc rulng 0n Ihc blncc
CurrcnI lblIcs shccI dIc shccI dIc.
Pr0II nd L0ss vcrgc rIc 0I cxchngc rIc rulng 0n Ihc blncc
Icms I0r Ihc ycr. shccI dIc.
Hcd 0IIcc I cIul rIc Igurc n Ihc hcd 0IIcc
CurrcnI cc0unI b00k
Muyw Plc, s busncss IhI cnggcs n Irdng 0I vcgcIblc 0l n Ngcr
wIh brnch 0IIcc n Tuns. Trl blnccs, Ir0m Ihc hcd 0IIcc nd brnch
b00ks s I 30 ScpIcmbcr 2008 rc s I0ll0ws:
33
Ngcr Tuns
0R CR 0R CR
'000 '000 I'000 I'000
Shrc cpIl - AuIh0rscd,
!ssucd nd Iully pd b0,000
Fxcd sscIs 04,9b0 52,9b0
SI0cks 0cI0bcr 2007 3,920 4,400
0cprccI0n 0cI 2007 2b,400 2,000
Purchscs/slcs 23,b00 08,800 40,000 0,400
0cbI0rs/crcdI0rs 49,29b 2,b00 27,200 30,720
0pcrIng cxpcnscs 33,228 30,000
nk lncc/0vcrdrII b,300 34,400
rnch/H0 currcnI cc0unI 8,832 45,840
Pr0vs0n I0r unrclzcd
Pr0II 0n sI0ck
sI
0cI 200 _______ 73b _______ _______
233,83b 233,83b 98,9b0 98,9b0
AddI0nl !nI0rmI0n:
() Fxcd sscIs (cxccpI Ih0sc c0sIng I5,7b0,000) hd bccn purchscd n
Ngcr s0mc ycrs g0 nd IrnsIcrrcd I0 brnch I c0sI 0I
4,230,000. 0Ihcr Ixcd sscIs wcrc purchscd l0clly 0n 0cI0bcr
2007.
(b) All purchscs wcrc mdc n Ngcr nd nv0ccd I0 Ihc brnch I c0sI
plus 0, b 0I whch rclIcs I0 crrgc cxpcnscs I0 Tuns nd 4 I0
pr0II.
(c) 0urng Ihc ycr cndcd 30
Ih
ScpIcmbcr 2008, Ihc brnch b0ughI g00ds
l0clly c0sIng I2,500,000 0uI 0I whch I3,b00,000 w0rIh 0I g00ds wcrc
sIll n sI0ck I Ihc cnd 0I Ihc ycr.
(d) A rcmIIncc 0I I,984,000 Ir0m Ihc brnch 0n 25 ScpIcmbcr 2008 ws
n0I rcccvcd 0r crcdIcd by Ihc hcd 0IIcc unIl 0cI0bcr 2008.
(c) 0n 30 ScpIcmbcr 2008, sI0cks wcrc vlucd s I0ll0ws:
Ngcr 2b,240,000
Tuns I2,400,000
(I) Thc I0ll0wng cxchngc rIcs wcrc pplcblc
0cI0bcr 2007 I4.5 I0
30 ScpIcmbcr 2008 I4.0 I0
Avcrgc durng Ihc ycr I5.0 I0
Y0u rc rcqurcd I0 prcprc Ihc c0mbncd Trdng, pr0II nd l0ss cc0unI nd
blncc shccI 0I Muyw Plc.
34
Fxcd AsscIs H0 47,200 AcIul 4,230
L0cl 5,7b0 4.5 ,280
0pcnng sI0ck 4,400 5.0 2,880
0cprccI0n 0cI0bcr 2,000 AcIul 3,b8
Purchscs /slcs 40,000 0,400 5.0 8,000 22,080
0cbI0rs/crcdI0rs 27,200 30,720 4.0 b,800 7,b80
nk blncc 34,400 4.0 8,b00
w0rkng cxpcnscs 30,000 5.0 b,000
Cl0sng sI0ck - blncc shccI 2,400 5.0 2,480
Cl0sng sI0ck - Trdng cc0unI 2,400 5.0 2,480
0cprccI0n I0r Ihc ycr - P&L 5,29b ,538
0cprccI0n - blncc shccI 5,29b ,55
Exchngc gn ________ ________ _______ 5,5b7
() 0cprccI0n I0r P&L
L0clly purchscd sscIs (I57b,000/5.0) 5
AsscIs Fr0m H0 ,423
,538
(b) 0cprccI0n I0r lncc shccI
L0clly purchscd sscIs (I57b,000/4.5) 28
AsscIs Fr0m H0 ,423
,55
Ngcr Tuns T0Il
TrnsIcr I0 rnch 5,500
Slcs 03,300 22,080 25,380
08,800 22,080 25,380
0pcnng sI0ck 3,920 2,880 b,0b4
TrnsIcr Ir0m H0 5,500
Purchscs 23,b00 2,500 2b,00
37,520 0,880 42,b4
Lcss cl0sng sI0ck 2b,240 2,480 28,b5b
C0sI 0I slcs ,280 8,400 3,508
0r0ss pr0II 97,520 3,b80 ,872
Exchngc gn 5,5b7 5,5b7
Unrclzcd pr0II (n0 l0ngcr rcqurcd) b72
35
03,759 3,b80 7,439
w0rkng cxpcnscs 33,228 b,000 39,228
0cprccI0n 0,49b ,538 2,034
43,724 7,538 5,2b2
b0,035 b,42 bb,77
Ngcr Tuns T0Il
'000 '000 '000
Fxcd sscIs 04,9b0 5,50 20,470
0cprccI0n 3b,89b 5,b9 42,0b5
b8,0b4 0,34 78,405
SI0cks 2b,240 2,480 28,720
0cbI0rs 49,29b b,880 5b,7b
rnch currcnI cc0unI 9,98
Csh n IrnsI 49b 49b
nk blncc ________ 8,04 8,04
b4,077 27,805 9,882
CrcdI0rs (2,b00) (7,b80) (29,280)
nk 0vcrdrII (b,300) _______ (b,300)
CpIl & Rcscrvcs
Shrc cpIl b0,000 b0,000
Pr0II & L0ss bb,77 bb,77
H0 currcnI cc0unI ________ 20,25 20,25
() Cl0sng sI0ck '000
Hcd 0IIcc 2b,240
rnch 2,480
Unrclscd pr0II (b4)
28,b5b
Fxcd AsscIs H0 47,200 4.0 ,800
L0cl 5,7b0 4.0 ,440
0pcnng sI0ck 4,400 5.0 2,880
0cprccI0n
sI
0cI0bcr 2,000 5.0 2,400
Purchscs /slcs 40,000 0,400 5.0 8,000 22,080
0cbI0rs/crcdI0rs 27,200 30,720 4.0 b,800
nk blncc 34,400 4.0
3b
w0rkng cxpcnscs 30,000 5.0
Cl0sng sI0ck - blncc shccI 2,400 4.0
Cl0sng sI0ck - Trdng cc0unI 2,400 5.0
0cprccI0n I0r Ihc ycr - P&L 5,29b 5.0
0cprccI0n - blncc shccI _______ 5,29b 4.0
Exchngc gn 2b,b5b 2b,b5b
Undcr Ihs mcIh0d, Ihc m0unIs n Ihc blncc shccI 0I I0rcgn cnIcrprsc,
sh0uld bc IrnslIcd nI0 Ihc rcp0rIng currcncy 0I Ihc nvcsIng c0mpny, usng
Ihc rIc 0I cxchngc rulng I Ihc blncc shccI dIc. Exchngc dIIcrcnccs
wll, I Ihs rIc dIIcrs Ir0m IhI rulng I Ihc prcv0us blncc shccI dIc 0r I
Ihc dIc 0I ny subscqucnI cpIl n|ccI0n (0r rcducI0n).
Am0unIs n Ihc pr0II nd l0ss cc0unI 0I I0rcgn cnIcrprsc, sh0uld bc
IrnslIcd I cl0sng rIc 0r I n vcrgc rIc I0r Ihc cc0unIng pcr0d. Thc
usc 0I Ihc cl0sng rIc s m0rc lkcly I0 chcvc Ihc 0b|ccIvc 0I rcIlccIng Ihc
Inncl rcsulIs nd rclI0nshps s mcsurcd n Ihc I0rcgn brnch's Inncl
sIIcmcnIs pr0r I0 IrnslI0n. H0wcvcr, I cn bc rgucd IhI n vcrgc rIc
rcIlccIs, m0rc Irly, Ihc pr0IIs nd l0sscs nd csh Il0ws s Ihcy rsc I0 Ihc
gr0up, Ihr0ugh0uI n cc0unIng pcr0d. Thc usc 0I cIhcr mcIh0d s IhcrcI0rc
pcrmIIcd, pr0vdcd IhI Ihc 0nc sclccIcd s pplcd c0nssIcnIly Ir0m pcr0d I0
pcr0d.
N0 dcInIvc mcIh0d 0I clculIng Ihc vcrgc rIc hs bccn prcscrbcd, sncc
Ihc ppr0prIc mcIh0d my |usIIbly vry, bcIwccn Ihc ndvdul
c0mpncs. FcI0rs IhI wll nccd I0 bc c0nsdcrcd, ncludc Ihc c0mpny's
nIcrnl cc0unIng pr0ccdurcs nd Ihc cxIcnI 0I scs0nl Irdc vrI0n, Ihc
usc 0I wcghIng pr0ccdurc wll, n m0sI cscs, bc dcsrblc. whcrc Ihc vcrgc
rIc uscd, dIIcrs Ir0m Ihc cl0sng rIc, dIIcrcncc wll rsc, whch sh0uld bc
dclI wIh, n rcscrvcs.
() Ihc pr0II nd l0ss cc0unI my bc IrnslIcd cIhcr I Ihc wcghIcd
vcrgc 0r Ihc cl0sng rIc I0r Ihc ycr.
(b) ny cxchngc dIIcrcncc rsng s lwys m0vcmcnI 0n rcscrvcs nd
ncvcr g0cs I0 Ihc pr0II nd l0ss cc0unI.
Thc mcchncs 0I Ihs mcIh0d rc dcnIcl wIh Ih0sc uscd n prcprng Ihc
cc0unIs 0I n ndvdul 0IIcc. Ths mcns IhI,
() Ihc pr0II nd l0ss cc0unI s IrnslIcd usng cIul rIcs whcrc kn0wn
(n vcrgc I0r Ihc pcr0d Icnds I0 bc uscd n prcIcc), nd hsI0rcl
rIcs I0r n0nm0ncIry Icms, such s 0pcnng nd cl0sng sI0ck nd
dcprccI0n, nd
(b) ny cxchngc dIIcrcnccs rc rcp0rIcd s prI 0I pr0II I0r Ihc ycr.
37
SIgc
TrnslIc Ihc cl0sng blncc Undcr cl0sng rIc I Ihc Usc Ihc cl0sng rIc I
shccI nd usc Ihs I0r prcprng ycr cnd I0r ll Icms Ihc ycr cnd I0r m0ncIry
Ihc c0ns0ldIcd blncc shccI (buI scc bcl0w) Icms nd Ihc ppr0prIc
n Ihc n0rml wy. hsI0rcl rIcs I0r n0n
m0ncIry Icms.
Shrch0ldcrs' Iund sh0uld
bc IrcIcd s blncng
Igurc (scc bcl0w).
As mcnI0ncd b0vc, Ihc shrc cpIl my bc IrnslIcd I Ihc hsI0rcl rIc
(undcr b0Ih mcIh0ds). Thc rcscrvcs wll Ihcn bc Ihc blncng Igurc. Thc
dvnIgc 0I Ihs mcIh0d s IhI I smplIcs Ihc 'cnccllI0n' 0I Ihc shrc
cpIl 0n c0ns0ldI0n.
TrnslIc Ihc pr0II Usc Ihc vcrgc rIc 0r cl0sng Thc pr0II nd l0ss cc0unI
nd l0ss cc0unI rIc I0r Ihc ycr, I0r ll Icms sh0uld bc IrnslIcd, usng Ihc
(buI scc c0mmcnI 0n dvdcnds). cxchngc rIcs rulng s I Ihc
Thc Igurcs 0bIncd cn Ihcn Imc Ihc m0unIs rcc0rdcd n
bc uscd n prcprng Ihc Ihc Inncl sIIcmcnI wcrc
c0ns0ldIcd pr0II nd l0ss csIblshcd.
cc0unI. !n m0sI cxmnI0ns
qucsI0ns, I wll bc ncccssry
I0 IrnslIc ll Icms, prI
Ir0m dcprccI0n, I Ihc vcrgc
rIc I0r Ihc ycr, nd I0 IrnslIc
dcprccI0n I Ihc rIcs rulng
whcn Ihc rclcvnI Ixcd sscIs
wcrc cqurcd (0r rcvlucd). !I,
h0wcvcr, Ihc nI0rmI0n s
vlblc, y0u sh0uld usc
Icmp0rl rIcs spccIc I0
0pcnng nd cl0sng sI0cks.
TrnslIc Ihc Usc Ihc cl0sng rIc I Usc Ihc cl0sng rIc I Ihc
shrch0ldcrs' Iund bcgnnng 0I Ihc ycr (IhI bcgnnng 0I Ihc ycr I0r
I Ihc bcgnnng 0I s 0pcnng rIc). m0ncIry Icms nd Ihc
Ihc ycr. ppr0prIc hsI0rcl rIcs I0r
n0nm0ncIry Icms.
TrnslIc Ihc Usc Ihc cl0sng rIc I Usc Ihc cl0sng rIc I Ihc
Shrch0ldcrs' Fund bcgnnng 0I Ihc ycr bcgnnng 0I Ihc ycr I0r
I Ihc bcgnnng 0I (IhI s 0pcnng rIc) m0ncIry Icms nd Ihc
Ihc ycr. ppr0prIc hsI0rcl rIcs I0r
n0nm0ncIry Icms.
!n mny qucsI0ns, I s ncccssry I0 rcc0nsIrucI Ihc 0pcnng blncc shccI.
38
ClculIc Ihc I0Il Ths sIgc wll bc unncccssry, AIIcr Indng Ihc cxchngc
cxchngc dIIcrcncc unlcss y0u rc skcd I0 sIIc dIIcrcnccs, I wll bc p0ssblc
I0r Ihc ycr s I0ll0ws: Ihc I0Il cxchngc dIIcrcncc I0 prcprc Ihc c0ns0ldIcd
shrch0ldcrs' Iund I 0r rc skcd I0 prcprc pr0II nd l0ss cc0unI. Thc
Ihc bcgnnng 0I Ihc sIIcmcnI 0I Ihc m0vcmcnI cxchngc dIIcrcnccs sh0uld bc
ycr (s n sIgc 3 n rcscrvcs. ncludcd bcI0rc Ix.
b0vc).
Add: rcIncd pr0II bcI0rc cxchngc dIIcrcnccs
(SIgc 2) X
Lcss: Shrch0ldcrs's Iund I Ihc ycr cnd(sIgc ) X
Exchngc 0IIcrcnccs (bl) XX
N0Ic: !I my bc ncccssry I0 d|usI I0r pr0II 0r l0ss Ikcn drccI I0 rcscrvcs
durng Ihc ycr.
usncsscs s0mcImcs crry 0n Ihcr 0pcrI0ns Ihr0ugh Ihcr brnchcs n
dIIcrcnI plccs, whlc Ihc 0pcrI0ns 0I s0mc brnchcs rc drccI cxIcns0ns
0I Ihc Hcd 0IIcc cIvIcs. S0mc brnchcs rc lrgcly ndcpcndcnI nd
mnIn scprIc rcc0rds 0I Ihcr IrnscI0ns wIh Ihcr Hcd 0IIcc. Uns0ld
sI0cks rclIng I0 nIrc0mpny IrnsIcr 0I g00ds, gvc rsc I0 Ihc pr0blcm 0I
unrclzcd pr0IIs, whlc I0rcgn brnchcs nIr0ducc Ihc c0mplcI0n 0I I0rcgn
currcncy IrnslI0n. Thc Iw0 mcIh0ds 0I cc0unIng I0r I0rcgn brnchcs wcrc
dclI wIh n Ihs chpIcr.
. Slc 0I g00ds I nv0ccd prcc bcIwccn Hcd 0IIcc nd rnch wll gvc rsc I0
0nc 0I Ihc I0ll0wng, I Ihc Icms rc n0I s0ld I0 n cxIcrnl prIy, I Ihc cnd 0I Ihc
pcr0d:
() Pr0II I0 Hcd 0IIcc
(b) !ncrcsc n Iurn0vcr
(c) Unrclscd pr0II
(d) F0rcgn currcncy l0ss
(c) TrnslI0n l0ss
2. whch 0I Ihc I0ll0wng mcIh0ds 0I IrnslI0n, w0uld y0u rcc0mmcnd I0r n
ndcpcndcnI I0rcgn brnch!
() Tcmp0rl mcIh0d
(b) M0ncIry/ n0n m0ncIry mcIh0d
(c) CurrcnI/ n0n currcnI mcIh0d
(d) Cl0sng rIc mcIh0d
(c) () nd (b) b0vc
3. 0nc dIIcrcncc bcIwccn n !ndcpcndcnI nd 0cpcndcnI brnch s:
() Hcd 0IIcc pr0curcs I0r dcpcndcnI brnchcs
39
(b) 000ds rc mrkcdup I0r dcpcndcnI brnchcs
(c) Acc0unIng rcc0rds nd b00ks rc kcpI by Ihc ndcpcndcnI brnchcs
(d) !ndcpcndcnI brnchcs rc ll0wcd c0nIr0l 0vcr Slcs.
