95

AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:

Prcprc Ihc cc0unIs 0I csIIc gcnccs, pr0pcrIy c0mpncs, Irmcrs, shppng
c0mpncs, c00pcrIvc s0ccIcs nd pcns0n nd pr0vdcnI Iunds.
Expln Ihc cc0unIng mcIh0d I0r 0l nd gs cc0unIng.
Prcprc rclcvnI cc0unIs.
EsIIc AgcnIs nd Pr0pcrIy C0mpncs prcprc pr0II nd l0ss cc0unI nd
blncc shccI s n0rml Irdng c0mpny nd n ddI0n, prcprc
ppr0prI0n cc0unI. Thc pcculrIy n Is blncc shccI s IhI Ircch0ld lnd
hcld I0r rcslc s clssIcd s sI0ck undcr currcnI sscIs.
!rulnd EsIIc 0cvcl0pmcnI Ngcr Plc, ws rcgsIcrcd n ycr 2005. !I
purchscd Ircch0ld lnd I A|h I0r Ihc purp0sc 0I crcIng hghly dcvcl0pcd
h0ldy ccnIrc nd rcIrcmcnI csIIc. Thc rc 0I lnd purchscd c0nssIs 0I
4,000 pl0Is Ir0m whch bl0ck 0I 20 pl0Is ws dcsgncd s sp0rIs nd
cnIcrInmcnI rcn whlsI Ihc rcmnng lnd ws 0IIcrcd I0r slc I 5,000
pcr pl0I, I0r dcvcl0pmcnI 0I luxury bungl0ws. As I 30 Aprl, 2008 Ihc p0sI0n
0I Ihc c0mpny, ws s I0ll0ws:
AuIh0rzcd shrc cpIl 50,000
!ssucd nd Iully pd:
0rdnry Shrcs @ .00 pcr shrc 27,000
9 Rcdccmblc PrcIcrcncc Shrcs 4,500
Unppr0prIcd Pr0II br0ughI I0rwrd 9,b00
4,00
7 0cbcnIurcs 8,000
0cbcnIurcs RcdcmpI0n Fund b,900
bb,000
9b
'000
45,330
EnIcrInmcnI rcn ncludng Lnd & Illng I c0sI (750)
44,580
0cbcnIurc RcdcmpI0n Fund !nvcsImcnI, I c0sI
(MrkcI \luc 7,500,000) b,900
5,480
CurrcnI AsscIs: '000
Frcch0ld Lnd (2,000 pl0Is uns0ld) I c0sI 2,000
Arcn SI0cks 750
Arcn 0cbI0rs 30
nk 4,520
7,400
Lcss: CurrcnI LblIcs:
Trdc CrcdI0rs 80
Pr0p0scd 0rdnry 0vdcnd 2,700
2,880
NcI CurrcnI AsscIs 4,520
bb,000
Thc I0ll0wng IrnscI0ns I00k plcc n Ihc ycr cndcd 30 Aprl 2008:
() 0n 1uly 2007, I0 bc cIIccIvc My 2007, Ihc c0mpny s0ld Ihc
cnIcrInmcnI Arcn I0 C0mplcIc Lcsurc LId I0r 3 mll0n I0gcIhcr
wIh Arcn SI0cks nd dcbI0rs I Ihc blncc shccI Igurc. Csh
scIIlcmcnI ws mdc 0n 20 1uly 2007.
(b) Thc prcIcrcncc shrcs wcrc rcdccmcd 0n 30 1unc 2007, wIhn Ihc Icrms
0I Ihc 0rgnl ssuc, I prcmum 0I 05, I0 bc n lcu 0I ny ccrucd
dvdcnd. Thc prcmum 0n rcdccmpI0n s I0 bc wrIIcn 0II I0 cpIl
rcscrvc.
(c) 0n 1uly 2007, Ihc pr0p0scd 0rdnry dvdcnd ws pd.
(d) 0n 3 0cI0bcr 2007, Ihc 7 0cbcnIurcs wcrc rcdccmcd I 04 I0gcIhcr
wIh b m0nIhs ccrucd nIcrcsI. Thc prcmum 0n rcdcmpI0n s I0 bc
wrIIcn 0II I0 CpIl Rcscrvc. Thc 0cbcnIurc RcdcmpI0n Fund hd bccn
crcIcd 0uI 0I pr0II.
(c) 0n N0vcmbcr 2007, Ihc c0mpny mdc b0nus shrc ssuc I0 Ihc
0rdnry shrch0ldcrs 0I 0nc I0r cvcry Ihrcc 0rdnry shrcs hcld 0n
IhI dIc. Thc cpIl rcscrvc rsng Ir0m Ihc rclsI0n 0I Ixcd sscIs
ws ssucd I0r Ihs purp0sc.
(I) 0urng Ihc c0ursc 0I Ihc ycr, 400 pl0Is wcrc s0ld I 5,000 pl0I.
(g) Als0, wIhn Ihc ycr, Ihc crcdI0rs s I My 2007, wcrc pd 0II I
dsc0unI 0I 5 nd dmnsIrIvc cxpcnscs 0I 450,000 ncurrcd, 0I
whch 20,000 ws unpd I 30 Aprl 2008.
(h) !nc0mc Ir0m nvcsImcnIs (mrkcI vluc 0n 3 0cI0bcr 2007 ws
7,800,000) m0unIcd I0 270,000.
Y0u rc rcqurcd I0 prcprc I0r !rulnd EsIIc 0cvcl0pmcnI Ngcr Plc Ihc
I0ll0wng I0r ycr cndcd 30 Aprl 2008:
97
() Pr0II nd L0ss Appr0prI0n Acc0unI.
(b) lncc ShccI s I 30 Aprl 2008.
(c) nk Acc0unI.
()
N'000 N'000
AdmnsIrIvc cxpcnscs 450 Pr0II 0n Slc 0I Lnd (w2) 3,b00
0cbcnIurc !nIcrcsI b30 !nc0mc Ir0m !nvcsImcnI 270
NcI Pr0II c/d 2,800 0sc0unI 0n CrcdI0rs 0
3,880 3,880
CpIl RcdcmpI0n Rcscrvc Fund 4,500 l. b/d 2,800
Unppr0prIcd Pr0II Fund 2,000 0cbcnIurc RcdcmpI0n Fund b,900
NcI Pr0II c/d 2,800 Unppr0prIcd Pr0II 9,b00
9,300 9,300
(b)
Shrc CpIl: N'000 N'000 N'000 N'000
0rdnry Shrcs ssucd I !nvcsImcnI (MrkcI \luc) b,900
N.00 pcr shrc 3b,000
CpIl Rcscrvc (w) 8,470 Frcch0ld Lnd I c0sI 9,b00
0cbcnIurc RcdcmpI0n nk 47,480 57,080
Rcscrvc Fund 4,500
Pr0II & L0ss A/c 4,800 27,770
CrcdI0rs 20 ______
b3,980 b3,980
(c)
N'000 N'000
l. /d 4,520 PrcIcrcncc Shrcs RcdcmpI0n 4,725
Slc 0I Arcn 3,000 0rdnry 0vdcnd 2,700
Slc 0I Arcn SI0ck & 0cbI0rs 880 0cbcnIurc RcdcmpI0n 8,720
Slc 0I Lnd b,000 !nIcrcsI 0n 0cbcnIurc b30
Slc 0I Fxcd AsscIs 59,755 Trdc CrcdI0rs 70
!nvcsImcnI !nc0mc 270 l. C/d 47,480
74,425 74,425
. CpIl Rcscrvc '000 '000
Am0unI 0I Slcs 0I Fxcd AsscIs 8,420
(b,300,000 - 4,458,000)
Am0unI IrnsIcrrcd I0 cpIl
Rcscrvc 0n ssuc 0I b0nus shrcs 9,000
Prcmum 0n rcdcmpI0n 0I PrcI. Shrcs 230
Prcmum 0n rcdcmpI0n 0I 0cbcnIurc 720 9,950
8,470
2. Pr0II 0n Slc 0I Lnd
Pr0cccds 0n slc (400pl0Is @ 5,000) pcr pl0I b,000
C0sI (400 x b,000) 2,400
Pr0II 0n Slc 3,b00
98
Frmcrs prcprc Irdng, pr0II nd l0ss cc0unI nd blncc shccI, |usI s
cvcry 0Ihcr busncss 0uIII. H0wcvcr, pcculrIcs n Irmcr's cc0unI rc
mnly n Ihc vluI0n 0I sI0ck 0I rblc plnII0n pr0ducIs nd lvcsI0ck.
SIIcmcnI 0I Acc0unIng SIndrd N0. 4 (SAS) 0n SI0ck, prcscrbcs IrcImcnI
0I Ihcsc pcculrIcs.
() FrsI - Imc lnd clcrng nd sIumpng my nv0lvc subsInIl
c0sIs whch rc s0mcImcs cpIlscd.
(b) Tllgcs ngr0und nd hrvcsIcd cr0ps rc Ihrcc dsIncI
0pcrI0nl sIgcs rcqurng vluI0n. Ech 0pcrI0nl sIgc
hs Is 0wn pcculr pr0blcms 0I rcvluI0n. C0sIs ncurrcd rc
chrgcd I0 cch cIcg0ry.
(c) Thc vluc 0I Illgcs usully ncludcs Ihc ccumulIcd c0sIs 0I
lb0ur nd usgc 0I mchncry I0r prcprng Ihc lnd I0r
plnIng, pl0ughng nd IcrIlzcr sprcdng.
(d) !n - gr0und cr0ps rc usully vlucd by ncludng Ihc c0sIs
ss0cIcd wIh Illgcs, lb0ur, sccdlngs, wccdng, dscsc
c0nIr0l nd Ihc IIrbuIblc c0sI 0I mchncry uscd.
(c) Thc vluI0n 0I hrvcsIcd cr0ps nv0lvcs Ihc c0rrccI
dcIcrmnI0n 0I cIul npuI c0sIs, lb0ur, dcprccI0n nd
sI0rgc c0sIs I Ihc Imc 0I hrvcsI, I0 cnsurc IhI Ihc vluc 0I
hrvcsIcd cr0ps ncludcs ll Ihc c0sIs ncurrcd Ir0m Illgc I0
hrvcsIng.
(I) M0sI Irm pr0ducIs rc pcrshblc 0r dcIcr0rIc quckly,
IhcrcI0rc, I s ppr0prIc I0 mkc rcs0nblc pr0vs0n I0r
dcIcr0rI0n 0r nml sp0lgc bscd 0n n0rm wIhn Ihc
ndusIry 0r IIcr c0nsulII0n wIh cxpcrIs.
(g) whcrc Ihcrc s dcquIc rcc0rd kccpng nd n ppr0prIc c0sI
cc0unIng sysIcm, c0sI I0rms Ihc bss I0r Ihc vluI0n 0I rblc
pr0ducIs. !n 0Ihcr sIuI0ns, ncI rclsblc vluc s uscd.
(h) 0IIcl prccs I0r ccrIn pr0ducIs, such s, mzc, s0rghum nd
mllcI, rc publshcd by Ihc ppr0prIc c0mm0dIy 0rds, I0r
cxmplc, NI0nl 0rns 0rd. Usc 0I such 0IIcl prcc s n0I,
h0wcvcr, rcc0mmcndcd cxccpI whcrc Ihcy rc bcl0w c0sI.
() Thc m|0r pr0blcm wIh Ihc dcIcrmnI0n 0I Ihc vluc 0I
plnII0n pr0ducI s IhI, plnII0n d0cs n0I usully sIrI I0
pr0ducc unIl IIcr l0ng gcsII0n pcr0d. Thus, ll c0sIs
ss0cIcd wIh lnd prcprI0n, plnIng, prunng nd
dcvcl0pmcnI rc ccumulIcd unIl Ihc Irccs c0mc I0 mIurIy
0r bcgn I0 bcr IruIs. Thc ccumulIcd c0sIs I0 mIurIy rc
m0rIscd 0vcr Ihc csImIcd pr0ducIvc lIc 0I Ihc plnII0n.
(b) !I s Ihc n0rml prcIcc I0 hvc plnIng d0nc n l0Is 0r bIchcs
s0 s I0 hvc c0nInu0us Il0w 0I plnII0n 0uIpuI. whcrc
99
p0ssblc, c0sI 0I such l0Is 0r bIchcs rc ccumulIcd scprIcly
n 0rdcr I0 mIch Ihcr rcvcnuc wIh ss0cIcd c0sIs, whcn
hrvcsIcd nd s0ld.
(c) Ech ycr Ihc c0sI 0I plnII0n 0uIpuI c0nssIs 0I Ihc
prcprI0n 0I Ihc c0sI ccumulIcd I0r Ihc qunIIcs hrvcsIcd
plus Ihc c0sI 0I cxIrcIng nd Irnsp0rIng Ihcm I0 Ihc p0nI 0I
slc.
(d) S0mc cnIcrprscs prcIcr I0 usc vcrgc c0sI 0I pr0ducI0n n
ssgnng vluc I0 Ihc qunIIcs hrvcsIcd nd Ih0sc
unhrvcsIcd. Ths mcIh0d s |usIIblc bccusc m0sI
plnII0n pr0ducIs rc h0m0gcn0us.
(c) S0mc plnII0n cr0ps such s sugrcnc nd bnn rc
nnul cr0ps whch ycld pr0ducc wIhn Ihc IrsI ycr 0I bcng
plnIcd. SI0cks 0I such pr0ducc rc vlucd n Ihc smc mnncr
s rblc pr0ducIs.
0n Ihc 0Ihcr hnd, ccrIn IruI Irccs such s 0rngcs, mng0cs
rc 0IIcn gr0wn 0n much smllcr sclc Ihn w0uld n0rmlly
bc rcgrdcd s plnII0n. H0wcvcr, sI0cks 0I Ihcr pr0ducIs rc
vlucd n Ihc smc mnncr s Ih0sc n plnII0ns.
() Tw0 m|0r pr0blcms rc ss0cIcd wIh Ihc vluI0n 0I
lvcsI0cks:
() 0cIcrmnng Ihc cIul numbcr nd Ihcr cxsIcncc,
cspcclly, grzng nml, nd
() !dcnIIyng Ihc vr0us sIgcs 0I Ihcr dcvcl0pmcnI.
(b) Thc I0ll0wng Ihrcc ppr0chcs I0 vluI0n 0I sI0ck rc
gcncrlly n usc:
() C0sI ppr0ch: Thc vluc s bscd 0n Ihc cIul c0sI
ncurrcd 0n cch cIcg0ry 0I lvcsI0ck.
() NcI rclsblc vluc: Thc vluc s bscd 0n Ihc cxpccIcd
rcIurns ll0wng I0r Ihc c0sIs 0I IIIcnng, prcprI0n
I0r slc nd scllng.
() Apprscd vluc: Thc vluc s dcIcrmncd by pr0Icss0nl
vlucrs, Ikng nI0 c0nsdcrI0n Ihc currcnI mrkcI
vluc, Ihc m0rIlIy IcI0r nd Ihc rclIvc mrkcIblIy
0I Ihc brccd 0r clss 0I sI0ck.
(c) whcrc lvcsI0ck s rscd prmrly I0r Is pr0ducIs rIhcr Ihn
I0r c0nsumpI0n, such s dry cIIlc 0r cgglyng p0ulIry,
dIIcrcnI c0nsdcrI0ns rsc n Ihc vluI0n 0I such lvcsI0ck.
!I s usul I0 ccumulIc Ihc c0sI 0I brngng such lvcsI0ck I0
Ihc p0nI 0I mIurIy I whch Ihcy bcgn I0 ycld pr0ducIs nd
I0 m0rIsc such c0sIs 0vcr Ihcr csImIcd pr0ducIvc lvcs.
(d) Thc sI0cks n lvcsI0ck cnIcrprsc usully ncludc Iccds - sI0ck,
drugs, smll mplcmcnIs nd 0Ihcr csscnIl mIcrls. Thcy
rc usully vlucd I c0sI IIcr physcl c0unI.
200
() 0pcn dcprImcnIl cc0unIs I0r dIIcrcnI cIvIcs such s dry,
cr0ps, IruIs nd lvcsI0cks rcrng, nd whcrc ncccssry,
subdvdc Ihc cIvIcs.
(b) 0pcn lcdgcr cc0unIs s n c0mmcrcl cIvIcs, I0r cxmplc,
dcbI purchscs A/c nd crcdI crcdI0rs cc0unI, I0r purchscs
0I npuI 0n crcdI.
(c) R0II0n 0I cr0ps rcsulIng n numbcr 0I Iclds lyng Ill0w,
0ccs0nlly s0wn wIh Ill0w cr0ps, IhI s, numbcr 0I Iclds
rc n0I n Iull pr0ducI0n.
(d) Lrgc mcchnscd Irms kccp Inncl rcc0rds buI m0sI smll
Irm rcc0rds rc nc0mplcIc 0r I bcsI, snglc cnIrcs rcc0rdng
rcccpIs nd pymcnIs.
(c) Lrgc cxpcndIurc ncurrcd 0n sccds nd IcrIlzcrs my
0ccs0nlly bc sprcd 0vcr pcr0d. Frmng cqupmcnI
purchscd IhI rc 0I mIcrl vluc nd cxpccIcd I0 bc n usc
I0r l0ng pcr0d sh0uld bc cpIlscd.
(I) \luI0n 0I lvcsI0ck nd mn0rl rghIs rc crrcd 0uI by Irm
cxpcrIs.
(g) whcrc dcsIrucI0n 0I nmls nd cr0ps s rcsulI 0I dscsc
nd pcsI rcspccIvcly 0ccur, c0mpcnsI0n I0r l0ss rc c0mpuIcd
I0r p0ssblc nsurncc clm.
(h) Lrgc Irms Ikc nsurncc c0vcr I0r l0ss 0I lvcsI0ck duc I0
nIccI0n 0r l0ss 0I cIIlc s rcsulI 0I sIryng.
Thc Irl blncc 0I MulIlIcrl Frms s I 3 0cccmbcr 2008 s s I0ll0ws:
Rcgulr lb0ur cxpcnscs 5,20
Rcpr 0I m0I0r vchclcs b80
PcIr0l, 0l nd lubrcI0ns 33b
ElccIrcIy 240
0cprccI0n ,080
RcnI nd rIcs 720
!nsurncc 20
0cbI0rs 7,200
Rcprs 0I Pr0pcrIy 720
Tclcph0nc 9b
nk chrgcs 3b
0cncrI0r rcprs nd dcscl 9b0
20
0Ihcr gcncrl cxpcnscs 240
Csh I bnk 320
EqupmcnI b,400
0rwngs 2,800
CpIl 7,200
CrcdI0rs 2,3b0
0pcnng sI0ck 5,53b
Purchscs b,92
Slcs 25,20
Subsdcs 904
FcrIlzcr 5b0
Sccds ,280
C0nIrcI w0rk - cr0p ,b80
Csul lb0ur - cr0p 40
0Ihcr cxpcnscs - cr0p 208
Fccd 2,240
Csul lb0ur - lvcsI0ck 20
\cIcnry Mcdcnc - LvcsI0ck 320
0ry cxpcnscs 80
Sundry cxpcnscs - lvcsI0ck b0 ______
45,584 45,584
. Cl0sng SI0ck: Cssv- 240,000, Ym- N540,000, C0w- 240,000, Rm
- 400,000.
2. Slcs: Cssv - 2,400,000, Ym - 3,b80,000, C0w - b,5b0,000, Rm
- N2,480,000
3. 2/3 0I RcnI & RIcs, PcIr0l, ElccIrcIy nd Tclcph0nc sh0uld bc chrgcd I0
Ihc Frm's Acc0unI.
4. Thc 0pcnng sI0cks I0r Ihc I0ll0wng pr0ducI lncs: Cssv ,25b,000,
Ym - ,240,000, C0w - 2,200,000, Rm- ,840,000.
5. Purchscs 0I: C0w - 4,720,000, nd Rm - ,472,000.
b. 0wn C0nsumpI0n: Cssv - b4,000, C0w - 20,000.
7. Subsdcs: Cssv - b0,000, Ym - 224,000, C0w - 320,000, Rm
- 200,000.
Prcprc Trdng, Pr0II & L0ss Acc0unI 0I MulIlIcrl Frms I0r Ihc ycr cndcd
3 0cccmbcr 2008 nd Is lncc ShccI s I IhI dIc.
202
CASSA\A YAM C0w RAM
'000 '000 '000 '000
Slcs 2,400 3,b80 b,5b0 2,480
Subsdcs b0 224 320 200
0wn C0nsumpI0n b4 20
() 2,b24 3,904 7,000 2,b80
C0sI 0I Slcs:
0pcnng SI0ck ,25b ,240 2,200 840
Purchscs ____ ____ 4,720 ,472
,25b ,240 b,920 2,32
Lcss: Cl0sng SI0ck 240 544 240 400
(b) ,0b b9b b,b80 ,92
0r0ss 0uIpuI ( -b) ,b08 3,208 0,320 7b8
Cr0ps: '000 '000 '000
0r0ss 0uIpuIs
Cssv ,b08
Ym 3,208
4,8b
Lcss: 0rccI Expcnscs:
FcrIlzcr 5b0
Sccd ,280
C0nIrcI w0rk ,b80
Csul Lb0ur 40
0Ihcr cxpcnscs 208
3,7b8
0r0ss Pr0II ,048
LvcsI0ck:
0r0ss 0uIpuI:
C0w 0,320
Rm 7b8
,088
Fccd 2,240
Csul Lb0ur 20
\cIcnry Mcdcnc 320
203
'000 '000 '000
0ry 80
Sundry cxpcnscs b0 (2,920)
0r0ss Pr0II 8,b8
T0Il 0r0ss Pr0II 9,2b
0cncrl Expcnscs:
Rcgulr Lb0ur 5,20
Rcpr 0I M0I0r \chclcs b80
PcIr0l, 0l nd Lub 2/3 x 33b 224
ElccIrcIy - 2/3 x 240 b0
0cprccI0n ,080
RcnI nd RIcs 2/3 x 720 480
!nsurncc 20
Rcprs 0I Pr0pcrIy 720
Tclcph0nc (2/3 x 9b) b4
nk Chrgcs 3b
0cncrl rcprs nd 0cscl 9b0
0Ihcr 0cncrl cxpcnscs 240 (9,984)
NcI L0ss I0r Ihc ycr (7b8)
Fxcd AsscIs: EqupmcnI b,400
CurrcnI AsscIs:
SI0ck (240 + 544 + 240 + 400) ,424
0cbI0rs 7,200
Csh I nk 320
8,944
CurrcnI LblIcs:
CrcdI0rs (2,3b0)
b,584
2,984
Fnnccd y:
CpIl 7,200
Lcss: NcI L0ss I0r Ihc ycr (7b8)
b,432
0rwngs: (2,800 + 84 + 2 + 80 + 240 + 32) (3,448)
2,984
C0mpncs nv0lvcd n pr0spccIng nd pr0ducI0n 0I crudc 0l rc gudcd by
Ihc SIIcmcnI 0I Acc0unIng SIndrd (SAS) N0. 4. Thc bsc prncplcs nd
llusIrI0n 0I pcculr cc0unIng IrcImcnI nd mcIh0ds 0I clculIng
dcplcI0n, dcprccI0n nd m0rIsI0n 0I pr0spccIng nd pr0ducI0n c0sIs
0I 0l nd gs wll bc mdc. Rcdcrs rc dvscd I0 hvc n0Ihcr l00k I SAS
N0 4, I0r Ihc dcInI0n 0I Icrms nd 0Ihcr dcIls.
204
() Mncrl rghIs cqusI0n c0sIs,
(b) Expl0rI0n nd drllng c0sIs,
(c) 0cvcl0pmcnI c0sIs,
(d) Pr0ducI0n c0sIs,
(c) Supp0rI EqupmcnI nd IclIcs c0sIs, nd
(I) 0cncrl c0sIs.
McIh0ds nd pr0ccdurcs I0ll0wcd by 0l c0mpncs n cc0unIng I0r
cxpl0rI0ns nd dcvcl0pmcnI c0sIs dvcrgc sgnIcnIly. Tw0 bsc
cc0unIng mcIh0ds IhI rc n c0mm0n usc rc Ihc Iull c0sI nd Ihc
succcssIul cII0rIs mcIh0ds. 0Ih mcIh0ds rc wdcly I0ll0wcd nd cch
0I Ihcm hs vld c0nccpIul |usIIcI0n.
() All c0sIs ncurrcd 0n mncrl rghIs cqusI0n, cxpl0rI0n nd
dcvcl0pmcnI cIvIcs (ncludng IuIurc dcvcl0pmcnI c0sIs)
sh0uld bc cpIlzcd rrcspccIvc 0I whcIhcr 0r n0I Ihc cIvIcs
rcsulIcd n Ihc dsc0vcrng 0I rcscrvcs.
(b) Thc c0mpncs usng Iull c0sI mcIh0d rc rcIcrrcd I0 s Iull
c0sI c0mpncs whlc Ih0sc usng succcssIul cII0rIs mcIh0d rc
rcIcrrcd I0 s succcssIul cII0rIs c0mpncs:
(c) A Ihrd mcIh0d kn0wn s Rcscrvc Rcc0gnI0n Acc0unIng (RRA)
ll0ws n cnIcrprsc I0 rcc0gnsc Ihc vluc 0I pr0vcd 0l nd
gs rcscrvcs s sscIs nd chngcs n such rcscrvc vlucs s
crnngs n Ihc Inncl sIIcmcnIs. Ths mcIh0d s n0I c0mm0n,
IhcrcI0rc, I s n0I rcc0mmcndcd.
(d) A cclng IcsI sh0uld bc c0nducIcd I lcsI nnully, n 0rdcr I0
dcIcrmnc whcIhcr Ihc c0sIs cpIlzcd cn bc rcc0vcrcd Ir0m
Ihc pr0vcd rcscrvc.
(c) Pr0vcd rcscrvcs rcprcscnI csImIcd qunIIy 0I 0l nd gs IhI
cn bc cxpccIcd I0 bc rcc0vcrcd Ir0m kn0wn rcscrv0rs usng
cxsIng Icchn0l0gy. Pr0vcd rcscrvc my bc dcvcl0pcd 0r
undcvcl0pcd.
() C0sIs ncurrcd pr0r I0 cqusI0n 0I mncrl rghIs nd 0Ihcr
cxpl0rI0n cIvIcs n0I spccIclly drccIcd I0 n dcnIIblc
sIrucIurc, sh0uld bc wrIIcn 0II n Ihc pcr0d Ihcy rc ncurrcd.
(b) All c0sIs ncurrcd 0n mncrl rghIs cqusI0n, cxpl0rI0n,
pprsl nd dcvcl0pmcnI cIvIcs sh0uld bc cpIlscd,
nIlly 0n Ihc bss 0I wclls, Icld 0r cxpl0rI0n c0sI ccnIrcs,
pcndng dcIcrmnI0n.
(c) Such c0sIs sh0uld bc wrIIcn 0II whcn I s dcIcrmncd IhI Ihc
wcll s dry.
(d) Mncrl rghIs cqusI0n c0sIs IhI hvc n0I bccn ll0cIcd
sh0uld bc m0rIscd 0vcr Ihc rcmnng lIc 0I Ihc lccncc.
205
(c) NcI b00k vluc 0I undcprccIcd mncrl rghIs cqusI0n c0sIs
sh0uld bc rcvcwcd nnully, I0r mprmcnI 0n wcllbywcll
bss. Any mprmcnI dsc0vcrcd sh0uld bc wrIIcn 0II.