(c) !ndcpcndcnI brnchcs usully IrnscI n I0rcgn currcncy
4. TrnscI0ns bcIwccn Ihc hcd 0IIcc nd ndcpcndcnI brnchcs rc rcc0rdcd n
() Spccl gcncrl lcdgcr
(b) CurrcnI cc0unI
(c) 000ds scnI I0 brnch cc0unI
(d) F0rcgn currcncy IrnslI0n rcscrvc
(c) rnch sI0ck d|usImcnI cc0unI.
5. Hcd 0IIcc currcnI cc0unI s mrr0r 0I whch cc0unI!
() rnch sI0ck cc0unI
(b) rnch currcnI cc0unI
(c) rnch dcbI0rs cc0unI
(d) rnch Irdng cc0unI
(c) 000ds scnI I0 rnch cc0unI
b. SIIc 0nc p0ssblc rcs0n why rnch CurrcnI Acc0unI my n0I grcc wIh Hcd
0IIcc CurrcnI cc0unI.
7. SIIc Ihc I0rmul I0r clmnIng unrclscd pr0IIs Ir0m g00ds scnI I0 brnch I
c0sI plus 20.
8. SIIc h0w rcvcnuc nd cxpcnscs rc IrnslIcd undcr Ihc cl0sng rIc mcIh0d.
9. whcn s Ihc Icmp0rl mcIh0d pplcblc I0r IrnslI0n 0I Ihc Inncl sIIcmcnIs
0I I0rcgn brnchcs!
0. !n Ihc c0nIcxI 0I brnch cc0unIng, whI s scmuI0n0m0us brnch!
40
4
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc Iw0 mcIh0ds 0I Acc0unIng I0r C0nIrcIs.
UndcrsInd h0w I0 dcIcrmnc pr0II undcr Ihc Iw0 mcIh0ds.
C0mpuIc Ihc vluc 0I w0rk n Pr0grcss I Ihc cnd 0I pcr0d.
A c0nsIrucI0n c0nIrcI s c0nIrcIul grccmcnI bcIwccn Iw0 prIcs, whcrcby
prIy kn0wn s Ihc c0nIrcIcc grccs I0 py spccIcd c0nsdcrI0n I0 Ihc
0Ihcr prIy, kn0wn s Ihc c0nIrcI0r, I0r Ihc cxccuI0n 0I spccIc pr0|ccI bscd
0n spccIcd Icrms nd c0ndI0ns.
A c0nsIrucI0n c0nIrcI s crrcd 0uI I0r Ihc cxccuI0n 0I pr0|ccI, whch my
bc Cvl, uldng, Engnccrng nd s0 0n. Thc pcr0d 0I cxccuI0n my bc wIhn
0nc ycr (sh0rIIcrm pr0|ccIs), 0r sprcd 0vcr pcr0d cxcccdng 0nc ycr
(l0ngIcrm pr0|ccIs).
!n cc0unIng I0r c0nsIrucI0n c0nIrcIs, SAS N0 5: Acc0unIng I0r C0nsIrucI0n
C0nIrcIs rcc0mmcnds IhI cvcry cnIcrprsc sh0uld usc cIhcr Ihc c0mplcIcd
c0nIrcI mcIh0d 0r Ihc pcrccnIgc 0I c0mplcI0n mcIh0d.
Sh0rITcrm c0nIrcIs rc cxccuIcd wIhn pcr0d 0I 2 m0nIhs whch
my Ill wIhn 0nc 0r Iw0 cc0unIng ycrcnds. whcrc such c0nIrcI
s c0mmcnccd nd c0mplcIcd wIhn n cc0unIng ycrcnd, Ihc
rcsulInI c0nIrcI pr0II, s rcc0gnzcd mmcdIcly n IhI cc0unIng
ycrcnd. whcrc Ihc c0nIrcI s c0mmcnccd n 0nc cc0unIng ycr nd
c0ncludcd n Ihc ncxI, Ihcn, Ihcrc s Ihc nccd I0 dcIcrmnc n whch
cc0unIng ycr I0 rcc0gnzc such pr0II. Thcrc s ls0 Ihc nccd I0
dcIcrmnc Ihc vluc 0I w0rknpr0grcss I Ihc cnd 0I Ihc IrsI cc0unIng
ycr n whch Ihc c0nIrcI ws c0mmcnccd buI n0I c0mplcIcd.
Thc pr0vs0n 0I SAS N0 5: C0nsIrucI0n C0nIrcIs 0n Sh0rITcrm C0nIrcIs
s summrzcd s I0ll0ws:
() Thc C0mplcIcd C0nIrcI McIh0d sh0uld bc uscd I0r sh0rIIcrm
c0nIrcIs.
42
(b) F0rcsccblc L0sscs sh0uld bc chrgcd I0 Ihc Pr0II nd L0ss
Acc0unI n Ihc pcr0d n whch Ihcy rc dcnIIcd.
(c) A c0nIrcI sh0uld bc rcgrdcd s c0mplcIcd, 0nly whcn ll
cIvIcs rclIng I0 I rc cc0mplshcd. !n sIuI0n whcrc
Ihc ddI0nl c0sIs rcqurcd I0 c0mplcIc Ihc c0nIrcI rc n0I
sgnIcnI, pr0vs0n sh0uld bc mdc I0r such c0sIs nd Ihc
C0nIrcI IrcIcd s c0mplcIcd.
0|ub0|u C0nsIrucI0n LmIcd undcrI00k I0 buld plnI I0r T0lu MnuIcIurng
LmIcd, I c0nIrcI prcc 0I 00,000. ExpcndIurc rclIng I0 Ihc c0nIrcI
rc s I0ll0ws:
MIcrls 30,000
0rccI wgcs 40,000
0rccI Expcnscs 5,000
PlnI @ C0sI 35,000
PlnI Hrc 2,000
Sundry T00ls 3,000
Thc c0nIrcI ws c0mplcIcd by Ihc ycr cndcd 3 Mrch, 2008, durng whch,
Ihc c0mpny rcccvcd b0,000 Ir0m T0lu MnuIcIurng LId. Thc wrIIcn d0wn
vlucs 0I Ihc plnI nd I00ls wcrc 25,000 nd 500, rcspccIvcly..
Prcprc Ihc C0nIrcI Acc0unI.
MIcrls 30,000 C0nIrcI Prcc 00,000
0rccI wgcs 40,000 PlnI (w0\) c/d 25,000
0rccI Expcnscs 5,000 Sundry T00ls (w0\) 500
PlnI @ C0sI 35,000
PlnI Hrc 2,000
Sundry T00ls 3,000
C0nIrcI Pr0II Tkcn 0,500 _______
25,500 25,500
43
\luc 0I w0rk CcrIIcd 00,000 Csh rcccvcd b0,000
_______ C0nIrcI 0cbI0r(lncc c/d) 40,000
00,000 00,000
Thcrc rc spccl pr0blcms ss0cIcd wIh cc0unIng I0r busncsscs
whch crry 0uI l0ng Icrm c0nsIrucI0n c0nIrcIs. Thcsc pr0blcms cn
bc summrzcd s I0ll0ws:
() Thcsc pr0|ccIs usully nv0lvc pplcI0n 0I vcry subsInIl
m0unIs 0I physcl nd Inncl rcs0urccs.
(b) Thc pr0ducI0n cyclc cn bc vcry l0ng n c0mprs0n wIh 0Ihcr
busncsscs.
(c) Pr0II rcc0gnI0n I0r cch ycr 0I 0pcrI0n durng Ihc pcr0d 0I
cxccuI0n 0I Ihc c0nIrcIs.
Thc I0ll0wng, rc Ihc mcIh0ds 0I ppr0ch I0r c0nsIrucI0n busncss:
() Rcs0urccs rc c0nIr0llcd 0n c0nIrcI bss.
(b) Ech c0nIrcI s gvcn scprIc dcnIIcI0n c0dc numbcr nd
Ihc c0sIs 0I ll rcs0urccs supplcd I0 IhI c0nIrcI rc chrgcd I0
I.
(c) AI nIcrvls, Ihr0ugh0uI Ihc pcr0d 0I Ihc c0nIrcI n
ppr0xmI0n 0I Ihc dcgrcc 0I c0mplcI0n 0I cch c0nIrcI (n
Icrms 0I Ihc c0nIrcI prcc) nd ccrIIcIc I0 Ihs cIIccI s ssucd
by qulIcd pr0Icss0nl.
(d) Thc ccrIIcIcs cnblc csImIcs I0 bc mdc 0I Ihc pr0II crncd
0r l0ss susIncd 0n Ihc c0nIrcI upI0dIc nd ls0, 0I Ihc vluc
0I Ihc w0rknpr0grcss. Als0 Ihc ccrIIcIcs rc Ihc bscs I0r
clm I0r nIcrm pymcnIs (kn0wn s pr0grcss pymcnIs).
(c) Thc c0nIrcI0r d0cs n0I ncccssrly hvc I0 wI unIl Ihc cnd 0I
Ihc c0nIrcI pcr0d, 0r rcccvc pymcnIs, bcI0rc rcc0gnsng
pr0IIs.
(I) !I s usul I0r Ihc c0nIrcIcc I0 dcducI wIhh0ldng Ix I s0urcc,
Ir0m Ihc pr0grcss pymcnIs.
ScprIc lcdgcr cc0unIs rc mnIncd, I0r cch c0nIrcI n whch
rclcvnI c0sIs rc p0sIcd nd 0Ihcr rclcvnI cnIrcs mdc I0r pr0pcr
m0nI0rng nd mngcmcnI 0I cch c0nIrcI.
F0r cch c0nIrcI Ihcrc s Ihc nccd I0 dcIcrmnc Ihc ppr0prIc pr0II I0
bc rcc0gnzcd. Thc I0ll0wng rc Ihc cccpIblc mcIh0ds 0I rcc0gnzng
pr0II 0n c0nsIrucI0n c0nIrcIs:
44
() ArchIccI's 0r Engnccr's ccrIIcIc mcIh0d.
(b) PcrccnIgc 0I c0mplcI0n mcIh0d (SAS N0 5).
Undcr Ihs mcIh0d, cch c0nIrcI s dcbIcd wIh Ihc c0sIs 0I mIcrls
supplcd, pymcnIs I0 subc0nIrcI0rs, wgcs nd c0nIrcI 0vcrhcds.
AI Ihc cnd 0I Ihc pcr0d, Ihc cc0unI s crcdIcd wIh rchIccIurl
vluI0n, Ihc vluc 0I w0rk d0nc buI n0I ycI ccrIIcd nd Ihc vluc 0I
unuscd rcs0urccs, such s mIcrls I sIc, nd vluc 0I Ixcd sscIs I
sIc. A crcdI blncc 0n Ihc cc0unI, ndcIcs p0IcnIl pr0II 0n Ihc
c0nIrcI, whlc dcbI blncc ndcIcs p0IcnIl l0ss.
!n cc0rdncc wIh Ihc c0nccpI 0I prudcncc, I s rcc0mmcndcd IhI ny
I0rcsccblc l0ss sh0uld bc rcc0gnzcd mmcdIcly whlc csImIcd
pr0II rcc0gnzcd sysIcmIclly s bcl0w.
Pr0II rcc0gnzcd I0 dIc =EsImIcd pr0II x 2/3 x csh rcccvcd__
\luc 0I w0rk ccrIIcd.
\ulIurc Ngcr LmIcd, undcrIkcs I0 buld n0Ihcr gnI C0l bunkcr
I0r EsIcrn C0l LmIcd, I c0nIrcI prcc 0I 50,000,000, csImIng
IhI Ihc w0rk wll Ikc 8 m0nIhs I0 c0mplcIc. AI Ihc Inncl ycr
cndcd 3 Mrch 2008, Ihc cxpcndIurc 0n Ihc c0nIrcI wcrc s I0ll0ws:
MIcrls 30,000
0rccI wgcs 40,000
0rccI Expcnscs 5,000
PlnI I c0sI 35,000
PlnI hrc 2,000
Sundry I00ls 3,000
Thc wrIIcn d0wn vluc 0I plnI I0r Ihc ycr cndcd 3 Mrch 2008, ws
25,000,000 whlc Ihc vluc 0I sundry I00ls ws csImIcd I0 bc
500,000. AI Ihc ycr cnd, Ihc vluc 0I w0rk ccrIIcd ws 00,000,000,
whlc csh rcccvcd Ir0m Ihc cusI0mcr m0unIcd I0 b0,000.
Prcprc Ihc c0nIrcI nd c0nIrcIcc's cc0unIs, I0r Ihc ycr cndcd 3
Mrch 2008.
45
'000 '000
MIcrl 30,000 PlnI (w0\) c/d 25,000
0rccI wgcs 40,000 T00ls (w0\) c/d 500
0rccI Expcnscs 5,000 w0rk n Pr0grcss (c/d) 93,700
PlnI Hrc 2,000
PlnI I C0sI 35,000
T00ls I C0sI 3,000
Pr0II Rcc0gnscd 4,200 _______
9,200 9,200
'000 '000
\luc 0I w0rk CcrIIcd 00,000 Csh rcccvcd b0,000
C0nIrcI 0cbI0r(bl c/d) 40,000
________ _______
00,000 00,000
. C0mpuII0n 0I pr0II rcc0gnscd
'000 '000
\luc 0I w0rk ccrIIcd 00,000
C0sI 0I w0rk I0 dIc:
MIcrl 30,000
0rccI wgcs 40,000
0rccI Expcnscs 5,000
PlnI Hrc 2,000
PlnI I C0sI 35,000
T00ls I C0sI 3,000
5,000
PlnI (wdv) c/d (25,000)
T00ls (wdv) c/d (500)
89,500
EsImIcd pr0II 0,500
Pr0II I0 bc rcc0gnzcd = 2/3 x Csh rcccvcd x EsImIcd pr0II
\luc 0I w0rk ccrIIcd
= 2/3 x b0,000,000 x 0,500,000
00,000,000
= 4,200,000
4b
() C0sI 0I w0rk ccrIIcd, w0uld hvc bccn uscd n clculIng Ihc csImIcd
pr0II, I pr0vdcd.
() Ths s prudcnI ppr0ch I0 clculIng pr0II rcc0gnscd.
An0Ihcr cccpIblc ppr0ch I0 rcc0gnzcd pr0II s s I0ll0ws:
= Csh Rcccvcd___ x EsImIcd Pr0II
\luc 0I w0rk CcrIIcd
ThcrcI0rc, Pr0II Ikcn = b0 x 0,500,000
= b,300,000
Ths mcIh0d s n lnc wIh pr0vs0n 0I SAS 5: C0nsIrucI0n C0nIrcIs. !I
s pplcblc whcrc C0sI 0I C0mplcIng Ihc c0nIrcI cn bc csImIcd
wIh dcgrcc 0I ccrInIy.
0vcn Ihc dcIls undcr llusIrI0n 82, \ulIurc Ngcr LmIcd, buI
wIh Ihc I0ll0wng ddI0nl nI0rmI0n:
() !I s csImIcd IhI Ihc PlnI wll hvc wrIIcn d0wn vluc 0I
5,000,000 I Ihc cnd 0I Ihc c0nIrcI, whlc Ihc Sundry I00ls
wll bc vlucd I ,900,000.
(b) EsImIcd IuIurc c0sI I0 c0mplcIc Ihc c0nIrcI rc s I0ll0ws:
MIcrls 3,000
wgcs 25,000
0rccI Expcnscs 2,900
Sundry T00ls I C0sI 2,000
Prcprc Ihc C0nIrcI Acc0unI, sh0wng Ihc pr0II Ikcn.
47
MIcrl 30,000 PlnI (wdv) c/d 25,000
0rccI wgcs 40,000 T00ls (wdv) c/d 500
0rccI Expcnscs 5,000 w0rk n Pr0grcss(blncng Igurc) c/I 95,500
PlnI Hrc 2,000
PlnI I C0sI 35,000
T00ls I C0sI 3,000
Pr0II Rcc0gnscd b,000 _______
2,000 2,000
C0mpuII0n 0I pr0II rcc0gnscd
C0nIrcI Prcc 50,000
MIcrls 30,000
0rccI wgcs 40,000
0rccI Expcnscs 5,000
PlnI Hrc 2,000
(77,000)
EsImIcd FuIurc C0sI:
MIcrls 3,000
wgcs 25,000
0rccI Expcnscs 2,900 (40,900)
0cprccI0n:
PlnI (35,0005,000) 20,000
T00ls (3,000+2,000,900) 3,00
(23,00)
EsImIcd C0nIrcI C0sI I0 C0mplcI0n (4,000)
AIIrbuIblc Pr0II = \luc 0I w0rk CcrIIcd x EsImIcd Pr0II
C0nIrcI Prcc
= 00,000,000 x 9,000,000
50,000,000
= b,000,000
FuIurc c0sI musI bc cpblc 0I bcng csImIcd wIh dcgrcc 0I
ccrInIy.
48
Thcrc rc 0Ihcr c0nscrvIvc ppr0chcs, I0 clculIng Ihc pr0II I0 bc
Ikcn, whch rc cccpIblc:
() Csh rcccvcd_ x \luc 0I w0rk ccrIIcd x EsImIcd pr0II
\luc 0I w0rk ccrIIcd C0nIrcI prcc
(b) C0sI 0I w0rk c0mplcIcd_________ x EsImIcd pr0II
EsImIcd c0nIrcI c0sI 0n c0mplcI0n
Thc pr0II Ikcn undcr cch 0I Ihc b0vc lIcrnIvc mcIh0ds rc s
I0ll0ws:
() b0,000,000 x 00,000,000 x 9,000,000
00,000,000 50,000,000
= 3,b00,000
(b) 89,500,000 x 9,000,000
4,000,000
= 5,73,000
Undcr Ihc pr0vs0ns 0I SAS N0 5: Acc0unIng I0r C0nsIrucI0n C0nIrcIs,
Ihc vluc 0I w0rk n pr0grcss I0r lncc ShccI purp0scs, s clculIcd
s I0ll0ws:
C0sI ncurrcd I0 dIc X
Plus IIrbuIblc pr0II (I ny) X
XX
Lcss I0rcsccblc l0sscs X
X
Lcss pr0grcss pymcnIs rcccvcd
0r rcccvblc X
Thc I0ll0wng dcIls rc pr0vdcd n rcspccI 0I I0ur c0nIrcIs:
Sng0 Abulc Pcr0 !gbcs
C0nIrcI prcc 800,000 85,000 b0,000 00,000
Csh rcccvcd 450,000 7b,000
\luc 0I w0rk nv0ccd 500,000 80,000
C0sI 0I w0rk ccrIIcd 400,000 b0,000 50,000 2,000
EsImIcd IuIurc c0sIs 20,000 2,000 20,000 70,000
C0sIs I0 dIc 400,000 b0,000 55,000 3,000
Y0u rc rcqurcd I0:
() ClculIc Pr0II 0r L0ss I0 bc Ikcn 0n cch C0nIrcI
(b) Sh0w h0w Ihc w0rk n Pr0grcss w0uld bc dscl0scd n Ihc lncc ShccI.
49
()
C0nIrcIs
C0nIrcI prcc 800,000 85,000 b0,000 00,000
C0sIs I0 dIc 400,000 b0,000 55,000 3,000
EsImIcd IuIurc c0sIs 20,000 2,000 20,000 70,000
EsImIcd C0nIrcI c0sIs 520,000 b2,000 75,000 83,000
EsImIcd pr0II/(l0ss) 280,000 23,000 (5,000) 7,000
(b)
w0rk n Pr0grcss (I0r blncc shccI)
C0sI I0 0Ic: Sng0 400,000
Abulc b0,000
Pcr0 55,000
!gbcs 3,000
528,000
Add pr0II Ikcn: Sng0 57,500
Abulc 20,5b5
78,0b5
70b,0b5
Lcss I0rcsccblc l0sscs: Pcr0 5,000
b9,0b5
Lcss Pr0grcss PymcnIs:
Rcccvcd: Sng0 450,000
Abulc 7b,000
52b,000
Rcccvblc: Sng0 (500,000450,000) 50,000
Pcr0 (80,0007b,000) 4,000
!gbcs 5,000
b9,000
. Pr0II 0r L0ss Tkcn 0n Pr0|ccIs:
= 280,000 x 500,000 x 450,000
800,000 500,000
= 57,500
= 23,000 x 80,000 x 7b,000
85,000 80,000
= 20,5b5
= All Ihc I0rcsccblc l0sscs sh0uld bc rcc0gnzcd
mmcdIcly
50
= 7,000 x 5,000 x 0__
00,000 80,000 = Nl
Thcrc rc Iw0 cccpIblc mcIh0ds I0r cc0unIng I0r c0nsIrucI0n c0nIrcIs.
Als0, Ihcrc rc cccpIblc mcIh0ds I0r pr0II dcIcrmnI0n. Thc dcIcrmnI0n
0I Ihc vluc 0I w0rknpr0grcss I0r Ihc blncc shccI dscl0surc ws cxmncd.
Thc crIcr sIIcd n Ihc SIIcmcnI 0I Acc0unIng SIndrd N0 5: Acc0unIng
I0r C0nsIrucI0n c0nIrcIs ws ls0 cxmncd.
. whch 0I Ihc I0ll0wng s n0I bss I0r rcvcnuc rcc0gnI0n 0n c0nsIrucI0n
c0nIrcIs!
() ArchIccIurl \luI0n.
(b) C0mplcI0n 0I c0nIrcI.
(c) Pr0grcss pymcnIs 0I c0nIrcI sum.
(d) Pr0grcss rcp0rI 0n w0rk c0mplcIcd.
(c) Pcr0d 0I Imc spcnI.
2. whch 0I Ihc I0ll0wng s n0I n cnIry n Ihc C0nIrcI 0cbI0r's Acc0unI!
() C0nIrcI Sum.
(b) CcrIIcd Am0unI.
(c) Csh Rcccvcd.
(d) MIcrl C0nsumcd.
(c) AsscI Purchscd.
3. whch 0I Ihc I0ll0wng s n0I uscd n clculIng w0rknpr0grcss, I ycr
cnd!
() C0sI upI0dIc.
(b) RcIcnI0n m0ncy.
(c) Am0unI rcccvcd 0r rcccvblcs.
(d) Pr0II Ikcn I0 Pr0II nd L0ss Acc0unI.
(c) CrcdI0rs' blncc.
4. A c0nIrcI spnnng 0vcr 0nc ycr s cllcd:
() C0nsIrucI0n C0nIrcI.
(b) Cvl C0nIrcI.
(c) L0ngTcrm C0nIrcI.
(d) uldng C0nIrcI.
(c) Sh0rITcrm C0nIrcI.
5. Undcr l0ngIcrm c0nIrcIs, Ihc I0ll0wng IIrbuIcs rc dcnIIcd, cxccpI
() Pr0IIs rc rcc0gnscd usng pcrccnIgc 0I c0mplcI0n mcIh0d.
(b) F0rsccblc l0sscs rc wrIIcn 0II I0 pr0II nd l0ss cc0unI n Ihc
ycr Ihcy rc dcnIIcd.
(c) C0sIs rc ccumulIcd unIl 0vcr IIIy pcrccnI 0I Ihc c0nIrcI s
c0mplcIcd.
(d) Thcrc s n0 dsI0rI0n n pr0IIs 0vcr Ihc pcr0d 0I Ihc c0nIrcI.
(c) Undcr bllngs nd 0vcr bllngs rc rcp0rIcd s prI 0I w0rkn
pr0grcss.
5
8.3.2
b. whch 0I Ihc mcIh0ds 0n cc0unIng I0r c0nIrcIs rcc0gnscs pr0IIs s
cIul!
7. rcIly dcInc L0ngIcrm c0nsIrucI0n c0nIrcIs.
8. !Icmsc 0nc IcIurc 0I c0nsIrucI0n c0nIrcI.
9. 0IIcrcnIIc bcIwccn l0ngIcrm nd sh0rIIcrm c0nsIrucI0n c0nIrcIs.
0. SIIc 0nc bss I0r rcc0gnsng l0sscs 0n l0ngIcrm c0nsIrucI0n c0nIrcIs.
.
52
53
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc Ihc0rcIcl spccIs 0I nvcsImcnI cc0unIng.
Prcprc Ihc rclcvnI cc0unIs I0r unI IrusI c0mpncs, undcrwrIcrs nd sI0ck
br0kng Irms.
Prcprc snkng Iund nd snkng Iund nvcsImcnI cc0unIs.
whcn n sscI nccds I0 bc rcplccd, Ihc Iunds nccdcd c0uld bc pr0vdcd
by scIIng sdc n grccd m0unI cch ycr, nvcsIcd wIh Ihc
c0mp0ncnI 0I c0mp0und nIcrcsI. Ths wll bc suIIccnI I0 pr0vdc
sum cqul I0 Ihc c0sI 0I Ihc sscI, lcss rcsdul vluc I Ihc cnd 0I Is
csImIcd lIc. Thc dvnIgc 0I Ihs mcIh0d s IhI csh wll bc
vlblc I0 pr0vdc I0r Ihc sscI rcplccmcnI.
Thc b00k vluc 0I Ihc sscI rcmns unchngcd durng Ihc pcr0d 0I
buldng Ihc snkng Iund, Ihc dcprccI0n bcng rcIlccIcd n Ihc crcdI
blncc 0n Ihc snkng Iund cc0unI. AI Ihc cnd 0I Ihc pcr0d, Ihc blncc
n Ihc snkng Iund wll bc IrnsIcrrcd I0 Ihc crcdI 0I Ihc sscI, lcvng
Ihc blncc n Ihc lIIcr, s Ihc rcsdul blncc.
AI Ihc 0ccurrcncc 0I cch 0I Ihc I0ll0wng sIuI0ns ( c), Ihc snkng
Iund cc0unI, cnIrcs I0r Ihc wrIc 0II 0I sscI, wll bc s sIIcd gnsI,
cch ( c).
() 0n scIIng sdc Ihc nsIlmcnI
nnuIy P & L Snkng Iund
(b) 0n nvcsIng Ihc nsIlmcnI Csh Snkng Iund
(c) 0n rcccpI nd rcnvcsImcnI Csh Snkng Iund
0I nIcrcsI 0n nvcsImcnI Snkng Csh
Iund !nv.
(d) 0n Ihc cxpry 0I Ihc lIc 0I Ihc sscI. Snkng Iund AsscI
(c) 0n purchsc 0I ncw sscI AsscI Snkng Iund
54
PlnI whch c0sI 250,000 wIh lIc spn 0I 3 ycrs nd Ihc rcsdul vluc 0I
3,250 ws nvcsIcd I 5. Y0u rc I0 sh0w rclcvnI cc0unIs, ssumng IhI
Ihc m0unIs I0 bc scI sdc rc b9,250 I0r Ihc IrsI ycr nd b9,500 I0r
cch 0I Ihc rcmnng Iw0 ycrs. Assumc IhI Ihc rcplccmcnI c0sI s cqul I0
Ihc 0rgnl c0sI.
Y0u rc rcqurcd I0 prcprc Ihc Snkng Fund Acc0unI.
Ycr . bl c/d b9,250 Ycr P&L b9,250
Ycr 2 bl. c/d 42,250 Ycr2 bl b/d b9,250
!nIcrcsI 3,500
_______ P/L b9,500
42,250 42,250
Ycr 3. lncc c/I 28,750 Ycr 3 l 42,250
!nIcrcsI 7,000
_______ P& L b9,500
28,750 28,750
PlnI Acc0unI 28,750 l. c/d 28,750
Ycr Csh 250,000 Snkng Fund Acc0unI 28,750
_______ Csh 3,250
250,000 250,000
Ycr
. Csh b9,250 lncc c/d b9,250
2. l.b/d b9,250 2 l. c/d 42,250
Csh b9,500
Csh (0uI) 3,500 _______
42,250 42,250
3. l b/d 42,250 3 l. c/d 28,750
Csh b9,500
Csh (nIcrcsI) 7,000 _______
28,750 28,250
4. l b/d 28, 750
Thc !nvcsImcnI wll bc s0ld I0r 28,750 whch, ddcd I0 Ihc csh 0I 3,250
rcccvcd I0r scrp vluc 0I Ihc 0ld plnI, wll pr0vdc 250,000 I0wrds Ihc
c0sI 0I ncw plnI.
55
Snkng Iund cn bc pr0vdcd I0 wrIc 0II l0n dcbcnIurc 0r n sscI n
csc 0I m0rIsI0n. whcrc dcbcnIurc s rcdccmblc I Ixcd dIc,
snkng Iund cn bc ccumulIcd by IrnsIcrrng cqul m0unIs 0uI 0I
pr0IIs I0 crcIc snkng Iund cc0unI. SmulInc0usly, sum
cquvlcnI I0 Ihc m0unI 0I cch IrnsIcr wll bc nvcsIcd n sccurIcs
I0 crcIc snkng Iund nvcsImcnI whch, wIh c0mp0und nIcrcsI I
spccIcd rIc, wll sum up I0 Ihc m0unI rcqurcd I0 py Ihc dcbI.
Snkng Iund I0 rcdccm l0n lblIy, cIc.
0r Cr
() 0n scIIng sdc Ihc P & L Acc0unI Snkng Fund
nsIlmcnI nnuIy Acc0unI
(b) 0n nvcsIng Ihc nsIlmcnI Snkng Fund Csh Acc0unI
!nvcsImcnI Acc0unI
(c) 0n rcccpI nd rcnvcsImcnI Csh Acc0unI Snkng Fund Acc0unI
0I nIcrcsI 0n nvcsImcnI Snkng Fund Csh Acc0unI
!nvcsImcnI Acc0unI
(d) 0n rcdcmpI0n 0I dcbcnIurcs Csh Acc0unI Snkng Fund
!nvcsImcnI Acc0unI
0cbcnIurc Csh Acc0unI
Snkng Fund 0cncrl Rcscrvc
Acc0unI Acc0unI.
Sphcrc C0mpny LmIcd b0rr0wcd 5,000,000 Ihr0ugh dcbcnIurcs nd
grccd I0 rcdccm Ihc m0unI I Ihc cnd 0I 5 ycrs by mcns 0I Snkng
Fund.
Prcprc Ihc ncccssry cc0unIs.
Csh 5,000,000 l c/d 5,000,000
Rcscrvc 5,000,000 l c/d 5,000,000
Snkng Iund nvcsImcnI 5,000,000 l c/d 5,000,000
Snkng Fund Acc0unI 5,000,000 Snkng Fund Acc0unI 5,000,000
5b
Agb0n - mgbc LId hs ssucd 2.5m 7pcrccnI dcbcnIurcs I pr, 0n 1nury
2007. Thc Icrms ncludc IhI Ihc c0mpny sh0uld pr0vdc snkng Iund I0r
rcdcmpI0n 0n 3 0cccmbcr, ycr lIcr. !I s sccrIncd IhI Ihc nnul sum
I0 bc scI sdc I0r Ihc Ihrcc ycrs I 5 c0mp0und nIcrcsI, I0 ccumulIc I0
.00, s 0.37209.
() C0mpuIc Ihc IrsI nvcsImcnI I0 bc mdc 0n 3 0cccmbcr, I0ll0wng Ihc
ssuc,
(b) Sh0w |0urnl cnIrcs I0r Ihc IrsI Iw0 ycrs, nd
(c) lcdgcr cc0unIs I0r Ihc Ihrcc ycrs.
() Am0unI I0 bc scI sdc.
2.5m x 0.37209 = 793,022.5
(b) 10urnl EnIrcs
() Snkng Fund Acc0unI 793,022.5
Csh Acc0unI 793,022.5
cng nnul sum nvcsIcd
I 5 p. n 0cc. 2008
() Csh Acc0unI 39,500
Snkng Fund Acc0unI 39,500
cng nIcrcsI rcccvcd 0n
N793,022.5 I 5 p.
() Snkng Fund !nvcsImcnI Acc0unI 39,500
Csh Acc0unI 39,500
cng nvcsImcnI 0I nIcrcsI rcccvcd
(c) ()
'm 'm
3 0cc. 2009 Csh 2.5 0cbcnIurc Rcdccmcd 2.5
()
3 0cc. 200b Csh 793,022.5 3 0cc. 200b bl c/I 793,022.5
1n. 2007 bl b/d 793,022.5 3 0cc. 2007 bl c/I ,b25,b9b
Csh 793,022.5
!nIcrcsI I 5
0n (793,022.5) 39 ,b5
,b25,b9b ,b25,b9b
1n 2008 l b/I ,b25,b9b 3 0cc. 2008 Csh 2,500,000
0cc. 2008 Csh 793,022.5
57
!nIcrcsI 8,284.8 _________
2,500,000 2,500,000
Thc dIIcrcnccs bcIwccn Ihc usc 0I Snkng Fund I0r sscIs rcplccmcnI
nd dcbcnIurc 0r l0n rcpymcnI, rc:
() Am0unI scI sdc I0r Ihc snkng Iund I0r wrIng 0II Ihc sscI s
dcbIcd I0 pr0II nd l0ss cc0unI, whcrcs I0r Ihc rcdcmpI0n 0I
dcbcnIurcs, I s dcbIcd I0 Ihc ppr0prI0n cc0unI.
Thc dIIcrcncc n Ihc IrcImcnI s duc I0 Ihc IcI IhI 0nc s
dcInIc chrgc I0r dcprccI0n whlsI Ihc 0Ihcr s mcrcly n
ppr0prI0n I0 prcvcnI Ihc m0unI scI sdc Ir0m bcng uscd
s dvdcnd, unIl Ihc dcbI s rcpd.
(b) whcn Ihc sscI s wrIIcn 0II, Ihc Iund nd Ihc sscIs rc clcrcd
unIl ncw sscI s purchscd whlsI Ihc nvcsImcnI cc0unI
rcmns. whcrcs, n dcbcnIurc rcdcmpI0n, Ihc nvcsImcnI nd
Ihc dcbcnIurc rc clcrcd buI Ihc Iund rcmns nd s vlblc
I0r dsIrbuI0n.
() An nvcsImcnI c0uld bc cIhcr Ixcd nIcrcsI sccurIcs (dcbcnIurcs
/ l0n sI0cks) 0r cquIcs.
(b) Thc nvcsImcnI n Ixcd nIcrcsI sccurIcs, IIrcIs Ixcd nIcrcsI,
0n Ihc n0mnl vluc 0I Ihc nvcsImcnI, whch my bc pyblc
nnully, scmnnully 0r qurIcrly.
(c) Thc vluc 0I Ihc nvcsImcnI s Ihc (u0Icd Prcc x N0mnl \luc)
plus 0Ihcr c0sI (I purchscd) 0r Lcss 0Ihcr c0sI (I s0ld).
(d) F0r Ihc Ixcd nIcrcsI sccurIcs, Ihc nvcsImcnI cn bc purchscd
/ s0ld cumdv / nIcrcsI (ncludng 0vdcnd) 0r cxdv / !nIcrcsI
(cxcludng dvdcnd).