(I) !mprmcnI rscs whcn Ihc c0sI s grcIcr IhI Ihc sscsscd
vluc.
(g) Am0rIsI0n 0I cxpl0rI0n nd drllng c0sIs ncurrcd 0n cch
wcll Icld 0r pr0pcrIy sh0uld bc 0n unI0Ipr0ducI0n bss
usng pr0vcn dcvcl0pcd rcscrvcs.
(h) Thc usc 0I cclng IcsIs s n0I mndI0ry.
Lb0 Pr0ducng LId ws nc0rp0rIcd n ycr 2008 nd hs Iw0 0l Mnng
Lcscs (0ML). Rcscrvcs n c0mmcrcl qunIIcs wcrc dsc0vcrcd n 2008, n
0nc 0I Ihc 0MLs. ExpcndIurc wcrc:
'000
RcnI nd sgnIurc b0nus 3,200
Expl0rI0n c0sIs b,000
0cvcl0pmcnI c0sIs 2,000
EsImIcd IuIurc 0cvcl0pmcnI c0sIs 8,000
EsImIcd IuIurc bnd0nmcnI c0sIs (ncIs 0I Slvgc vluc) 800
40,000
0ML 20 (00 ycrs)
RcnI nd SgnIurc b0nus 5,7b0
Expl0rI0ry / drllng c0sIs (dry h0lc c0sIs) 7,7b0
23,520
Rcscrvcs nd pr0ducI0n dI 0I crudc 0l wcrc:
Pr0vcd rcscrvcs I 3/2/2008:
0cvcl0pcd 54,400 brrcls
Undcvcl0pcd b,000 brrcls
Pr0ducI0n - 2008 b,400 brrcls
Y0u rc rcqurcd I0 c0mpuIc dcplcI0n, dcprccI0n nd m0rIsI0n (00&A)
I0r 2008 nd prcprc n cxIrcI 0I pr0II nd l0ss cc0unI s I 3 0cccmbcr
2008 undcr:
() Thc Iull c0sI mcIh0d
(b) SucccssIul cII0rIs mcIh0d.
()
0ML 20 '000
AcqusI0n c0sIs 3,200
Expl0rI0n c0sIs b,000
0cvcl0pmcnI c0sIs 2,000
20b
FuIurc 0cvcl0pmcnI c0sIs 8,000
EsImIcd IuIurc bnd0nmcnI c0sIs 800
0ML 20 (00 ycrs):
AcqusI0n c0sIs 5,7b0
Expl0rI0n c0sIs (0ry h0lc) 7,7b0
b3,520
0cprccI0n, 0cplcI0n nd Am0rIsI0n
pcr brrcl: b3,520,000____
(70,400 + b,400)
= 827.083
00 & A I0r 2008 = b,400 x 827.083
= 5,293,33
00 & A 5,293,33
Fxcd AsscIs:
0l & 0s Pr0pcrIcs b3,520,000
00 & A (5,293,33)
58,22b,bb9
(b)
0ML 200
AcqusI0n C0sIs 3,200,000
Lcsc Pcr0d 00ycrs
00 & A I0r 2004 = 3,200,000 = 32,000
00
'000
Expl0rI0n C0sIs b,000
0cvcl0pmcnI C0sIs 2,000
NcI Abnd0nmcnI C0sIs 800
28,800
Pr0vcd 0cvcl0pcd Rcscrvc (54,400+ b,400) = b0,800 brrcls
00 & A I0r 2008 = 28,800,000 x b400
b0,800
= 3,03,579
00 & A AcqusI0n 32,000
Expl0rI0n / 0cvcl0pmcnI 3,03,579
0ry h0lc c0sI 23,520,000
207
Pr0vcd Pr0pcrIy 32,000,000
00 & A (3,03,579)
28,9b8,42
Pr0vcd Pr0pcrIy 0I 32 mll0n s sh0wn n Ihc Irl blncc s Ihc cxpcndIurc
I0 dIc 0n 0ML 200 I0r 00 ycrs 0I 40 mll0n, lcss csImIcd IuIurc
dcvcl0pmcnI c0sI 0I 8 mll0n.
Fr0m Ihc I0ll0wng nI0rmI0n, y0u rc rcqurcd I0 c0mpuIc Ihc vluc 0I Ihc
mprmcnI (I ny) nd c0mmcnI brcIly 0n y0ur c0mprIvc:
C0ST ASSESSE0 \ALUE
'000 '000
0ML 00 30,000 48,000
0ML 0 2,000 4,800
0ML 02 b,000 ,200
0ML 03 8,000 24,000
C0ST ASSESSE0 \ALUE !MPA!RMENT
'000 '000 '000
0ML 00 30,000 48,000 N!L
0ML 0 2,000 4,800 7,200
0ML 02 b,000 ,200 4,800
0ML 03 8,000 24,000 N!L
bb,000 78,000 2,000
: !mprmcnI s sscssblc ndvdully, wcll by wcll, n ggrcgIc 0r 0n
gr0up 0I pr0pcrIy bss. !I mprmcnI wcrc d0nc 0n ndvdul bss,
pr0vs0n 0I 2mll0n w0uld bc mdc. H0wcvcr, n0 pr0vs0n w0uld
bc mdc I0r gr0up 0r ggrcgIc bscs 0I sscssmcnI sncc gr0up
sscsscd vluc s hghcr Ihn c0sI. Prudcncc c0nccpI s pplcd hcrc.
00 & A s c0mpuIcd bscd 0n Ihc cquvlcnI unIs 0I pr0ducI0n n
brrcls, whcrc 0l nd gs rc |0nIly pr0duccd. Thc brrcls rc Ihc c0sI
unI I0r 0l nd rc cquvlcnI I0 42 US 0ll0ns, whlc gs s mcsurcd
n mcIrc cubc IccI (MCF). F0r Ihc purp0sc 0I clculIng cquvlcnI
unIs, I s sIndrd ssumpI0n IhI 0nc brrcl 0I 0l c0nIns sx
Imcs s much cncrgy s gs, hcncc Ihc v0lumc 0I gs s dvdcd by b I0
rrvc I cquvlcnI brrcls.
208
00 & A c0uld ls0 bc c0mpuIcd bscd 0n Ihc currcnI prccs (ycrcnd)
0I Ihc rcscrvcs nd pr0ducI0n. Thc rcvcnuc mcIh0ds sh0uld clmnIc
dsI0rI0n cuscd by Ihc b: c0nvcrs0n rI0 by dcIcrmnng m0rIsI0n
0n Ihc rclIvc vluc 0I hydr0crb0ns.
Usng Ihc I0ll0wng dI, c0mpuIc Iull c0sIs I0r 2004 00 & A usng:
() EquvlcnI physcl unIs 0I pr0ducI0n, nd
() Rcvcnuc vlucs 0I 0l nd gs.
'000
NcI cpIlzI0n c0sIs 7,500
FuIurc 0cvcl0pmcnI c0sIs 5,000
EsImIcd dsmnIlcmcnI nd rcclmI0n
C0sIs, ncI 0I slvgc 2,500
End 0I ycr I0Il pr0vcd rcscrvc:
0l 475,000 brrcls
0s 450,000 MCF
2004 Pr0ducI0n / Rcvcnuc:
0l 25,000 bbls 7,500,000
0s b0,000 MCF 900,000
End 0I ycr Prcc
0l b,000 / bbl
0s 500 / MCF
0l 25,000 bbls
0s b0,000 = 0,000 bbls
b 35,000 E
End 0I Ihc ycr I0Il pr0vcd rcscrvcs:
0l 475,000 bbls
0s 450,000 = 75,000 bbls
b 550,000 E
00 & A = 25,000,000 x 35,000
(35,000 + 550,000)
= ,495,72b
209
'000
0l 25,000 bbls x b,000 50,000
0s b0,000 bbls x 500 30,000
80,000
T0Il Pr0vcd Rcscrvcs CurrcnI \luc: '000
0l 475,000 bbls x b,000 2,850,000
0s 450,000 MCF x 500 225,000
3,075,000
00 & A = 25,000,000 x 80,000,000________
(80,000,000 + 3,075,000)
= 24,580,090
Fducry rclI0nshp cxsIs bcIwccn Ihc s0lcI0r nd hs clcnIs, c0nscqucnIly,
Irm 0I s0lcI0rs s 0blgcd I0 kccp scprIc cc0unIs 0I clcnI's m0ncys nd
s0lcI0r's 0wn m0ncy.
Thc s0lcI0r musI kccp Ihc I0ll0wng cc0unIng b00ks I0 rcc0rd Ihc
IrnscI0ns 0n bchlI 0I hs clcnI's nd hs 0IIcc 0pcrI0ns.
() Cshb00k (2 c0lumns: ClcnI's nk A/c, 0IIcc nk A/c)
(b) ll dclvcrcd b00k
(c) PcIIy csh 0r dsburscmcnIs b00k.
(d) ClcnI's lcdgcr Acc0unI - (2 c0lumns - ClcnI's A/c, 0IIcc A/c)
(c) PrvIc lcdgcr - Acc0unI n0I ncludcd n clcnI's lcdgcr
Thc I0ll0wng cnIrcs sh0uld bc mdc n s0lcI0r's b00ks whcn Ihc sIIcd
IrnscI0ns Ikc plcc:
() whcn m0ncy s rcccvcd Ir0m Ihc clcnI by Ihc S0lcI0r.
0R Csh 00k (clcnI) }
CR ClcnI lcdgcr (clcnI) } wIh m0unI rcccvcd
(b) S0lcI0r dvnccs m0ncy 0r mkcs rcmIInccs I0 hs clcnI
0R ClcnI lcdgcr (0IIcc) }
CR Csh 00k (0IIcc) } wIh Ihc m0unI dvnccd
(c) ClcnI pys bck m0ncy dvnccd
0R Csh 00k (0IIcc) } wIh vluc 0I m0ncy pd
CR ClcnI lcdgcr (clcnI) }
(d) TrnsIcr s mdc n Ihc clcnI's lcdgcrs I0r m0ncy dvnccd
0R ClcnI lcdgcr (clcnI) }wIh vluc 0I m0ncy IrnsIcrrcd
CR ClcnI lcdgcr (0IIcc) }
20
(c) S0lcI0r ncurs c0sIs 0n bchlI 0I clcnI.
0R ClcnI lcdgcr (0IIcc) } wIh c0sI ncurrcd
CR PrvIc lcdgcr (c0sI cc0unI) }
(I) TrnsIcr s mdc 0n c0sI ncurrcd 0n bchlI 0I Ihc clcnI n Ihc
clcnI's lcdgcr
0R ClcnI lcdgcr (clcnI) } wIh Ihc mxmum m0unI grccd
CR ClcnI lcdgcr (0IIcc) } I0. !I cn bc IrnsIcrrcd bcIwccn
clcnI nd s0lcI0r.
(g) M0ncy s pd 0n bchlI 0I clcnI
0R ClcnI lcdgcr (clcnI) }
CR Csh b00k (clcnI) } wIh m0unI pd.
Mr. 0c0rgc, s0lcI0r, crrcd 0uI Ihc I0ll0wng IrnscI0ns durng Ihc m0nIh
0I 0cI0bcr 2008:
0cI. 0: Pd b0,000 I0 Mr. 1mcs, I Ihc rcqucsI 0I hs clcnI,
Mr. 0Slv, 0n cc0unI 0I dcbI duc Ir0m Mr. 0Slv I0 1mcs, Ihc
clcnI hvng n0 m0ncy n Ihc hnd 0I s0lcI0r.
0cI. 20: Mr. 0Slv pys 240,000 I0 Ihc s0lcI0r I0 mccI Ihc b0,000 nd
I0 dschrgc Ihc blncc 0I dcbI duc I0 Mr. 1mcs.
0cI. 25: Mr. 1mcs rcccvcd chcquc 0I 50,000 Ir0m Ihc s0lcI0r, bcng Ihc
blncc 0I Ihc dcbI duc, Ir0m Mr. 0Slv. Thc s0lcI0r chrgcd Mr.
0Slv b,000 s c0sIs whch rc grccd by Ihc clcnI nd rcmIs
Ihc blncc I0 Mr. 1mcs by chcquc.
P0sI Ihc b0vc IrnscI0ns n Ihc ncccssry cc0unIs, nd rcc0rds
s I wll ppcr n Ihc b00ks 0I Mr 0c0rgc.
0Ic PrIculrs 0IIcc A/c ClcnI A/c 0Ic PrIculrs 0IIcc A/c ClcnI A/c
N N N N
20/0 0Slv 240,000 0/0 0Slv Advncc b0,000
20/0 0Slv Trns b0,000 20/0 0Slv (TrnsIcr) b0,000
25/0 0Slv C0sI b,000 25/0 0Slv I0 1mcs 50,000
25/0 0Slv - C0sI b,000
25/0 0Slv bl.Rcpd 24,000
______ _______ l.C/d b,000 _______
bb,000 240,000 bb,000 240,000
l. /d b,000
0Ic PrIculrs 0IIcc A/c ClcnI A/c 0Ic PrIculrs 0IIcc A/c ClcnI A/c
N N N N
0/0 Csh dvncc b0,000
20/0 Csh TrnsIcr b0,000 20/0 Csh 240,000
25/0 Csh I0 1mcs 50,000 20/0 Csh (TrnsIcr) b0,000
25/0 Csh - C0sI b,000 25/0 Csh C0sI b,000
2
25/0 Cshl.Rcpd 24,000
25/0 l. C/d b,000 ______ ______ _______
bb,000 240,000 bb,000 240,000
l. /d b,000
0Ic N0. 0I ll ClcnI PrIculrs C0sIs 0sburscmcnI T0Il
25/0 Mr. 0Slv \r0us mIIcrs b,000 b,000
l. /d XX ll dclvcrcd b,000
P & L A/C b,000 l. C/d XX
b,000 b,000
F0r dcIlcd bckgr0und nd Ihc0rcIcl kn0wlcdgc 0I Pcns0n nd
Pr0vdcnI Iund, y0u rc dvscd I0 sIudy SIIcmcnI 0I Acc0unIng
SIndrds - SAS N0 8 - Acc0unIng I0r Empl0yccs' RcIrcmcnI cncIIs
nd Pcns0n RcI0rms AcI, 2004.
SAS 8 s cIIccIvc 99, c0nscqucnIly, ll Ihc cc0unIng pplcI0ns
hcrc rc bscd 0n SAS N0 8, whch rcqurcs c0mplcIc rcvcw I0 gvc
cIIccI I0 Ihc pr0vs0ns 0I Ihc ncwly pr0mulgIcd Pcns0n RcI0rms AcI
(2004).
C0mpncs nd 0rgnzI0ns 0pcrIng pcns0n 0r pr0vdcnI Iund rc
0blgcd I0 pp0nI 0rd 0I TrusIccs I0r Ihc purp0sc 0I mngng Ihc
Iund. Thc cc0unIng rcc0rds cxpccIcd I0 bc kcpI rc s I0ll0ws:
. Pcns0n Expcnscs cc0unI . Pcns0n Fund Acc0unI
2. nk Acc0unI 2. nk Acc0unI
3. Pr0II nd L0ss Acc0unI 3. !nvcsImcnI Acc0unI
4. Rcvcnuc Acc0unI
5. lncc ShccI
() 0R P&L A/c } () 0r nk A/c
CR Pcns0n Expcnscs A/c } CR Pcns0n Iund A/c
wIh cmpl0ycr's c0nIrbuI0n } wIh m0ncy rcccvcd Ir0m Ihc
I0 pcns0n Iund. } c0mpny.
(b) 0R Slrcs & wgcs } (b) 0R nk A/c
CR Pcns0n Expcnscs A/c } CR Pcns0n Iund A/c
wIh cmpl0yccs' c0nIrbuI0n I0 } wIh c0nIrbuI0n Ir0m cmpl0yccs
pcns0n Iund. } & cmpl0ycrs.

22
(c) 0R Pcns0n cxpcnscs A/c } (c) 0R !nvcsImcnI A/c (cpIl c0lumn)
CR nk A/c } CR nk A/c
wIh Ihc m0ncy pd I0 Ihc } wIh purchsc prcc 0I nvcsImcnI.
Pcns0n TrusIcc. }
(d) 0R !nvcsImcnI A/c
CR Pcns0n Iund A/c
wIh I0Il nvcsImcnI nc0mc.
(c) 0R Pcns0n Iund A/c
CR nk A/c
wIh I0Il cxpcnscs ncurrcd.
(I) 0R nk A/c
CR !nvcsImcnI A/c
wIh !nIcrcsI / 0vdcnd rcccvcd.
(g) 0R Pcns0n Iund A/c
CR nk A/c
wIh m0unI pd I0 Pcns0ncrs.
Thc 0rd 0I 0rccI0rs 0I 0sy LId dccdcd 0n 30 Aprl, 7, I0 nIr0ducc
c0nIrbuI0ry Pcns0n Schcmc I0r Is sIII. Thc SIII Pcns0n Fund ws
c0nsIrucIcd by TrusI 0ccd whch pr0vdcd I0r Ihc pymcnI 0I Pcns0ns Ir0m
1uly, 2007.
Thc I0ll0wng c0nIrbuI0ns rc I0 bc pd I0 Ihc Fund:
() 0 0I sIII m0nIhly slrcs rc I0 bc dcducIcd nd pd I0 Ihc IrusIccs
cvcry m0nIh.
(b) Thc c0mpny's c0nIrbuI0n I0 Ihc TrusI Fund rc:
() Fvc nnul nsIlmcnIs 0I 400,000 pcr nnum I0 c0vcr Ihc
pcns0n lblIy n rcspccI 0I psI scrvccs, Ihc IrsI nsIlmcnIs
I0 bc pd 0n 1uly , 2007.
() A sum cqul I0 Ihrcc Ihc mcmbcrs' c0nIrbuI0ns rc I0 bc mdc
I Ihc smc Imc mcmbcrs' c0nIrbuI0ns rc pd 0vcr.
Thc TrusIccs rcccvcd Ihc IrsI c0nIrbuI0n Ir0m Ihc c0mpny n rcspccI 0I psI
scrvccs 0n 1uly, 2007. Mcmbcrs' c0nIrbuI0n m0unIng I0 b0,000 I0r sx
m0nIhs cndcd 0cccmbcr 3, 2007, wcrc rcccvcd I0gcIhcr wIh Ihc m0nIhly
c0nIrbuI0ns duc Ir0m Ihc c0mpny s I whcn duc. TrusIccs purchscd Ihc
I0ll0wng nvcsImcnIs.
() 2 1uly 2007 4 b0,000 Eb0ny SIIc SI0ck @ 88 Cum dv 1unc & 0cc
(b) 2 1uly 2007 3 b0,000 Lg0s SIIc SI0ck @ b9 Ex dv 1uly & 0cc.
(c) 3 ScpI 2007 3 b0,000 Nsrw SIIc SI0ck @ 77 Cum dv Aprl & 0cI.
Thc I0ll0wng pymcnIs wcrc mdc:
SImp duIy nd br0kcrgc 0n nvcsImcnIs () ,5b0, (b) ,2b0, (c) 540
Thc TrusIccs rcs0lvcd I0 mkc Ihc ppr0prIc nIcrcsI pp0rI0nmcnI 0n ll
nvcsImcnIs hcld nd I0 ccruc I0r nIcrcsI duc.

23
Thc IrusIccs pd pcns0n 0I 50,000 nd ncurrcd sundry cxpcnscs 0I 4,000
durng Ihc sx m0nIhs pcr0d cndcd 0cccmbcr 3 2007.
) wrIc up !nvcsImcnI Acc0unIs s Ihcy wll ppcr n Ihc TrusIcc's b00ks.
() Prcprc Pcns0n Fund Acc0unI I0r Ihc sx m0nIhs cndcd 3 0cccmbcr
2007 nd lncc ShccI s I IhI dIc.
()
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
2/7/03 nk Purchscsb0,000 200 *54,b0 /2/03 nk !nIcrcsI ,200
//03 Pcns0n / Rcv ______ 200 ______ 3/2/03 l. c/d b0,000 200 54,b0
b0,000 400 54,b0 b0,000 ,400 54,b0
//04 l. b/d b0,000 200 54,b0
* Nb0,000 x 88 Cum dv. = b0,000 x 88 = 53,800 + ,5b0 (sImp duIcs & br0kcrgc)
00 = 54,3b0 lcss N200 (!nc0mc) = 54,b0
4 x b0,000 x = N200
00 2
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
2/7/03 nk Purchscs b0,000 *42,bb0
2/7/03 Ad|. Exdv 50 2/7/03 Ad|. Exdv 50
2/7/03 Pcns0n / rcv _____ 900 ______ 3/2/03 l. c/d b0,000 750 42,80
b0,000 900 42,80 b0,000 900 42,80
//04 l. b/d b0,000 750 42,80
* Nb0,000 @ b9 Cum dv. = b0,000 x b9 = N4,400 + ,2b0 (sImp duIcs & br0kcrgc)
00 = 42,bb0
N0m !nc0mc CpIl N0m !nc0mc CpIl
N N N N N N
3/9/03 nk Purchscs 20,000 250 *5,b90 /0/03 nk !nIcrcsI 300
Pcns0n / Rcv ______ 200 _____ 3/2/03 l. c/d 20,000 50 5,b90
20,000 450 5,b90 20,000 450 5,b90
//04 l. /d 20,000 50 5,b90
* N20,000 @ 77 Cum dv. = 20,000 x 77 = 5,400 + 540 = 5,940 lcss N250 (!nc0mc)
00
20,000 x 2 x 2 = N250
00 2
N N
/7/03 Pcns0n Fund 400,000 !nvcsImcnI 4 Eb0ny 54,3b0
3/2/03 Pcns0n Fund - Empl0yccs b0,000 3 Lg0s 42,bb0
- Empl0ycrs 80,000 3 Nsrw 5,940
!nvcsImcnI !nc0mc 4 Eb0ny ,200 Pcns0n Fund - Expcnscs 4,000
3 Nsrw 300 Pcns0n Pd 50,000
______ l. c/d 474,540
b4,500 b4,500
l. /d 474,540
24
()
N N
Expcnscs 4,000 C0nIrbuI0n - nk 400,000
Pcns0n Pd 50,000 - nk b0,000
lncc C/d 588,300 - nk 80,000
!nvcsImcnI !nc0mc
Eb0ny ,200
Lg0s 900
_______ Nsrw 200
b42,300 b42,300
l. /d 588,300
N
L0ng Tcrm !nvcsImcnIs 4 Eb0ny SI0ck 54,b0
3 Lg0s SI0ck 42,80
3 Nsrw SI0ck 5,b90
2,bb0
Accrucd !nIcrcsI ,00
nk lncc 474,540
588,300
Fnnccd y:
Pcns0n Fund 588,300
Shppng c0mpncs rc cxpccIcd I0 mnIn scprIc
I0r cch vcsscl I0 sccrIn pr0II / l0ss Ir0m cch v0ygc.
s lkc pr0II nd l0ss cc0unI 0I Irdng c0nccrn.
All cxpcnscs rclIng I0 v0ygc (I0r cxmplc, sI0rcs, wgcs, nsurncc,
c0mmss0n br0kcrgc, Iucl nd rcprs) rc dcbIcd I0 Ihc v0ygc
cc0unI. All crnngs, pssgc m0ncy, IrcghI nd ml m0ncy (I ny)
rc crcdIcd I0 v0ygc cc0unI. Thc blncc 0n Ihc v0ygc cc0unI
rcprcscnIs Ihc pr0II 0r l0ss mdc 0n Ihc v0ygc nd s IrnsIcrrcd I0
Ihc gcncrl pr0II nd l0ss cc0unI.
SS 0l0kun ws chrIcrcd 0n Mrch 2008, by 0ccn \cw Shppng
Agcncy LId Ir0m Awyc Lncs LmIcd. !I scIs 0n v0ygc 0n IhI dIc
s I0ll0ws:
Accr I0 App wIh gcncrl crg0 I 2,300 pcr I0n. Thc chrIcr
sIpulIcs I0r n ddrcss c0mmss0n I0 Ihc chIIcrcrs 0I 2 0n IrcghI,
pyblc 0n sgnng Ihc bll 0I ldng I0gcIhcr wIh br0kcrgc 0I 5 I0
Ihc chrIcrs' gcnIs, 0I whch, 0nc IIIh s rcpyblc I0 Ihc vcsscl.
C0nkry I0 P0rI Hrc0urI s I ,700 pcr I0n. Addrcss c0mmss0n 0I
2 0n IrcghI pyblc I0 chIIcrcrs nd br0kcrgc 0I 0ncIhrd 0I 5
pyblc I0 chrIcrs gcnIs 0n sgnng chrIcr. Thc vcsscl ws nsurcd
by C0rncrsI0nc !nsurncc PLC 0n 1nury 2008, I0r 0nc ycr I 3
mll0n nd mngng 0wncrs' ArIclcs 0I Ass0cI0n Ixcd
rcmuncrI0n I .5 0I gr0ss IrcghI chrgcs.
25
Thc I0ll0wng rc rclcvnI cxIrcIs Ir0m Ihc shppng c0mpny's cc0unI:
FrcghI 0I 5,000 I0ns 0I Rcc I0 App nd 7,500 I0ns 0I Rubbcr I0
P0rI Hrc0urI:
wgcs I0r Ihc ycr 9,b00,000
whrIgc I P0rIHrc0urI ,750,000
CpIns 0sburscmcnI - P0rIHrc0urI 325,000
whrIgc I App 320,000
AgcnIs' dsburscmcnIs - App 75,000
CpIn's dsburscmcnIs - App 50,000
SI0rcs Acc0unI 5b0,000
P0rI Chrgcs, cIc. Accr ,350,000
CpIn's Acc0unIs I0r Lb0ur wgcs 750,000
Fucl 7,000
SIcvcd0rcs I C0nkry 420,000
Pr0vs0ns I C0nkry b4,000
Rcprs 0n \0ygc 25,000
CpIn's cxpcnscs - C0nkry 00,000
AgcnIs' Acc0unIs I0r P0rI chrgcs cxclusvc 0I
Addrcss c0mmss0n & br0kcrgc 75,000
Thc v0ygc IcrmnIcd 0n 30 N0vcmbcr 2008. Y0u rc rcqurcd I0
prcprc \0ygc Acc0unI (pr0vdc cxpcnscs I0 Ihc ncrcsI m0nIh).
0uIwrd (Accr I0 App) 5,000 x 2,300 34,500,000
!nwrd (C0nkry I0 P0rIHrc0urI) 7,500 x ,700 29,750,000
b4,250,000
SI0rcs 5b0,000
P0rI Chrgcs ,350,000
CpIn cc0unIs 750,000
Fucl 7,000
SIcvcd0rcs 420,000
Pr0vs0ns I0 C0nkry b4,000
Rcprs 25,000
CpIns cxpcnscs (C0nkry) 00,000
AgcnIs Acc0unI 75,000
wgcs (
9
/
2
x 9,b00,000) 7,200,000
whrIgc (P0rI Hrc0urI) ,750,000
CpIns (P0rI - Hrc0urI) 325,000
whrIgc (App) 320,000
AgcnIs cIc. 75,000
2b
!nsurncc (
9
/
2
x 3,000,000) 2,250,000
CpIns - App 50,000
0uIwrd - r0kcrgc 5 x 34,500,000 x
4
/
5
,380,000
- C0mmss0n 2 x 34,500,000 b90,000
!nwrd - r0kcrgc 5 x 29,750,000 x

/
3
495,833
- C0mmss0n 2 x 29,750,000 595,000
Mngng 0wncr .5 x b4,250,000 9b3,750
(20,549,583)
Pr0II 0n Ihc \0ygc 43,700,47
0r0ups 0I ndvduls n cmpl0ymcnI, Irdc, c0mmcrcc 0r ndusIry c0mc
I0gcIhcr I0 I0rm c00pcrIvc s0ccIy wIh vcw I0 nvcsIng Ihcr
rcs0urccs I0r Ihc bcncIIs 0I Ihc mcmbcrs.