Cum - dv s sIuI0n whcn Ihc prcc ncludcs Ihc rghI 0I buycr I0
rcccvc Ihc ncxI nsIlmcnI 0I nIcrcsI, ncludng subscqucnI
nsIllmcnIs 0I nIcrcsI.
Exdv s sIuI0n whcn prcc d0cs n0I ncludc Ihc rghI 0I buycr I0
rcccvc Ihc ncxI nsIlmcnI 0I nIcrcsI. Hc s Ihcn cnIIlcd I0 subscqucnI
nsIllmcnIs 0I nIcrcsI. All prccs rc Cumdv unlcss whcn
spccIclly sIIcd I0 bc cxdv.
58
() C0mpuIc ncI purchsc prcc s:
(u0Icd Prcc x N0mnl \luc) +
SImp duIy, br0kcrgc cIc.
_
Accrucd !nIcrcsI.
() 0R !nvcsImcnI A/c (cpIl c0lumn) wIh Ihc purchsc prcc
0R Accrucd !nIcrcsI Acc0unI (!nc0mc c0lumn) wIh Accrucd
nIcrcsI
CR nk A/c }wIh Purchsc Prcc
() 0R nk A/c }
CR !nvcsImcnI A/c (!nc0mc C0lumn) } wIh nIcrcsI ncludng
} Ihc mmcdIc 0nc.
(b)
() C0mpuIc purchsc prcc s: (qu0Icd prcc x n0m. vluc) + sImp
duIy br0kcrgc cIc.
() 0R !nvcsImcnI A/c (cpIl c0lumn) } wIh purchsc prcc
CR nk A/c }
() 0R !nvcsImcnI A/c (cpIl c0lumn) } wIh nIcrcsI
CR !nvcsImcnI A/c (nc0mc c0lumn) }
(v) 0R nk A/c } wIh Ihc nsIllmcnIs 0I
CR !nvcsImcnI A/c (nc0mc c0lumn) } nIcrcsI cxcludng Ihc
} mmcdIc ncxI 0nc.
(c)
() ClculIc NET Pr0cccds s : (qu0Icd prcc x n0m. vluc) -
(r0kcrgc, SImp duIy cIc. + Accrucd nIcrcsI)
() 0R nk A/c wIh NcI Pr0cccds
CR !nvcsImcnI A/c (!nc0mc C0lumn) wIh ccrucd nIcrcsI
CR !nvcsImcnI A/c (CpIl C0lumn) wIh blncc ncI pr0cccds
() ClculIc Pr0II / L0ss 0n Slcs = NcI Pr0cccds C0sI
whcrc C0sI = N0m. \luc 0I !nv. S0ld x Avcrgc C0sI
N0m. \luc 0I T0Il !nvcsImcnI
nd Avcrgc C0sI = Purchsc Cum 0v NcI Purchsc Prcc
Purchsc Ex 0v = Purchsc Prcc plus nIcrcsI
(v) 0R P & L A/c } wIh l0ss 0n slc
CR !nvcsImcnI A/c (cpIl c0lumn) }
0R !nvcsImcnI A/c (cpIl c0lumn) } wIh pr0II 0n slc
CR P & L A/c }
(v) 0R nk A/c }
CR !nvcsImcnI A/c (nc0mc c0lumn) } wIh nIcrcsI 0n NcI
!nvcsImcnI, IhI s,
59
Purchscs - Slcs s
Ir0m mmcdIc ncxI
nsIlmcnI.
(d)
() ClculIc Ihc ncI pr0cccds (s n slcs cum dv)
() ClculIc Ihc nIcrcsI 0n Ihc sccurIcs s0ld Ir0m Ihc dIc 0I slcs I0
Ihc dIc 0I ncxI nsIlmcnI.
() 0R nk A/c }
CR !nvcsImcnI A/c (cpIl c0lumn) } wIh ncI pr0cccds.
(v) 0R !nvcsImcnI A/c (nc0mc c0lumn) }
CR !nvcsImcnI A/c (cpIl c0lumn) } wIh nIcrcsI n sIcp 2
(v) ClculIc Pr0II/L0ss 0n dsp0sl = NcI Pr0cccds+!nIcrcsI - C0sI
whcrc C0sI = N0m. \l. 0I !nv. S0ld x Avcrgc C0sI
N0m. \l. 0I T0Il !nv.
Thc currcnI prcIcc s n0I I0 mkc n pp0rI0nmcnI 0I dvdcnd 0n
purchsc 0r slcs 0I cquIcs, cIhcr cum 0r 'cx' dvdcnd. Thc Iull c0sI
0I nvcsImcnI ncludng cxpcnscs rc dcbIcd I0 Ihc cpIl c0lumn.
() 0R !nvcsImcnI A/c (n0mnl c0lumn) } wIh c0sI 0I nvcsImcnI
CR nk A/c } ncludng cxpcnscs.
(b) 0R !nvcsImcnI A/c (n0mnl c0lumn) } wIh 0nus Shrcs (Scrp
CR nk A/c } !ssuc)
(c) 0R !nvcsImcnI A/c (cpIl c0lumn) } wIh m0unI pd I0
CR nk A/c } purchsc Ihc rghI
Ikcnup.
(d) 0R nk A/c } wIh slcs pr0cccds 0n
CR !nvcsImcnI A/c (cpIl c0lumn) } Ihc rghI s0ld
(N0 rcc0rd wll bc mdc s rcgrd
Ihc N0mnl \luc)
(c) 0R nk A/c } wIh dvdcnd rcccvcd
CR !nvcsImcnI A/c (nc0mc c0lumn) }
whcn Iw0 prccs rc qu0Icd n qucsI0n c.g. b0k I0 75k, Ihc l0wcr s
Ihc purchsc prcc whlsI Ihc hghcr s Ihc slcs prcc. F0r blncc shccI
purp0scs, Ihc mdmrkcI prcc s Ikcn.
Thc I0ll0wng IrnscI0ns 0I Ay0 !nvcsImcnIs LId I00k plcc durng Ihc
ycr cndcd 1unc 30, 2008.
/7/2007 - Purchscd 20,000 4 Rvcrs SIIc 0cvcl0pmcnI
SI0ck (!nIcrcsI Pyblc Fcbrury & AugusI) I b0

/
2

- Purchscd 300,000 9 Trcsury ll I b8 (!nIcrcsI

pyblc 0cI & Aprl).
b0
r0kcrgc nd 0Ihcr cxpcnscs m0unIcd I0 ,000.
2/7/2007 - Purchscd 200,000 0rdnry shrcs cch n N0C PLC
I0r 400,000.
/8/2007 - Rcccvcd hlIycr's nIcrcsI 0n 4 Rvcr SIIc 0cv.
SI0ck.
5/8/2007 - N0C PLC mdc b0nus ssuc 0I 3 0rdnry shrcs I0r
cvcry 2 hcld. 25,000 unIs 0I Ihc b0nus ssuc ws s0ld
I0r 0 cch.
30/8/2007 - Purchscd 50,000 9 Trcsury bll I 70 cx - dv
/0/2007 - Rcccvcd nIcrcsI 0n 9 Trcsury bll
- Purchscd 50,000 0rdnry Shrcs 0I cch n 0PC
PLC I 7.75 cch.
2/0/2008 - S0ld 30,000 4 Rvcr SIIc 0cv. SI0ck I b cx dv..
/02/2008 - Rcccvcd hlI - ycr's nIcrcsI 0n 4 Rvcr SIIc 0cv.
SI0ck.
/03/2008 - Rcccvcd 0vdcnd 0I 8 0n shrcs n N0C PLC.
/04/2008 - Rcccvcd nIcrcsI 0n 9 Trcsury bll.
- 0PC PLC mdc rghI ssuc 0n Ihc bss 0I ' I0r 2' I
5 / shrc. HlI 0I Ihc rghI ws s0ld 0n Ihc mrkcI I0r
2.50 pcr shrc.
0/0b/2008 - Rcccvcd 0vdcnd 0I 2

/
2
0n shrcs n 0PC Plc.
Y0u rc rcqurcd I0 wrIc up Ihc rclcvnI nvcsImcnI cc0unIs s Ihcy w0uld
ppcr n Ihc b00ks 0I Ay0 !nvcsImcnIs LmIcd I0r Ihc ycr cndcd 30 1unc
2008.
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
/7/07 nk Purchsc 20,000 2000 70,b00 /8/07 nk !nIcrcsI 2,400
2//08 Ad|. I0r Exdv 00 2//08 nk Slcs 30000 8,300
30//08 !nvcsImcnI !nc0mc 4200 2//08 Ad|. I0r Exdv 00
30//08 P & L A/c 750 2//08 nk !nIcrcsI 2,400
30/b/08 l. C/d 90,000 ,500 52,950
20,000 b300 7,350 20,000 b300 7,350
/7/04 l. /d 90,000 ,500 52,950
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
2/8/07 nk Purchsc 200,000 400,000 5/8/07 nk Slcs 250,000 250,000
5/8/07 0nus !ssuc 300,000 /3/08 nk dvdcnd 22,500
/3/08 !nvcsImcnI !nc0mc 22,500 30/b/08 l. C/d 250,000 200,000
3/b/08 Pr0II 0n 0sp0sl _______ ______ 50,000 _______ _____ ______
500,000 22,500 450,000 500,000 22,500 450,000
/7/08 l. /d 250,000 200,000
b
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
/0/07 nk Purchsc 50,000 387,500 /4/08 nk Slcs
0I RghI 3,25b
/4/08 nk RghI 2,500 b2,500 /b/08 nk 0v 7,82.50
30/b/08 !nvcsImcnI !nc0mc _____ 7,82.50 ______ 30/b/08 l. C/d b2,500 48,750
b2,500 7,82.50 450,000 b2,500 7, 82.50 450,000
/7/08 l. /d b2,500 48,750
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
/7/07 nk Purchsc 300,000 b,750 98,250 30/8/07 nk Slcs 0I RghI ,25
30/8/07 Purchsc 50,000 05,000 /0/07 nk !nIcrcsI 3,500
30/8/07 Ad|. I0r Ex0v ,25 /4/08 nk !nIcrcsI 20,250
30/b/08 !nvcsImcnI !nc. 34,875 30/b/08 l.C/d 450,000 b,750 304,375
450,000 4,b25 304,375 450,000 4,b25 304375
/7/04 l. /d 450,000 b,750 304,375
SccurIcs n Ixcd nIcrcsI (l0n SI0ck), rc n0rmlly qu0Icd n unIs 0I
00, unlcss 0Ihcrwsc spccIcd.
Purchsc Prcc 0I 4 Rvcrs SIIc 0cv SI0ck wll bc:
20,000 x 0.b05 = 72,b00
Accrucd !nIcrcsI = 5 / 2 x 4 x 20,000 (2,000)
70,b00
An undcrwrIcr s 0nc wh0 undcrIkcs I0 Ikc 0vcr shrcs n0I purchscd
whcn Ihcy rc bcng 0IIcrcd I0r slc I0 Ihc publc 0r by prvIc plccmcnI,
n rcIurn I0r n grccd c0mmss0n. Thc I0ll0wng Icrmn0l0gcs rc
rclcvnI:
() Ths s Ihc c0mmss0n n
undcrwrIcr rcccvcs 0n Ihc vluc 0I shrcs hc undcrwrIcs. Ths
s bscd 0n Ihc 0rgnl c0nIrcI, 0n Ihc p0rI0n cIully
Ikcn up.
(b) Ths s Ihc c0mmss0n Ihc
prncpl undcrwrIcr wll py I0 subundcrwrIcr n csc hc
cnIcrs nI0 subundcrwrIng grccmcnI n 0rdcr I0 sprcd Ihc
rsk. Ths s bscd 0n Ihc 0rgnl vluc 0I Ihc c0nIrcI nd N0T
0n Ihc p0rI0n Ikcn up.
(c) Ths s Ihc ddI0nl c0mmss0n pd
I0 Ihc prncpl undcrwrIcr n csc 0I subundcrwrIng
grccmcnI.
b2
(d) Ths s Ihc numbcr 0I shrcs, whch wll bc
ll0IIcd I0 Ihc prncpl undcrwrIcr n ddI0n I0 Ihc pr0p0rI0n
I0 bc undcrwrIIcn, 0n Ihc rcsduc, n0I Iully subscrbcd by Ihc
publc.
0pcn scprIc cc0unI I0r cch undcrwrIng c0nIrcI
Pr0vdc scprIc c0lumns I0r shrcs nd csh
() 0R: UndcrwrIng A/c } wIh pplcI0n nd ll0ImcnI pr0cccds,
CR: Csh / nk A/c } n rcspccI 0I shrcs Ikcn 0vcr.
!I Ihcrc s ny cxccss pymcnI 0n pplcI0n duc I0 Ihc dvncc
pymcnI, Ihc cxccss wll bc scI0II gnsI ll0ImcnI m0ncs.
(b) 0R: nk / Csh A/c }
CR: UndcrwrIng A/c } wIh C0mmss0n Rcccvcd
(c) 0R: UndcrwrIng A/c }
CR: nk / Csh A/c } wIh C0mmss0n pd I0 subundcrwrIcr
!I shrcs rc rcccvcd I0r rcmuncrI0n, 0R Ihc shrcs c0lumn 0nly
(d) 0R: UndcrwrIng A/c }
CR: nk / Csh A/c } wIh Ihc 0pI0n pd I0r
(c) 0R nk / Csh A/c }
CR UndcrwrIng A/c } wIh 0pI0n m0ncy Rcccvcd
(I) 0R: UndcrwrIng A/c } wIh ncdcnIl cxpcnscs 0n
CR: nk / Csh A/c } undcrwrIng c0nIrcI
(g) 0R: UndcrwrIng A/c }
CR: P & L A/c } wIh pr0II 0n undcrwrIng c0nIrcI
(h) 0R P & L A/c }
CR UndcrwrIng A/c } wIh l0ss 0n undcrwrIng c0nIrcI
() 0R Cl0sng sI0ck 0I } wIh vluc 0I cl0sng sI0ck 0I uns0ld
Uns0ld shrcs } shrcs.
CR UndcrwrIng A/c }
Fr0nIlnc LId dccdcd I0 ssuc ,000,000 shrcs 0I .00 cch I pr, 0k0b0
pyblc 0n pplcI0n, 40k0b0 0n ll0ImcnI nd 50k0b0 0n IrsI nd Inl
cll. Ynkus LId, Inncc c0mpny, grccs I0 undcrwrIc Ihc wh0lc ssuc, I
c0mmss0n 0I 2.5 nd I0 pply Irm I0r 200,000 shrcs. Ynkus LId rrngcd
wIh Funky LId IhI Ihcy subundcrwrIc 25 0I Ihc shrcs I0r c0mmss0n 0I
2.
b3
Thc publc pplcs I0r nd ws ll0IIcd 400,000 shrcs nd Ynkus LId ws
ll0IIcd Ihc Irm's pplcI0n I0r 200,000 shrcs.
Ynkus LId hd dcp0sIcd chcquc dcsgncd I0r Ihc pplcI0n m0ncy 0n shrcs
undcrwrIIcn nd Funky LId n Iurn, hd dcp0sIcd Ihc rclcvnI chcqucs nd
whch clcrcd whcn Ihc rcsulI 0I Ihc ssuc bccmc kn0wn nd c0mmss0n duc
ws pd.
AIIcr ll0ImcnI nd bcI0rc Inl pymcnI, Ynkus LId s0ld 00,000 shrcs I
45k cch, hvng mdc Ihc Inl pymcnI. Ynkus LId Ihcn s0ld 250,000 shrcs
I 0k cch.
AI Ihc cnd 0I Ihc Inncl ycr 0I Ynkus LId, shrcs 0I Fr0nIlnc LId, wcrc
vlucd I 20k cch.
Y0u rc rcqurcd I0 prcprc Ihc UndcrwrIng Acc0unI 0I Ynkus LId rcIlccIng
Ihc b0vc IrnscI0ns.
nk Frm ApplcI0n. 500,000 50,000 nk- C0mm. Rcc'd 25,000
nkShrcs Ikcn 0n All0I 200,000 nk - Slcs 00,000 45,000
nk - Fnl Cll 200,000 nk - Slcs 250,000 275,000
nkc0mm Pd 5,000 l c/d 50,000 50,000
P & L A/c _______ 40,000 _______ _______
500,000 495,000 500,000 495,000
l b/d 50,000 50,000
Shrc Ikcn 0vcr:
Frm ApplcI0n
T0Il !ssuc ,000,000
Frm ApplcI0n (200,000) 200,000
Publc SubscrpI0n (400,000)
400,000
SubUndcrwrIng (00,000) 300,000
500,000
0nly SI0ckbr0kcr wh0 s mcmbcr 0I Ihc Ngcrn SI0ck Exchngc s
ll0wcd I0 dcl n qu0Icd sI0cks nd shrcs 0n bchlI 0I hs clcnIs, 0n
Ihc cpIl mrkcI's Irdng Il00r.
A sI0ckbr0kcr buys 0r sclls sI0cks nd shrcs bscd 0n hs clcnI's
nsIrucI0n I prcc dcIcrmncd dly 0n Ihc Il00r 0I Ihc Exchngc by
mrkcI I0rccs. AIIcr buyng 0r scllng, Ihc sI0ckbr0kcr wll scnd I0 hs
clcnI c0nIrcI n0Ic dcIlng Ihc unI prcc, qu0II0n 0I shrcs b0ughI
b4
0r s0ld, c0mmss0ns nd chrgcs pyblc 0r rcccvblc 0n Ihc
IrnscI0n.
A summry 0I Ihc bsc d0ublc cnIrcs n Ihc b00ks 0I Ihc sI0ckbr0kcr s
scI 0uI bcl0w:
() ClcnI 10bbcr c0mmss0n Prcc pd I0r shrcs SI0ckbr0kcrs
rcccvblc sImp cc0unI C0mmss0ns sImp duIy 0n
c0nIrcI sImp cc0unI Purchsc c0nIrcI sImp.
(b) 10bbcr 0ughI 0ughI TckcI Acc0unIs Mkcup prcc 0I shrcs plus
SImp Acc0unI sImp duIy.
(c) 10bbcr 0r Csh Csh 0r 10bbcr 0IIcrcncc bcIwccn prcc pd I0r
shrcs nd mkcup prcc
(plus sImp duIy).
(d) Csh ClcnI Csh rcccvcd Ir0m clcnI.
(c) TckcI Acc0unI Csh Csh pd I0 sI0ck cxchngc I0r
purchscs durng Ihc cc0unI.
(I) C0nIrcI s0ld cc0unI Csh M0nIhly pymcnI I0 Ihc !nlnd
cc0unI Rcvcnuc.
(g) C0mmss0n
Rcccvblc Pr0II & L0ss Acc0unI C0mmss0n Erncd.
() 10bbcr ClcnI c0mmss0n rcccvblc NcI Pr0cccds scllng C0mmss0n
Acc0unI, c0nIrcI sImp
c0nIrcI sImp cc0unI.
(b) TckcI Acc0unI 10bbcr !nlnd Rcvcnuc Mkcup prcc 0I shrcs s0ld plus
buycr's sImp duIy.
(c) Csh 0r 10bbcr 10bbcr 0r Csh 0IIcrcncc bcIwccn gr0ss pr0cccd
pr0cccds nd mkcup prcc
(d) !nlnd Rcvcnuc Csh SImp duIy pd 0n bchlI 0I Ihc
buycr.
(c) C0nIrcI sImp Csh M0nIhly pymcnI I0 Ihc !nlnd
Rcvcnuc.
(I) Csh TckcI Acc0unI Csh rcccvcd Ir0m Ihc SI0ck
Exchngc I0r slcs.
(g) ClcnI Csh PymcnI I0 clcnI 0I ncI pr0cccds.
(h) C0mmss0n
Rcccvblc A/c Pr0II & L0ss Acc0unI C0mmss0n I0r cc0unIng pcr0d.
!n prcIcc, C0nIrcI 10urnl wll bc uscd I0r Ihc cnIrcs 0I purchscs nd
slcs.
b5
Mr. 10hns0n, sI0ckbr0kcr, crrcd 0uI Ihc I0ll0wng nsIrucI0ns I0r hs
clcnIs:
Fr0m Mr. Ay0dclc - Purchscd 2000 shrcs 0I Cdbury Plc I 72
Fr0m Mr. Ay0dclc - Purchscd 000 shrcs 0I Unlcvcr Plc @ 80
Fr0m Mr. Admu - S0ld 2000 shrcs 0I 0C 0scs Plc @ 5
Fr0m Mr. 0k0r0 - Purchscd 0,000 shrcs 0I Tcxc0 Plc @ 00
Fr0m Mr. 0k0r0 S0ld 5000 shrcs 0I Ngcrn rcwcrcs Plc @ b0
SI0ckbr0kcrs c0mmss0n s nd sImp duIy 0I s pyblc 0n cvcry
IrnscI0n.
Prcprc C0nIrcI 10urnl 0I Ihc SI0ckbr0kcr.
0Ic Nmc 0I PrIy 0cs. 0I Prcc T0Il Nmc 0I 0cs. 0I SImp
SccurIcs \luc PrIy SccurIcs 0uIcs
N N & C0mm N
Ay0dclc 2000
Cdbury Plc 72 4b,880 0clcr 2,880 44,000
Ay0dclc 000
Unlcvcr Plc 80 8,b00 0clcr ,b00 80,000
2000 0C
0clcr 5 0,000 Admu 0scs Plc 200 9,800
200
0k0r0 0,000
Tcxc0 Plc 00 ,020,000 0clcr 20,000 ,000,000
0clcr 5000 Ng
b0 300,000 0k0r0 rcwcrcs b,000 294,000
() (2) (3)
() Ech Icm s dcbIcd I0 0clcr 0r ClcnI Acc0unI
(b) HlI crcdIcd I0 sImp duIcs cc0unI nd HlI crcdIcd I0 c0mmss0n
A/c
(c) Ech Icm crcdIcd I0 dclcr 0r clcnI A/c.
!nvcsImcnI TrusIs, I0gcIhcr wIh UnI TrusIs, I0rm gr0up 0I Inncl
nIcrmcdrcs, wh0sc mn IuncI0n s I0 cnblc nvcsI0rs I0 sprcd
Ihcr rsks nd 0bIn Ihc dvnIgcs 0I pr0Icss0nl mngcmcnI 0I
Ihcr nvcsImcnIs. Thcy gcncrlly h0ld Ihc shrcs 0I wdc rngc 0I
c0mpncs, nd Ihus Ihc purchscr 0I shrcs n TrusI, sprcds hs Iunds
n smll cc0unIs 0vcr lrgc numbcr 0I cxpcrIly sclccIcd mngcd
nvcsImcnIs.
bb
Thcrc rc mp0rInI dsIncI0ns bcIwccn !nvcsImcnI TrusIs nd UnI
TrusIs. Thc mn dIIcrcncc bcng IhI n !nvcsImcnI TrusI s n0I rclly
IrusI I ll, buI lmIcd lblIy c0mpny 0pcrIng undcr CAMA
(2004), whcrcs UnI TrusI 0pcrIcs undcr IrusI dccd.
An nvcsImcnI IrusI rscs Is cpIl by ssung shrcs I0 Ihc publc, n
Ihc n0rml wy nd uIlzcs Ihc Iunds 0bIncd I0 nvcsI n 0Ihcr
sccurIcs.
!nvcsImcnI IrusIs dsIrbuIc dvdcnds nnully, 0uI 0I Ihc nc0mc Ihcy
rcccvc Ir0m Ihcr nvcsImcnI sscIs, IIcr ll0wng I0r cxpcnscs 0I
dmnsIrI0n nd ll0cI0n I0 rcscrvcs.
As lmIcd lblIy c0mpny, nvcsImcnI IrusI c0mpncs musI c0mply
wIh Ihc pr0vs0ns 0I CAMA (2004).
H0wcvcr, Ihc IrcImcnI nd dcIls 0I nc0mc Ir0m nvcsImcnIs n Ihc
Rcvcnuc Acc0unI (s Ihc Pr0II nd L0ss cc0unI 0I n !nvcsImcnI TrusI
C0mpny s c0nvcncnIly Icrmcd), sh0uld n0rmlly bc sh0wn by wy 0I
n0Ic.
Any 0I Ihc I0ll0wng Iw0 I0rmIs c0uld bc d0pIcd:
()
0vdcnds nd !nIcrcsI X
RclIvc cxplnI0ry N0Ic I0 Rcvcnuc Acc0unI:
N0Ic 3 0vdcnds nd !nIcrcsI:
u0Icd !nvcsImcnI XX
Unqu0Icd !nvcsImcnI XX
X
(b)
!nIcrcsI nd 0vdcnds 2 X
N0Ic 4 !nIcrcsI nd 0vdcnds, hvc bccn
rcccvcd Ir0m nvcsImcnIs s I0ll0ws:
u0Icd 0n Ngcr SI0ck Exchngc XX
u0Icd 0n 0Ihcr SI0ck Exchngc XX
Unqu0Icd XX
!nvcsImcnI Funds 0n 0cp0sI XX
X
UnI IrusI, s n 0rgnzI0n wh0sc 0b|ccIvc s Ihc c0llccIvc nvcsImcnI
0I m0ncy subscrbcd by Is mcmbcrs.
Thcrc rc Ihrcc prIcs I0 Ihc TrusI: Thc Mngcrs, Ihc TrusIccs nd Ihc
H0ldcrs. UnIs rc usully vlucbscd, IhI s, Ihc currcnI vluc 0I Ihc
p0rII0l0 plus cshnhnd nd I nk (IhI s, unnvcsIcd Iunds).
b7
() nk A/c
(b) UnI CpIl A/c
(c) !nvcsImcnI A/c
(d) SIIcmcnI 0I \luI0n
(c) SIIcmcnI 0I Fnncl P0sI0n
() 0R: nk A/c } wIh m0ncy l0dgcd 0n Ihc
CR: UnI CpIl A/c } subscrpI0n 0I unIs by unI h0ldcr
(b) 0R !nvcsImcnI A/c } wIh Purchsc 0I SccurIcs
CR nk A/c }
(c) 0R: nk A/c } wIh dvdcnds / nc0mc rcccvcd 0n
CR: !nvcsImcnI A/c } nvcsImcnI
(d) 0R: UnI CpIl A/c } wIh Ihc pymcnI I0 rcsgnng
CR: nk A/c } mcmbcr
Rcsgnng mcmbcr wll bc pd bscd 0n prcvlng vluc pcr UnI I
hs / hcr rcsgnI0n.
F0rIy (40) pc0plc cmc I0gcIhcr I0 I0rm Y0mmy UnI TrusI nd Ihcy
hvc pp0nIcd y0u s Ihc IrusIcc. Thc rulc 0I Ihc IrusI pr0vdcs IhI
cch mcmbcr wll subscrbc 0nc unI pcr m0nIh, Ihc vluc 0I unI
bcng dcIncd s:
Thc unI vluc shll bc 5,000 I Ihc IrsI m0nIhly mccIng. ThcrcIIcr,,
I cch m0nIhly mccIng, Ihc IrusI p0rII0l0 shll bc vlucd I Ihc
m0nIhly mrkcI prcc (s sh0wn n Ihc SI0ck Exchngc lsIng), I0 whch
shll bc ddcd ny unnvcsIcd csh blncc, nd Ihc I0Il sum dvdcd
by Ihc numbcr 0I unIs subscrbcd I0r I0 dIc, I0 gvc Ihc currcnI unI
vluc.
Any mcmbcr wh0 wshcs I0 rcsgn, s pd n csh, Ihc vluc 0I Ihc unIs
hc/shc hs subscrbcd I0r, upI0dIc. Thc vluc I0r Ihs purp0sc, s Ihc
currcnI unI vluc, Ixcd I Ihc mccIng I whch hc gvcs hs nIcnI0n
I0 wIhdrw.
AI Ihc IrsI m0nIhly mccIng, Ihc mcmbcrs grccd I0 purchsc 8000
Unquc Pr0ducIs Plc 0rdnry Shrcs I 22.50 cch nd Ihc blncc
0I csh n hnd, crrcd I0rwrd.
AI Ihc ncxI mccIng, Ihcsc shrcs wcrc qu0Icd I 24.50 nd wIh
m0nIhly subscrpI0n Ihcy dccdcd I0 buy b,000 Exccl PLC 0rdnry
shrcs I 4 cch. y Ihc Imc mcmbcrs mcI I0r Ihc Ihrd mccIng,
Unquc Pr0ducIs PLC 0rdnry shrcs wcrc qu0Icd I 24 nd Exccl PLC
0rdnry shrcs I 2.50 nd I ws grccd I0 buy b0,000 0rdnry
b8
shrcs 0I kcrs Plc I 3 cch. Tw0 mcmbcrs rcsgncd I Ihs mccIng
nd Ihcy wcrc gvcn rcIund 0I Ihcr unIs n csh, I Ihc grccd vluI0n.
0n Ihc dy 0I Ihc I0urIh mccIng, Ihc shrcs n Ihc IrusI's p0rII0l0 wcrc
vlucd s I0ll0ws:
Unquc Pr0ducIs PLC 24
Exccl PLC 3
kcrs PLC 3
0n IhI dy 5,000 nd 7,000 wcrc rcccvcd s dvdcnds 0n Unquc nd
Exccl rcspccIvcly.
Y0u rc rcqurcd I0:
() ClculIc Ihc unI vluI0n 0n Ihc dy 0I Ihc I0urIh mccIng.
(b) Prcprc drII sIIcmcnI IhI wll clcrly c0nvcy I0 Ihc mcmbcrs Ihc
IrusI's Inncl p0sI0n, 0n IhI dIc.
(c) Sh0w ll Ihc cnIrcs n Ihc b00ks 0I Ihc IrusIcc nd Ihc blnccs up I0
Ihc cnd 0I m0nIh 3.
40 M0nIh SubscrpI0ns: 40unIs I 5,000 200,000
Purchscs: 8,000 Unquc 0rd.@ 22.50 cch (80,000)
20,000
40 M0nIh 2 SubscrpI0ns: 40unIs @ 5400 cch 2b,000
Purchscs: b,000 Exccl 0rd.@ 4 cch (224,000)
2,000
M0nIh 3 RcpymcnIs : 4unIs I 5,050 cch (20,200)
38 SubscrpI0ns: 38unIs I 5,050 cch 9,900
Purchscs: b0,000 kcrs 0rd.@ 3 cch (80,000)
3,700
!nvcsImcnI !nc0mc 2,000
5,700
8000 Unquc 0rd. @ 24.50 pcr unI 9b,000
nk lncc I0r M0nIh 20,000
2b,000
N0. 0I UnIs 40
\luc / UnI (2b,000) = 5,400
40
8000 Unquc 0rd. @ 24 92,000
b000 Exccl 0rd.@ 2.50 200,000
b9
392,000
nk lncc I0r M0nIh 2 2,000
404,000
N0. 0I UnIs (40 + 40) 80
\luc / UnI 404,000 = 5,050
80
8,000 Unquc 0rd. @ 24 pcr unI 92,000
b,000 Exccl 0rd.@ 3 pcr unI 208,000
b0,000 kcrs 0rd. @ 3 pcr unI 80,000
580,000
nk lncc I0r M0nIh 3 3,700
583,700
N0. 0I UnIs (80 + 38 4) 4
\luc / UnI 583,700 = 5,20
4
(c)
M0nIh UnI Cp 200,000 M0nIh !nvcsI 80,000
2 UnI Cp 2b,000 2 !nvcsI 224,000
3 UnI Cp 9,900 3 UnI Cp 20,200
3 !nvcsImcnI !nc0mc 2,000 3 !nvcsImcnI 80,000
________ l C/d 5,700
b9,900 b9,900
M0nIh nk 80,000 l C/d 584,000
2 nk 224,000
3 nk 80,000 _______
584,000 584,000
l /d 584,000
M0nIh 3 nk 20,200 M0nIh nk 200,000
l C/d 587,700 2 nk 2b,000
_______ 3 nk 9,900
b07,900 b07,900
l C/d 2,000 M0nIh 4 nk 2,000
70
Ths chpIcr dcIls Ihc d0ublc cnIry prncplcs nd rclIcd b00ks 0I cc0unIs
mnIncd by Ihc 0pcrI0rs 0I !nvcsImcnI nd UnI TrusI C0mpncs, Snkng
Funds nd AnnuIcs, UndcrwrIng nd SI0ckbr0kng Irms.
ExmnI0n Iypc qucsI0ns nd nswcrs wcrc uscd I0 llusIrIc Ihc prncplcs.
. Frm ApplcI0n 0I n UndcrwrIcr s -------------
() Thc numbcr 0I shrcs IhI wll bc ll0IIcd I0 Ihc prncpl undcrwrIcr, n
ddI0n I0 Ihc pr0p0rI0n I0 bc undcrwrIIcn 0n Ihc rcsduc n0I Iully
subscrbcd by Ihc publc.
(b) Thc I0Il numbcr 0I shrcs pplcd I0r by n undcrwrIcr.
(c) Thc numbcr 0I shrcs n0I Iully subscrbcd by Ihc publc.
(d) Thc numbcr 0I shrcs pplcd I0r by Ihc publc.
(c) Thc numbcr 0I shrcs pplcd I0r by n undcrwrIcr nd Ihc publc.
2. Ay !nvcsImcnIs LId, purchscd N20,000 Lg0s SIIc 0cvcl0pmcnI SI0ck I b0

/
2
0n
1uly , 2004. !nIcrcsI s pyblc n Fcbrury nd AugusI. whI s Ihc purchsc
prcc 0I Ihs nvcsImcnI n Ihc b00ks 0I Ay !nvcsImcnI LId!
() N72,b00
(b) N20,000
(c) N70,b00
(d) N70,000
(c) N7,b00.
3. Thc TrusIcc 0I UnI TrusI s N0T cxpccIcd I0 kccp n hs b00ks
() nk Acc0unI
(b) UnI CpIl Acc0unI
(c) n !nvcsImcnI Acc0unI
(d) CrcdI0rs Acc0unI
(c) SIIcmcnI 0I \luI0n.
4. Thc rcc0rd mnIncd by sI0ckbr0kcr whcrc IrnscI0ns cnIcrcd nI0 0n bchlI
0I clcnIs rc rcc0rdcd s cllcd _________________
() Csh b00k
(b) C0nIrcI 10urnl
(c) ClcnIs Lcdgcr
(d) SI0ck Lcdgcr
(c) TrnscI0n 10urnl.
5. 0cIls 0I !nc0mc nd ExpcndIurc 0I n !nvcsImcnI TrusI C0mpny s c0nIncd n
Is __________________
() Pr0II nd L0ss Acc0unI
(b) !nc0mc nd ExpcndIurc
(c) Rcvcnuc Acc0unI
(d) Rcvcnuc nd ExpcndIurc Acc0unI
(c) lncc ShccI.
7
b. SIIc 0nc IuncI0n 0I SI0ckbr0kcr.
7. whI s Ihc mn dsIncI0n bcIwccn n !nvcsImcnI TrusI nd UnI TrusI!
8. 0sIngush bcIwccn nvcsImcnI purchscd 0r s0ld Cum- 0v nd Ex - 0v.