Thc s0ccIy s gudcd by Is c0nsIIuI0n nd bylws nd musI bc
rcgsIcrcd wIh Ihc 0rccI0r 0I C00pcrIvc S0ccIcs 0I Ihc SIIc 0I Is
0pcrI0ns.
Thc Funds 0I c00pcrIvc s0ccIy rc usully gcncrIcd Ir0m Ihc
c0nIrbuI0ns Ir0m mcmbcrs Ihr0ugh drccI m0nIhly c0nIrbuI0ns nd
grccd dcducI0ns Ir0m mcmbcrs' slrcs, n csc 0I cmpl0yccs.
Thc Iund s Ihcn lcnI I0 Is mcmbcrs I0r sIIcd purp0sc I n nIcrcsI
rIc IhI s usully bcl0w Ihc mrkcI rIc.
C0nIrbuI0ns Ir0m mcmbcrs c0uld bc n I0rm 0I subscrpI0ns I0 Ihc
s0ccIy's shrc cpIl, mcmbcrs' svngs 0r cducI0n Iund.
Thc S0ccIy's Funds rc nvcsIcd n shrcs 0I lmIcd lblIy c0mpncs,
sh0rIIcrm dcp0sIs, 0r c0mm0dIcs I0r slc I0 Is mcmbcrs, I0 gcncrIc
nc0mc I0r Ihc s0ccIy.
Thc 0IIccrs 0I Ihc s0ccIy rc 0blgcd I0 prcprc nd ly bcI0rc Is
mcmbcrs, Ihc udIcd Inncl sIIcmcnIs 0I Ihc s0ccIy I pr0pcrly
c0nvcncd Annul 0cncrl MccIng I whch ssucs rclIng I0 Ihc
cIvIcs 0I Ihc s0ccIy n Ihc ycr undcr rcvcw nd dvdcnds pyblc
I0 mcmbcrs rc dscusscd.
Thc cc0unIs prcprcd by Ihc s0ccIy musI ncludc lncc ShccI nd
Rcvcnuc cc0unI wIh rclcvnI n0Ics 0n Ihc cc0unIs.
27
Fxcd AsscIs (NcI 0I 0cprccI0n) 9b,770
SI0cks 0I Rcchrgc Crds b8,045
!nvcsImcnIs - Sh0rIIcrm 0cp0sIs 4,382,50
u0Icd 72,45
Mcmbcrs' !ndcbIcdncss: L0ns 9,08,339
0Ihcrs ,b8,32b
nk nd csh blnccs b0,9b2
Accrucd cxpcnscs 403,500
Shrc cpIl b57,559
Shrc prcmum 0,524
Mcmbcrs' svngs 23,045,3b
Rcscrvc Fund ,087,70
EducI0n Fund 84,82
!nIcrcsI nc0mc:
0n Mcmbcrs' l0ns ,448,402
0n !nvcsImcnI 87,79
Pr0II 0n slc 0I c0mm0dIcs 4b3,930
EnIrncc Fccs 3,000
L0n I0rms nd pr0ccssng Iccs 5,000
Sundry nc0mc ,03
SIII slrcs nd cxpcnscs 259,b0
Trnsp0rI cxpcnscs 35,975
Tclcph0nc cxpcnscs 3,320
C0mmIIcc MccIng cxpcnscs 79,900
PrnIng nd SII0ncry 39,425
nk Chrgcs nd C0mmss0ns 232,b25
0cncrl Rcprs nd MnIcnncc 3,290
AudI Iccs 20,000
ExccuIvc C0mmIIcc H0n0rr 03,500
A0M Expcnscs 280,000
0cprccI0n Chrgc b,583
TrnsIcr I0 Rcscrvc Fund 423,209
TrnsIcr I0 EducI0n Fund 42,32 __________
28,2b4,855 28,2b4,855
AIIcr ppr0prI0n I0 Rcscrvc nd EducI0n Fund, Ihc ExccuIvc C0mmIIcc
Pr0p0scd I0 py ,227,000 s dvdcnds I0 mcmbcrs nd IrnsIcr Ihc blncc
I0 0cncrl Rcscrvc.
28
Prcprc Ihc S0ccIy's Rcscrvc cc0unI I0r Ihc ycr cndcd 3 0cccmbcr, 2008
nd blncc shccI s I IhI dIc.
!nIcrcsI 0n Mcmbcrs' L0ns ,448,402
!nvcsImcnI !nc0mc 87,79
Pr0II 0n slc 0I C0mm0dIcs 4b3,930
EnIrncc Iccs 3,000
L0ns I0rms nd pr0ccssng Iccs 5,000
Sundry !nc0mc ,03
T0TAL !NC0ME 2,785,0b4
SIII slrcs nd cxpcnscs 259,b0
Trnsp0rI cxpcnscs 35,975
Tclcph0nc 3,320
C0mmIIcc MccIng cxpcnscs 79,900
PrnIng nd SII0ncry 39,425
nk chrgcs nd C0mmss0ns 232,b25
0cncrl rcprs nd mnIcnncc 3,290
AudI Iccs 20,000
ExccuIvc C0mmIIcc H0n0rr 03,500
A0M Expcnscs 280,000
0cprccI0n b,583
T0TAL CHAR0ES (,092,228)
SURPLUS F0R THE YEAR ,b92,83b
TrnsIcr I0 Rcscrvc Fund 423,209
TrnsIcr I0 EducI0n Fund 42,32
Pr0p0scd 0vdcnd ,227,000
,b92,530
lncc IrnsIcrrcd I0 0cncrl Rcscrvc 30b
Fxcd AsscIs 9b,770
!nvcsImcnIs - Sh0rIIcrm 0cp0sIs 4,382,50
u0Icd Shrcs 72,45 5,03,b55
SI0cks 0I Rcchrgc Crds b8,045
29
Mcmbcrs !ndcbIcdncss - 0n L0ns 9,08,339
0Ihcrs ,b8,32b 20,b3b,bb5
nk nd Csh blnccs b0,9b2
2b,707,097
CurrcnI LblIcs:
Accrucd Expcnscs 403,500
Pr0p0scd 0vdcnd ,227,000
,b30,500
Shrc CpIl b57,559
Shrc Prcmum 0,524
Mcmbcrs Svngs 23,045,3b
Rcscrvcs Fund ,087,70
EducI0n Fund 84,82
0cncrl Rcscrvc 30b
25,07b,597
2b,707,097
Ths chpIcr dcls wIh Ihc pcculrIcs ss0cIcd wIh cc0unIng I0r
spcclscd busncsscs 0I EsIIc Agcnccs nd Pr0pcrIy C0mpncs, Frmcrs,
0l nd 0s rclIcd c0mpncs, S0lcI0rs, Pcns0n / Pr0vdcnI Fund Mngcrs
nd C00pcrIvc S0ccIcs.
. whch 0I Ihc I0ll0wng cxpcnscs s pcculr I0 shppng c0mpncs!
() SIcvcd0rcs
(b) Slrcs
(c) P0rI chrgcs
(d) CpIn cxpcnscs
(c) whrIgc.
2. !n 0l nd 0s Acc0unIng I0r c0sI, succcssIul cII0rIs mcIh0d cc0unI I0r c0sI s
I0ll0ws:
() All c0sI ss0cIcd wIh cqusI0n cxpl0rI0n nd dcvcl0pmcnI cIvIcs
rc cpIlscd.
(b) Thc c0sIs cn bc m0rIscd gnsI succcssIul Inds 0n gr0ss rcvcnuc bss.
(c) Thc dcIcrmnI0n 0I cpIlscd c0sIs I0 bc m0rIscd sh0uld bc 0n
c0unIrywdc bss.
(d) 0nly c0sIs ss0cIcd wIh succcssIul wclls rc cpIlscd whlc Ih0sc 0I
unsucccssIul cqusI0n nd cxpl0rI0n cIvIcs rc cxpcnscd.
(c) A `cclng IcsI' s rcqurcd n 0rdcr I0 dcIcrmnc whcIhcr Ihc c0sIs
cpIlscd cn bc rcc0vcrcd Ir0m pr0vcd rcscrvc.
220
3. whch 0I Ihc I0ll0wng cxpcnscs s n0I cxclusvc I0 Irm cc0unIng!
() Fccd Expcnscs.
(b) \cIcnry Mcdcnc Expcnscs.
(c) \chclc Rcprs & MnIcnncc Expcnscs.
(d) 0ry Expcnscs.
(c) FcrIlzcr Expcnscs.
4. Thc Pcns0n RcI0rm AcI 2004 s dIIcrcnI Ir0m Ihc prcv0us pcns0n lcgslI0n
bcng 0pcrIcd I0r Ihc publc scrvnIs bccusc pcns0n s n0w c0nIrbuIcd by -
() Empl0yccs nd cmpl0ycrs.
(b) Empl0yccs 0nly.
(c) Empl0yccs 0nly.
(d) Trdc Un0ns.
(c) MngcmcnI.
5. C00pcrIvc S0ccIcs' Funds rc cxpccIcd I0 bc nvcsIcd n --
() u0Icd Shrcs
(b) Trcsury blls
(c) C0mm0dIcs I0r slc I0 Is mcmbcrs.
(d) Sh0rI-Tcrm 0cp0sIs
(c) PlnI nd Mchncry.
b. SIIc 0NE cc0unIng rcc0rd IhI s0lcI0r s cxpccIcd I0 mnIn n
rcspccI 0I clcnIs' m0ncs.
7. SIIc Ihc br0d clssIcI0n 0I 0l nd 0s upsIrcm cIvIcs 0pcrI0ns
c0sI.
8. whI s 0nc ppr0ch I0 vluI0n 0I sI0ck 0I lvcsI0cks!.
9. SIIc 0NE cc0unI IhI sh0uld bc mnIncd by Ihc 0rd 0I TrusIccs 0I
Pcns0n 0r Pr0vdcnI Fund.
0. SIIc 0NE gudng prncplc 0I C00pcrIvc S0ccIy.
22
AIIcr sIudng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
UndcrsInd Ihc mcnng nd purp0sc 0I 0AAP.
0scuss Ihc s0urccs 0I 0AAP n Ngcr.
Kn0w whI c0nsIIuIcs !nIcrnI0nl 0AAP.
Expln Ihc bsc cc0unIng prncplcs nd c0nccpIs n Ngcrn 0AAP.
Thcrc rc mny lIcrnIvc p0sIulIcs, ssumpI0ns, prncplcs nd mcIh0ds
IhI c0uld bc uscd n prcprng Ihc Inncl sIIcmcnIs 0I rcp0rIng cnIIy.
Thcsc lIcrnIvc mcIh0ds mpcI 0n Ihc Inncl p0sI0n nd 0pcrI0nl
rcsulIs 0I c0rp0rIc cnIIcs dIIcrcnIly. T0 cnsurc dcgrcc 0I c0mprs0n 0I
Inncl rcp0rIs, Ihcrc sh0uld bc mnmum unI0rm sIndrds nd gudclncs
0I Inncl cc0unIng IhI dIIcrcnI cnIIcs hvc I0 I0ll0w n Inncl
rcp0rIng. Thcsc sIndrds rc rcIcrrcd I0 s 0cncrlly AcccpIcd Acc0unIng
Prncplcs (0AAP).
SIIcd smply, 0AAP rc Ihc c0nvcnI0ns, rulcs, pr0ccdurcs nd br0d gudclncs
d0pIcd n Ihc prcprI0n nd prcscnII0n 0I Inncl sIIcmcnIs n gvcn
|ursdcI0n, c.g. Ngcr.
0AAP ncludc br0d dcs 0I mcsurcmcnI nd clsscI0ns, s wcll s dcIlcd
rulcs nd pr0ccdurcs uscd by cc0unInIs n prcprng nd prcscnIng
cc0unIng rcp0rIs. Thc rulcs I0ll0wcd by cc0unInIs n Ihc prcprI0n 0I
Inncl sIIcmcnIs rc c0nIncd n Ihc cc0unIng sIndrds ssucd by Ihc
sIndrdscIIng b0dy n gvcn |ursdcI0n. !n Ngcr, such sIndrds rc
ssucd by Ihc Ngcrn Acc0unIng SIndrds 0rd (NAS).
Adhcrcncc I0 gcncrlly cccpIcd cc0unIng prncplcs scrvcs Ivc mp0rInI
purp0scs. Thcsc rc:
() !I ncrcscs Ihc blIy 0I uscrs 0I Inncl sIIcmcnIs I0 undcrsInd
Ihc cc0unIng rcp0rIs ssucd by dIIcrcnI rcp0rIng cnIIcs.
222
(b) !I pr0vdcs rcs0nblc dcgrcc 0I c0mprs0n bcIwccn Inncl rcp0rIs
prcscnIcd by cnIIcs sncc Ihcy d0pI sIndrd Irmcw0rk 0I
gudclncs.
(c) !I ncrcscs Ihc c0nIdcncc 0I nvcsI0rs, mrkcIs, nd ndccd Ihc gcncrl
publc, IhI Ihc Inncl sIIcmcnIs ssucd by rcp0rIng cnIIy,
IIhIully rcprcscnIs Is IrnscI0ns.
(d) Prcprcrs 0I Inncl sIIcmcnIs hvc scI 0I gudclncs whch cn bc
rcdly rcIcrrcd I0 n cc0unIng nd rcp0rIng Ihcr Inncl
IrnscI0ns.
(c) ExIcrnl udI0rs nccd 0AAP I0 gudc Ihcm n rcp0rIng 0n Ihc IruIh
nd Irncss 0r 0Ihcrwsc 0I Ihc Inncl IrnscI0ns 0I dIIcrcnI cnIIcs.
Thc s0urccs 0I 0AAP n Ngcr ncludc:
() C0mpncs nd Allcd MIIcrs AcI, CAP 20, LFN 2004.
(b) !nsurncc AcI, 2003
(c) nks nd 0Ihcr Fnncl !nsIIuI0ns AcI 99.
(d) NI0nl !nsurncc C0mmss0n AcI 2003.
(c) PrudcnIl gudclncs ssucd by Ihc CcnIrl nk 0I Ngcr.
(I) SccurIy nd Exchngc C0mmss0n nd SI0ck Exchngc rulcs nd
rcgulI0ns.
(g) Acc0unIng SIndrds ssucd by Ihc Ngcrn Acc0unIng SIndrds
0rd (NAS).
(h) Acc0unIng SIndrds ssucd by Ihc !nIcrnI0nl Acc0unIng SIndrds
0rd c0nsIIuIc scc0ndry s0urcc 0I 0AAP n Ngcr.
() Pcns0n RcI0rms AcI, 2004
!n Ihc prcv0us sccI0ns 0I Ihs chpIcr, wc hvc nIcrprcIcd 0AAP s gcncrlly
cccpIcd cc0unIng 0AAP c0uld ls0 bc nIcrprcIcd s gcncrlly
cccpIcd cc0unIng S0mc uIh0rs hvc rgucd IhI Ihc Icrm
prncplc gvcs 0AAP n un|usIIcd mcsurc 0I pcrmncncc sncc Ihc c0nccpI
chngcs n rcsp0nsc I0 ncw dcvcl0pmcnIs n Ihc busncss nd cc0n0mc
cnvr0nmcnI.
Thc w0rd prcIcc pcrhps bcIIcr rcIlccIs Ihc IcI IhI cc0unIng prcIcc
lIcrs n rcsp0nsc I0 chngcs n dIIcrcnI s0clcc0n0mc cnvr0nmcnIs. 0AAP,
IhcrcI0rc, g0cs bcy0nd mcrc prncplcs s Ihcy cnc0mpss c0nIcmp0rry
cc0unIng prcIccs IhI rc pcrmssblc wIhn n cc0unIng cnvr0nmcnI.
y cxIcns0n, !nIcrnI0nl 0AAP cnc0mpsscs c0nIcmp0rry cc0unIng
prcIccs IhI rc rcgrdcd s pcrmssblc by Ihc cc0unIng pr0Icss0n nd
rcgulI0rs nIcrnI0nlly (0nhm, cI l 2008).
Thc Acc0unIng SIndrds ssucd by Ihc !nIcrnI0nl Acc0unIng SIndrds
0rd (!AS) c0nsIIuIc Ihc s0urcc 0I nIcrnI0nl 0AAP.
223
Thc I0ll0wng IcI0rs, 0uIlncd by 0nhm cI l (2008), mcmbcrs 0I ErnsI &
Y0ung 0l0bl, pr0vdc uscIul gudc n dcIcrmnng whcIhcr n cc0unIng
prcIcc sh0uld bc cccpIblc n c0unIry's 0AAP, s wcll s nIcrnI0nl
0AAP.
() !s Ihc prcIcc ddrcsscd n cc0unIng sIndrds 0r 0Ihcr 0IIcl
pr0n0unccmcnIs!
(b) !s Ihc prcIcc ddrcsscd n cc0unIng sIndrds IhI dcl wIh
smlr nd rclIcd ssucs!
(c) !I Ihc prcIcc s n0I ddrcsscd n cc0unIng sIndrds,s I dclI wIh
n Ihc sIndrds 0I n0Ihcr c0unIry IhI c0uld rcs0nbly bc c0nsdcrcd
I0 0IIcr uIh0rIIvc gudncc!
(d) !s Ihc prcIcc c0nssIcnI wIh Ihc nccds 0I uscrs nd Ihc 0b|ccIvcs 0I
Inncl rcp0rIng!
(c) 00cs Ihc prcIcc hvc uIh0rIIvc supp0rI n Ihc cc0unIng lIcrIurc!
(I) !s Ihc prcIcc c0nssIcnI wIh Ihc undcrlyng c0nccpIul Irmcw0rk
d0cumcnI!
(g) 00cs Ihc prcIcc mccI bsc crIcr s I0 Ihc qulIy 0I nI0rmI0n
rcqurcd I0r Inncl sIIcmcnIs I0 bc uscIul I0 uscrs!
(h) 00cs Ihc prcIcc Irly rcIlccI Ihc cc0n0mc subsIncc 0I Ihc IrnscI0n
nv0lvcd!
() !s Ihc prcIcc c0nssIcnI wIh Ihc IundmcnIl c0nccpI 0I 'Ir
prcscnII0n!'
(|) Arc 0Ihcr c0mpncs n smlr sIuI0n gcncrlly pplyng Ihc prcIcc!
Thcsc rc gcncrlly cccpIcd prncplcs uscd n Ihc prcprI0n 0I Inncl
sIIcmcnIs nd rc rrcly dscl0scd bccusc 0I Ihcr gcncrl cccpIblIy. Thcy
rc:
() EnIIy C0nccpI: Ths prncplc ssumcs IhI c0mpny 0r c0rp0rI0n s
scprIc cnIIy 0n Is 0wn, I cn suc nd bc sucd n c0urI 0I lw.
(b) 00ng C0nccrn: Thc c0nccpI ssumcs IhI n 0rgnzI0n wll c0nInuc
I0 0pcrIc I0r Ihc I0rcsccblc IuIurc. Thc blncc shccI nd pr0II nd
l0ss cc0unI ssumc n0 nIcnI0n I0 lqudIc 0r curIl Is sclc 0I
0pcrI0ns.
(c) RclzI0n C0nccpI: Ths c0nccpI rcc0gnzcs rcvcnuc s s00n s I s
cpblc 0I 0b|ccIvc mcsurcmcnI nd Ihc vluc 0I sscI s rcs0nbly
ccrIn.
(d) MIchng C0nccpI: Undcr Ihs c0nccpI, rcvcnuc 0r nc0mc nd c0sIs n
pcr0d rc mIchcd nd dclI wIh n Ihc pr0II nd l0ss cc0unI 0I Ihc
pcr0d Ihcy rclIc.
(c) 00ublc EnIIy Prncplc/C0nccpI: Ths c0nccpI ssumcs IhI cvcry
IrnscI0n sh0uld hvc Iw0 cnIrcs. !n 0Ihcr w0rds, whcrc Ihcrc s
dcbI cnIry, Ihcrc hs I0 bc c0rrcsp0ndng crcdI cnIry I0r pr0pcr
cc0unIblIy.
224
(I) C0nssIcncy C0nccpI: Ths mcns IhI cvcry lkc Icm wIhn cch
cc0unIng pcr0d sh0uld bc IrcIcd Ihc smc wy. Ths ll0ws I0r csy
c0mprs0n 0I cc0unIs 0I n cnIIy 0vcr pcr0d 0I Imc.
(g) Prudcncc C0nccpI: Ths ssumcs IhI nc0mc s cIully rclzcd, n0I
csImIcd. ThI s, rcvcnuc nd pr0II sh0uld n0I bc nIcpIcd buI
rcc0gnzcd 0nly whcn rclzcd n csh 0r 0Ihcr sscIs.
Prudcncc nd rclzI0n c0nccpIs, rc bsc c0nccpIs n dcIcrmnng
pr0II mdc.
(h) Pcr0dcIy: Ths c0nccpI ssumcs IhI IrnscI0ns sh0uld bc scprIcd
nI0 prIculr pcr0ds I0r csy mIchng 0I rcvcnuc wIh cxpcnscs.
() HsI0rcl C0sI: Ths ssumcs IhI Icms sh0uld bc sIIcd I Ihcr 0rgnl
c0sI 0I purchsc rIhcr Ihn rclsblc vluc.
Ths s Ihc mcdum Ihr0ugh whch cc0unIng c0nccpIs rc pplcd I0 Inncl
IrnscI0ns n Ihc prcprI0n 0I Inncl sIIcmcnIs.
Thc mcIh0ds d0pIcd nd pplcd by n 0rgnzI0n n pplyng Ihc
IundmcnIl cc0unIng prncplcs I0 Is Inncl IrnscI0ns rc cllcd Ihc
. Thcrc rc Iw0 bscs uscd n Ihc prcprI0n 0I Inncl
sIIcmcnIs. Thcy rc:
() Thc ccrul bss, nd
(b) Thc csh bss.
Evcry 0rgnzI0n 0r C0rp0rI0n hs p0lcy uscd n Ihc prcprI0n 0I Is
cc0unIs. rc, IhcrcI0rc, Ihc bsc rulcs, prncplcs,
c0nvcnI0ns nd pr0ccdurcs d0pIcd n Ihc prcprI0n nd prcscnII0n 0I
Inncl sIIcmcnIs.
Acc0unIng p0lccs d0pIcd by n 0rgnzI0n 0r C0rp0rI0n n Ihc
prcprI0n nd prcscnII0n 0I Inncl sIIcmcnIs rc dscl0scd undcr 0nc
hcdng I0 pr0vdc n 0vcrvcw.
P0lccs d0pIcd by n 0rgnzI0n rc bscd 0n pcrs0nl |udgcmcnI
nd Ihc suIblIy 0I prcscnIng Iruc nd Ir vcw 0I Ihc rcsulI 0I n
0rgnzI0n. ThcrcI0rc, Ihcrc s nccd I0r mngcmcnI I0 bc crcIul
nd rI0nl n Ihcr ch0cc 0I cc0unIng p0lccs.
Thcrc rc prncplcs IhI sh0uld bc uscd s gudc. Thcsc rc:
() Ths prncplc sIIcs IhI gcncrlly Ihc
lcgl I0rm 0I cvcry IrnscI0n s bss I0r rcc0rdng Is
c0mmcrcl sIIus n Ihc b00ks 0I cc0unIs, buI Ihcrc rc nsInccs
whcrcby Ihc lcgl sIIus dIIcrs Ir0m Ihc c0mmcrcl sIIus. !n
225
such nsInccs, Ihc c0mmcrcl sIIus shll bc rcc0gnzcd rIhcr
Ihn Ihc lcgl I0rm. F0r cxmplc, n Inncc lcsc grccmcnI,
Ihc c0mmcrcl sIIus s rcc0gnzcd by ncludng Ihc sscIs
cqurcd s prI 0I Ihc Ixcd sscIs 0I Ihc lcsscc, dcspIc Ihc IcI
IhI lcgl IIlc rcmns wIh Ihc lcss0r.
(b) Ths prncplc sIIcs IhI n cc0unInI sh0uld bc
Ir nd unbscd n Ihc pr0ccss 0I rcc0rdng, c0llIng,
summrzng, nlysng nd nIcrprcIng Inncl IrnscI0ns.
Ths mplcs IhI cc0unInIs sh0uld bc Ir I0 ll uscrs 0I
Inncl nI0rmI0n nd ls0 IrcI IrnscI0ns wIh0uI cm0I0n.
(c) Thc prncplc h0lds IhI 0nly Icms 0I mIcrl
vlucs rc cc0rdcd sIrcI cc0unIng IrcImcnI, IhI s, Icms
wIh sgnIcnI vlucs.
(d) Rcvcnuc nd pr0IIs rc n0I I0 bc nIcpIcd buI
rcc0gnzcd 0nly whcn rclzcd whlc kn0wn l0sscs sh0uld bc
dcquIcly pr0vdcd I0r.
(c) Ths s pr0ducI 0I Ihc 0b|ccIvIy prncplc. !I
cmphszcs Ihc nccd I0r cc0unInIs n0I I0 bc nIlucnccd by ny
uscr, buI I0 prcprc cc0unIs bscd 0n cccpIblc prncplcs.
whcrc IundmcnIl cc0unIng c0nccpIs rc I0ll0wcd n Ihc prcprI0n
0I cc0unIs, dscl0surc 0I such c0nccpIs s n0I ncccssry unlcss Ihcrc s
dcprIurc Ir0m Ihc IundmcnIl cc0unIng c0nccpIs.
H0wcvcr, whcn sclccIng cc0unIng p0lccs, rI0nl |udgcmcnI sh0uld
bc uscd, Ihus, Ihc prncplcs 0I subsIncc 0vcr I0rm, 0b|ccIvIy, Irncss,
nd mIcrlIy cn c0nvcncnIly ll0w prudcncc I0 g0vcrn.
A rcp0rIng cnIcrprsc sh0uld dscl0sc Ihc bss uscd n Ihc prcprI0n
0I cc0unIs I I s sgnIcnI I0r Ihc undcrsIndng nd nIcrprcII0n
0I Inncl sIIcmcnI. Thc p0lccs sh0uld ls0 bc dscl0scd s n
nIcgrl prI 0I Ihc Inncl sIIcmcnIs.
Acc0unIng p0lccs sh0uld bc uscd c0nssIcnIly I0 IclIIc c0mprs0n
cxccpI whcrc dIIcrcnI p0lcy wll bcIIcr cnhncc 0r rcIlccI ncI pr0II
0r l0ss 0I currcnI 0r subscqucnI pcr0ds.
whcn Ihcrc s chngc n cc0unIng p0lcy, Ihc nIurc, |usIIcI0n
nd Ihc cIIccI 0n currcnI ycr's pr0II 0r l0ss sh0uld bc dscl0scd. Als0,
cumulIvc cIIccI 0I Ihc chngc 0n pr0II nd l0ss 0I pr0r pcr0ds sh0uld
bc d|usIcd n Ihc rcIncd crnngs.