9. wh0 s n UndcrwrIcr!
0. whI s n UndcrwrIng C0mmss0n!
72
73
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
0scuss Ihc Ihc0rcIcl spccIs 0I lcsc cc0unIng.
Apply Ihc vr0us mcIh0ds 0I cc0unIng I0 Inncc chrgcs n Ihc b00ks 0I Ihc
lcss0r nd Ihc lcsscc.
UndcrsInd Ihc cc0unIng I0r hrc purchsc IrnscI0ns.
Prcprc Ihc rclcvnI cc0unIs rclIng I0 hrc purchsc IrnscI0ns.
SIIcmcnI 0I Acc0unIng SIndrds (SAS) N0. sIpulIcs dcIlcd
ppr0prIc IrcImcnI nd dscl0surc 0I lcsc IrnscI0ns n Ihc b00ks
0I b0Ih Ihc lcss0r nd lcsscc.
Ths s c0nIrcIul grccmcnI bcIwccn n 0wncr, Ihc lcss0r, nd n0Ihcr
prIy, Ihc lcsscc, whch c0nvcys I0 Ihc lIIcr, Ihc rghI I0 usc Ihc lcscd
sscI I0r n grccd pcr0d 0I Imc n rcIurn I0r c0nsdcrI0n, usully
pcr0dc pymcnIs cllcd `rcnIs.'
Lcsng rrngcmcnIs rc usully c0nIrcIcd s 0pcrIng lcsc 0r
Inncc / cpIl lcsc.
Ths s 0nc n whch Ihc lcss0r, whlc gvng Ihc lcsscc Ihc usc 0I Ihc
lcscd pr0pcrIy, rcIns prcIclly ll Ihc rsks, 0blgI0ns nd rcwrds
0I 0wncrshp (I0r cxmplc, crly 0bs0lcsccncc nd pprccI0n).
Ths s 0nc n whch 0wncrshp, rsks nd rcwrd rc IrnsIcrrcd I0 Ihc
lcsscc, wh0 s undcr 0blgI0n I0 py such c0sIs s nsurncc,
mnIcnncc nd smlr chrgcs 0n Ihc pr0pcrIy. Usully, Ihc grccmcnI
s n0ncnccllblc nd Ihc lcsscc hs Ihc 0pI0n I0 buy Ihc pr0pcrIy I0r
n0mnl m0unI up0n Ihc cxprI0n 0I Ihc lcsc.
0Ihcr I0rms 0I Fnncc 0r CpIl lcscs rc:
74
() Lcvcrgcd Lcsc s IhrccprIy lcsc nv0lvng lcndcr (0IIcn
Inncl nsIIuI0n) n ddI0n I0 Ihc usul lcss0r nd lcsscc.
Thc lcndcr supplcs, n m0sI cscs, Ihc grcIcr prI 0I Ihc purchsc
prcc 0I Ihc lcscd sscI.
(b) Slcs - Typcd Lcsc s 0nc whcrc Ihc 0IIcr0r 0r dclcr (Ihc Lcss0r)
IrnsIcrs subsInIlly ll Ihc 0wncrshp rsks nd bcncIIs 0I
Ihc pr0pcrIy I0 Ihc lcsscc nd I Ihc nccpI0n 0I Ihc lcsc, Ihc
Ir vluc 0I Ihc lcscd pr0pcrIy s grcIcr 0r lcss Ihn Is crryng
m0unI n Ihc b00ks 0I Ihc lcss0r, rcsulIng n pr0II 0r l0ss I0
Ihc lcss0r, wh0 s 0IIcn mnuIcIurcr 0r dclcr.
(c) 0rccI Fnncc Lcsc s 0nc whch IrnsIcrs subsInIlly ll Ihc
0wncrshp rsks nd bcncIIs 0I Ihc pr0pcrIy I0 Ihc lcsscc nd I
Ihc nccpI0n 0I Ihc lcsc, Ihc Ir vluc 0I Ihc lcscd sscI s Ihc
smc s Is crryng m0unI I0 Ihc lcss0r (0IIcn n0I Ihc
mnuIcIurcr 0r dclcr).
(d) `Slcs nd Lcsc ck' s 0nc n whch Ihc scllcr 0I Ihc pr0pcrIy,
lcscs I bck Ir0m Ihc buycr.
Thc I0ll0wng sIcps rc ncccssry:
ClculIc Ihc I0Il lcsc pymcnIs, IhI s:
!nsIllmcnIl pymcnI x N0 0I !nsIllmcnIs.
C0mpuIc csh /Ir vluc 0I Ihc lcscd pr0pcrIy.
!I my bc gvcn, buI I n0I, clculIc I s I0ll0ws:
() !nsIllmcnIs n rrcrs (IhI s, I ycr cnd)
= !nsIlmcnI (|+r|
n
)
whcrc r = lcsc rcnIl rIc r
n = durI0n 0I Ihc lcsc.
(b) !nsIllmcnIs n dvncc (IhI s, I Ihc bcgnnng 0I Ihc
ycr):
!nsIlmcnI - (+r)
I
+
r
whcrc I = n
n = durI0n 0I Ihc lcsc.
C0mpuIc Ihc dcprccI0n 0n Ihc 0I
Ihc lcscd sscI.
ClculIc Ihc I0Il nIcrcsI 0n Ihc lcsc / Inncc chrgcs:
T0Il lcsc pymcnI xx
Csh / Ir vluc (x)
T0Il lcsc nIcrcsI / Inncc chrgcs x
75
- Fnncc chrgcs my bc sprcd
0vcr Ihc pcr0d 0I Ihc lcsc, usng:
() SIrghI lnc mcIh0d,
(b) Sum 0I Ihc ycrs dgI mcIh0d, nd
(c) AcIurl mcIh0d.
:
Fnncc chrgcs rc dsIrbuIcd cvcnly 0vcr Ihc pcr0d 0I Ihc lcsc nd
rc wrIIcn 0II I0 Pr0II nd L0ss Acc0unI cc0rdngly, IhI s:
Fnncc chrgc__
0urI0n 0I lcsc
Thc Inncl chrgcs wll bc wrIIcn 0II I0 pr0II nd l0ss cc0unI 0n Ihc
bss 0I Ihc sum 0I Ihc ycrs' dgIs. F0r lcscd sscI wIh 3ycrs lIc
spn, Ihc Inncc chrgcs wll bc dsIrbuIcd nI0 cch ycr's pr0II nd
l0ss cc0unI s I0ll0ws:
Ycr 0gI Pr0p0rI0n
3 3/b
2 2 2/b
3 /b
b
!nIcrcsI n cch pcr0d wll bc c0mpuIcd 0n Ihc blncc IIcr dcducIng Ihc
!nsIllmcnIl pymcnIs nd ddng Ihc nIcrcsI duc 0n Ihc csh prcc.
!nIcrcsI
Csh Prcc x x
Ycr !nsIlmcnI x
lncc ycr x
!nIcrcsI: X 0I lncc Ycr x x x
x
Ycr 2 !nsIlmcnI x
lncc ycr 2 x
!nIcrcsI: X 0I lncc Ycr 2 x x x x
x x x
Ycr 3 !nsIllmcnI x
lncc ycr 3 x
!nIcrcsI: X 0I lncc Ycr 3 x_ xx
x x x x
Thc nIcrcsI wll bc chrgcd bcI0rc Ihc !nsIllmcnIl pymcnIs rc
dcducIcd, I I s pyblc n rrcrs.
7b
!nIcrcsI pyblc mcIh0d !nIcrcsI Suspcnsc McIh0d
() Lcscd AsscIs A/c () Lcscd AsscIs A/c
(b) Pr0v. F0r 0cprccI0n A/c (b) Pr0v. F0r 0cprccI0n A/c
(c) Lcss0rs A/c (c) Lcss0rs A/c
(d) Fnncc Chrgcs A/c (d) Fnncc Chrgcs A/c
(c) Pr0II nd L0ss Acc0unI (c) P & L A/c
(I) Fnncc Chrgcs Suspcnsc A/c.
!nIcrcsI Pyblc McIh0d !nIcrcsI Suspcnsc McIh0d
() 0R Lcscd AsscIs cc0unI () 0R Lcscd AsscIs A/c
CR Lcss0r's cc0unI CR Lcss0r's Ac
(wIh csh prcc/Ir vluc 0I lcscd sscIs) (wIh csh prcc/Ir vluc 0I
lcscd sscIs)
(b) 0R Fnncc chrgc A/c (b) 0R !nIcrcsI suspcnsc A/c
CR Lcss0r's A/c CR Lcss0r's A/c
(wIh nIcrcsI I0r cch 0I Ihc pcr0d) (wIh Ihc I0Il lcsc nIcrcsI.)
(c) 0R Lcss0rs A/c (c) 0R Fnncc chrgc A/c
CR nk A/c CR !nIcrcsI suspcnsc A/c
(wIh Ihc !nsIllmcnIl pymcnI) (wIh Ihc nIcrcsI duc I0r cch 0I
Ihc pcr0d)
(d) 0R P & L A/c (d) 0R P & L A/c
CR Fnncc Chrgc A/c CR Fnncc chrgc A/c
(wIh Ihc nIcrcsI duc I0r cch pcr0d) (wIh nIcrcsI duc I0r cch pcr0d)
(c) 0R P & L A/c (c) 0R Lcss0r's A/c
CR Pr0v.I0r 0cpn A/c CR nk A/c
(wIh Ihc dcprccI0n I0r cch pcr0d) (wIh !nsIllmcnIl pymcnI.)
(I) 0R P & L A/c
CR Pr0v. I0r 0cpn A/c
(wIh dcprccI0n I0r cch
pcr0d)
ks Hulgc C0nIrcI0rs LmIcd hs Iw0 lIcrnIvcs. !I c0uld cIhcr
buy 0r lcsc ncw Iruck I c0sI 0I 8mll0n.
Thc Icrms 0I Ihc lcsc rc s I0ll0ws:
() Thc prmry pcr0d 0I Ihc lcsc s I0r 4 ycrs Ir0m 1nury ,
2008, wIh rcnIl rcpymcnI 0I bmll0n pcr nnum, pyblc
0n 0cccmbcr 3 0I cch ycr.
(b) Thc lcsscc hs Ihc rghI I0 c0nInuc I0 lcsc Ihc Iruck IIcr Ihc
cnd 0I prmry pcr0d I0r n ndcInIc pcr0d, sub|ccI I0 0nly
n0mnl rcnI.
(c) Thc lcsscc s rcqurcd I0 py I0r rcprs, mnIcnncc nd
nsurncc c0sI s Ihcy rsc.
(d) Thc nIcrcsI rIc mplcI n Ihc lcsc s 5 pcr nnum.
(c) Thc lcsscc csImIcd IhI Ihc uscIul cc0n0mc lIc 0I Ihc Iruck s
b ycrs nd IhI dcprccI0n c0uld bc clculIcd 0n sIrghI
lnc bss.
77
() C0mpuIc Ihc Inncc chrgc I0 bc rcc0gnscd 0n Ihc lcscd Iruck
undcr Ihc dIIcrcnI mcIh0ds 0I sprcdng Inncc chrgcs.
(b) Rcc0rd dcIlcd cc0unIng cnIrcs n rcspccI 0I 0nc 0I Ihc
mcIh0ds dcnIIcd n () b0vc.
() ClculI0n 0I Inncc chrgc:
() T0Il lcsc pymcnI = bmll0n x 4 = 24mll0n
() Thc Ir vluc 0I Ihc Lcscd Truck:
!nsIlmcnI | (+r)
n
| = bm x |(.5)
4
r 0.5
(!nsIllmcnIl pymcnI n rrcrs) = bm x 2.8550
= 7,30,000
() 0cprccI0n = 7,30,000
bycrs = 2,855,000
(v) ClculI0n 0I nIcrcsI:
T0Il !nsIllmcnIs 24,000,000
Csh Prcc / Ir vluc (7,30,000)
T0Il !nIcrcsI / Fnncc chrgc b,870,000
= T0Il nIcrcsI = b,870,000 = ,77,500
Lcsc pcr0d 4
!nIcrcsI Fnncc Chrgc
Ycr 0gI All0cI0n '000
4 4/0 x b,870,000 2,748
2 3 3/0 x b,870,000 2,0b
3 2 2/0 x b,870,000 ,374
4 /0 x b,870,000 b87
0 b,870
!nIcrcsI
Fr \luc/Csh Prcc 7,30
Add: !nIcrcsI - 5 x 7,30,000 2,570 2,570
9,700
Lcss
sI
!nsIlmcnI b,000
3,700
Add: !nIcrcsI - 5 x 3,700,000 2,055 2,055
5,755
Lcss 2
nd
!nsIlmcnI b,000
9,755
Add: !nIcrcsI - 5 x 9,755,000 ,4b3 ,4b3
78
,28
Lcss 3
rd
!nsIlmcnI b,000
5,28
Add: !nIcrcsI - 5 x 5,28,000 782 782
b,000
Lcss 4
Ih
!nsIlmcnI b,000 _____
N!L b,870
(b)
'000 '000
//05 Lcss0r A/c 7,30 3/2/05 l. c/d 7,30
//0b l b/d 7,30 3/2/0b l c/d 7,30
//07 l b/d 7,30 3/2/07 l c/d 7,30
//08 l b/d 7,30 3/2/08 l c/d 7,30
'000 '000
3/2/0b l c/d 2,855 3/2/0b P & L A/c 2,855
3/2/07 l c/d 5,70 //07 l b/d 2,855
_____ 3/2/07 P & L /c 2,855
5,70 5,70
3/2/08 l c/d 8,5b5 //08 l b/d 5,70
_____ 3/2/08 P & L A/c 2,855
8,5b5 8,5b5
//09 l /d 8,5b5
'000 '000
3/2/05 !nsIlmcnI b,000 //05 Lcscd Truck A/c 7,30
3/2/05 l. c/d 3,700 3/2/05 Fnncc chrgcs 2,570
9,700 9,700
3/2/0b !nsIlmcnI b,000 //0b l. b/d 3,700
3/2/0b l. c/d 9,755 3/2/0b Fnncc chrgcs 2,055
5,755 5,755
3/2/07 !nsIlmcnI b,000 //07 l. b/d 9,755
3/2/07 l. c/d 5,28 3/2/07 Fnncc chrgcs ,4b3
,28 ,28
3/2/08 !nsIlmcnI b,000 //08 l. b/d 5,28
______ 3/2/08 Fnncc chrgcs 782
b,000 b,000
79
'000 '000
3/2/05 Lcss0r A/c 2,570 3/2/05 P & L A/c 2,570
3/2/0b Lcss0r A/c 2,055 3/2/0b P & L A/c 2,055
3/2/07 Lcss0r A/c ,4b3 3/2/07 P & L A/c ,4b3
3/2/08 Lcss0r A/c 782 3/2/08 P & L A/c 782
Fnncc chrgcs / Lcscd Truck & 0cprccI0n Pr0vs0n Acc0unIs rc Ihc smc
s undcr !nIcrcsI Pyblc A/c mcIh0d.
'000 '000
3/2/05 Lcss0r A/c b,870 3/2/05 Fnncc chrgcs 2,570
_____ 3/2/05 l. C/d 4,300
b,870 b,870
3/2/0b l. /d 4,300 3/2/0b Fnncc chrgcs 2,055
_____ 3/2/0b l. C/d 2,245
4,300 4,300
3/2/07 l. /d 2,245 3/2/07 Fnncc chrgcs ,4b3
_____ 3/2/07 l. C/d 782
2,245 2,245
3/2/08 l. /d 782 3/2/08 Fnncc chrgcs 782
'000 '000
3/2/05 nk b,000 //05 Lcscd Truck 7,30
3/2/05 l. c/d 8,000 3/2/05 Fnncc chrgcs b,870
24,000 24,000
3/2/0b nk b,000 //0b l. b/d 8,000
3/2/0b l. c/d 2,000 ______
8,000 8,000
3/2/07 nk b,000 //07 l. b/d 2,000
3/2/07 l. C/d b,000 ______
2,000 2,000
3/2/08 b,000 //08 l b/d b,000
IrnscI0n s 0nc n whch Ihc scllcr 0I n Icm prIs wIh
p0sscss0n nd IrnsIcrs smc I0 buycr wh0 n rcIurn, pys I0 Ihc scllcr n
m0unI kn0wn s hrc purchsc prcc by wy 0I n nIl dcp0sI plus pcr0dc
nsIllmcnIs 0vcr Ihc hrc purchsc pcr0d. Thc hrc purchsc prcc wll
n0rmlly bc hghcr Ihn Ihc n0rml scllng prcc 0I Ihc Icm, Ihc dIIcrcncc
bcng hrc purchsc nIcrcsI 0r Inncc chrgc.
80
!I sh0uld bc n0Icd IhI whI Ihc hrc purchscr hs, whlc Ihc hrc pcr0d lsIs,
s |usI p0sscss0n. Hc d0cs n0I cqurc Ihc IIlc unIl hc hs pd Ihc lsI
nsIlmcnI nd cxcrcscd hs 0pI0n I0 cqurc IIlc by pyng IurIhcr I0kcn
sum, whch shll bc sIpulIcd n Ihc hrc purchsc grccmcnI.
Thc hrc purchscr, h0wcvcr, hs Ihc IrsI 0pI0n nd Ihc Icm cnn0I bc s0ld I0
n0Ihcr pcrs0n unlcss hc hs ndcIcd hs unwllngncss I0 cxcrcsc Ihc 0pI0n.
: Ths s Ihc I0Il sum (dcp0sI plus nsIllmcnIs)
pyblc by Ihc hrc purchscr.