Fnncl sIIcmcnIs rc prcprcd undcr Ihc hsI0rcl c0sI c0nvcnI0n,
cxccpI I0r s0mc Ixcd sscIs whch rc ncludcd I Ihcr pr0Icss0nl
vluI0n.
22b
0r0up Pr0II nd L0ss cc0unI nd lncc ShccI ncludc Ihc cc0unIs
0I Ihc c0mpny nd ll Ihc subsdrcs nd Ihc c0mpny's shrc 0I
pr0II IIcr Ix, lcss l0sscs 0I ss0cIcd c0mpncs.
Any cxccss 0I Ihc c0sI 0I cqusI0n 0vcr Ihc Ir vlucs 0I Ihc ncI sscIs
s rcc0gnzcd s n sscI n Ihc blncc shccI s g00dwll rsng 0n
cqusI0n.
!nvcsImcnIs n subsdry nd ss0cIcd c0mpncs rc sIIcd I Ihc
l0wcr 0I c0sI 0r Ihc c0mpny's shrc 0I Ihcr ncI Ingblc sscI vluc I
Ihc ycr cnd.
Lnd nd buldngs rc sIIcd I Ihcr pr0Icss0nl vluI0n plus
ddI0ns I c0sI. 0Ihcr Ixcd sscIs rc sIIcd I c0sI.
0cprccI0n 0n Ixcd sscI s clculIcd I0 wrIc-0II Ihc c0sI 0r
vluI0n 0n sIrghI lnc bss 0vcr Is cxpccIcd uscIul lIc.
SI0cks rc sIIcd I Ihc l0wcr 0I c0sI nd ncI rclzblc vluc IIcr
mkng dcquIc pr0vs0n I0r 0bs0lcsccncc nd dmgcd Icms. !n
Ihc csc 0I g00ds mnuIcIurcd by Ihc c0mpny, c0sI c0nssIs 0I drccI
lb0ur, mIcrl nd ppr0prIc pr0p0rI0n 0I IcI0ry 0vcrhcd.
Turn0vcr rcprcscnIs Ihc ncI vluc 0I g00ds nd scrvcc nv0ccd 0r s0ld
I0 Ihrd prIy, ncI 0I vluc ddcd Ix (\AT).
Thcsc rc sIIcd I Ihc vlucs 0I ndcpcndcnI cngnccrs' ccrIIcIc I0r
w0rk d0nc buI n rcspccI 0I whch pymcnIs wcrc n0I rcccvcd I Ihc
ycr cnd, plus csImIcd vlucs mdc by 0IIcls 0I Ihc c0mpny 0I Ihc
rclzblc vluc 0I w0rk d0nc n0I ycI ccrIIcd.
TrnscI0ns n I0rcgn currcnccs rc c0nvcrIcd nI0 Nr I Ihc
prcvlng rIc rulng I Ihc dIc Ihc rclcvnI nv0ccs rc rcccvcd,
whlc sscIs nd lblIcs dcn0mnIcd n I0rcgn currcnccs rc
IrnslIcd I Ihc prcvlng rIc rulng 0n Ihc lncc ShccI dIc.
Pr0vs0n s mdc I0r dcIcrrcd IxI0n by Ihc lblIy mcIh0d I0 Ikc
cc0unI 0I ll Imng dIIcrcnccs bcIwccn cc0unIng IrcImcnI 0I ccrIn
Icms nd Ihcr c0rrcsp0ndng IrcImcnI I0r nc0mc Ix purp0scs.
227
Ths chpIcr hs cxplncd Ihc mcnng nd s0urccs 0I 0AAP n Ngcr nd
gl0blly. !I ls0 l00kcd I Ihc purp0sc 0I 0AAP nd Ihc bsc cc0unIng
c0nccpIs uscd n Ngcr.
. Thc ssumpI0ns, prncplcs, nd mcIh0ds d0pIcd n Ihc prcprI0n nd
prcscnII0n 0I Inncl sIIcmcnIs rc kn0wn s
() 0cncrlly AcccpIcd AudIng Prncplcs
(b) 0cncrlly Ad0pIcd Acc0unIng Prncplcs
(c) 0cncrlly AcccpIcd Acc0unIng Prncplcs
(d) 0cncrlly Appr0vcd Acc0unIng Prncplcs
(c) 0cncrlly AcccpIcd AudIng Pr0grmmc.
2. whch 0I Ihc I0ll0wng s n0I IcI0r I0 c0nsdcr n dcIcrmnng whcIhcr prIculr
prcIcc s cccpIblc!
() Thc prcIcc s ddrcsscd n n cc0unIng sIndrd
(b) Thc prcIcc s c0nssIcnI wIh Ihc nccds 0I Ihc uscrs 0I Inncl rcp0rIs
(c) Thc prcIcc s c0nssycnI wIh
(d) Thc prcIcc s c0nvcncnI I0 cxIcrnl udI0rs
(c) 0Ihcr c0mpncs pply Ihc prcIcc n smlr crcumsInccs.
3. Thc I0ll0wng crIcr rc uscd, cxccpI 0nc, whcn sclccIng Ihc ppr0prIc
cc0unIng p0lccs I0 d0pI.
() Pcrs0nl 1udgmcnI
(b) 0b|ccIvIy
(c) Frncss
(d) csI PrcIccs
(c) RcqurcmcnIs 0I n cc0unIng sIndrd
4. whch 0I Ihc I0ll0wng s n0I s0urcc 0I 0AAP n Ngcr!
() !nsurncc AcI, 2003
(b) !nvcsImcnI SccurIcs AcI
(c) !CAN AcI 0I 9b5
(d) CAMA 2004
(c) SI0ck Exchngc rulcs
5. whch 0I Ihc c0nccpIs s n0I pplcblc n Ihc prcprI0n 0I sIIcmcnI 0I IIrs 0I
c0mpny IhI s wndng up!
() EnIIy c0nccpI
(b) 00ng C0nccrn c0nccpI
(c) RclzI0n c0nccpI
(d) SubsIncc 0vcr F0rm
(c) MIcrlIy c0nvcnI0n
228
b. !n cc0unIng, Ihcrc rc gcncrlly cccpIcd cc0unIng prncplcs. !dcnIIy 0nc
such prncplc.
7. 0cInc cc0unIng p0lccs.
8. SIIc 0nc cc0unIng c0nccpI.
9. Acc0unIng p0lccs uscd n n 0rgnzI0n dcpcnds 0n pcrs0nl |udgmcnI. SIIc
Ihc c0nccpI IhI sh0uld bc uscd s gudc whcn sclccIng cc0unIng p0lccs.
0. whI s Ihc mn dvnIgc 0I hsI0rcl c0sI c0nccpI!
229
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc pr0ccss 0I ssung cc0unIng sIndrds n Ngcr.
UndcrsInd Ihc !AS 0uc Pr0ccss.
Expln Ihc c0mp0sI0n 0I Ngcrn Acc0unIng SIndrds 0rd (NAS).
UndcrsInd NAS 0uc Pr0ccss.
Thc Ngcrn Acc0unIng SIndrds 0rd (NAS) ws csIblshcd n
ScpIcmbcr, 982 wIh Ihc rcsp0nsblIy 0I dcvcl0png cc0unIng sIndrds
I0 bc 0bscrvcd n Ihc prcprI0n nd prcscnII0n 0I Inncl sIIcmcnIs n
Ngcr. !Is IrsI lcgl uIh0rIy ws Ihc pr0vs0n 0I SccI0n 335() 0I Ihc
C0mpncs nd Allcd MIIcrs AcI, 990, whch rcqurcs IhI Inncl
sIIcmcnIs prcprcd n Ngcr shll c0mply wIh Ihc SIIcmcnI 0I Acc0unIng
SIndrds ssucd by Ihc Ngcrn Acc0unIng SIndrds 0rd. CurrcnIly, Ihc
Iull lcgl uIh0rIy 0I Ihc NAS s pr0vdcd by Ihc Ngcr Acc0unIng SIndrds
0rd AcI, 2003 whch c0nIns wdc rngc 0I pr0vs0ns 0n Ihc csIblshmcnI,
Innccs nd p0wcrs 0I Ihc 0rd.
Thc rcs0ns I0r scIIng up Ihc NAS, s cxplncd by 00ds0n Nnd, Is ChcI
ExccuIvc, rc I0:
() nrr0w Ihc rcs 0I dIIcrcnccs n prcIccs s0 IhI Inncl sIIcmcnIs
IhI rc prcscnIcd I0 uscrs rc sIrucIurlly unI0rm nd mcnngIul,
() pr0ducc cc0unIng nI0rmI0n IhI rcIlccI Ngcr's cc0n0mc
cnvr0nmcnI whlc I Ihc smc Imc sIsIyng Ihc nIcpIcd nccds 0I
uscrs 0I Ihc nI0rmI0n, nd
() nIr0ducc mcsurcs whch wll cnhncc Ihc rclblIy nd vcl0cIy 0I
nI0rmI0n rcp0rIcd n Inncl sIIcmcnIs.
230
Undcr sccI0n 2 0I Ihc NAS AcI 2003, Ihc 00vcrnng C0uncl 0I Ihc NAS shll
c0nssI 0I Ihc I0ll0wng:
() Chrmn wh0 shll bc pr0Icss0nl cc0unInI wIh c0nsdcrblc
pr0Icss0nl cxpcrcncc n cc0unIng prcIccs.
(b) Iw0 rcprcscnIIvcs cch 0I Ihc I0ll0wng:
() !nsIIuIc 0I ChrIcrcd Acc0unInIs 0I Ngcr, nd
() Ass0cI0n 0I NI0nl Acc0unInIs 0I Ngcr.
(c) rcprcscnIIvc cch 0I Ihc I0ll0wng:
() Fcdcrl MnsIry 0I C0mmcrcc
() Fcdcrl MnsIry 0I Fnncc
() CcnIrl nk 0I Ngcr
(v) C0rp0rIc AIIrs C0mmss0n
(v) Fcdcrl !nlnd Rcvcnuc Scrvcc
(v) Ngcr 0cp0sI !nsurncc C0rp0rI0n
(v) SccurIcs nd Exchngc C0mmss0n
(v) AudI0r0cncrl I0r Ihc FcdcrI0n
(x) Acc0unInI - 0cncrl 0I Ihc FcdcrI0n
(x) ChrIcrcd !nsIIuIc 0I TxI0n 0I Ngcr
(x) Ngcr Acc0unIng Tcchcrs Ass0cI0n, nd
(x) Ngcr Ass0cI0n 0I Chmbcrs 0I C0mmcrcc, !ndusIrcs, Mncs
nd AgrculIurc
(d) Thc ExccuIvc SccrcIry 0I Ihc 0rd
SccI0n b 0I Ihc NAS AcI 2003, rcqurcs Ihc 0rd I0 pcrI0rm Ihc I0ll0wng
IuncI0ns:
() 0cvcl0p nd publsh n Ihc publc nIcrcsI, cc0unIng sIndrds I0 bc
0bscrvcd n Ihc prcprI0n 0I Inncl sIIcmcnIs.
(b) Pr0m0Ic Ihc gcncrl cccpIncc nd d0pI0n 0I such sIndrds by Ihc
prcprcrs nd uscrs 0I Inncl sIIcmcnIs.
(c) Pr0m0Ic nd cnI0rcc c0mplncc wIh Ihc cc0unIng sIndrds
dcvcl0pcd 0r rcvcwcd by Ihc 0rd.
(d) Rcvcw Ir0m Imc I0 Imc, Ihc cc0unIng sIndrds dcvcl0pcd n lnc
wIh Ihc prcvlcnI s0cl, cc0n0mc nd p0lIcl cnvr0nmcnI.
(c) Rcccvc Ir0m Imc I0 Imc n0Iccs 0I n0nc0mplncc wIh Is sIndrds
Ir0m Ihc prcprcr, uscr 0r udI0r 0I cc0unIs.
(I) Rcccvc c0pcs 0I ll qulIcd udI rcp0rIs I0gcIhcr wIh dcIlcd
cxplnI0ns I0r such qulIcI0ns Ir0m Ihc udI0rs 0I Ihc cc0unIs
wIhn pcr0d 0I sxIy dys Ir0m Ihc dIc 0I such qulIcI0n.
(g) Advsc Ihc supcrvsng MnsIcr 0n Ihc mkng 0I rcgulI0ns undcr
SccI0n 35b 0I CAMA 2004.
(h) Advsc Ihc Fcdcrl 00vcrnmcnI 0n mIIcrs rclIng I0 cc0unIng
sIndrds.
23
() PcrI0rm such 0Ihcr duIcs whch n Ihc 0pn0n 0I Ihc C0uncl rc ncccsry
0r cxpcdcnI I0 cnsurc Ihc cIIccnI pcrI0rmncc 0I Ihc IuncI0ns 0I Ihc
0rd undcr Ihc AcI.
SccI0n 7 0I Ihc AcI cmp0wcrs Ihc 0rd I0:
() !dcnIIy cc0unIng ssucs whch rcqurc sIndrdzI0n nd csIblsh
Ihc 0rdcr 0I pr0rIy I0r ddrcssng Ihcm.
(b) 0cIcrmnc Ihc sc0pc nd 0b|ccIvcs 0I cch sIndrd.
(c) Prcscrbc Ihc mcIh0ds nd pr0ccdurc I0r Ihc pr0ducI0n 0I sIndrds.
(d) Prcscrbc Ihc Imc Iblc I0r Ihc pr0ducI0n 0I cch sIndrd.
(c) Appr0vc dscuss0n ppcrs, cxp0surc drIIs nd sIndrds.
(I) EnI0rcc nd ppr0vc cnI0rccmcnI 0I c0mplncc wIh cc0unIng
sIndrds n Ngcr.
(g) Excrcsc such p0wcrs s rc ncccssry 0r cxpcdcnI I0r gvng cIIccI I0
Ihc pr0vs0ns 0I Ihc AcI.
Thc dcvcl0pmcnI 0I ncw nd pr0p0scd cc0unIng sIndrd nv0lvcs l0ng
pr0ccss whch cnsurcs IhI ll nIcrcsIcd prIcs rc gvcn Ihc 0pp0rIunIy I0
cxprcss Ihcr vcws. Ths sIndrd scIIng pr0ccss s cllcd 0uc Pr0ccss nd I
cn Ikc m0rc Ihn Iw0 ycrs n s0mc cscs. Thc sIgcs nv0lvcd n Ihc
pr0ducI0n 0I (SAS) rc 0uIlncd bcl0w:
() Thc IrsI sIgc n Ihc dcvcl0pmcnI 0I n cc0unIng sIndrd s Ihc
I0r sIndrdsI0n. Such I0pc cn bc suggcsIcd
by ny ndvdul 0r 0rgnsI0n.
(b) Thc ncxI sIgc s Ihc sclccI0n 0I 0I cxpcrIs,
c0mprsng mnly 0I lcdng uIh0rIcs n IhI rc. Ths c0mmIIcc
usully ncludcs n cc0unInI n prcIcc, rcprcscnIIvc 0I Ihc IIccIcd
ndusIry, rcprcscnIIvc 0I Ihc Fcdcrl !nlnd Rcvcnuc Scrvcc 0rd,
nd cdcm, nd I lcsI 0nc pcrs0n rcprcscnIng Ihc busncss
c0mmunIy wh0 my bc IIccIcd by Ihc pr0p0scd sIndrd (Nnd,
200b).
(c) Thc SIccrng C0mmIIcc drccIs Ihc NAS sccrcIrI n drIIng 0r
(rcdrIIng) 0I Ihc , whch dcIls Ihc spccIs 0I Ihc
I0pc I0 bc c0vcrcd.
(d) whcn Ihc SIccrng C0mmIIcc s sIsIcd wIh Ihc p0nIs 0uIlncd, I s
submIIcd I0 Ihc C0uncl I0r ppr0vl.
(c) Up0n Ihc ppr0vl 0I Ihc p0nIs 0uIlncd by Ihc C0uncl, Ihc sIccrng
c0mmIIcc drccIs Ihc SccrcIrI n Ihc prcprI0n 0I
AIIcr c0nsdcrI0n 0I Ihc by Ihc sIccrng
c0mmIIcc, I s rcc0mmcndcd I0 Ihc C0uncl I0r ppr0vl s cxp0surc
drII.
(I) Thc C0uncl usully mccIs I0r Iw0 w0rkng dys I0 mcIcul0usly cxmnc
Ihc cxp0surc drII submIIcd I0 I. !I Iw0Ihrds 0I Ihc mcmbcrs prcscnI
232
I Ihc Tcchncl scss0n v0Ic n Iv0ur 0I Is publcI0n, Ihcn Ihc
d0cumcnI bcc0mcs n .
(g) Ech Exp0surc 0rII s cxp0scd I0r b0uI Ihrcc m0nIhs. 0urng Ihs
pcr0d, rccpcnIs 0I Ihc d0cumcnI rc cxpccIcd I0 c0mmcnI n wrIng
nd Ihc NAS my c0nducI whcrc ncccssry.
(h) scd 0n c0mmcnIs rcccvcd Ir0m Ihc publc, Ihc Exp0surc 0rII my
bc mcndcd. !I n mcndcd cxp0surc drII s ppr0vcd by IhrccqurIcrs
0I C0uncl mcmbcrs prcscnI I Is mccIngs, I bcc0mcs n
!n 973, Ihc !nIcrnI0nl Acc0unIng SIndrds C0mmIIcc (!ASC) ws
csIblshcd I0 dcvcl0p nd ssuc cc0unIng sIndrds IhI sh0uld gudc Ihc
prcprI0n nd prcscnII0n 0I Inncl sIIcmcnIs, gl0blly. Thc !ASC ws
n cxsIcncc unIl 200 by whch Imc I hd ssucd I0rIy0nc !nIcrnI0nl
Acc0unIng SIndrds (!ASs). ccusc 0I dIIcrcnccs n nIcrprcIng Ihc
cc0unIng sIndrds ssucd by Ihc !ASC, ncw b0dy cllcd
(S!C) ws csIblshcd by Ihc !ASC n 997. As I
200, Ihc S!C hd ssucd 32 nIcrprcII0ns, s0mc 0I whch rc sIll pplcblc
I0 Inncl sIIcmcnIs ssucd I0dy.
!n 200, Ihcrc wcrc IundmcnIl chngcs n Ihc gl0bl sIndrd scIIng b0dy
whch rcsulIcd n Ihc csIblschmcnI 0I ncw b0dy cllcd !nIcrnI0nl
Acc0unIng SIrdrds 0rd (!AS), I0 Ikc 0vcr Ihc rcsp0nsblIcs 0I Ihc !ASC
wIh cIIccI Ir0m
sI
Aprl, 200. Thc !AS n0w ssucs !nIcrnI0nl Fnncl
Rcp0rIng SIndrds (!FRS) n plcc 0I !nIcrnI0nl Acc0unIng SIndrds
(!AS) ssucd by Ihc !ASC.
ArIclc 2 0I Ihc !AS C0nsIIuI0n scIs 0uI Ihc 0b|ccIvcs 0I Ihc !ASC I0undI0n,
s I0ll0ws:
() T0 dcvcl0p, n Ihc publc nIcrcsI, snglc scI 0I hgh qulIy,
undcrsIndblc nd cnI0rccblc gl0bl cc0unIng sIndrds IhI
rcqurc hgh qulIy, IrnsprcnI, nd c0mprblc nI0rmI0n n
Inncl sIIcmcnIs nd 0Ihcr Inncl rcp0rIng I0 hclp prIcpnIs
n w0rld's cpIl mrkcIs nd 0Ihcr uscrs mkc cc0n0mc dccs0ns,
(b) T0 pr0m0Ic Ihc usc nd rg0r0us pplcI0n 0I Ih0sc sIndrds,
(c) T0 IulIl Ihc 0b|ccIvcs ss0cIcd wIh () nd (b) b0vc, I0 Ikc cc0unI
0I, s ppr0prIc, Ihc spccl nccds 0I smll nd mcdumszcd cnIIcs
nd cmcrgng cc0n0mcs, nd
(d) T0 brng b0uI c0nvcrgcncc 0I nI0nl cc0unIng sIndrds nd
nIcrnI0nl Inncl rcp0rIng sIndrds I0 hgh qulIy rcs0luI0ns.
233
!n cc0rdncc wIh ArIclc 8 0I Is C0nsIIuI0n, Thc !nIcrnI0nl Acc0unIng
SIndrds 0rd s n ndcpcndcnI, prvIclyIundcd cc0unIng sIndrd
scIIcr bscd n L0nd0n, U.K. Thc 0rd mcmbcrs c0mc Ir0m nnc c0unIrcs nd
hvc vrcIy 0I IuncI0nl bckgr0unds.
Thc !AS sIrucIurc hs Ihc I0ll0wng mn IcIurcs.
() . Thc IrusIccs rc n0I nv0lvcd n Ihc sIndrd pr0ccss 0I Ihc
!AS, buI hvc rcsp0nsblIy I0r sIrIcgc 0pcrI0nl ssucs such s
budgcIs, 0pcrI0nl pr0ccdurcs 0I Ihc !AS nd pp0nImcnI 0I
mcmbcrs 0I Ihc 0rd, !FR!C nd SAC.
(b) . Thc 0rd c0nssIs 0I 2 IullImc mcmbcrs nd 2 prI
Imc mcmbcrs wh0 rc pp0nIcd by Ihc TrusIccs, bscd 0n Ihcr
Icchncl sklls nd 0Ihcr cxpcrcncc. Thcsc mcmbcrs rc rcsp0nsblc
I0r Ihc sIndrd scIIng cIvIcs 0I Ihc !AS.
(c) . Thc SAC pr0vdcs I0rum I0r
Ihc !AS I0 c0nsulI wIh rngc 0I ndvduls nd 0rgnsI0ns IIccIcd
by Ihc !AS'S w0rk. Thc SAC ls0 dvscs Ihc !AS 0n wdc rngc 0I
ssucs ncludng Ihc !AS's gcnd nd !AS's pr0|ccI pr0rIcs nd
ImcIblc.
(d)
Thc !FR!C sssIs Ihc !AS n mpr0vng Inncl rcp0rIng by
pr0vdng Imcly gudncc nd nIcrprcII0n 0I nIcrnI0nl Inncl
rcp0rIng sIndrds.
As wIh SASs, Ihc dcvcl0pmcnI 0I !FRSs I0ll0ws duc pr0ccss whch c0mprsc
Ihc I0ll0wng sx sIgcs, cc0rdng I0 Ihc !AS's 0uc Pr0ccss Hndb00k.
SIgc : ScIIng Ihc gcnd,
SIgc 2: Pr0|ccI Plnnng,
SIgc 3: 0cvcl0pmcnI nd publcI0n 0I dscuss0n ppcr,
SIgc 4: 0cvcl0pmcnI nd publcI0n 0I n cxp0surc drII,
SIgc 5: 0cvcl0pmcnI nd publcI0n 0I n !FRS,
SIgc b: Pr0ccdurcs IIcr n !FRS s ssucd.
ArgumcnIs I0r rc:
() Thcy gvc cc0unInIs nd udI0rs s0mc pr0IccI0n Ir0m Ih0sc wh0
my Iry I0 prcssurzc Ihcm nI0 usng mpr0pcr mcIh0ds nd, IhcrcI0rc,
cnsurc Ihcr ndcpcndcncc.
(b) Thcy cnsurc IhI ll sIkch0ldcrs mkc c0nIrbuI0ns nI0 Ihc sIndrd
I0rmulI0n nd s such cnrchcs Ihc qulIy,
(c) Thcy usully c0nI0rm wIh nIcrnI0nl cc0unIng sIndrds,
(d) Thcy ls0 c0nI0rm wIh ll cxsIng lw nd rcgulI0n rcqurcmcnIs,
I0r cxmplc CAMA 2004, 0F!A 99, !nsurncc AcI 2003,
234
(c) Thc SIndrds rc rcvcwcd pcr0dclly I0 c0nI0rm wIh Ihc lIcsI
cc0n0mc nd s0cl dcvcl0pmcnIs, nd
(I) Thc cncImcnI 0I Ihc NAS AcI, 2003, gvcs I p0wcr I0 cnI0rcc
c0mplncc wIh sIndrd.
ArgumcnIs gnsI my bc dscusscd, s I0ll0ws:
() Thcy nhbI nIIvc s dccs0ns hvc lrcdy bccn mdc,
(b) Thcy rrcly Ikc cc0unI 0I pcculrIcs 0I Ihc ndvdul busncsscs,
nd
(c) SIndrds my bc `wIcrcd - d0wn', duc I0 cxp0surc I0 nIcrcsIcd prIcs
0r nIcndcd uscrs.
Ths chpIcr hs dscusscd Ihc c0mp0sI0n, IuncI0ns, nd p0wcrs 0I Ihc
Ngcrn Acc0unIng SIndrds 0rd (NAS), s wcll s Is duc pr0ccss nd
0b|ccIvcs, sIrucIurc nd Ihc sIndrd scIIng pr0ccss 0I Ihc !AS.
. Thc SIndrds ssucd by Ihc Ngcrn Acc0unIng SIndrd 0rd rc cllcd
() SIndrd Acc0unIng SIIcmcnIs
(b) SIIcmcnIs 0I AcccpIcd SIndrds
(c) SIIus 0I Acc0unIng SIndrds
(d) SIIcmcnIs 0I Acc0unIng SIndrds
(c) SIIcmcnI 0I AudIng SIndrds
2. whI s Ihc mxmum pcr0d I0r rcccvng c0mmcnIs 0n n Exp0surc 0rII!
() 2 m0nIhs.
(b) b m0nIhs.
(c) 3 m0nIhs.
(d) 5 m0nIhs.
(c) 2 m0nIhs.
3. H0w mny sIrucIurcs d0cs Iypcl sIndrd hs!
() 3
(b) b
(c) 9
(d) 2
(c) 5
4. Thc I0ll0wng rc mcmbcrs 0I NAS, cxccpI:
() CcnIrl nk 0I Ngcr..
(b) C0rp0rIc AIIrs C0mmss0n.
(c) 0IIcc 0I Ihc Acc0unInI 0cncrl.
(d) Rcvcnuc M0blsI0n nd Fscl C0mmss0n.
(c) !CAN
235
5. whch 0NE 0I Ihc I0ll0wng s Ihc IrsI sIcp n Ihc dcvcl0pmcnI 0I ncw
cc0unIng sIndrd!
() SclccI0n 0I I0pc.
(b) SclccI0n 0I mcmbcrs 0I Ihc sIccrng c0mmIIcc.
(c) 0rIIng 0I Ihc p0nIs 0uIlnc.
(d) Publc hcrng.
(c) PrcprI0n 0I Ihc drII cxp0surc drII.
b. SIIc 0nc mcmbcr 0I Ihc Ngcrn Acc0unIng SIndrds 0rd.
7. whI lcgslI0n cmp0wcrs Ihc NAS I0 cnI0rcc Ihc c0mplncc wIh ny
SIIcmcnI 0I Acc0unIng SIndrd!
8. 0nc rgumcnI n Iv0ur 0I SIIcmcnIs 0I Acc0unIng SIndrds s IhI Ihcy
c0nI0rm wIh cxsIng.................. nd ................. rcqurcmcnIs.
9. Thc Ngcrn Acc0unIng SIndrds 0rd ws csIblshcd n ycr..........
0. !n whI ycr ws Ihc SIndrds !nIcrprcII0ns C0mmIIcc csIblshcd!
23b
237
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
UndcrsInd Ihc csscncc 0I Ihc cc0unIng sIndrds ssucd by Ihc NAS nd Ihc
!AS.
0scuss Ihc sIndrds ssucd by Ihc NAS.
Kn0w Ihc prcIcl pplcI0ns 0I SASs.
!dcnIIy nd dscuss !ASs nd !FRSs n0I c0vcrcd by SASs.
As dscusscd n ChpIcr 3, Ihc Ngcrn Acc0unIng SIndrds 0rd s
mndIcd by Ihc NAS AcI 2003, I0 ssuc
(SAS) Ir0m Imc I0 Imc, I0 gudc cc0unIng prcIcc n Ngcr. Thc cc0unIng
sIndrds s0 Ir ssucd by Ihc NAS, s sIIcd n Ihc 0dy's Hndb00k I0r
2008/2009, rc lsIcd bcl0w.
0scl0surc 0I Acc0unIng P0lccs
2 !nI0rmI0n I0 bc 0scl0scd n Fnncl SIIcmcnIs
3 Pr0pcrIy, PlnIs nd EqupmcnI
4 SI0cks
5 C0nsIrucI0n C0nIrcIs
b ExIr0rdnry !Icms nd Pr0r Ycr Ad|usImcnIs
7 F0rcgn Currcncy C0nvcrs0n nd TrnslI0n
8 Acc0unIng I0r Empl0yccs' RcIrcmcnI cncIIs
9 Acc0unIng I0r 0cprccI0n
0 nks nd N0nnk Fnncl !nsIIuI0ns (PrI )
Lcscs
2 Acc0unIng I0r 0cIcrrcd Txcs (supcrscdcd by SAS 9)
3 Acc0unIng I0r !nvcsImcnIs
4 PcIr0lcum !ndusIry: UpsIrcm AcIvIcs
5 nks nd N0nnk Fnncl !nsIIuI0ns (PrI 2)
b Acc0unIng I0r !nsurncc usncss
7 PcIr0lcum !ndusIry: 00wnsIrcm AcIvIcs
8 Csh Fl0w SIIcmcnIs
238
9 Acc0unIng I0r Txcs
20 Abrdgcd Fnncl SIIcmcnIs
2 Ernngs Pcr Shrc
22 Rcscrch nd 0cvcl0pmcnI C0sI
23 Pr0vs0ns, C0nIngcnI LblIcs nd C0nIngcnI AsscIs
24 ScgmcnI Rcp0rIng
25 Tclcc0mmuncI0ns AcIvIcs
2b usncss C0mbnI0ns
27 C0ns0ldIcd nd ScprIc Fnncl SIIcmcnIs
28 !nvcsImcnIs n Ass0cIcs
29 !nIcrcsIs n 10nI \cnIurcs
30 !nIcrm Fnncl Rcp0rIng
!FRS FrsIImc Ad0pI0n 0I !nIcrnI0nl Fnncl Rcp0rIng
SIndrds
!FRS 2 Shrcbscd PymcnIs
!FRS 3 usncss C0mbnI0ns
!FRS 4 !nsurncc C0nIrcIs
!FRS 5 N0ncurrcnI AsscIs Hcld I0r Slc nd 0sc0nInucd
0pcrI0ns
!FRS b Expl0rI0n I0r nd EvluI0n 0I Mncrl Rcs0urccs
!FRS 7 Fnncl !nsIrumcnIs : 0scl0surcs
!FRS 8 0pcrIng ScgmcnIs
!AS PrcscnII0n 0I Fnncl SIIcmcnIs
!AS 2 !nvcnI0rcs
!AS 7 SIIcmcnI 0I Csh Fl0ws
!AS 8 Acc0unIng P0lccs, Chngcs n Acc0unIng EsImIcs nd
Err0rs
!AS 0 EvcnIs IIcr Ihc Rcp0rIng Pcr0d
!AS C0nsIrucI0n C0nIrcIs
!AS 2 !nc0mc Txcs
!AS b Pr0pcrIy, PlnI And EqupmcnI
!AS 7 Lcscs
!AS 8 Rcvcnuc
!AS 9 Empl0ycc cncIIs
!AS 20 Acc0unIng I0r 00vcrnmcnI 0rnIs nd 0scl0surc 0I
00vcrnmcnI AsssIncc
!AS 2 Thc EIIccIs 0I Chngcs n F0rcgn Exchngc RIcs
!AS 23 0rr0wng C0sIs
!AS 24 RclIcd PrIy 0scl0surcs
!AS 2b Acc0unIng nd Rcp0rIng by RcIrcmcnI cncII Plns
!AS 27 C0ns0ldIcd nd ScprIc Fnncl SIIcmcnIs
239
!AS 28 !nvcsImcnI n Ass0cIcs
!AS 29 Fnncl Rcp0rIng n HYpcrnIlI0nry Ec0n0mcs
!AS 3 !nIcrcsIs n 10nI \cnIurc
!AS 32 Fnncl !nsIrumcnIs: PrcscnII0n
!AS 33 Ernngs Pcr Shrc
!AS 34 !nIcrm Fnncl Rcp0rIng
!AS 3b !mprmcnI 0I AsscIs
!AS 37 Pr0vs0ns, C0nIngcnI LblIcs nd C0nIngcnI AsscIs
!AS 38 !nIngblc AsscIs
!AS 39 Fnncl !nsIrumcnI: Rcc0gnI0n nd McsurcmcnI
!AS 40 !nvcsImcnI Pr0pcrIy
!AS 4 AgrculIurc
!FR!C Chngcs n cxsIng 0cc0mmss0nng, RcsI0rI0n nd Smlr
LblIcs
!FR!C 2 Mcmbcrs' Shrcs n C00pcrIvc EnIIcs nd Smlr !nsIrumcnIs
!FR!C 4 0cIcrmnng whcIhcr n ArrngcmcnI c0nIns Lcsc
!FR!C 5 RghIs I0 !nIcrcsIs Arsng Ir0m 0cc0mmss0nng, RcsI0rI0n nd
Envr0nmcnIl RchblII0n Funds
!FR!C b LblIcs rsng Ir0m PrIcpIng n SpccIc MrkcIwsIc
ElccIrcl nd ElccIr0nc EqupmcnI
!FR!C 7 Applyng Ihc RcsIIcmcnI Appr0ch undcr !AS 29 Fnncl
Rcp0rIng n HypcrnIlI0nry Ec0n0mcs
!FR!C 8 Sc0pc 0I !FRS 2
!FR!C 9 RcsscssmcnI 0I Embcddcd 0crvIvcs
!FR!C 0 !nIcrm Fnncl Rcp0rIng nd !mprmcnI
!FR!C !FRS 2 0r0up nd Trcsury Shrc TrnscI0ns
!FR!C 2 Scrvcc C0nccss0n ArrngcmcnIs
!FR!C 3 CusI0mcr L0ylIy Pr0grmmcs
!FR!C 4 !AS 9 Thc LmI 0n 0cIncd cncII AsscI, Mnmum Fundng
RcqurcmcnIs nd Ihcr !nIcrcI0ns
!FR!C 5 AgrccmcnIs I0r Ihc C0nsIrucI0n 0I Rcl EsIIc
!FR!C b Hcdgcs 0I NcI !nvcsImcnI n F0rcgn 0pcrI0n
!FR!C 7 0sIrbuI0ns 0I N0nCsh AsscIs I0 0wncrs.
S!C7 !nIr0ducI0n 0I Ihc Eur0
S!C0 00vcrnmcnI AsssIncc N0 spccIc RclI0n I0 0pcrIng
AcIvIcs
S!C2 C0ns0ldI0n Spccl Purp0sc EnIIcs
S!C3 10nIly C0nIr0llcd EnIIcs N0n M0ncIry C0nIrbuI0ns by
\cnIurcrs
S!C5 0pcrIng Lcscs !nccnIvcs
S!C2 !nc0mc Txcs Rcc0vcry 0I Rcvlucd N0n 0cprccblc AsscIs
S!C25 !nc0mc Txcs Chngcs n Ihc Tx SIIus 0I EnIIy 0r Is
Shrch0ldcrs
240
S!C27 EvluIng Ihc SubsIncc 0I TrnscI0ns nv0lvng Ihc Lcgl F0rm
0I Lcsc
S!C29 Scrvcc C0nccss0n ArrngcmcnIs: 0scl0surcs
S!C3 Rcvcnuc rIcr TrnscI0ns nv0lvng AdvcrIsng Scrvccs
S!C32 !nIngblc AsscIs wcb SIc C0sIs.
!FRS FrsIImc Ad0pI0n 0I !nIcrnI0nl
Fnncl Rcp0rIng SIndrds N0nc
!FRS 2 Shrcbscd PymcnIs N0nc
!FRS 3 usncss C0mbnI0ns SAS 2b
!FRS 4 !nsurncc C0nIrcIs SAS b
!FRS 5 N0ncurrcnI AsscIs Hcld I0r Slc nd
0sc0nInucd 0pcrI0ns N0nc
!FRS b Expl0rI0n I0r nd EvluI0n 0I Mncrl
Rcs0urccs SAS 4
!FRS 7 Fnncl !nsIrumcnIs: 0scl0surcs SAS 0 nd 5**
!FRS 8 0pcrIng ScgmcnIs SAS 24
!AS PrcscnII0n 0I Fnncl SIIcmcnIs SAS nd 2
!AS 2 !nvcnI0rcs SAS 4
!AS 7 SIIcmcnI 0I Csh Fl0ws SAS 8
!AS 8 Acc0unIng P0lccs, Chngcs n Acc0unIng
EsImIcs nd Err0rs SAS b**
!AS 0 EvcnIs IIcr Ihc Rcp0rIng Pcr0d N0nc
!AS C0nsIrucI0n C0nIrcIs SAS 5
!AS 2 !nc0mc Txcs SAS 9
!AS b Pr0pcrIy, PlnI And EqupmcnI SAS 3
!AS 7 Lcscs SAS
!AS 8 Rcvcnuc N0nc
!AS 9 Empl0ycc cncIIs SAS 8
!AS 20 Acc0unIng I0r 00vcrnmcnI 0rnIs nd
0scl0surc 0I 00vcrnmcnI AsssIncc N0nc
!AS 2 Thc EIIccIs 0I Chngcs n F0rcgn Exchngc RIcs SAS 7
!AS 23 0rr0wng C0sIs N0nc
!AS 24 RclIcd PrIy 0scl0surcs N0nc
!AS 2b Acc0unIng nd Rcp0rIng by RcIrcmcnI
cncII Plns SAS 8
!AS 27 C0ns0ldIcd nd ScprIc Fnncl SIIcmcnIs SAS 27
24
!AS 28 !nvcsImcnI n Ass0cIcs SAS 28
!AS 29 Fnncl Rcp0rIng n HYpcrnIlI0nry Ec0n0mcs N0nc ycI
!AS 3 !nIcrcsIs n 10nI \cnIurc SAS 29
!AS 32 Fnncl !nsIrumcnIs: PrcscnII0n SAS 0 nd 5**
!AS 33 Ernngs Pcr Shrc SAS 2
!AS 34 !nIcrm Fnncl Rcp0rIng SAS 30
!AS 3b !mprmcnI 0I AsscIs SAS 9**
!AS 37 Pr0vs0ns, C0nIngcnI LblIcs nd C0nIngcnI
AsscIs SAS 23
!AS 38 !nIngblc AsscIs
!AS 39 Fnncl !nsIrumcnI: Rcc0gnI0n nd
McsurcmcnI SAS 0 nd 5**
!AS 40 !nvcsImcnI Pr0pcrIy SAS 3
!AS 4 AgrculIurc SAS 4**
Thc syllbus rcqurcs sIudcnIs I0 sIudy dcIlcd c0nIcnIs nd pplcI0n Ir0m
SAS 0 I0 SAS ssucd I0 dIc nd I0 dscuss !ASs / !FRSs n0I c0vcrcd by Ihc
currcnI suIc 0I SASs ssucd by Ihc NAS. Thc c0rrclIcd prcscnII0n 0I SASs
nd !ASs b0vc clcrly sh0ws us Ihc !ASs nd !FRSs I0 bc ncludcd n 0ur
dscuss0n 0I cc0unIng sIndrds n Ihs chpIcr. Rcdcrs rc dvscd I0 vl
Ihcmsclvcs 0I Ihc publshcd by Ihc NAS
nd vsI Ihc !AS wcbsIc I0 0bIn c0mprchcnsvc c0vcrgc 0I Ihc sIndrds,
sncc snglc chpIcr n Ihs mnul cnn0I by ny sIrcIch 0I mgnI0n
c0vcr ll Ihc spccIs 0I Ihc cc0unIng sIndrds lsIcd b0vc. whI s, IhcrcI0rc,
prcscnIcd n Ihc I0ll0wng sccI0ns, n Icrms 0I c0nIcnIs 0I SASs nd !ASs, s
Ihc0rcIcl nd prcIcl gudc 0n Ngcrn Acc0unIng SIndrds.
Eqully w0rIhy 0I mcnI0n s Ihc IcI IhI s0mc 0I Ihc sIndrds dscusscd n
Ihs chpIcr hvc bccn llusIrIcd crlcr 0n. !n such cscs, n Ihc subsccI0n
cnIIlcd , rcdcrs wll bc rcIcrrcd I0 Ihc chpIcrs whcrc
Ihc rclIcd llusIrIvc cxmplcs hvc bccn gvcn. !n Ihc 0Ihcr cscs whcrc Ihc
sIndrds hvc n0I bccn llusIrIcd n 0Ihcr chpIcrs 0I Ihs mnul, llusIrI0ns
rc gvcn s such I0pcs rc dscusscd.
Thc SIIcmcnI 0I Acc0unIng SIndrd N0. 0: nks nd N0nnk Fnncl
!nsIIuI0ns (PrI ), sccks I0 pr0vdc gudc I0r cc0unIng p0lccs nd
cc0unIng mcIh0ds IhI sh0uld bc I0ll0wcd by bnks n Ihc prcprI0n nd
prcscnII0n 0I Ihcr Inncl sIIcmcnIs. Such gudc s ncccssry I0 cnsurc
hclIhy rcp0rIng prcIccs nd rclblc Inncl nI0rmI0n n Ihc bnkng
sccI0r.
242
Thc SIIcmcnI (PrI ), I0cuscs 0n Ihrcc mn rcs, rclIng I0 cc0unIng
prcIccs 0I bnks, nmcly:
() !nc0mc rcc0gnI0n,
(b) L0ss rcc0gnI0n, nd
(c) lncc ShccI ClssIcI0n.
S0mc 0I Ihc m|0r pr0vs0ns 0I SAS N0. 0, rc prcscnIcd bcl0w:
() A bnk sh0uld rIculIc nd dscl0sc s n nIcgrl prI 0I Is Inncl
sIIcmcnIs, ll Ihc sgnIcnI cc0unIng p0lccs d0pIcd n Ihc
prcprI0n 0I Is Inncl sIIcmcnIs.
(b) Thc cc0unIng p0lccs sh0uld bc pr0mncnIly dscl0scd undcr 0nc
cpI0n rIhcr Ihn s n0Ics I0 ndvdul Icms n Ihc Inncl
sIIcmcnIs.
() 0n l0ns, 0vcrdrIIs nd 0Ihcr rsk sscIs, nIcrcsI nc0mc sh0uld bc
rcc0gnscd s0 s I0 rcc0rd c0nsInI ycld 0n Ihc 0uIsIndng prncpl,
0vcr Ihc lIc 0I Ihc crcdI I Ihc nIcrcsI rIc pplcblc I0 Ihc IclIy.
(b) F0r dsc0unI pr0ducIs, 0n whch nIcrcsI s 0IIcn scIIlcd upIr0nI 0r n
rrcrs, Ihc dsc0unI sh0uld bc 0vcr Ihc lIc 0I Ihc pr0ducI s0 s I0 gvc
c0nsInI ycld 0n Ihc 0uIsIndng prncpl.
(c) CrcdIrclIcd Icc nc0mc, whcrc mIcrl nd Is c0llccIblIy s n0I n
d0ubI, sh0uld bc dcIcrrcd nd m0rIscd 0vcr Ihc lIc 0I Ihc rclIcd crcdI
n pr0p0rI0n I0 Ihc 0uIsIndng crcdI rsk. CrcdI rclIcd Icc nc0mc
sh0uld bc rcgrdcd s mIcrl n ll sIuI0ns whcrc n ggrcgIc,
Ihcy c0nsIIuIc I lcsI 0 0I Ihc pr0|ccIcd vcrgc nnul ycld 0vcr
Ihc lIc 0I Ihc IclIy I0 whch Ihcy rclIc. RclIcd drccI cxpcnscs sh0uld
bc dcducIcd Ir0m Ihc Iccs bcI0rc dcIcrrl.
(d) !n sIuI0n whcrc crcdIrclIcd Icc nc0mc s n0I mIcrl s dcIncd
b0vc, Ihc Iccs my bc rcc0gnscd I 0ncc, pr0vdcd ll ss0cIcd c0sIs
rc cxpcnscd n Ihc smc pcr0d.
(c) N0ncrcdI rclIcd Icc nc0mc sh0uld bc rcc0gnscd s crncd. Fccs
crncd 0vcr l0ng pcr0d 0I Imc 0r n sIgcs, nd whch rc n0I
c0nIngcnI up0n Ihc 0ccurrcncc 0I IuIurc cvcnI, sh0uld bc rcc0gnscd
whcn Ihc rclIcd scrvcc s pcrI0rmcd, 0r 0n Ihc c0mplcI0n 0I c0nIrcIcd
sIgcs. Fccs rclIng I0 IrnscI0n n whch s0mc p0rI0n 0I rclIcd
crcdI rsk s rcIncd, sh0uld bc IrcIcd s b0vc.
(I) Lcsc rcnIl nc0mc sh0uld bc rcc0gnscd n sysIcmIc mnncr s0 s
I0 rcc0rd c0nsInI ycld 0n Ihc lcss0r's ncI nvcsImcnI n Ihc lcsc
0vcr Is Icrms. !I Ihc lcsc c0nIns n nIcrcsI rIc vrI0n clusc, Ihc
ycld sh0uld bc d|usIcd n Ihc ppr0prIc pcr0d.
(g) Pr0IIs 0r l0sscs rsng 0n slc 0I l0ns 0r dsc0unIs wIh0uI rcc0ursc I0
Ihc scllcr, sh0uld bc rcc0gnscd by Ihc scllcr, whcn Ihc IrnscI0n s
c0mplcIcd.
(h) Pr0II rsng 0n slc 0I l0ns 0r dsc0unI wIh rcc0ursc I0 Ihc scllcr,
sh0uld bc m0rIscd by Ihc scllcr 0vcr Ihc rcmnng lIc. L0sscs sh0uld
bc rcc0gnscd s s00n s Ihcy cn bc rcs0nbly csImIcd.
243
nks sh0uld mkc pr0vs0n I0r ll l0sscs s s00n s Ihcy cn bc rcs0nbly
csImIcd. L0sscs cn rsc 0n ny sscI c0nsdcrcd d0ubIIul 0I bcng rclzcd
n Iull nd cn ncludc l0n l0ss pr0vs0ns gnsI dmnuI0n n Ihc vluc 0I
0Ihcr sscIs nd l0ss c0nIngcnccs.
() nks sh0uld mkc pr0vs0n I0r l0n l0ss IIcr Ih0r0ugh nd
sysIcmIc rcvcw 0I ll Is crcdI rsks, ncludng l0ns nd dvnccs,
lcscs nd 0IIblncc shccI cnggcmcnIs. Thc prccsc Imc I whch
pr0vs0n sh0uld bc mdc gnsI crcdI rsk, s mIIcr 0I |udgcmcnI,
cspcclly n Ihc csc 0I rcv0lvng IclIcs such s 0vcrdrIIs. Ech
bnk sh0uld dcvcl0p I0rml pr0ccdurc I0r dcnIIyng n0npcrI0rmng
IclIcs nd cvluIng l0n l0sscs nd sysIcmIc mcIh0d 0I mkng
pr0vs0ns I0r l0n l0sscs. Ech bnk sh0uld c0nsdcr 0Ihcr ndcI0ns
IhI l0ss my rsc 0n crcdI rsk sncc I0r cxmplc, l0n my bc
d0ubIIul 0I rcc0vcry cvcn I I s pcrI0rmng n cc0rdncc wIh Is Icrms.
(b) L0n l0ss pr0vs0ns rc s pr0vdcd bcl0w.
!ndcI0ns IhI Ixcd IclIy s n0npcrI0rmng ncludc sIuI0n n whch
nIcrcsI nd/0r prncpl rcpymcnIs rc n rrcrs 0I Ihc IclIy Icrms.
!n Ih0sc cscs:
() !nIcrcsI 0vcrduc by m0rc Ihn 90 dys (0r such sh0rIcr pcr0d s my
bc spccIcd by rcgulI0ry uIh0rIcs) sh0uld bc suspcndcd nd
rcc0gnscd 0n csh bss.
(b) Prncpl rcpymcnI whch s 0vcrduc by m0rc Ihn 20 dys (0r such
sh0rIcr pcr0d s my bc spccIcd by rcgulI0ry uIh0rIcs) sh0uld bc
Iully pr0vs0ncd nd rcc0vcrcs rcc0gnscd 0n csh bss.
(c) whcn ndvdul prncpl rcpymcnI rc sub|ccI I0 pr0vs0n, bnks
sh0uld mkc pr0vs0n gnsI Ihc 0uIsIndng prncpl rcpymcnIs
n0I ycI duc s I0ll0ws:
N0. 0I dys I0r whch Mnmum pcrccnIgc pr0vs0n
prncpl s 0vcrduc rcqurcd I0r prncpl n0I duc
80 dys 50
3b0 dys 00
whcrc rcgulI0ry uIh0rIcs sIpulIc sh0rIcr pcr0ds 0r hghcr
pcrccnIgcs Ihn ndcIcd b0vc, such sh0rIcr pcr0ds 0r hghcr
pcrccnIgcs sh0uld bc I0ll0wcd.
(d) whcrc Ihc IclIy s sccurcd by pcrIccI Ixcd lcgl chrgc 0vcr, 0r by
IIlc I0, Ingblc pr0pcrIy, Ihc prncpl pr0vs0n c0uld ccsc 0ncc Ihc
0uIsIndng prncpl s lcss Ihn spccIcd pr0p0rI0n 0I Ihc csImIcd
ncI rclsblc vluc 0I Ihc sccurIy s I0ll0ws:
() whcrc Ihc prncpl rcpymcnI s 0vcrduc by m0rc Ihn
0nc ycr, Ihc 0uIsIndng unpr0vdcd prncpl sh0uld n0I cxcccd
50 0I Ihc csImIcd ncI rclzblc vluc 0I sccurIy.
244
() whcrc Ihc prncpl rcpymcnI s 0vcrduc by m0rc Ihn Iw0 ycrs,
Ihcrc sh0uld bc n0 0uIsIndng unpr0vdcd p0rI0n 0I Ihc crcdI
IclIy rrcspccIvc 0I Ihc csImIcd ncI rclzblc vluc 0I
sccurIy hcld.
() !n b0Ih () nd () b0vc, whcrc rcgulI0ry uIh0rIcs sIpulIc
sh0rIcr pcr0ds 0I l0wcr pcrccnIgcs, such sh0rIcr 0r l0wcr
pcrccnIgcs sh0uld bc I0ll0wcd.
(c) whcrc IclIy s sccurcd by Il0Ing chrgc 0r n unpcrIccIcd 0r
cquIblc chrgc 0vcr Ingblc pr0pcrIy, I sh0uld bc IrcIcd s n
unsccurcd crcdI nd n0 cc0unI Ikcn 0I ny sccurIy hcld n dcIcrmnng
Ihc pr0vs0n I0r l0ns l0ss.
() N0rmlly, Ihc IrsI ndcI0n IhI rcv0lvng 0r 0vcrdrII IclIy my
bc n0npcrI0rmng s whcn Ihc Iurn0vcr 0n Ihc cc0unI s c0nsdcrbly
l0wcr Ihn nIcpIcd whcn Ihc IclIy ws rrngcd 0r whcn nIcrcsI
s chrgcd whch Ikcs Ihc IclIcs b0vc Is crcdI lmI.
!n Ihcsc crcumsInccs:
() A rcv0lvng IclIy sh0uld bc clssIcd s n0npcrI0rmng nd
unpd nIcrcsI suspcndcd 0ncc pcr0d 0I 90 dys (0r sh0rIcr
pcr0d s my bc spccIcd by rcgulI0ry uIh0rIcs) clpscs
IIcr Ihc IclIy lmI s cxcccdcd.
() whcrc crcdI lmIs rc n0I cxcccdcd, cch bnk sh0uld hvc
sysIcmIc mcIh0d I0r Ihc dcnIIcI0n 0I n0npcrI0rmng
rcv0lvng crcdIs. 0ncc clssIcd s n0npcrI0rmng, ll unpd
nIcrcsI 0n Ihc IclIy sh0uld bc suspcndcd.
() 0ncc IclIy s clssIcd s n0npcrI0rmng, pr0vs0n gnsI
Prncpl nd unpd nIcrcsI sh0uld bc mdc n cc0rdncc wIh
sysIcmIc mcIh0d I0 rcducc Ihc 0uIsIndng prncpl I0 Ihc
csImIcd ncI rclsblc vluc 0I ny sccurIy hcld (I0ll0wng
Ihc crIcr crlcr spccIcd 0vcr spccIcd pcr0d).
(b) !n Ihc csc 0I rcv0lvng nd 0vcrdrII IclIcs, whcrc l0n rcschcdulng
s grccd wIh cusI0mcr, Ihc rcschcdulng sh0uld bc IrcIcd s ncw
IclIy buI pr0vs0nng sh0uld c0nInuc unIl I s clcr IhI Ihc
rcschcdulng s w0rkng. !nIcrcsI prcv0usly suspcndcd nd, pr0vs0ns
gnsI prncpl prcv0usly mdc, sh0uld bc rcc0gnscd 0n csh bss.
!n mny cscs, sh0rI Imc csh Il0w dIIculIcs rcsulI n cusI0mcr
Icmp0rrly Illng bchnd Is IclIy Icrms. !n Ihcsc cscs, pr0vs0n
sh0uld bc mdc n cc0rdncc wIh Ihc prncplcs scI 0uI b0vc. 0ncc
Ihc IclIcs bcgn I0 pcrI0rm, nIcrcsI prcv0usly suspcndcd nd
pr0vs0ns gnsI prncplc prcv0usly mdc sh0uld bc rcc0gnscd 0n
csh bss.
245
nks sh0uld mkc gcncrl l0n l0ss pr0vs0n 0I I lcsI 0I Ihcr
rsk sscIs n0I spccIclly pr0vdcd I0r, n ddI0n I0 spccIc pr0vs0ns,
I0 pr0vdc gnsI Ihc undcnIIcd l0sscs whch rc kn0wn I0 cxsI n
ny p0rII0l0, usng sysIcmIc mcIh0d, whch sh0uld bc c0nssIcnIly
I0ll0wcd Ir0m pcr0d I0 pcr0d.