: Ths s Ihc n0rml scllng prcc 0I Ihc g00ds I0 bc s0ld.
: 0r Inncc chrgc, s Ihc cxccss 0I Ihc hrc
purchsc prcc 0vcr Ihc csh prcc. Thc hrc purchscr nIcrcsI s Ihc
c0mpcnsI0n I0 Ihc scllcr I0r hvng hs Iunds Icd d0wn wIh Ihc buycr
0vcr Ihc hrc pcr0d.
Ths s Ihc nIl sum pyblc by Ihc hrc purchscr I Ihc
nccpI0n 0I Ihc hrc purchsc IrnscI0n.
Ths s Ihc sum pyblc by Ihc hrc purchscr buycr I
spccIcd nIcrvls I0 lqudIc Ihc blncc 0I hrc purchsc prcc I Ihc
cnd 0I Ihc hrc pcr0d.
!I s n Ihc nIurc 0I hrc purchsc IrnscI0ns IhI whI Ihc buycr buys
undcr Ihs rrngcmcnI s nvrbly Ixcd sscI. T0 cqurc Irdng
sI0cks undcr hrc purchsc rrngcmcnI s vrIully n0I Icsblc I0r
Ihc I0ll0wng rcs0ns:
() Thc hrc purchsc 0pI0n s n0rmlly ch0scn whcrc Ihc vluc 0I
Ihc Icm s rclIvcly hgh nd pymcnI undcr csh purchsc
IrnscI0ns wll nv0lvc much csh 0uIIl0w. !I s unlkcly IhI
Irdng sI0cks wll Ill undcr Ihs cIcg0ry.
(b) 000ds purchscd undcr hrc purchsc Icrms cnn0I bc s0ld durng
Ihc hrc pcr0d.
(c) T0 cqurc Irdng sI0cks undcr hrc purchsc Icrms wll rcqurc
s0 sh0rI hrc pcr0d s I0 nullIy Ihc bcncIIs 0I Ihc hrc purchsc
rrngcmcnI.
Thc hrc purchscr shll brng Ihc sscI 0n hrc purchsc nI0 hs b00ks
s Ixcd sscI nd dcprccIc I n0rmlly, cvcn Ih0ugh, hc hs n0I ycI
cqurcd IIlc. Ths s n nsIncc whcrc Ihc Inncl rclIy 0r subsIncc
0I IrnscI0n Ikcs prcccdcncc 0vcr Ihc lcgl I0rm n c0mplncc
wIh Ihc c0nvcnI0n 0I subsIncc 0vcr I0rm.
Thc Hrc purchscr sprcds Ihc Hrc purchsc nIcrcsI 0n r0II0nl
bss 0vcr Ihc hrc pcr0d.
Ths my bc chcvcd by usng ny 0I Ihc I0ll0wng mcIh0ds:
() Equl nsIllmcnIs (0r sIrghI lnc) mcIh0d,
8
(b) Sum 0I Ihc ycrs dgIs mcIh0d, nd
(c) AcIurl mcIh0d.
()
Undcr Ihs mcIh0d, Ihc hrc purchsc nIcrcsI s sprcd cqully 0vcr Ihc
hrc pcr0d. !I s Ihc smplcsI mcIh0d.
AC s0ld mchnc I0 XYZ 0n hrc purchsc bss. Y0u rc gvcn Ihc I0ll0wng
nI0rmI0n.
Csh Prcc 28,000
!nIl dcp0sI 0,000
A ycrly nsIlmcnI 0I 7,500 cch pyblc 0n 3 0cccmbcr I0r 4 ycrs, ws
grccd. Thc c0mpny mkcs up cc0unIs I0 3 0cccmbcr.
ClculIc Ihc hrc purchsc nIcrcsI IIrbuIblc I0 cch ycr.
!nIl dcp0sI 0,000
Add: !nsIllmcnIs ( 7,500 x 4) 30,000
Hrc Purchsc Prcc 40,000
Lcss: Csh Prcc (28,000)
H. P. !nIcrcsI 2,000
ThcrcI0rc, hrc purchsc !nIcrcsI wrIIcn 0II cch ycr s 2,000
4
= 3,000
(b)
Undcr Ihs mcIh0d, H.P. nIcrcsI s wrIIcn 0II 0vcr Ihc hrc pcr0d n
rcducng mnncr, bscd 0n dgIs s llusIrIcd bcl0w:
Assumng Ihc IcIs rc Ihc smc s n llusIrI0n () b0vc,
clculIc Ihc Hrc purchsc nIcrcsI IIrbuIblc I0 cch ycr.
Ycr 0gI All0cIcd w0rkngs H.P. !nIcrcsI
4
4
/
0
x 2000 4,800
2 3
3
/
0
x 2000 3,b00
3 2
2
/
0
x 2000 2,400
4

/
0
x 2000 ,200
0 2,000
!n sIuI0n whcrc Ihc numbcr 0I nsIllmcnIs s hgh, Ihc
dcIcrmnI0n 0I Ihc sum 0I Ihc dgIs bcc0mcs pr0blcm. T0 s0lvc Ihc
pr0blcm, y0u cn usc Ihc I0rmulr bcl0w: S
=
n
/
2
(n - )
whcrc
S = sum 0I Ihc dgIs
n=n0. 0I !nsIllmcnIs
82
!n Ihc b0vc cxmplc, sum 0I Ihc dgIs =
4
/
2
(4 - )
= 0
(c)
Undcr Ihs mcIh0d, H.P. nIcrcsI s wrIIcn 0II by chrgng Ixcd rIc 0I
nIcrcsI 0n Ihc 0uIsIndng blncc I Ihc dIc 0I nsIllmcnIs. Ths
mcIh0d pr0duccs c0nsInI pcr0dc rIc 0I rcIurn 0n Ihc 0uIsIndng
csh prcc I0r cch pcr0d. Thc rIc 0I nIcrcsI my bc 0bIncd Ir0m
cIurl Iblc. AlIcrnIvcly, Ihc rIc my bc clculIcd usng Ihc
nnuIy I0rmul nd s0lvng I0r Ihc nIcrcsI rIc. Thc nnuIy I0rmul
s gvcn s I0ll0ws:
P = ((+r)
n

whcrc P = Csh Prcc lcss dcp0sI

= !nsIlmcnI pyblc I spccIcd nIcrvls
n = Numbcr 0I !nsIllmcnIs
r = rIc 0I nIcrcsI pcr pcr0d c0vcrcd by cch nsIlmcnI
10hn s0ld cqupmcnI I0 1ncI 0n hrc purchsc. Y0u rc gvcn Ihc
I0ll0wng nI0rmI0n:
Csh Prcc 20,945
!nIl 0cp0sI 8,000
Thc HP c0nIrcI grccd nnul nsIllmcnIs 0I 5,000 cch, pyblc
0n 3 0cccmbcr, 0vcr 4 ycrs pcr0d
H P nIcrcsI s chrgcd I 20 pcr nnum.
C0mpuIc nIcrcsI pyblc usng Ihc cIurl mcIh0d.
Ycr 0 Csh prcc 20,945
Lcss 0cp0sI 8,000
2,945
Ycr H P nIcrcsI @ 20 2,589 2,589
5,534

sI
!nsIlmcnI (5,000)
0,534
Ycr 2 H P nIcrcsI @ 20 2,0b 2,0b
2,b40
2
nd
!nsIlmcnI (5,000)
7,b40
Ycr 3 H P nIcrcsI @ 20 ,528 ,528
9,b8
83
3
rd
!nsIlmcnI (5,000)
4,b8
Ycr 4 H P nIcrcsI @ 20 832 832
5,000
4
Ih
!nsIlmcnI (5,000) _____
N!L 7,055
() AsscI cqurcd 0n HP Tcrms:
0r. HP Ixcd AsscI A/c } wIh Ihc csh prcc
Cr. HP CrcdI0rs A/c }
(b) 0cp0sI / !nsIlmcnI Pd:
0r. HP CrcdI0rs A/c } wIh m0unI pd
Cr. nk A/c }
(c) Rcc0gnI0n 0I HP !nIcrcsI
ncludcd n nsIllmcnIs pd:
0r. HP !nIcrcsI A/c } wIh HP !nIcrcsI IIrbuIblc
Cr. HP CrcdI0rs A/c } I0 Ihc nsIlmcnI pcr0d.
(d) AI Ihc cc0unIng ycrcnd:
0r. Pr0II & L0ss A/c } wIh HP !nIcrcsI wrIIcn 0II
Cr. HP !nIcrcsI A/c } durng Ihc ycr.
0r. Pr0II & L0ss A/c } wIh dcprccI0n 0n
Cr. Pr0vs0n I0r 0cprccI0n A/c } HP sscI
Thc cl0sng blncc 0n Ihc HP crcdI0rs cc0unI s Ihc 0uIsIndng p0rI0n
0I Ihc csh prcc. whcn HP !nIcrcsI Suspcnsc mcIh0d s 0pcrIcd, Ihc
Hrc purchsc crcdI0rs cc0unI blncc s, IhcrcI0rc, dscl0scd n Ihc
blncc shccI.
1cks0n LId purchscd ncw cr 0n 1nury 2005, Ir0m Sulymn LId, 0n
hrc purchsc Icrms undcr whch 1cks0n LId pd dcp0sI 0I b5,000, I0
bc I0ll0wcd by I0ur nnul nsIllmcnIs 0I 500,000 cch, pyblc 0n 3
0cccmbcr. !nIcrcsI s chrgcd 0n 0uIsIndng blncc I 0 pcr nnum. Csh
prcc 0I Ihc cr s 2,200,000.
Thc cc0unIng ycr 0I b0Ih c0mpncs cnds 0n 3 0cccmbcr.
0cprccI0n 0n Ihc cr s I 20 pcr nnum 0n sIrghIlnc bss. All Ihc
sums duc wcrc pd 0n duc dIcs.
() Sh0w Ihc rclcvnI lcdgcr cnIrcs n Ihc b00ks 0I 1cks0n LId.
(b) Prcprc blncc shccI cxIrcI rcIlccIng blnccs s I 3 0cccmbcr
2003.
84
()
N N
//05 nk (0cp0sI) b5,000 //05 HP M0I0r \chclc 2,200,000
3/2/05 nk(
sI
!nsIllmcnI)500,000 3/2/05 HP !nIcrcsI 58,500
3/2/05 l C/d ,243,500 (2,200,000b5,050) x 0 ________
2,358,500 2,358,500
3/2/0b nk (2
nd
!nsIl.) 500,000 //0b l. /d ,243,500
3/2/0b l C/d 8b7,850 3/2/0b HP !nIcrcsI 24,350
,3b7,850 ,3b7,850
3/2/07 nk (3
rd
!nsIl.) 500,000 //07 l. /d 8b7,850
3/2/07 l C/d 454,b35 3/2/07 HP !nIcrcsI 8b,785
954,b35 954,b35
3/2/08 nk (4
Ih
!nsIl.) 500,000 //08 l. /d 454,b35
_______ 3/2/08 HP !nIcrcsI 45,3b5
500,000 500,000
* N45,4b3.5 r0undcd d0wn I0 N45,3b5
3/2/05 HP CrcdI0r 58,500 3/2/05 P &L A/c 58,500
3/2/0b HP CrcdI0r 24,350 3/2/0b P & L A/c 24,350
3/2/07 HP CrcdI0r 8b,785 3/2/07 P & L A/c 8b,785
3/2/08 HP CrcdI0r 45,3b5 3/2/08 P & L A/c 45,3b5
//05 HP CrcdI0r 2,200,000
3/2/05 l C/d 440,000 3/2/05 P & L A/c 440,000
3/2/0b l C/d 880,000 //0b l. /d 440,000
________ 3/2/0b P & L A/c 440,000
880,000 880,000
3/2/07 l C/d ,320,000 3/2/07 l b/d 880,000
________ 3/2/07 P & L A/c 440,000
,320,000 ,320,000
(b) lncc ShccI ExIrcI s I 3 0cccmbcr, 2007
C0sI 0cpr. N\
M0I0r \chclc 2,220,000 ,320,000 900,000
85
Hrc Purchsc CrcdI0r 454,b35
()
N N
//05 nk (0cp0sI) b5,000 //05 HP M0I0r \chclc 2,200,000
3/2/05 nk (
sI
!nsIlmI) 500,000 //05 !nIcrcsI Suspcnsc 45,000
3/2/05 l C/d ,500,000 ________
2,b5,000 2,b5,000
3/2/0b nk (2
nd
!nsIl.) 500,000 //0b l. /d ,500,000
3/2/0b l C/d ,000,000 ________
,500,000 ,500,000
3/2/07 nk (3
rd
!nsIl.) 500,000 //07 l. /d ,000,000
3/2/07 l C/d 500,000 ________
,000,000 ,000,000
3/2/08 nk (4
Ih
!nsIl.) 500,000 //08 l. /d 500,000
N N
//05 HP CrcdI0rs A/c 45,000 3/2/05 HP !nIcrcsI A/c 58,500
(500,000 x 4) + b5,000) N(2,200,000 - b5,000) x 0
2,200,000 _______ 3/2/05 l. C/d 25b,500
45,000 45,000
//0b l C/d 25b,500 3/2/0b HP !nIcrcsI A/c 24,350
_______ 3/2/0b l. C/d 32,50
25b,500 25b,500
//07 l C/d 32,50 3/2/07 HP !nIcrcsI A/c 8b,758
______ 3/2/07 l. C/d 45,3b5
32,50 32,50
//08 l C/d 45,3b5 3/2/08 HP !nIcrcsI A/c 45,3b5
(!nIl 0cp0sI + 4 !nsIllmcnIs) - Csh Prcc.
(b5,000 + 2,000,000) - 2,200,000
= 45,000
3/2/05 HP !nI. Suspcnsc A/c 58,500 3/2/05 P & L A/c 58,500
3/2/0b HP !nI. Suspcnsc A/c 24,350 3/2/0b P & L A/c 24,350
3/2/07 HP !nI. Suspcnsc A/c 8b,785 3/2/07 P & L A/c 8b,785
3/2/08 HP !nI. Suspcnsc A/c 45,3b5 3/2/08 P & L A/c 45,3b5
N: Pr0vs0n I0r 0cprccI0n cc0unI s Ihc smc s n S0luI0n () b0vc.
8b
lncc ShccI (ExIrcI) s I 3 0cccmbcr, 2007
C0sI 0cpr. N\
Fxcd AsscIs:
M0I0r \chclc 2,200,00 ,7b0,000 440,000
CurrcnI LblIcs:
HP CrcdI0r 500,000
Lcss: HP !nIcrcsI Suspcnsc 45,3b5 454,b35
Thc bsc dIIcrcncc bcIwccn ppr0chcs () nd (b) b0vc, rc:
() wIh mcIh0d (), HP !nIcrcsI IIrbuIblc I0 Ihc nsIlmcnI pcr0ds rc
crcdIcd I0 HP crcdI0rs cc0unI pcr0dclly nd dcbIcd I0 HP nIcrcsI
cc0unI, whcn nsIllmcnIs rc pd.
wIh mcIh0d (b), Ihc wh0lc 0I Ihc cxpccIcd HP nIcrcsI s crcdIcd I0 HP
crcdI0rs. !nIcrcsI I Ihc nccpI0n 0I Ihc IrnscI0n s hcld n suspcnsc
n Ihc HP nIcrcsI suspcnsc A/c. Fr0m Ihs cc0unI, Ihc nIcrcsI s wrIIcn
0II I0 Ihc cxpcnsc cc0unI pcr0dclly. Evcry Imc n nsIlmcnI s pd,
Ihc HP nIcrcsI IIrbuIblc I0 Ihc pcr0d s cxpcnscd by dcbIng Ihc HP
nIcrcsI A/c nd crcdIng Ihc HP nIcrcsI suspcnsc cc0unI.
(b) wIh mcIh0d (), Ihc blncc 0n Ihc HP crcdI0rs cc0unI s Ihc csh
prcc sIll 0uIsIndng I IhI dIc.
wIh mcIh0d (b), Ihc blncc 0n Ihc HP crcdI0rs cc0unI s Ihc csh
prcc 0uIsIndng plus Ihc unm0rIscd blncc 0I Ihc I0Il cxpccIcd
HP nIcrcsI, whch s Ihc dcbI blncc 0n Ihc HP !nIcrcsI suspcnsc
cc0unI. !n Ihc lncc ShccI, Ihc blncc 0n Ihc lIIcr cc0unI wll bc
dcducIcd Ir0m Ihc blncc 0n Ihc I0rmcr cc0unI I0 0bIn csh prcc
0uIsIndng.
(c) McIh0d (), s rcc0mmcndcd I0r s0lvng cxmnI0n qucsI0ns unlcss
y0u rc spccIclly rcqurcd I0 d0pI mcIh0d (b).
Fr0m Ihc scllcr's p0nI 0I vcw, g00ds s0ld 0n HP bss, Ill nI0 Iw0
cIcg0rcs:
() Lrgc Icms, nd
(b) Smll Icms: !I s mp0ssblc I0r HP scllcr I0 scprIc gr0ss pr0II
Ir0m HP nIcrcsI bccusc 0I lrgc v0lumc 0I IrnscI0ns. wc
shll, IhcrcI0rc, c0nccnIrIc 0n lrgc Icms.
F0r lrgc Icms, Ihc m0unIs nv0lvcd rc rclIvcly subsInIl nd
Ihc IrnscI0ns, rclIvcly Icw nd nIrcqucnI. !I s, IhcrcI0rc, p0ssblc
nd prcIcblc I0r Ihc HP scllcr I0 scprIc gr0ss pr0II nd HP nIcrcsI
nd cc0unI I0r cch scprIcly. !I sh0uld bc n0Icd IhI slcs gvc rsc
I0 Iw0 knds 0I pr0IIs: nmcly
87
() 0r0ss Pr0II, IhI s, csh prcc lcss c0sI 0I g00ds
(b) HP nIcrcsI, IhI s, Hrc prcc lcss csh prcc.