L0ngIcrm nvcsImcnIs n mrkcIblc sccurIcs sh0uld bc sIIcd I Ihc
l0wcr 0I c0sI nd ncI rclsblc vluc. MrkcIblc vluc sh0uld bc
dscl0scd.
Sh0rIIcrm nvcsImcnIs n mrkcIblc sccurIcs sh0uld bc sIIcd I
ncI rclsblc vluc. 0rgnl c0sI sh0uld bc dscl0scd.
!nvcsImcnI n sccurIcs I0r whch Ihcrc s n0 cIvc mrkcI, sh0uld bc
sIIcd I l0wcr 0I c0sI nd ncI rclsblc vluc.
Thc SIIcmcnI ws ssucd I0 chcvc Ihc I0ll0wng prmry 0b|ccIvcs:
() I0 cnsurc IhI publshcd Inncl sIIcmcnIs c0nIn suIIccnI
nI0rmI0n b0uI lcsc IrnscI0ns, I0 mkc I p0ssblc I0r uscrs 0I
such sIIcmcnIs I0 dcIcrmnc Ihc cIIccIs 0I lcsc c0mmImcnIs, 0n Ihc
prcscnI nd IuIurc 0pcrI0ns 0I Ihc rcp0rIng cnIcrprscs, nd
(b) I0 cnsurc unI0rm dscl0surc 0I Icrms nd clsscs 0I lcscs n Inncl
sIIcmcnIs.
Thc I0ll0wng Icrms rc s dcIncd by Ihc SIndrd:
() A lcsc s c0nIrcIul grccmcnI bcIwccn n 0wncr (Ihc lcss0r) nd
n0Ihcr prIy (Ihc lcsscc) whch c0nvcys I0 Ihc lcsscc, Ihc rghI I0 usc
Ihc lcscd sscI I0r n grccd pcr0d 0I Imc n rcIurn I0r c0nsdcrI0n,
usully pcr0dc pymcnIs cllcd rcnIs.
(b) 0pcrIng lcsc 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.
(c) Fnncc 0r CpIl lcsc s 0nc n whch 0wncrshp rsks nd rcwrds
rc IrnsIcrrcd I0 Ihc lcsscc, wh0 s 0blgIcd 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.
24b
0Ihcr vrnIs 0I Fnncc 0r CpIl lcscs rc:
() 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.
() SlcsIypcd lcsc s 0nc whcrc Ihc 0IIcr0r 0r dclcr (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 lcscd sscI s grcIcr Ihn Is crryng m0unI n
Ihc b00ks 0I Ihc lcss0r rcsulIng n pr0II 0r l0ss I0 Ihc lcss0r
(wh0 s 0IIcn n0I mnuIcIurcr 0r dclcr).
() 0rccI Inncc 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 lcscd sscIs s Ihc
smc s Is crryng m0unI I0 Ihc lcss0r (0IIcn n0I
mnuIcIurcr 0r dclcr).
() A rcp0rIng cnIcrprsc sh0uld sIIc, n Ihc ppr0prIc sccI0n 0I Is
Inncl sIIcmcnIs, Is cc0unIng p0lcy wIh rcspccI I0 lcscs.
(b) A rcp0rIng cnIcrprsc sh0uld, I Ihc nccpI0n, 0I lcsc, clssIy I s
cIhcr Inncc lcsc 0r n 0pcrIng lcsc.
(c) A lcsc qulIcs s Inncc lcsc I Ihc I0ll0wng c0ndI0ns rc mcI.
() Lcsc s n0ncnccllblc, nd
() Any 0I Ihc I0ll0wng s pplcblc:
Thc lcsc Icrm c0vcrs subsInIlly (80 0r m0rc) Ihc
csImIcd uscIul lIc 0I Ihc sscI 0r,
Thc ncI prcscnI vluc 0I Ihc lcsc s Is nccpI0n, usng
Ihc mnmum lcsc pymcnIs nd Ihc mplcI nIcrcsI
rIc, s cqul I0 0r grcIcr Ihn Ihc Ir vluc 0I Ihc lcscd
sscI 0r,
Thc lcsc hs purchsc 0pI0n whch s lkcly I0 bc
cxcrcscd.
(d) A lcsc whch d0cs n0I qulIy s Inncc lcsc s spccIcd b0vc,
sh0uld bc IrcIcd s n 0pcrIng lcsc.
() Thc rcp0rIng cnIcrprsc sh0uld cc0unI I0r Inncc lcsc by rcc0rdng
Ihc lcsc s n cqusI0n 0I n sscI nd Ihc ncurrcncc 0I lblIy.
(b) whcrc lcsc rghI s cpIlscd by Ihc lcsscc s n () b0vc, Ihc
I0ll0wng sh0uld bc dcIcrmncd:
() Thc nIl vluc 0I Ihc lcscd sscI nd Ihc c0rrcsp0ndng
lblIy,
() Thc m0rIsI0n rIc 0r m0unI, nd
() Thc m0unI by whch Ihc lcsc lblIy s I0 bc rcduccd.
(c) AI Ihc bcgnnng 0I Ihc lcsc Icrm, Ihc lcsscc sh0uld rcc0rd Ihc nIl
sscI nd lblIy I m0unIs cqul I0 Ihc Ir vluc 0I Ihc lcscd sscI
247
lcss Ihc prcscnI vluc 0I n ungurnIccd 0r prIlly gurnIccd
rcsdul vluc whch w0uld ccruc I0 Ihc lcss0r I Ihc cnd 0I Ihc Icrm 0I
Ihc lcsc. Thc dsc0unI IcI0r I0 pply n clculIng Ihc prcscnI vluc
0I Ihc ungurnIccd rcsdul vluc ccrung I0 Ihc lcss0r s Ihc nIcrcsI
rIc mplcI n Ihc lcsc.
(d) whcrc Ihc lcsscc cnn0I dcIcrmnc Ihc Ir vluc 0I Ihc lcscd sscI I
Ihc nccpI0n 0I Ihc lcsc 0r s unblc I0 mkc rcs0nblc csImIc 0I
Ihc rcsdul vluc 0I Ihc lcsc wIh0uI whch Ihc nIcrcsI rIc mplcI
n Ihc lcsc c0uld n0I bc c0mpuIcd, Ihc nIl sscI nd lblIy sh0uld
bc rcc0rdcd I m0unIs cqul I0 Ihc prcscnI vluc 0I Ihc mnmum lcsc
pymcnIs usng Ihc lcsscc's ncrcmcnIl b0rr0wng rIc s Ihc
dsc0unIng IcI0r.
(c) Thc lcscd sscI sh0uld bc dcprccIcd 0r Ihc rghIs undcr Ihc lcscd
sscIs sh0uld bc m0rIscd n mnncr c0nssIcnI wIh Ihc dcprccI0n
p0lcy 0n Ihc lcsscc's 0wn sscIs.
(I) Thc mnmum lcsc pymcnI n rcspccI 0I cch cc0unIng pcr0d sh0uld
bc ll0cIcd bcIwccn Inncc chrgc nd Ihc rcducI0n 0I Ihc 0uIsIndng
lcsc lblIy. Thc Inncc chrgc sh0uld bc dcIcrmncd by pplyng
Ihc rIc mplcI n Ihc lcsc I0 Ihc 0uIsIndng lblIy I Ihc bcgnnng
0I Ihc pcr0d. Thc 'sum 0I Ihc ycrs dgI' my bc uscd s n
ppr0xmI0n.
(g) C0nIngcnI rcnIls sh0uld bc wrIIcn 0II n Ihc pcr0d n whch Ihcy rc
ncurrcd.
Thc rcnIl cxpcnsc sh0uld bc chrgcd nI0 Ihc nc0mc cc0unI 0n sysIcmIc
bss, n lnc wIh Ihc Imc pIIcrn 0I Ihc uscr's bcncII, n0I 0n Ihc bss 0I Ihc
rcnIl pymcnIs mdc by Ihc uscr.
() An sscI undcr Inncc lcsc, sh0uld bc rcc0rdcd n Ihc Inncl
sIIcmcnIs 0I Ihc lcss0r, n0I s pr0pcrIy, plnI nd cqupmcnI, buI s n
nvcsImcnI n lcsc.
(b) AI Ihc nccpI0n 0I Ihc lcsc, Ihc lcss0r sh0uld rcc0gnsc n Ihc cc0unIs
smulInc0usly:
() gr0ss nvcsImcnI n Ihc lcsc, nd
() uncrncd Inncc nc0mc Ir0m Ihc lcsc.
(c) Thc uncrncd Inncc nc0mc sh0uld bc dcIcrrcd nd ll0cIcd I0
nc0mc 0I Ihc lcss0r 0vcr Ihc lcsc Icrm bscd 0n pIIcrn rcIlccIng
c0nsInI pcr0dc rIc 0I rcIurn 0n Ihc lcss0r's ncI nvcsImcnI
0uIsIndng.
(d) C0nIngcnI rcnIls sh0uld bc rcc0gnscd n Ihc cc0unIs 0I Ihc pcr0d I0
whch Ihcy rclIc.
(c) !nIl drccI c0sIs IhI rc dcnIIblc wIh drccI Inncng 0I Ihc lcsc
sh0uld bc Ikcn I0 Ihc nc0mc sIIcmcnI n Ihc pcr0d n whch Ihc c0sIs
wcrc ncurrcd.
248
(I) !n slcs Iypc lcsc, Ihc mnuIcIurcr 0r dclcrlcss0r sh0uld Ikc I0 Ihc
nc0mc sIIcmcnI, Ihc dIIcrcncc bcIwccn Ihc Ir vluc 0I Ihc sscI I
Ihc nccpI0n 0I Ihc lcsc nd Is crryng m0unI.
(g) !nvcsImcnI n lcscs sh0uld bc rcvcwcd pcr0dclly I0r rcc0vcrblIy
n Ihc smc mnncr s 0Ihcr rcccvblcs, buI wIh rcgrd I0 Ihc sccurIy,
I ny, hcld by Ihc lcss0r, I0r cxmplc, rcc0ursc I0 Ihc lcscd sscI.
(h) whcrc rcpprsl s mdc 0I Ihc rcsdul vluc 0I Ihc sscI nd Ihs
sh0ws dmnuI0n, Ihc rcsulIng l0ss sh0uld bc chrgcd I0 Ihc nc0mc
sIIcmcnI. 0r0ss nvcsImcnI n Ihc lcsc sh0uld smlrly bc wrIIcn
d0wn.
() whcrc Ihc lcss0r clssIcs lcsc grccmcnI s n 0pcrIng lcsc, I
sh0uld bc cc0unIcd I0r by Ihc lcss0r s n Icm 0I pr0pcrIy, plnI nd
cqupmcnI. Acc0rdngly, Ihc pcr0dc rcnIls IhI rc rcccvblc sh0uld
bc IrcIcd s rcnIl nc0mc.
(b) Thc dcprccI0n 0I lcscd sscI by Ihc lcss0r sh0uld bc 0n Ihc bss 0I
Ihc lcss0r's n0rml dcprccI0n p0lcy I0r IhI clss 0I sscIs lcscd
0uI.
(c) Thc nIl drccI c0sIs ss0cIcd wIh Ihc 0pcrIng lcsc sh0uld bc
chrgcd s ncurrcd I0 Ihc nc0mc sIIcmcnI.
() whcrc n slc nd lcsc - bck IrnscI0n, n sscI s s0ld I prcc
cqul I0 0r grcIcr Ihn Ihc currcnI mrkcI vluc nd I s lcscd bck
I0r Icrm ppr0xmIng Ihc uscIul lIc 0I Ihc sscI nd I0r pymcnIs
IhI rc suIIccnI I0 c0vcr Ihc ncw 0wncr's nvcsImcnI plus rcs0nblc
rcIurn Ihcrc0n, Ihc IrnscI0n sh0uld bc clssIcd s Inncc lcsc
by Ihc scllcrlcsscc.
(b) !I slc nd lcscbck qulIcs s Inncc lcsc, Ihc pr0II gcncrIcd
by Ihc scllcr lcsscc sh0uld bc dcIcrrcd nd m0rIscd sysIcmIclly
0vcr Ihc uscIul lIc 0I Ihc sscI.
(c) whcrc slc nd lcscbck qulIcs s n 0pcrIng lcsc, IhI s,
whcn I d0cs n0I mccI Ihc c0ndI0ns 0I Inncc lcsc, Ihc pr0II
gcncrIcd by Ihc scllcrlcsscc sh0uld bc dcIcrrcd nd m0rIscd n
pr0p0rI0n I0 Ihc rcnIl pymcnIs 0vcr Ihc Icrm 0I Ihc lcsc.
(d) whcrc Ihc mrkcI vluc 0I Ihc sscI s lcss Ihn Ihc crryng m0unI 0n
Ihc dIc 0I Ihc slc nd lcscbck IrnscI0n, Ihc dIIcrcncc sh0uld bc
chrgcd mmcdIcly I0 Ihc nc0mc sIIcmcnI 0I Ihc scllcrlcsscc.
Smlrly, c0sIs ss0cIcd wIh Ihc IrnscI0n, I0r cxmplc, lcgl nd
pr0Icss0nl Iccs, sh0uld bc chrgcd I0 Ihc nc0mc sIIcmcnI.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS 2 !nI0rmI0n I0 bc dscl0scd
n Inncl sIIcmcnIs nd SAS 3 - Acc0unIng I0r pr0pcrIy, plnI nd
cqupmcnI, Ihc I0ll0wng dscl0surcs sh0uld bc mdc:
249
() Thc m0unI nd Ihc m|0r clsscs 0I sscIs bcng lcscd I Ihc blncc
shccI dIc. LblIcs rclIcd I0 Ihcsc lcscd sscIs sh0uld bc scprIcly
dscl0scd Ir0m 0Ihcr lblIcs nd I Ihc smc Imc, dIIcrcnIIng
bcIwccn currcnI nd l0ngIcrm p0rI0ns 0I Ihc lblIcs.
(b) C0mmImcnIs I0r mnmum lcsc pymcnIs wIh Icrm n cxccss 0I
0nc ycr, n summry, sIIng Ihc m0unI nd Ihc ycrly IuIurc pymcnI
duc.
(c) Any sgnIcnI rcsIrcI0ns, rcncwl 0r purchsc 0pI0ns, c0nIngcnI
rcnIls nd 0Ihcr c0nIngcnccs rsng Ir0m lcscs.
Thc I0ll0wng dscl0surcs sh0uld bc mdc n Ihc Inncl sIIcmcnIs 0I Ihc
lcss0r:
() Ihc gr0ss nvcsImcnI n lcscs clssIcd s Inncc lcscs, Ihc
rclIcd dcIcrrcd nc0mc nd Ihc ungurnIccd rcsdul vlucs 0I Ihc
lcscd sscIs bc dscl0scd I Ihc blncc shccI dIc,
(b) Ihc ncI nvcsImcnI n lcscs, sh0uld bc br0kcn nI0 currcnI nd
n0ncurrcnI p0rI0ns.
(c) Ihc bss 0r bscs uscd I0 ll0cIc nc0mc, nd
(d) I0r sscIs undcr 0pcrIng lcsc, Ihc m0unI 0I sscIs undcr cch
cIcg0ry nd Ihc ccumulIcd dcprccI0n I Ihc blncc shccI dIc.
Thc SIIcmcnI I0cuscs 0n Ihrcc mn I0rms 0I nvcsImcnIs, nmcly,
() Sh0rIIcrm nvcsImcnIs (currcnI nvcsImcnI),
() L0ngIcrm nvcsImcnIs, nd
() !nvcsImcnI pr0pcrIcs.
() rc sscIs by n cnIcrprsc I0r purp0sc 0I cpIl
pprccI0n 0r nc0mc gcncrI0n wIh0uI cIvIcs n Ihc I0rm 0I
pr0ducI0n, Irdc, 0r pr0vs0n 0I scrvccs.
(b) rc nvcsImcnIs whch rc rcdly rclsblc
nd nIcndcd I0 bc hcld I0r n0I m0rc Ihn 0nc ycr.
(c) rc nvcsImcnIs 0Ihcr Ihn sh0rIIcrm
nvcsImcnI.
(d) An ! s n nvcsImcnI n lnd 0r buldng hcld
prmrly I0r gcncrIng nc0mc 0r cpIl pprccI0n nd n0I 0ccupcd
subsInIlly I0r usc, 0r n Ihc 0pcrI0ns 0I, Ihc nvcsIng cnIcrprscs. A
pr0pcrIy s dccmcd I0 bc subsInIlly 0ccupcd I Ihc 0wncr 0I n0Ihcr
cnIcrprsc n Ihc smc gr0up 0ccupcs m0rc Ihn 5 0I Ihc lcIIblc
spcc.
250
A rcp0rIng cnIcrprsc sh0uld clssIy Is nvcsImcnIs nI0 sh0rIIcrm
nvcsImcnIs, l0ngIcrm nvcsImcnIs, nd nvcsImcnI pr0pcrIcs.
() Sh0rIIcrm nvcsImcnIs sh0uld bc vlucd I Ihc l0wcr c0sI nd mrkcI
vluc. Thc crryng m0unI sh0uld bc dcIcrmncd 0n n Icm bss.
(b) Thc m0unI by whch c0sI cxcccds mrkcI vluc (unrclscd l0ss) sh0uld
bc chrgcd I0 Ihc nc0mc sIIcmcnI I0r Ihc pcr0d.
(c) Rclscd gns nd l0sscs 0n dsp0sl 0I sh0rIIcrm nvcsImcnI sh0uld
bc Ikcn I0 Ihc nc0mc sIIcmcnI I0r Ihc pcr0d 0I dsp0sl.
() L0ngIcrm nvcsImcnIs sh0uld bc crrcd I c0sI 0r I rcvlucd m0unI.
(b) whcn Ihcrc hs bccn pcrmncnI dcclnc n Ihc vluc 0I n nvcsImcnI,
Ihc crryng m0unI 0I Ihc nvcsImcnI sh0uld bc wrIIcn d0wn I0
rcc0gnsc Ihc l0ss. Such rcducI0n sh0uld bc chrgcd I0 Ihc nc0mc
sIIcmcnI. RcducI0n n crryng m0unI my bc rcscrvcd whcn Ihcrc
s n ncrcsc, 0Ihcr Ihn Icmp0rry, n Ihc vluc 0I Ihc nvcsImcnI, 0r I
Ihc rcs0ns I0r Ihc rcducI0n n0 l0ngcr cxsI.
(c) An ncrcsc n crryng m0unI Ir0m Ihc rcvluI0n 0I l0ngIcrm
nvcsImcnIs sh0uld bc crcdIcd I0 0wncr's cquIy s rcvluI0n surplus.
T0 Ihc cxIcnI IhI dccrcsc n crryng m0unI 0IIscIs prcv0us
ncrcsc, I0r Ihc smc nvcsImcnI IhI hs bccn crcdIcd I0 rcvluI0n
surplus nd n0I subscqucnIly rcscrvcd 0r uIlscd, I sh0uld bc chrgcd
gnsI IhI rcvluI0n surplus rIhcr Ihn nc0mc.
(d) An ncrcsc 0n rcvluI0n whch s drccIly rclIcd I0 prcv0us
dccrcsc n crryng m0unI I0r Ihc smc nvcsImcnI IhI ws chrgcd
I0 nc0mc, sh0uld bc crcdIcd I0 Ihc cxIcnI IhI I 0IIscIs Ihc prcv0usly
rcc0rdcd dccrcsc.
(c) whcn rcp0rIng cnIcrprsc rcccvcs dvdcnds IhI rcprcscnI
dsIrbuI0n 0I crnngs rcIncd n Ihc busncss pr0r I0 cqusI0n 0I
sI0ck n n nvcsIcc c0mpny, such dvdcnds sh0uld bc IrcIcd s
dcducI0n Ir0m Ihc c0sI 0I Ihc nvcsImcnI.
(I) whcn rcp0rIng cnIcrprsc rcccvcs nIcrcsI 0n dIcd sI0ck whch
ncludcs nIcrcsI ccrucd bcI0rc Ihc dIc 0I purchsc, Ihc rclcvnI
m0unI sh0uld bc crcdIcd I0 cqusI0n c0sI nd Ihc p0rI0n 0I nIcrcsI
rclIng I0 p0sIcqusI0n pcr0d, sh0uld bc crcdIcd I0 nc0mc
sIIcmcnI.
(g) whcn n nvcsImcnI hs bccn wrIIcn d0wn s crlcr sIIcd b0vc, Ihc
ncw crryng m0unI s dccmcd I0 bc Ihc ncw bss I0r subscqucnI
cc0unIng purp0scs.
(h) Any dsc0unI 0r prcmum rsng 0n cqusI0n 0I dcbI sccurIcs sh0uld
bc m0rIscd 0vcr Ihc pcr0d I0 mIurIy s0 IhI crnngs Ir0m Ihc
nvcsImcnI w0uld rcIlccI c0nsInI ycld bscd 0n cqusI0n c0sI. Thc
m0rIscd dsc0unI 0r prcmum sh0uld bc crcdIcd 0r chrgcd I0 nc0mc
25
s Ih0ugh I wcrc ddcd I0 0r subIrcIcd Ir0m Ihc crryng m0unI 0I
Ihc sccurIy. Thc rcsulIng crryng m0unI sh0uld Ihcn bc rcgrdcd s
c0sI.
() Evcry cnIcrprsc sh0uld hvc p0lcy 0n cc0unIng I0r nvcsImcnI
pr0pcrIcs cIhcr n cc0rdncc wIh SAS N0. 3 nd SAS N0. 9, 0r n
cc0rdncc wIh Ihs SIndrd s sIIcd bcl0w.
(b) !nvcsImcnI pr0pcrIcs sh0uld bc crrcd n Ihc blncc shccI I Ihcr
mrkcI vluc nd rcvlucd pcr0dclly 0n sysIcmIc bss I lcsI
0ncc Ihrcc ycrs.
(c) !nvcsImcnI pr0pcrIcs sh0uld n0I bc sub|ccI I0 pcr0dc chrgcs I0r
dcprccI0n.
(d) A dccrcsc n crryng m0unI 0I n nvcsImcnI pr0pcrIy sh0uld bc
IrcIcd n Ihc mnncr spccIcd crlcr. An ncrcsc n crryng m0unI
sh0uld bc IrcIcd n cc0rdncc wIh Ihc pr0vs0ns crlcr pr0vdcd.
() Thc pcIr0lcum ndusIry s vcry ccnIrl n Ihc Ngcrn cc0n0my s
pcIr0lcum s Ihc mn s0urcc 0I rcvcnuc I0r Ihc NI0n. Thc ndusIry
plys m|0r r0lc n IclIIng Ihc cc0n0mc dcvcl0pmcnI 0I Ihc nI0n.
(b) AcIvIcs 0I Ihc ndusIry cn bc dvdcd nI0 Iw0 br0d cIcg0rcs:
upsIrcm nd d0wnsIrcm. UpsIrcm cIvIcs nv0lvc Ihc cqusI0n
0I mncrl nIcrcsI n pr0pcrIcs, cxpl0rI0n (ncludng pr0spccIng),
dcvcl0pmcnI nd pr0ducI0n 0I crudc 0l nd gs. 00wnsIrcm cIvIcs
nv0lvc Irnsp0rIng, rcInng, nd mrkcIng 0I 0l, gs nd dcrvIvcs.
(c) SAS 4, dcls wIh cc0unIng nd rcp0rIng I0r upsIrcm cIvIcs. !I
d0cs n0I c0vcr Ihc d0wnsIrcm cIvIcs.
Thc I0ll0wng Icrms rc uscd n Ihs SIIcmcnI wIh Ihc mcnngs spccIcd:
() s Ihc pr0ccss 0I gvng up IurIhcr cxpl0rI0n cIvIcs
n wcll 0r Icld n whch 0l 0r gs hs bccn I0und n c0mmcrcl
qunIIy. Ths d0cs n0I ncludc cppcd (pluggcd) wclls. !I cn ls0 rclIc
I0 Ihc gvng up 0I pr0ducI0n wclls 0r Icld I Ihc cnd 0I Ihcr pr0ducIvc
lvcs.
(b) rc c0sIs 0I cqurng c0nccss0n rghIs n lcsc
rc.
(c) s uscd gcncrclly I0 mcn Ihc dcprccI0n 0I Ingblc
c0sIs, dcplcI0n 0I mncrl cqusI0n c0sIs nd nIngblc c0sIs.
252
(d) s wcll drllcd I0 sccrIn Ihc c0mmcrcl p0IcnIls
0I rcscrv0r dsc0vcrcd Ir0m cxplnI0ry cIvIcs.
(c) s sIndrd 0I mcsurcmcnI n Ihc 0l ndusIry. 0nc brrcl
cquls 42 U.S gll0ns (35 mpcrl gll0ns) I sIndrd c0ndI0ns.
(I) rcIcrs I0 n grccmcnI n whch csh
c0nsdcrI0n 0r pr0pcrIy s gvcn I0 n0Ihcr prIy I0r hs usc n drllng
wcll 0n pr0pcrIy n whch Ihc pycr hs n0 mncrl rghIs, n cxchngc
I0r Icchncl nI0rmI0n Ir0m Ihc drllng 0I Ihc wcll.
(g) s w0rkng nIcrcsI rrngcmcnI nv0lvng Iw0 0r
m0rc prIcs, n whch crryng prIy 0r Ihc ssgncc Innccs Ihc
cxpl0rI0n nd dcvcl0pmcnI cIvIcs n c0nsdcrI0n I0r rcwrd
0uI 0I IuIurc pr0ducI0n (I ny) nd I ncccssry Ir0m Ihc crrcd prIy's
0r Ihc ssgn0r's shrc 0I such IuIurc pr0ducI0n. Thc ssgn0r s usully
Ihc crrcd prIy whlc Ihc ssgncc s Ihc crryng prIy. A pr0ducI0n
shrng c0nIrcI (PSC) s I0rm 0I crrcd nIcrcsI.
(h) s Ihc p0nI I whch Ihc drll hs rcchcd Is 0b|ccIvcs
dcpIh, n whch csc, dcIcrmnI0n cn bc mdc s I0 Is pr0ducIvIy
0r 0Ihcrwsc.
() s IcsI I0 dcIcrmnc whcIhcr Ihc rcc0rdcd cpIlscd
cxpl0rI0n, pprsl nd dcvcl0pmcnI c0sIs rc rcc0vcrblc Ir0m
pr0vcd rcscrvcs.
(|) s Ihc qunIIy 0I 0l 0r gs n rcscrv0r IhI cn
bc pr0duccd cc0n0mclly I currcnI prccs usng cxsIng Icchn0l0gy.
Thc PcIr0lcum AcI 9b9, h0wcvcr, dcIncs c0mmcrcl qunIIy s dly
pr0ducI0n 0I 0,000 brrcls 0I crudc 0l.
(k) s Ihc pr0ccss 0I brngng n 0l 0r gs wcll nI0 pr0ducI0n.
Thc pr0ccss bcgns 0nly IIcr Ihc wcll hs rcchcd Ihc dcpIh whcrc 0l
0r gs s Ih0ughI I0 cxsI, nd gcncrlly nv0lvcs nsIllI0n 0I csng
ppcs, pcrI0rI0n 0I Ihc csng ppcs nd cdzng nd IrcIurng
0pcrI0ns.