!n cc0unIng I0r lrgc Icms, Ihcrc rc Iw0 p0ssblc mcIh0ds:
() Hrc Purchsc !nIcrcsI Rcccvcd mcIh0d, nd
(b) Hrc Purchsc !nIcrcsI Suspcnsc Acc0unI mcIh0d.
()
() Slc 0I 000ds 0n HP Icrms:
0R: HP 0cbI0rs A/c } wIh csh prcc 0I g00ds s0ld.
CR: HP Slcs A/c }
() 0cp0sIs / !nsIllmcnIs Rcccvcd:
0R: nk / Csh A/c } wIh m0unI rcccvcd.
CR: HP 0cbI0rs A/c }
() Rcc0gnI0n 0I HP nIcrcsI ncludcd
n nsIllmcnIs rcccvcd: wIh nIcrcsI IIrbuIblc I0
0R: HP 0cbI0rs A/c } Ihc pcr0d c0vcrcd by Ihc
CR: HP !nIcrcsI Rcccvcd A/c } nsIlmcnI.
(v) AI cc0unIng ycrcnd:
0R: HP Trdng A/c }wIh c0sI 0I g00ds s0ld 0n
CR: 0cncrl Irdng 0r Purchscs A/c}HP Icrms.
0R: HP Slcs A/c } wIh I0Il crcdIs 0n Ihc
CR: HP Trdng A/c } HP slcs A/c I0r Ihc pcr0d
0R: HP !nIcrcsI Rcccvcd A/c } wIh I0Il crcdIs 0n Ihc HP
CR: HP Trdng A/c } nIcrcsI rcccvcd A/c I0r Ihc pcr0d
0R: HP Trdng A/c } wIh Ihc unrclscd gr0ss pr0II
CR: Pr0vs0n I0r Unrclscd } (scc n0Ic () bcl0w).
Pr0II A/c }
0R: HP Trdng A/c } wIh Ihc crcdI blncc 0n Ihc
CR: Pr0II & L0ss A/c } cc0unI IIcr cnIrcs ()(d)
b0vc.
(b)
() Slcs 0I g00ds 0n HP Tcrms:
0R: HP 0cbI0rs A/c } wIh HP Prcc
CR: HP Slcs A/c } wIh csh prcc
CR: HP !nIcrcsI Suspcnsc A/c } I0Il HP nIcrcsI.
() 0cp0sIs / !nsIllmcnIs Rcccvcd } smc s n mcIh0d 0.2.4
() Rcc0gnI0n 0I HP nIcrcsI
ncludcd n !nsIllmcnIs rcccvcd:}
0R: HP !nIcrcsI Suspcnsc A/c } wIh nIcrcsI IIrbuIblc I0
CR: HP !nIcrcsI Rcccvcd A/c } Ihc pcr0d c0vcrcd by Ihc
nsIlmcnI.
88
(v) AI cc0unIng ycrcnd - smc s n mcIh0d () b0vc.
Thc HP scllcr my sprcd Ihc HP nIcrcsI usng ny 0I Ihc mcIh0ds
lrcdy c0nsdcrcd.
Unrclscd pr0II s clculIcd usng Ihc I0rmul:
Unrclscd Pr0II:
lncc 0I csh prcc 0uIsIndng x (csh prcc - c0sI)
Csh Prcc
SubscqucnI m0vcmcnI n Ihc pr0vs0n I0r unrclscd pr0II s
rcIlccIcd n Ihc HP Trdng A/c nd Ihc pr0vs0n A/c.
Thc IcIs rc Ihc smc s n llusIrI0n !!! (b0vc), cxccpI I0r Ihc ddI0nl
nI0rmI0n IhI Sulymn LId rcc0gnscs s pr0II, cvcry ycr, Ihc pr0p0rI0n
0I Ihc cxpccIcd gr0ss pr0II, whch Ihc sum rcccvcd cvcry ycr Ir0m 1cks0n
LId, bcrs I0 Ihc csh prcc. Thc c0sI 0I Ihc cr I0 Sulymn LId, ws
,900, 000.
Y0u rc rcqurcd I0 sh0w Ihc lcdgcr cnIrcs n Ihc b00ks 0I Sulymn LId nd
Ihc blncc shccI cxIrcI s I 3 0cccmbcr, 2007.
()
//05 HP Slcs 2,200,000 //05 nk (0cp0sI) b5,000
3/2/05 HP !nI. Rcc'd 58,500 /2/05 nk (
sI
!nsIlmI) 500,000
_________ 3/2/05 l. C/d ,243,500
2,358,500 2,358,500
//0b l /d ,243,500 3/2/0b nk 2
nd
!nsI. 500,000
3/2/0b HP !nI. Rcc'd 24,350 3/2/0b l C/d 8b7,850
,3b7,850 ,3b7,850
//07 l /d 8b7,850 3/2/07 nk 3
rd
!nsI. 500,000
3/2/07 HP !nI. Rcc'd 8b,785 3/2/07 l C/d 454,b35
954,b35 954,b35
//08 l /d 454,b35 3/2/08 nk 4
Ih
!nsI. 500,000
3/2/08 HP !nI. Rcc'd 45,3b5 _______
500,000 500,000
3/2/05 Trdng A/c 2,200,000 //05 HP 0cbI0rs A/c 2,200,000
89
3/2/05 HP Trdng A/c 58,500 3/2/05 HP 0cbI0rs A/c 58,500
3/2/0b HP Trdng A/c 24,350 3/2/0b HP 0cbI0rs A/c 24,350
3/2/07 HP Trdng A/c 8b,785 3/2/07 HP 0cbI0rs A/c 8b,785
3/2/08 HP Trdng A/c 45,3b5 3/2/08 HP 0cbI0rs A/c 45,3b5
3/2/05 Purchscs ,900,000 3/2/05 HP Slcs 2,200,000
3/2/05 Pr0v.I0r Unrcl. Pr0II(w)b9,5b0 3/2/05 HP !nIcrcsI Rcc'd 58,500
3/2/05 P & L A/c 288,940 _________
2,358,500 2,358,500
3/2/0b P & L A/c 75,570 3/2/0b HP !nI. Rcc'd 24,350
________ 3/2/0b Pr0v. I0r Unrcl. Pr0II 5,220
75,570 75,570
3/2/07 P & L A/c 43,35 3/2/07 HP !nI. Rcc'd 8b,785
_______ 3/2/07 Pr0v. I0r Unrcl. Pr0I I 5b,350
43,35 43,35
3/2/08 P & L A/c 07,355 3/2/08 HP !nI. Rcc'd 45,3b5
_______ 3/2/08 Pr0v. I0r Unrcl. Pr0II b,990
07,355 07,355
288,940 rcc0gnscd s HP Pr0II I0r ycr cndcd 3/2/05, s mdc up
0I:
HP !nIcrcsI IIrbuIblc I0 Ihc ycr 58,500
0r0ss pr0II rclscd n Ihc ycr=( 2.2m- b9,5b0 30,440
288,940
3/2/05 l C/d (w) b9,5b0 3/2/05 HP Trdng A/c b9,5b0
3/2/0b HP Trdng A/c 5,220 //0b l. /d b9,5b0
3/2/0b l. C/d (w2) 8,340 ________
b9,5b0 b9,5b0
3/2/07 HP Trdng A/c 5b,350
//07 l. /d 8,340
3/2/07 l. /d (w3) b,990 ________
8,340 8,340
3/2/08 HP Trdng A/c b,990 //08 l. /d b,990
AIIcr ycr 2005, 0nly Ihc m0vcmcnI, IhI s, ncrcsc 0r dccrcsc n Ihc pr0vs0n
I0r unrclscd pr0II IhI wll bc IrnsIcrrcd I0 Ihc Hrc Purchsc Irdng cc0unI,
I0r cxmplc, Ihc pr0vs0n I0r unrclscd pr0II I 1nury 200b, ws
b9,3b0, whlc I 3/2/0b, ws 8,340. Ths rcprcscnIs dccrcsc 0I
90
5,220, whch ws IrnsIcrrcd I0 HP Trdng A/c by dcbIng Ihc pr0vs0n I0r
unrclscd pr0II A/c nd crcdIng Ihc HP Irdng A/c.
5,220 s Ihc p0rI0n 0I gr0ss pr0II c0nsdcrcd I0 hvc bccn rclscd n Ihc
ycr cndcd 3 0cccmbcr 200b. !I s Ihc pr0p0rI0n 0I gr0ss pr0II, whch Ihc
csh prcc rcccvcd Ir0m 1cks0n LId n 200b, bcrs I0 Ihc csh prcc s sh0wn
bcl0w:
= 500,000 - 24,350 x 2,200,000 - ,900,000
2,200,000
= 375,5b0 x 300,000
2,200,000 = 5,220
Csh rcccvcd n ycr 200b, s Ihc 2
nd
nsIlmcnI 0I 500,000lcss HP
nIcrcsI IIrbuIblc I0 200b, IhI s, 500,000 - 24,350 = 375,b50
Thc p0nI rscd b0vc, s cqully pplcblc I0 ycrs 2007 nd 2008.
HP 0cbI0r 454,b35
Pr0vs0n I0r Unrclscd Pr0II b,990
392,b45
Unrclscd gr0ss Pr0II (U0P) = Csh Prcc 0uIsIndng x Csh Prcc C0sI
Csh Prcc
() U0P I 3/2/05 = ,243,450 x (2,200,000 - ,900,000)
2,200,000
= ,243,450 x 300,000
2,200,000
= b9,5b0
(2) (w2) U0P @ 3/2/0b = 8b7,850 x 300,000
2,200,000
= 8,340
(3) (w3) U0P @ 3/2/07 = 454,b35 x 300,000
2,200,000
= b,990
(b)
//05 HP Slcs 2,200,000 //05 nk (0cp0sI) b5,000
//05 HP !nIcrcsI Suspcnsc 45,000 3/2/05 nk (
sI
!nsIlmI) 500,000
_________ 3/2/05 l. C/d ,500,000
2,b5,000 2,b5,000
//0b l /d ,500,000 3/2/0b nk 2
nd
!nsI. 500,000
_________ 3/2/0b l C/d ,000,000
,500,000 ,500,000
9
//07 l /d ,000,000 3/2/07 nk 3
rd
!nsI. 500,000
_________ 3/2/07 l C/d 500,000
,000,000 ,000,000
//08 l /d 500,000 3/2/08 nk 4
Ih
!nsI. 500,000
3/2/05 HP !nIcrcsI Rcc'd 58,500 //05 HP 0cbI0r 45,000
3/2/05 l C/d 25b,500
45,000 45,000
3/2/0b HP !nIcrcsI A/c 24,350 //0b l. /d 25b,500
3/2/0b l C/d 32,50 ________
25b,500 25b,500
3/2/07 HP !nIcrcsI A/c 8b,785 //07 l. /d 32,50
3/2/07 l C/d 45,3b5
32,50 32,50
3/2/08 HP !nIcrcsI A/c 45,3b5 //08 l. /d 45,3b5
3/2/05 HP Trdng A/c 58,500 3/2/05 HP !nI. Suspcnsc A/c 58,500
3/2/0b HP Trdng A/c 24,350 3/2/0b HP !nI. Suspcnsc A/c 24,350
3/2/07 HP Trdng A/c 8b,785 3/2/07 HP !nI. Suspcnsc A/c 8b,785
3/2/08 HP Trdng A/c 45,3b5 3/2/08 HP !nI. Suspcnsc A/c 45,3b5
Thc HP slcs cc0unI, HP Trdng cc0unI nd pr0vs0n I0r unrclscd pr0II
cc0unI rc Ihc smc s n mcIh0d () s0luI0n b0vc.
CurrcnI AsscIs:
Hrc Purchsc dcbI0r 500,000
Lcss: HP !nIcrcsI Suspcnsc 45,3b5
Pr0vs0n I0r unrclscd Pr0II b,990
07,355
392,b45
Thc bsc dIIcrcnccs bcIwccn Ihc Iw0 mcIh0ds llusIrIcd rc:
() wIh mcIh0d (), Ihc HP purchsc nIcrcsI IIrbuIblc I0 Ihc nsIlmcnI
pcr0ds rc dcbIcd I0 Ihc HP 0cbI0rs cc0unI pcr0dclly whcn Ihc
nsIllmcnIs rc rcccvcd nd crcdIcd I0 Ihc HP nIcrcsI rcccvcd
cc0unI.
wIh mcIh0d (b), Ihc wh0lc 0I Ihc cxpccIcd HP nIcrcsI s dcbIcd I0 Ihc
HP dcbI0r cc0unI, I nccpI0n nd crcdIcd I0 HP nIcrcsI suspcnsc
cc0unI Ir0m whcrc Ihc nIcrcsI wll bc pcr0dclly rclcscd I0 Ihc HP
nIcrcsI rcccvcd cc0unI whcn nsIllmcnIs rc rcccvcd.
92
(b) wIh mcIh0d (), Ihc blncc 0n Ihc HP 0cbI0r A/c s Ihc csh prcc
0uIsIndng Ir0m Ihc cusI0mcr.
wIh mcIh0d (b), Ihc blncc 0n Ihc HP 0cbI0r A/c s Ihc csh prcc
0uIsIndng plus Ihc HP nIcrcsI ycI I0 bc rcc0gnscd s nc0mc. Ths s
why 0n Ihc blncc shccI, Ihc HP 0cbI0r's blncc wll bc sh0wn lcss
Ihc crcdI blncc 0n Ihc HP nIcrcsI suspcnsc cc0unI.
(c) McIh0d (), s rcc0mmcndcd I0r s0lvng cxmnI0n qucsI0ns unlcss
y0u rc spccIclly rcqurcd I0 d0pI mcIh0d (b).
Lcsng nd hrc purchsc rc lkc Iwn br0Ihcrs. Thc dcnIcl pr0blcm 0I
c0mpuIng nd chrgng I0 rcspccIvc pcr0ds, 0I Inncc chrgcs nd hrc
purchsc nIcrcsI I0r lcsng nd hrc purchsc rcspccIvcly, rc Ihc I0cl p0nIs
IhI wcrc cxIcnsvcly dscusscd nd llusIrIcd n Ihs chpIcr. \r0us mcIh0ds
0I dcIcrmnng Inncc chrgcs nd hrc purchsc nIcrcsI n Ihc b00ks 0I Lcss0r
nd Lcsscc nd HP scllcr nd buycr wcrc dcm0nsIrIcd. SAS whch sIpulIcs
dcIlcd ppr0prIc IrcImcnI nd dscl0surcs 0I lcsc IrnscI0ns n Ihc
b00ks 0I lcss0r nd lcsscc ws rcvcwcd.
Usc Ihc I0ll0wng nI0rmI0n I0 nswcr ucsI0ns & 2:
Chukwud s0ld ncw m0I0rcyclc I0 0l, n 0kd 0pcrI0r, 0n hrc purchsc
bss undcr Ihc I0ll0wng Icrms:
Csh Prcc N280,000
!nIl 0cp0sI N00,000
Ycrly !nsIlmcnI N75,000 (pyblc 3 0cccmbcr)
Hrc pcr0d 4ycrs.
. ClculIc Hrc Purchsc Prcc 0I Ihc M0I0rcyclc.
() N380,000
(b) N280,000
(c) N400,000
(d) N455,000
(c) N420,000.
2. C0mpuIc Hrc Purchsc nIcrcsI I0 bc wrIIcn 0II cch ycr, usng
sIrghIlnc mcIh0d.
() N20,000
(b) N30,000
(c) N00,000
(d) N70,000
(c) N25,000.
93
3. 0urng Ihc hrc pcr0d hrc purchsc scllcr wIhh0lds -------
() P0sscss0n 0I sscI 0n Hrc Purchsc
(b) RghI I0 usc Ihc sscI 0n Hrc Purchsc
(c) Acccss I0 Ihc sscI 0n hrc purchsc
(d) TIlc I0 Ihc sscI 0n hrc purchsc
(c) RghI I0 lcsc Ihc sscI 0n hrc purchsc.
4. Pcr0dc pymcnIs mdc by Ihc lcscc I0 Ihc lcss0r rc cllcd_____________
() RcnI
(b) Lcsc pymcnI
(c) !nIcrcsI
(d) Fnncc chrgc
(c) Csh prcc.
5. whch 0I Ihc I0ll0wng s N0T Inncc lcsc rrngcmcnI!
() Lcvcrgcd lcsc
(b) Slcs - Typcd lcsc
(c) CpIl lcsc
(d) Slcs nd lcsc bck
(c) 0pcrIng lcsc.
b. !n cc0rdncc wIh SIIcmcnI 0I Acc0unIng SIndrds (SAS ), dcInc
Fnncc Lcsc.
7. whch 0I Ihc Iw0 mn clsscs 0I lcsc s n0ncnccllblc lcsc!
8. whI s Ihc mn dIIcrcncc bcIwccn cc0unIng cnIrcs rcqurcd undcr
nIcrcsI pyblc nd nIcrcsI suspcnsc mcIh0ds 0I cc0unIng I0r Fnncc
Chrgc!
9. H0w sh0uld hrc purchsc scllcr cc0unI I0r unrclscd pr0II 0n g00ds
s0ld 0n hrc purchsc n Is b00ks!
0. whI d0cs hrc purchsc nIcrcsI rcprcscnI n hrc purchsc IrnscI0n!