(l) s rghI grnIcd I0 c0mpny by Ihc Icdcrl g0vcrnmcnI
0n bchlI 0I Ihc FcdcrI0n I0 cxpl0rc nd pr0ducc 0l nd gs wIhn
gvcn rc. !n Ngcr, Ihs nv0lvcs Ihc grnIng 0I 0l cxpl0rI0n
lccncc, 0l pr0spccIng lccncc 0r 0l mnng lcsc.
(m) rcIcrs I0 Ihc prcscrvI0n 0r rcsI0rI0n 0I drllng sIc
I0 Is nIurl sIIc IIcr drllng. !I my ls0 bc rclIcd I0 cc0n0my nd
v0dncc 0I wsIc drllng.
(n) s ccnIrc c0mprsng 0I dcIncd gc0grphcl rc uscd
undcr Ihc Iull c0sI mcIh0d 0I cc0unIng s bss I0r ccumulIng
dcprccblc cpIlscd cxpl0rI0n, pprsl nd dcvcl0pmcnI
cxpcndIurc. C0sI p00ls rc usully n0I smllcr n szc Ihn c0unIry
cxccpI whcrc wrrnIcd by m|0r dIIcrcnccs n cc0n0mc, Iscl 0r 0Ihcr
IcI0rs n IhI c0unIry.
(0) rc ddI0nl cpIl c0sIs ncurrcd, I0ll0wng
dccs0n I0 dcvcl0p rcscrv0r.
(p) s n cxpl0rI0ry (wldcI) wcll IhI Inds ncw dcp0sI
0I 0l 0r gs.
253
(q) s Ihc csImIcd vluc 0I 0l nd/0r gs I Ihc dIc 0I
dsc0vcry.
(r) (ls0 rcIcrrcd I0 s dusIcr 0r wcI h0lc) s wcll IhI cIhcr
Inds n0 0l 0r gs 0r I00 lIIlc I0 mkc I c0mmcrclly vblc.
(s) s smlr I0 b0II0m h0lc grccmcnI cxccpI IhI
m0ncy 0r pr0pcrIy c0nIrbuI0ns rc mdc I0 n0Ihcr prIy 0nly n Ihc
cvcnI IhI Ihc wcll rcchcs n grccd dcpIh nd s I0und I0 bc n0n
pr0ducIvc.
(I) rc c0sIs ncurrcd n Ihc scrch I0r
0l nd gs dcp0sIs IIcr 0bInng lccncc buI bcI0rc dccs0n s
Ikcn I0 dcvcl0p rcscrv0r.
(u) s n crcgc usully lrgcr Ihn Icld
whcrc nIl Indngs cII0rIs such s gc0l0gcl nd gc0physcl survcys
rc undcrIkcn.
(v) s wcll drllcd I0 sccrIn whcIhcr 0r n0I 0l 0r gs
cxsIs n Icld.
(w) rcIcrs I0 Ihc IrnsIcr 0I ll prI 0I n 0l nd gs nIcrcsI n
c0nsdcrI0n I0r n grccmcnI by Ihc IrnsIcrcc (Irmcc), I0 mccI
ccrIn 0l cxpl0rI0n nd dcvcl0pmcnI c0sIs whch w0uld 0Ihcrwsc
hvc bccn undcrIkcn by Ihc 0wncr (Irm0r). Scc Frm 0uI.
(x) s shrng 0I 0l cxpl0rI0n nd dcvcl0pmcnI cIvIcs
nd c0sIs, whcrcby c0mpny wIh c0nccss0n, cIhcr bccusc I hs
m0rc p0IcnIl 0l crcgc IhI I cn hndlc 0r wshcs I0 shrc rsks,
nvIcs 0Ihcrs I0 cxpl0rc ll 0r p0rI0ns 0I Ihc IrcI n rcIurn I0r shrc
0I whIcvcr 0l s I0und. Scc Irm n.
(y) rcIcrs I0 Ihc Fcdcrl 00vcrnmcnI 0I Ngcr.
(z) mcns Ihc Fcdcrl 00vcrnmcnI, SIIc 00vcrnmcnI, Ihc
CpIl TcrrI0ry nd L0cl 00vcrnmcnIs.
() s gvcn rc 0r rcg0n, usully c0mprsng numbcr 0r
rcscrv0rs n whch 0l nd gs rcscrvcs cxsI.
(b) s Ihc p0ssblc dmnuI0n n Ihc vluc 0I unpr0vcd
pr0pcrIcs 0I n cxpl0rI0n nd pr0ducI0n c0mpny rsng Ir0m cvcnIs
0r crcumsInccs 0uIsdc Is c0nIr0l.
(c) s c0nIrcIul rrngcmcnI whcrcby Iw0 0r m0rc prIcs
undcrIkc n cc0n0mc cIvIy whch s sub|ccI I0 c0nIrcIully grccd
bss 0I shrng 0I c0nIr0l.
(d) s lccncc grnIcd I0 c0mpny
undcr Ihc PcIr0lcum AcI 0I 9b9 I0 cxpl0rc I0r pcIr0lcum nd d0cs n0I
c0nIcr n cxclusvc rghI 0vcr Ihc rc 0I Ihc lccncc. Ths usully hs
0nc ycr Icrm.
(c) mcns lccncc grnIcd I0 c0mpny undcr
Ihc PcIr0lcum AcI, 9b9, I0r Ihc purp0sc 0I wnnng pcIr0lcum, 0r ny
ssgnmcnI 0I such lcsc. Ths usully hs Icrm 0I bcIwccn IwcnIy
nd IhrIy ycrs.
(I) mcns lccncc grnIcd I0 c0mpny
undcr Ihc PcIr0lcum AcI, 9b9, I0r Ihc purp0sc 0I wnnng pcIr0lcum, 0r
ny ssgnmcnI 0I such lccncc. Thc Icrm s usully bcIwccn Ihrcc nd
Ivc ycrs.
254
(g) s Ihc prIy IhI c0nducIs Ihc 0pcrI0ns undcr |0nI vcnIurc.
Ths my ncludc Ihc drllng 0I wcll nd/0r Ihc pr0ducI0n 0I 0l Ir0m
IrcI 0r Icld undcr n grccd c0nIrcI.
(h) rc c0sIs ncurrcd n Ihc pcr0d pr0r I0 Ihc cqusI0n
0I lcgl rghI I0 cxpl0rc I0r 0l nd gs n prIculr l0cI0n. Such
c0sIs ncludc Ihc gc0l0gcl nd gc0physcl nlyss 0I Ihcsc dI.
() (0pcrIng 0r lIIng c0sIs) rc Ihc rccurrcnI c0sIs
ncurrcd n 0l nd gs pr0ducI0n cIvIcs.
(|) Pr0pcrIy ncludcs lcscs, rcscrvI0ns, r0ylIy rghIs nd smlr rghIs.
(k) Pr0vcd dcvcl0pcd rcscrvcs rcprcscnI 0l nd gs rcscrvcs IhI cn bc
cxpccIcd I0 bc rcc0vcrcd Ir0m cxsIng wclls nd IclIcs usng cxsIng
Icchn0l0gy.
(l) Pr0vcd rcscrvcs rcprcscnI csImIcd qunIIy 0I 0l nd gs IhI cn bc
rcc0vcrcd Ir0m kn0wn rcscrv0rs usng cxsIng Icchn0l0gy.
(m) Pr0vcd undcrdcvcl0pcd rcscrvcs ncludc ll pr0vcd 0l nd gs rcscrvcs
IhI d0 n0I qulIy I0 bc dcscrbcd s pr0vcd dcvcl0pcd rcscrvcs.
(n) Rcscrv0r s nIurl I0rmI0n 0I p0r0us nd pcrmcblc spccs n Ihc
crIh's crusI c0nInng ccumulI0n 0I 0l nd gs. Ech dsIncI
rcscrv0r s c0nIncd by mpcrmcblc r0cks 0r brrcrs whch hclp I0
Irp 0l nd gs.
(0) SIrIgrphc IcsI wcll s wcll drllcd I0 0bIn nI0rmI0n b0uI Ihc
gc0l0gcl c0ndI0ns 0I n cxpl0rI0n rc.
(p) wldcI wcll s ny wcll drllcd n unpr0vcn IcrrI0ry.
(q) w0rk 0vcr s rcmcdl 0pcrI0n rcqurcd I0 rcsI0rc 0l Il0w Ir0m
wcll I0 Is mxmum pr0ducI0n cpcIy 0r cnhncc Is pr0ducI0n
cpcIy I0ll0wng dcclnc n pr0ducI0n.
() All c0mpncs cnggcd n 0l nd gs cxpl0rI0n, dcvcl0pmcnI nd
pr0ducI0n cIvIcs, shll sIIc n Ihcr Inncl sIIcmcnIs, Ihc p0lcy
I0r cc0unIng I0r c0sIs ncurrcd nd Ihc mnncr 0I dsp0sng 0I
cpIlscd c0sIs n rcspccI 0I such cIvIcs. !n ddI0n, Ihc p0lcy 0n
cc0unIng I0r rcsI0rI0n nd bnd0nmcnI c0sI nd Ihc I0Il
rcsI0rI0n nd bnd0nmcnI c0sIs, sh0uld bc dscl0scd n Ihcr Inncl
sIIcmcnIs, cvcn I lrcdy ncludcd n c0sI 0I slcs.
(b) A c0mpny my usc cIhcr Ihc Iull c0sI mcIh0d 0r Ihc succcssIul
cII0rIs mcIh0d. Thc mcIh0d uscd sh0uld bc c0nssIcnIly pplcd nd
dscl0scd.
0l nd gs pr0ducng cIvIcs nv0lvc spccl Iypcs 0I c0sI, whch sh0uld bc
clssIcd s I0ll0ws:
() Mncrl rghIs cqusI0n c0sI,
(b) Expl0rI0n nd drllng c0sI,
(c) 0cvcl0pmcnI c0sI,
(d) Pr0ducI0n c0sIs,
255
(c) Supp0rI cqupmcnI nd IclIcs c0sIs, nd
(I) 0cncrl c0sIs.
C0sIs ncurrcd 0n mncrl rghIs cqusI0n, cxpl0rI0n, pprsl nd
dcvcl0pmcnI cIvIcs sh0uld bc cpIlscd.
All cpIlscd c0sIs ncurrcd n c0sI ccnIrc sh0uld bc dcprccIcd 0n Ihc unI
0I pr0ducI0n bss, usng pr0vcd rcscrvcs. Thc dcIcrmnI0n 0I Ihc cpIlscd
c0sI I0 bc m0rIscd sh0uld bc 0n c0unIrywdc bss.
() Cclng IcsIs sh0uld bc c0nducIcd I lcsI nnully I blncc
shccI dIc 0n c0unIry wdc bss. Such IcsIs sh0uld usc dsc0unIcd
vlucs I0r rcvcnuc, c0sIs, csImIcd IuIurc Ixcs, nd csImIcd IuIurc
dcvcl0pmcnI c0sIs.
(b) Thc prcc uscd I0r Ihc IcsI sh0uld bc IhI rulng I Ihc blncc shccI
dIc, whlc Ihc rcscrvc uscd sh0uld bc pr0vcd rcscrvcs. whcrc Ihc
cc0unIs rc prcprcd n U.S 00llrs Ihc dsc0unI rIc I0 bc uscd I0r
csImIng IuIurc csh Il0w shll bc Icn pcrccnI. whcrc cc0unIs rc
prcprcd n Nr, Ihc CN rcdsc0unI rIc sh0uld bc uscd.
(c) I Ihc ncI dsc0unIcd rcvcnuc s l0wcr Ihn Ihc cpIlscd c0sIs Ihc
dIIcrcncc sh0uld bc wrIIcn 0II.
() C0sI ncurrcd pr0r I0 cqusI0n 0I mncrl rghIs nd 0Ihcr cxpl0rI0n
cIvIcs n0I spccIclly drccIcd I0 n dcnIIblc sIrucIurc, sh0uld
bc cxpcnscd n Ihc pcr0d Ihcy rc ncurrcd.
(b) All c0sIs, ncurrcd 0n mncrl rghIs cqusI0n, cxpl0rI0n, pprsl
nd dcvcl0pmcnI cIvIcs sh0uld bc cpIlscd nIlly 0n Ihc bss
0I wclls, Icld 0r cxpl0rI0n c0sI ccnIrcs, pcndng dcIcrmnI0n. Such
c0sIs, sh0uld bc wrIIcn 0II whcn I s dcIcrmncd IhI Ihc wcll s dry.
!I IurIhcr pprsl 0I c0nccss0n s plnncd, c0sI 0I cxpl0rI0n nd pprsl
cIvIcs my bc crrcd I0rwrd pcndng dcIcrmnI0n 0I pr0vcd rcscrvcs n
c0mmcrcl qunIIcs I0r pcr0d 0I:
() n0I m0rc Ihn 3 ycrs I0ll0wng c0mplcI0n 0I drllng n n 0IIsh0rc
rc whcrc m|0r dcvcl0pmcnI c0sIs my nccd I0 bc ncurrcd, 0r
(b) I0r mxmum 0I 2 ycrs n n 0nsh0rc rc.
() Mncrl rghIs cqusI0n c0sIs whch hvc bccn ll0cIcd sh0uld bc
m0rIscd 0vcr Ihc rcmnng lIc 0I Ihc lccncc. NcI b00k vluc 0I
25b
undcprccIcd mncrl rghIs cqusI0n c0sIs, sh0uld bc rcvcwcd
nnully I0r mprmcnI 0n wcllbywcll bss. Any mprmcnI
dsc0vcrcd sh0uld bc wrIIcn 0II.
(b) Am0rIsI0n 0I cxpl0rI0n nd drllng c0sIs ncurrcd wIhn cch wcll,
Icld 0r pr0pcrIy, sh0uld bc 0n unI0Ipr0ducI0n bss usng pr0vcd
dcvcl0pcd rcscrvcs.
C0sI 0I pr0vdng mcnIcs I0r c0mmunIcs n rcs 0I 0pcrI0n sh0uld bc
wrIIcn 0II s ncurrcd.
Rcc0gnI0n 0I gns 0r l0sscs undcr c0nvcyncc, sh0uld bc s I0ll0ws:
() !I Ihc cnIrc nIcrcsI n n unpr0vcd pr0pcrIy I0r whch mprmcnI s
rcc0rdcd 0n n ndvdul bss s s0ld, gn 0r l0ss, sh0uld bc rcc0rdcd
I0 Ihc cxIcnI 0I dIIcrcncc bcIwccn Ihc pr0cccds nd ncI b00k vluc.
(b) !I Ihc cnIrc nIcrcsI n n unpr0vcd pr0pcrIy I0r whch mprmcnI s
rcc0rdcd 0n gr0up bss s s0ld, n0 gn 0r l0ss s rcc0gnscd unlcss
Ihc pr0cccds cxcccd Ihc 0rgnl c0sI 0I Ihc lcsc.
(c) !I p0rI0n 0I nIcrcsI n n unpr0vcd pr0pcrIy I0r whch ndvdul
mprmcnI s rcc0rdcd s s0ld, nd Ihc pr0cccds cxcccd Ihc I0Il crryng
vluc 0I Ihc cnIrc pr0pcrIy, Ihc cxccss 0I Ihc pr0cccds 0vcr Ihc ncI b00k
vluc sh0uld bc rcc0gnscd s gn.
(d) !I p0rI0n 0I nIcrcsI n n unpr0vcd pr0pcrIy I0r whch gr0up
mprmcnI s rcc0rdcd s s0ld nd Ihc pr0cccds cxcccd Ihc I0Il c0sI 0I
Ihc pr0pcrIy, Ihc cxccss 0I Ihc pr0cccds 0vcr ncI b00k vluc 0I Ihc gr0up
sh0uld bc rcc0gnscd s gn.
(c) !I Ihc cnIrc nIcrcsI n n unpr0vcd pr0pcrIy 0n whch m0rIsI0n s
ndvdully c0mpuIcd s s0ld, Ihc dIIcrcncc bcIwccn Ihc pr0cccds nd
pr0p0rI0nIc shrc 0I cch c0sI nd m0rIsI0n pr0vs0n (ncI b00k
vluc) sh0uld bc rcc0gnscd s gn 0r l0ss.
(I) !I p0rI0n 0I nIcrcsI n n unpr0vcd pr0pcrIy 0n whch m0rIsI0n s
ndvdully c0mpuIcd s s0ld, Ihc dIIcrcncc bcIwccn Ihc pr0cccds nd
pr0p0rI0nIc shrc 0I cch c0sI nd m0rIsI0n pr0vs0n (b00k
vlucs) sh0uld bc rcc0gnscd s gn 0r l0ss.
(g) I n unpr0vcd pr0pcrIy 0n whch mprmcnI hs bccn rcc0rdcd 0n n
ndvdul bss s surrcndcrcd 0r Ihc rghIs rclcscd, Ihc b00k vluc 0I
Ihc pr0pcrIy sh0uld bc cxpcnscd.
(h) !I n unpr0vcd pr0pcrIy 0n whch mprmcnI hs bccn rcc0rdcd 0n
gr0up bss s surrcndcrcd 0r Ihc rghIs rclcscd, Ihc b00k vluc 0I Ihc
pr0pcrIy sh0uld bc chrgcd I0 Ihc ccumulIcd mprmcnI cc0unI
nd n0 l0ss sh0uld bc rcc0gnscd.
Thc crryng prIy sh0uld rcc0rd Ihc I0Il c0sI ncurrcd n rcspccI 0I Ihc crrcd
nIcrcsI s cpIl cxpcndIurc. 0scl0surc sh0uld bc mdc 0I Ihc crryng
rrngcmcnIs, ncludng Ihc m0unI 0I crrcd cxpcndIurc I0 dIc.
257
() Thc Irm0r sh0uld n0I rcc0rd ny cxpcndIurc mdc 0n Is bchlI by Ihc
Irmcc. Any cpIlscd c0sIs prcv0usly ncurrcd by Ihc Irm0r n
rclI0n I0 Ihc wh0lc nIcrcsI sh0uld bc rcdcsgnIcd s rclIng I0 Ihc
prIl nIcrcsI rcIncd.
(b) whcrc csh rcmburscmcnI 0I psI c0sIs Ikcs plcc, Ihc Irm0r sh0uld
crcdI ny pr0cccds I0 Ihc cc0unIs, whcIhcr cpIl 0r cxpcnsc, n whch
such c0sIs wcrc 0rgnlly rcc0rdcd.
(c) Thc Irmcc sh0uld rcc0rd ll 0I Is cxpcndIurc rclIng I0 Ihc
rrngcmcnI, b0Ih n rcspccI 0I Is 0wn nIcrcsI nd IhI rcIncd by Ihc
Irm0r s nd whcn Ihc c0sIs rc ncurrcd.
N0 gn 0r l0ss sh0uld bc rcc0gnzcd 0n n unIzI0n rrngcmcnI cxccpI
whcrc csh rcccvcd cxcccds c0sIs.
whcrc Ihcrc s rcdcIcrmnI0n 0I nIcrcsI, Ihc rcsulIng d|usImcnI 0I Ihc
unI mcmbcrs' shrcs 0I pr0ducI0n nd c0sIs sh0uld bc cc0unIcd I0r 0n
pr0spccIvc bss, rIhcr Ihn wy 0I pr0r pcr0d rcsIIcmcnI.
() Thc 0pcrI0r 0I |0nI vcnIurc sh0uld mnIn scprIc scI 0I b00ks
dcdcIcd s0lcly I0 rcc0rdng Ihc IrnscI0ns rclIng I0 Ihc vcnIurc.
(b) Ech prIncr sh0uld cc0unI I0r Is pr0p0rI0nIc shrc 0I Ihc c0sIs,
pr0ducI0n, sscIs nd lblIcs 0I Ihc |0nI vcnIurc n lnc wIh Is
cc0unIng p0lcy.
0nc 0I Ihc I0ll0wng mcIh0ds sh0uld bc uscd I0 cc0unI I0r undcrlIIs nd
0vcrlIIs:
() 0Ih undcrlIIs nd 0vcrlIIs sh0uld bc ccrucd I0r. UndcrlIIs sh0uld bc
ncludcd s sI0ck, I Ihc l0wcr 0I c0sI 0r mrkcI vluc whlc 0vcrlIIs,
sh0uld bc vlucd I ycr cnd I sp0I prcc.
(b) !nv0ccd slcs sh0uld bc d|usIcd I0 cxcludc 0vcrlIIs I ycr cnd sp0I
prcc nd I0 ncludc undcrlIIs, I Ihc l0wcr 0I c0sI 0r ncI rclzblc
vluc.
() C0mpncs sh0uld mkc pr0vs0ns I0r rcsI0rI0n nd bnd0nmcnI
c0sIs lcss csImIcd slvgc vlucs, bscd 0n Ihc bcsI vlblc csImIc
by:
() chrgc gnsI nc0mc 0n sysIcm bss 0vcr Ihc Iull pr0ducIvc
lvcs 0I Ihc IclIcs c0nccrncd, s0 IhI Ihc ccumulIcd pr0vs0n
wll c0vcr Ihc c0sI 0I rcsI0rI0n nd bnd0nmcnI, 0r
() rcc0gnzng Ihc cvcnIul lblIy I Ihc 0uIscI, Ihc c0rrcsp0ndng
dcbI, sh0uld bc IrcIcd s cpIl c0sI I0 bc dcprccIcd 0r s
dcIcrrcd cxpcnscs I0 bc m0rIscd, usng Ihc unI0Ipr0ducI0n
bss.
258
(b) RcsI0rI0n nd Abnd0nmcnI c0sIs sh0uld bc dcducIcd n rrvng I
csImIcd IuIurc ncI rcvcnucs I0r cclng IcsI clculI0ns.
!I Ihc c0nsdcrI0n I0r Ihc Irm0uI ncludcs n rrngcmcnI I0r Ihc Irmcc I0
bcr subscqucnI c0sIs, whch w0uld 0Ihcrwsc, Ill I0 Ihc rcIncd nIcrcsI 0I
Ihc Irm0r, Ihc Irm0r sh0uld dscl0sc Ihc m0unI 0I such cxpcndIurc ncurrcd
by Ihc Irmcc n ggrcgIc durng Ihc cc0unIng pcr0d, I0 pr0vdc n
ndcI0n 0I Ihc c0nsdcrI0n rcccvcd Ir0m Ihc Irm0uIs.
Ths sIIcmcnI sccks I0 pr0vdc gudc I0r cc0unIng p0lccs nd cc0unIng
mcIh0ds IhI rc I0 bc I0ll0wcd by N0nnk Fnncl !nsIIuI0ns, such s:
() Fnncc H0uscs/C0mpncs,
() urcux 0c Chngc,
() M0rIggc !nsIIuI0ns,
(v) 0sc0unI H0uscs,
(v) SI0ck r0kng Frms, nd
(v) 0Ihcr CpIl MrkcI 0pcrI0rs.
() N0nbnk Inncl nsIIuI0ns (NF!s) sh0uld rIculIc nd dscl0sc,
s n nIcgrl prI 0I Ihcr Inncl sIIcmcnIs, ll Ihc sgnIcnI
cc0unIng p0lccs d0pIcd n Ihc prcprI0n 0I Ihcr Inncl
sIIcmcnIs.
(b) Thc cc0unIng p0lccs sh0uld bc pr0mncnIly dscl0scd, undcr 0nc
cpI0n, rIhcr Ihn s n0Ics I0 ndvdul Icms n Ihc Inncl
sIIcmcnIs.
() Ech sgnIcnI Icm 0I rcvcnuc sh0uld bc scprIcly rcp0rIcd by
N0nnk Fnncl !nsIIuI0n I0 cnblc Ihc uscrs 0I Is Inncl
sIIcmcnIs I0 sscss Ihc c0nIrbuI0n 0I IhI prIculr s0urcc 0I rcvcnuc.
(b) !nc0mc Ir0m l0ns, lcsc rcnIls, IcI0rng, nd 0Ihcr IrnscI0ns I0r
whch c0llccIblIy s n0I n d0ubI, sh0uld bc rcc0gnscd n Ihc cc0unIs
s crncd.
(c) !nIcrcsI 0n l0ns sh0uld bc ssumcd I0 bc crncd n Ihc pr0p0rI0n I0
Ihc 0uIsIndng prncpl, 0vcr Ihc pcr0d 0I IclIy. H0wcvcr, whcn Ihc
c0llccIblIy 0I l0n s n d0ubI, IurIhcr nc0mc sh0uld bc rcc0gnscd
259
0nly IIcr Ihc prncpl duc nd lrcdyrcc0gnscd nIcrcsI rc pd 0r
whcn rcqucsI I0r r0ll0vcr hs bccn grccd nd rclcvnI c0ndI0ns
mcI.
(d) CrcdIrclIcd Icc nc0mc, whcrc mIcrl I0 Ihc IrnscI0n nd Is
c0llccIblIy n0I n d0ubI, sh0uld bc dcIcrrcd nd m0rIscd 0vcr Ihc
lIc 0I Ihc crcdI n pr0p0rI0n I0 0uIsIndng crcdI rsk. CrcdIrclIcd
Icc nc0mc sh0uld bc rcgrdcd s mIcrl whcrc n ggrcgIc, I
c0nsIIuIcs I lcsI 0 0I Ihc pr0|ccIcd vcrgc nnul ycld nd sh0uld
bc dcducIcd Ir0m Ihc Iccs bcI0rc dcIcrrl.
(c) N0ncrcdI rclIcd Icc nc0mc sh0uld bc rcc0gnscd s nd whcn crncd.
Fccs crncd 0vcr l0ng pcr0d 0I Imc 0r sIgcs, I0r cxmplc, ssung
h0usc Iccs, whch rc n0I c0nIngcnI up0n Ihc 0ccurrcncc 0I IuIurc cvcnIs,
nd I0r whch c0llccIblIy s n0I n d0ubI, sh0uld bc rcc0gnscd whcn
Ihc rclIcd scrvccs rc pcrI0rmcd 0r 0n Ihc c0mplcI0n 0I c0nIrcIcd
sIgcs.
(I) F0r IrnscI0n whcrc succcss s d0ubIIul nd nc0mc c0nIngcnI 0n
c0mplcI0n, nc0mc sh0uld n0I bc rcc0gnscd unIl I s rcs0nbly ccrIn
IhI Ihc IrnscI0n wll bc c0mplcIcd.
() NF!s IhI hvc l0n p0rII0l0s sh0uld nlysc nd clssIy Ihcm
bcIwccn pcrI0rmng nd n0npcrI0rmng.
(b) Ech NF! sh0uld csImIc nd mkc gcncrl nd spccIc pr0vs0ns
gnsI l0n l0sscs n Ihc mnncr scI 0uI n prgrphs 74 nd 75,
IIcr Ih0r0ugh nd sysIcmIc rcvcw 0I ll Is crcdI rsks, ncludng
l0ns, lcscs nd 0IIblncc shccI cnggcmcnIs.
(c) F0r m0rIggc IrnscI0ns, pr0vs0ns sh0uld Ikc duc cc0unI 0I Ihc
l0ngIcrm nIurc 0I Ihc l0ns nd Ihc sccurIy vlblc, I rcpymcnI
bcc0mcs 0vcrduc I0r Ihrcc m0nIhs. whcrc prncpl rcpymcnI s
0vcrduc by m0rc Ihn 0nc ycr, Ihc 0uIsIndng unpr0vdcd prncpl
sh0uld n0I cxcccd 50 0I Ihc csImIcd ncI rclsblc vluc 0I Ihc
sccurIy. whcrc prncpl rcpymcnI s 0vcrduc by m0rc Ihn Iw0 ycrs,
Ihcrc sh0uld bc n0 0uIsIndng unpr0vdcd p0rI0n 0I Ihc crcdI IclIy,
rrcspccIvc 0I Ihc csImIcd ncI rclsblc vluc 0I sccurIy hcld.
(d)
() whcrc lcndng s rclIcd I0 spccIc IrnscI0n, nd Ihcrc s
cvdcncc IhI Ihc IrnscI0n wll n0I bc succcssIul, pr0vs0ns
sh0uld bc mdc mmcdIcly n Iull gnsI nIcrcsI nd prncpl
0uIsIndng, ncI 0I c0llIcrl rclscd 0r n p0sscss0n nd n Ihc
pr0ccss 0I rclsI0n.
() whcrc lcndng s n0I rclIcd I0 spccIc IrnscI0n 0r cvdcncc
0n Ihc sIIus 0I Ihc IrnscI0n s n0I rcdly vlblc, nd
succcss 0I Ihc IrnscI0n s d0ubIIul, Ihc I0ll0wng mnmum
gudclncs sh0uld bc I0ll0wcd:
!nIcrcsI 0vcrduc by m0rc Ihn 30 dys, sh0uld bc
suspcndcd nd rcc0gnscd 0n csh bss.
2b0
Prncpl rcpymcnIs whch rc 0vcrduc by m0rc Ihn 90
dys, sh0uld bc Iully pr0vdcd I0r nd rcc0vcrcs
rcc0gnscd 0n csh bss.
whcn ndvdul prncpl rcpymcnIs hvc bccn 0vcrduc
I0r m0rc Ihn 80 dys, NF!s sh0uld mkc Iull pr0vs0n
gnsI Ihc 0uIsIndng prncpl rcpymcnIs n0I ycI duc.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS 2 -
, NF!s sh0uld ls0 dscl0sc Ihc
I0ll0wng:
() Thc mcIh0ds nd bscs by whch pr0vs0ns I0r l0n 0r sccurIcs rc
mdc.
(b) Thc nIurc 0I 0IIblncc shccI cnggcmcnIs nd Ihc mcIh0d uscd I0
rcc0gnsc nc0mc 0r l0ss Ihcrc0n.
Thc dscl0surcs n Ihc !nc0mc SIIcmcnI nd Ihc N0Ics I0 Ihc Fnncl
SIIcmcnIs, sh0uld ncludc buI n0I ncccssrly bc lmIcd I0, Ihc I0ll0wng
nc0mc nd cxpcnsc cpI0ns, whcrc mIcrl,
()
() !nIcrcsI nd dsc0unI nc0mc,
() Lcsc Inncc nc0mc,
() Fccs I0r scrvccs rcndcrcd,
(v) F0rcgn cxchngc nc0mc,
(v) C0mmss0n nc0mc, nd
(v) !nvcsImcnI nc0mc.
(b)
() !nIcrcsI cxpcnsc,
() L0n l0ss cxpcnsc,
() C0mmss0n's cxpcnsc,
(v) 0cncrl nd dmnsIrIvc cxpcnscs,
(v) 0mnuI0n n sscI vlucs,
Thc b0vc cpI0ns sh0uld bc IurIhcr nlyscd cr0ss lncs 0I busncsscs, whcrc
mIcrl.
NF!s sh0uld gr0up Ihcr sscIs nd lblIcs n Ihc blncc shccI cc0rdng
I0 Ihcr nIurc, lqudIy nd mIurIy. Thc dscl0surcs n Ihc lncc shccI
nd Ihc N0Ics I0 Ihc Fnncl SIIcmcnIs, sh0uld ncludc buI n0I ncccssrly
bc lmIcd I0, Ihc I0ll0wng sscIs nd lblIcs cpI0ns:
()
() Csh,
() Sh0rIIcrm Iund nd sh0rIIcrm nvcsImcnI,
2b
() 0uc Ir0m bnks/duc Ir0m n0nbnk Inncl nsIIuI0ns,
(v) lls dsc0unIcd,
(v) !nvcsImcnIs,
(v) L0ns nd dvnccs,
(v) Advncc undcr Inncc lcscs,
(v) 0Ihcr sscIs, nd
(x) Fxcd sscIs.
(b)
() 0cp0sI0rs' Iunds, currcnI cc0unIs 0r clcnIs' Iunds,
() 0uc I0 bnk'/duc n0nbnk Inncl nsIIuI0ns,
() TxI0n pyblc,
(v) 0vdcnd pyblc,
(v) 0Ihcr 0r sundry lblIcs, nd
(v) L0ngIcrm l0ns.
(c)
() Shrc cpIl,
() SIIuI0ry rcscrvcs,
() 0cncrl rcscrvcs, nd
(v) RcIncd crnng/ccumulIcd dcIcI.
NF!s sh0uld ddI0nlly dscl0sc Ihc I0ll0wng n Ihcr Inncl sIIcmcnIs
() /
r0kcrs/0clcrs sh0uld dscl0sc:
() \luc 0I 0uIsIndng dclvcrcs I Ihc rulng mrkcI prcc,
() \luc 0I shrc b0x l0d I Ihc rulng mrkcI prcc,
() !nvcsImcnI pr0Ilc, IhI s, Ihc m0unI 0I m0ncy mrkcI/cpIl
mrkcI sscIs 0I Ihc c0mpny, nd
(v) lnccs 0n clcnI's cc0unIs.
(b)
CpIl mrkcI undcrwrIcrs sh0uld dscl0sc Ihc vluc 0I sccurIcs
undcrwrIIcn buI n0I ycI dsp0scd 0I, dsIngushng bcIwccn lsIcd nd
Ih0sc wIng lsIng.
(c)
0sc0unI H0uscs sh0uld mkc Iull dscl0surc 0I:
() SccurIcs, nlyscd nI0 Ircsury blls nd ccrIIcIcs, 0Ihcr
g0vcrnmcnI sccurIcs nd prvIc sccI0r sccurIcs, nd
() 0cp0sIs, splI bcIwccn cll nd Icrm dcp0sIs, wIh Ihcr mIurIy
pr0Ilcs.
(d)
Fnncc H0uscs sh0uld dscl0sc:
() T0Il vluc 0I plccmcnIs wIh 0Ihcr Fnncc H0uscs, wIh
nlyss 0I Ihc pcr0d I0 mIurIy/pcr0d Ir0m mIurIy,
() Schcdulc 0I sccI0rl ll0cI0n 0I rsk sscIs, such s Trdc
Inncc, nd
2b2
() rckd0wn 0I Icms IhI c0nsIIuIc 0Ihcr sscIs nd 0Ihcr
lblIcs.
(c)
urcux 0c Chngc sh0uld IrcI Ihcr I0rcgn currcnccs s sI0cks. Thc
sI0cks 0I I0rcgn currcnccs hcld I Ihc blncc shccI dIc sh0uld bc
vlucd I Ihc l0wcr 0I c0sI nd mrkcI vluc. Thc I0ll0wng dscl0surcs
sh0uld bc mdc by urcux 0c Chngc,
() unIIy nd Nr cquvlcnI 0I Ihc dIIcrcnI I0rcgn currcnccs
Irdcd n durng Ihc pcr0d, nd
() \luc 0I I0rcgn currcncy sI0ck hcld nd c0nvcrs0n rIcs uscd I
Ihc blncc shccI dIc.
(I)
Thc I0ll0wng dscl0surcs sh0uld bc mdc by M0rIggc !nsIIuI0ns.
() T0Il lblIcs I0 NI0nl H0usng Fund
() T0Il vluc 0I M0rIggc AsscIs nd m0vcmcnI Ihcrc0n, sh0wng:
sscIs br0ughI I0rwrd,
ddI0ns durng Ihc ycr,
dsp0sl nd rclsI0ns durng Ihc ycr, nd
blncc crrcd I0rwrd.
() 0Ihcr s0urccs 0I Iunds prI Ir0m shrc cpIl nd NI0nl
H0usng Iund.
(v) ClssIcI0n 0I m0rIggc l0ns rcccvblc nd m0rIggc bckcd
SccurIcs nI0 Ih0sc hcld I0r slc nd Ih0sc hcld I0r l0ngIcrm
nvcsImcnIs. 0cIlcd brckd0wn 0I scrvng rghIs cqurcd
durng Ihc ycr sIIng:
Ihc m0unI cpIlscd,
Ihc mcIh0d 0I m0rIsI0n, nd
Ihc m0unI m0rIscd.
Thc sIndrd pr0vdcs gudclncs I0r Ihc prcprI0n nd prcscnII0n 0I
Inncl sIIcmcnIs 0I nsurncc busncsscs n Ngcr.
() An nsurncc c0mpny sh0uld rIculIc nd dscl0sc s n nIcgrl
prI 0I Is Inncl sIIcmcnIs, ll Ihc sgnIcnI cc0unIng p0lccs
d0pIcd n Ihc prcprI0n 0I Is Inncl sIIcmcnIs.
2b3
(b) Thc cc0unIng p0lccs sh0uld bc pr0mncnIly dscl0scd undcr 0nc
cpI0n rIhcr Ihn s n0Ics I0 ndvdul Icms n Ihc Inncl
sIIcmcnIs.
0cncrl nsurcrs sh0uld d0pI Ihc n0rml bss 0I cc0unIng. whcrc I s n0I
p0ssblc I0 dcIcrmnc undcrwrIng rcsulIs wIh rcs0nblc ccrInIy unIl Ihc
I0ll0wng cc0unIng pcr0d, Ihc dcIcrrcd nnul bss bc d0pIcd. Thc
cc0unIng bss 0r bscs d0pIcd sh0uld bc dscl0scd. whcrc Ihc dcIcrrcd
nnul bss s uscd, Ihc clsscs 0I busncss nv0lvcd nd Ihc cxIcnI 0I Ihc
Imc dcIcrrl I0r pr0II sh0uld ls0 bc dscl0scd.
() Prcmum rcvcnuc sh0uld bc rcc0gnscd Ir0m dIc 0I IIchmcnI 0I rsk.
(b) Prcmum rcvcnuc sh0uld bc ssumcd I0 bc crncd cvcnly 0vcr Ihc pcr0d
0I rsk. whcrc Ihcrc s mrkcd vrI0n n Ihc pIIcrn 0I rsks wIhn
Ihc rsk pcr0d, prcmum rcvcnuc sh0uld bc cc0unIcd I0r n cc0rdncc
wIh Ihc pIIcrn 0I rsk cxp0surc.
(c) All wrIIcn prcmums rclIng I0 rsk I0r pcr0d n0I Illng wIhn Ihc
cc0unIng pcr0d, sh0uld bc crrcd I0rwrd s pr0vs0n I0r uncrncd
prcmum.
() 0cncrl nsurcrs sh0uld clssIy Ihcr cxpcnscs undcr Ihc I0ll0wng
cpI0ns:
() UndcrwrIng,
() Clms,
() !nvcsImcnIs, nd
(v) MngcmcnI.
(b) UndcrwrIng cxpcnscs sh0uld bc subdvdcd nI0 mnIcnncc nd
cqusI0n cxpcnscs.
(c) MnIcnncc cxpcnscs sh0uld bc chrgcd I0 Ihc rcvcnuc cc0unI n Ihc
ycr n whch Ihcy rc ncurrcd.
(d) Thc p0rI0n 0I cqusI0n cxpcnscs rclIng I0 uncrncd prcmums
sh0uld bc dcIcrrcd. 0cIcrrcd cqusI0n cxpcnscs sh0uld bc dcIcrmncd
scprIcly I0r cch clss 0I busncss.
(c) Such dcIcrrcd cqusI0n cxpcnscs sh0uld bc clculIcd by pplyng I0
Ihc cqusI0n cxpcnscs, Ihc rI0 0I uncrncd prcmum pr0vs0n I0
wrIIcn prcmum.
(I) Thc m0vcmcnI n dcIcrrcd cqusI0n cxpcnscs bcIwccn Iw0 cc0unIng
pcr0ds sh0uld bc cxpcnscd n Ihc rcvcnuc cc0unI.
(g) Clms nd clms hndlng cxpcnscs ncurrcd durng Ihc rcp0rIng
pcr0d sh0uld bc chrgcd I0 Ihc rcvcnuc cc0unI.
(h) AdcquIc pr0vs0n sh0uld bc mdc I0r scIIlcmcnI 0I clms ncurrcd
buI n0I rcp0rIcd by Ihc cnd 0I Ihc cc0unIng pcr0d. Any m0unI
rcc0vcrblc Ihr0ugh slvgc 0r subr0gI0n sh0uld bc uscd I0 rcducc
clms ncurrcd.
2b4
() !nvcsImcnI nd mngcmcnI cxpcnscs sh0uld bc chrgcd I0 Ihc pr0II
nd l0ss cc0unI n Ihc ycr n whch Ihcy rc ncurrcd.
() Uncxprcd rsks pr0vs0n sh0uld bc dcIcrmncd bscd 0n Ihc
undcrwrIng cxpcrcncc 0I cch clss 0I busncss.
(b) Pr0vs0n sh0uld bc mdc I0r uncxprcd rsks whcrc Ihc I0Il 0I
nIcpIcd clms nd rclIcd cxpcnscs cxcccds Ihc rclIcd uncrncd
prcmums.
Thc Inncl sIIcmcnIs 0I gcncrl !nsurcrs sh0uld ncludc rcvcnuc cc0unI
I0r cch clss 0I nsurncc busncss undcrIkcn.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0 2 -
- 0cncrl !nsurcrs sh0uld dscl0sc
Ihc I0ll0wng:
Thc Rcvcnuc Acc0unI rcIcrrcd I0, sh0uld dscl0sc Ihc I0ll0wng:
() 0rccI prcmums,
(b) !nwrd rcnsurncc prcmums,
(c) 0r0ss wrIIcn prcmums,
(d) NcI wrIIcn prcmums,
(c) 0ccrcsc n pr0vs0n I0r uncxprcd rsks, nd
(I) C0mmss0n rcccvcd.
() 0uIwrd rcnsurncc prcmums, nd
(b) !ncrcsc n pr0vs0n I0r uncxprcd rsks.
() 0rccI clms pd,
(b) !nwrd rcnsurncc clms pd,
(c) !ncrcsc n pr0vs0n I0r 0uIsIndng clms.
() 0uIwrd rcnsurncc rcc0vcrcs, nd
(b) 0ccrcsc n pr0vs0n I0r 0uIsIndng clms
() AcqusI0n, nd
(b) 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 cxpcnscs.
2b5
Thc dscl0surc n Ihc Pr0II nd L0ss Acc0unI nd N0Ics I0 Ihc Fnncl
SIIcmcnIs sh0uld ncludc Ihc I0ll0wng nc0mc nd cxpcnsc cpI0ns (unlcss
Ihcy hvc bccn dscl0scd n Ihc Rcvcnuc Acc0unI):
() 0r0ss wrIIcn prcmums,
(b) 0uIwrd rcnsurncc prcmums,
(c) Erncd prcmums,
(d) !nvcsImcnI nc0mc (ncI),
(c) C0mmss0ns rcccvcd, nd
(I) 0Ihcr nc0mc.
() UndcrwrIng cxpcnscs,
(b) Clms ncurrcd,
(c) MngcmcnI cxpcnscs, nd
(d) Pr0vs0ns I0r bd nd d0ubIIul dcbIs
0cncrl nsurcrs sh0uld rrngc Ihcr blncc shccI Icms n 0rdcr 0I lqudIy.
Thc dscl0surc n Ihc lncc ShccI nd N0Ics I0 Ihc Fnncl SIIcmcnIs
sh0uld ncludc Ihc I0ll0wng sscI nd lblIy cpI0ns:
() Csh,
(b) Sh0rI Icrm nvcsImcnIs,
(c) 0cbI0rs
(d) 0cIcrrcd cqusI0n cxpcnsc,
(c) L0ng Icrm nvcsImcnIs,
(I) SIIuI0ry dcp0sI, nd
(g) Fxcd sscIs.
() CrcdI0rs nd ccruls, nd
(b) !nsurncc Iund (ncludng pr0vs0ns I0r uncrncd prcmums,
0uIsIndng clms nd uncxprcd rsks).
() AuIh0rscd shrc cpIl.
(b) CllcdUp shrc cpIl.
(c) SIIuI0ry c0nIngcncy rcscrvcs.
(d) CpIl rcscrvcs.
(c) 0cncrl rcscrvcs.
LIc ssurncc busncss sh0uld bc cc0unIcd I0r 0n Ihc Iund cc0unIng bss.
2bb
Prcmum rcvcnuc sh0uld bc rcc0gnscd nd crcdIcd I0 Ihc Iund cc0unI whcn
duc I0r pymcnI Ir0m p0lcyh0ldcrs. Thcrc sh0uld bc n0 ll0cI0n 0I prcmum
rcvcnuc bcIwccn rcp0rIng pcr0ds.
RcccpIs Ir0m dcp0sI dmnsIrI0n nd 0Ihcr busncsscs 0I svng nIurc
sh0uld n0I bc IrcIcd s rcvcnucs buI lblIcs. !nIcrcsI ccrung I0 Ihc lIc
ssurcrs Ir0m nvcsImcnI 0I such dcp0sIs sh0uld bc rcc0gnscd n Ihc pr0II
nd l0ss cc0unI n Ihc pcr0d n whch Ihcy rc crncd, whlc nIcrcsI pd I0
dcp0sI0rs sh0uld bc rcc0gnscd s n cxpcnsc.
All clms duc 0r n0IIcd n n cc0unIng pcr0d sh0uld bc chrgcd I0 Ihc
Iund n IhI pcr0d.
All ncurrcd cxpcnscs sh0uld bc chrgcd I0 Ihc Iund I Ihc cnd 0I Ihc cc0unIng
pcr0d.
P0lcy lblIcs sh0uld bc s dcIcrmncd by Ihc cIurl vluI0n.
A vluI0n surplus sh0uld bc shrcd bcIwccn Ihc wIhpr0II p0lcyh0ldcrs
nd shrch0ldcrs n cc0rdncc wIh Ihc dvcc 0I Ihc cIury nd sub|ccI I0
Ihc pr0vs0ns s scI 0uI n prgrph 45.
A vluI0n dcIccncy sh0uld bc IrnsIcrrcd I0 Ihc pr0II nd l0ss cc0unI.
Thc Fnncl sIIcmcnIs 0I lIc ssurcr sh0uld ncludc lIc rcvcnuc cc0unI
0nly I I hs 0Ihcr clsscs 0I nsurncc busncss.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0.2 -
- lIc ssurcr sh0uld dscl0sc
Ihc I0ll0wng:
Thc Rcvcnuc Acc0unI 0I lIc ssurcr sh0uld dscl0sc Ihc I0ll0wng:
() 0rccI prcmums,
(b) !nwrd rcnsurncc prcmums,
(c) 0r0ss wrIIcn prcmums,
(d) NcI wrIIcn prcmums,
(c) C0mmss0ns rcccvcd.
0uIwrd rcnsurncc prcmums,
2b7
() 0rccI clms,
(b) !nwrd rcnsurncc clms,
(c) Rcnsurncc rcc0vcrcs, nd
(d) Surrcndcrs.
() AcqusI0n, nd
(b) MnIcnncc.
Thc dscl0surc n Ihc Pr0II nd L0ss Acc0unI nd N0Ics I0 Ihc Fnncl
SIIcmcnIs sh0uld ncludc Ihc I0ll0wng nc0mc nd cxpcnsc cpI0ns (unlcss
Ihcy hvc bccn dscl0scd n Ihc Rcvcnuc Acc0unI):
() 0r0ss wrIIcn prcmums,
(b) Erncd wrIIcn prcmums,
(c) Erncd prcmums,
(d) !nvcsImcnI nc0mc (ncI),
(c) C0mmss0n rcccvcd,
(I) Shrch0ldcrs' P0rI0n 0I LIc ssurncc surplus/dcIcI, nd
(g) 0Ihcr nc0mc.
0uIwrd rcnsurncc prcmums.
() Clms ncurrcd,
(b) UndcrwrIng cxpcnscs,
(c) MngcmcnI cxpcnscs, nd
(d) Pr0vs0n I0r bd nd d0ubIIul dcbIs.
LIc ssurcrs sh0uld rrngc Ihcr blncc shccI Icms n 0rdcr 0I lqudIy.
Thc dscl0surc n Ihc lncc ShccI nd N0Ics I0 Ihc Fnncl sIIcmcnIs sh0uld
ncludc Ihc I0ll0wng:
() Csh,
(b) Sh0rI Icrm nvcsImcnIs,
(c) 0cbI0rs,
(d) L0ns I0 p0lcyh0ldcrs,
(c) L0ng Icrm nvcsImcnIs,
(I) SIIuI0ry 0cp0sI, nd
(g) Fxcd sscIs.
2b8
() CrcdI0rs nd ccruls,
(b) 0uIsIndng clms,
(c) !nsurncc Iund, nd
(d) 0cp0sI dmnsIrI0n
() Cllcdup shrc cpIl,
(b) SIIuI0ry c0nIngcncy rcscrvcs,
(c) 0cncrl rcscrvcs, nd
(d) RcIncd crnngs/ccumulIcd l0sscs.
An nsurcr crryng 0n b0Ih lIc nd gcncrl busncsscs sh0uld I0ll0w Ihc smc
dscl0surc rcqurcmcnIs scI 0uI b0vc. !n ddI0n, Is Inncl sIIcmcnIs
sh0uld ncludc scprIc blncc shccI I0r lIc busncss.
Acc0unIng I0r nsurncc busncsscs hs bccn llusIrIcd n ChpIcr Thrcc 0I
Ihs sIudy gudc.
Ths sIndrd pr0vdcs Ihc rulcs g0vcrnng Ihc cc0unIng nd rcp0rIng 0I
d0wnsIrcm cIvIcs n Ngcr.
() All c0mpncs cnggcd n Ihc pcIr0lcum ndusIry sh0uld sIIc n Ihcr
Inncl sIIcmcnIs ll sgnIcnI cc0unIng p0lccs d0pIcd n Ihc
prcprI0n 0I Ihc sIIcmcnIs.
(b) Thc cc0unIng p0lccs sh0uld bc pr0mncnIly dscl0scd undcr 0nc
cpI0n rIhcr Ihn s n0Ic I0 ndvdul Icms n Ihc Inncl
sIIcmcnIs.
C0sI 0I sh0rI lIc cIlysIs sh0uld bc cxpcnscd n Ihc ycr n whch Ihcy rc
ncurrcd whlc c0sI 0I l0ng lIc cIlysIs sh0uld bc cpIlzcd nd wrIIcn 0II
0vcr Ihc lIc 0I Ihc rcIncry. whcrc l0ng lIc cIlysIs rc rcgcncrIcd, Ihc c0sIs
0I rcgcncrI0n sh0uld bc cpIlzcd nd m0rIscd 0vcr Ihc lIc 0I Ihc
rcgcncrI0n.
Turnr0und mnIcnncc c0sIs sh0uld bc cpIlscd nd m0rIscd 0vcr Ihc
cxpccIcd pcr0d bcI0rc Ihc ncxI Iurnr0und mnIcnncc s duc.
2b9
SIndby cqupmcnI sh0uld bc dcprccIcd 0vcr Ihc cxpccIcd uscIul lIc 0I
smlr cqupmcnI n usc.
Thc c0sIs 0I rcInng 0r pcIr0chcmcl plnIs nd cqupmcnI sh0uld bc
dcprccIcd 0n sIrghI lnc bss 0vcr Ihc uscIul lIc 0I Ihc sscIs 0r, I
0pcrIng I n0rml lcvcls 0I pr0ducI0n, 0n Ihc bss 0I cxpccIcd Ihr0ughpuI.
Thc mcIh0d uscd sh0uld bc dscl0scd nd c0nssIcnIly pplcd.
whcrc m|0r plnI rchblII0n, dcb0IIlcncckng 0r rcplccmcnI 0I m|0r
c0mp0ncnIs rcsulI n sgnIcnI nd dcnIIblc ncrcsc n 0uIpuI 0r
bcIIcrmcnI 0I Ihc plnIs, Is c0sI sh0uld bc cpIlscd nd m0rIscd 0vcr Ihc
pcr0d 0vcr whch Ihc bcncII s cxpccIcd I0 lsI. !n ny 0Ihcr csc, I sh0uld bc
cxpcnscd s ncurrcd.
rdgng c0sIs whch rc rcc0vcrblc Ir0m g0vcrnmcnI Ihr0ugh NNPC, sh0uld
bc scI up s clms rcccvblc. whcrc Ihcy rcmn 0uIsIndng I0r n
unrcs0nblc lcngIh 0I Imc, dcquIc pr0vs0n sh0uld bc mdc I0r Ihcm.
Clms n0I rcc0vcrcd wIhn Iw0 ycrs sh0uld bc Iully pr0vdcd I0r.
ATK 0vcrbllng clms sh0uld bc scI up s rcccvblc. whcrc Ihcy rcmn
unpd I0r n unrcs0nblc lcngIh 0I Imc, Ihcy sh0uld bc pr0vdcd I0r. Clms
n0I rcc0vcrcd wIhn Iw0 ycrs sh0uld bc Iully pr0vdcd I0r.
() whcrc purchscr s unblc I0 Ikc hs cnIIlcmcnI undcr Ikc 0r py
c0nIrcI, wIh rghI 0I mkcup, Ihc purchscr sh0uld IrcI Ihc m0unI
pd s rcccvblc. C0nvcrscly, Ihc supplcr sh0uld IrcI Ihc dvncc
rcccvcd s dcIcrrcd rcvcnuc. Thc dcIcrrcd rcvcnuc sh0uld bc
rcc0gnscd whcn Ihc mkcup rghI s cxcrcscd by Ihc purchscr.
(b) whcrc supplcr s unblc I0 dclvcr Ihc qunIIy c0nIrcIcd, Ihc m0unI
rcccvcd Ir0m Ihc purchscr sh0uld bc IrcIcd s lblIy by Ihc
supplcr whlc Ihc purchscr sh0uld IrcI Ihc m0unI pd s
rcpymcnI.
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS N0.2 -
c0mpncs 0pcrIng n Ihc
d0wnsIrcm sccI0r 0I Ihc pcIr0lcum ndusIry sh0uld dscl0sc Ihc I0ll0wng s
Ihcy rclIc I0 Ihcr cIvIcs:
270
()
() Pr0ccssng Iccs Ir0m Ihrd prIcs,
() Any m0unI 0I Iurnr0und mnIcnncc cpIlscd nd/0r
cxpcnscd, splI nI0 mIcrl c0sIs nd lb0ur c0sIs,
() 0cb0IIlcncckng c0sIs ncurrcd, cpIlzcd 0r cxpcnscd,
(v) Thc c0sI 0I rcscrch nd dcvcl0pmcnI,
(v) ss I0r vluI0n 0I pr0ducIs nd nIcrmcdIcs,
(v) F0r n nIcgrIcd plnI, rcvcnuc crncd I0r cch clss 0I cIvIcs.
(b)
() rdgng clms nd rclIcd pr0vs0n mdc, nd
() ATK 0vcrbllng clms nd rclIcd pr0vs0n mdc.
(c)
0cIls 0I Tkc 0r Py c0nIrcIs n0I ycI IulIllcd nd Ihc rclIcd dcIcrrcd
rcvcnuc 0r prcpymcnI.
Thc 0pcrIng rcsulIs 0I pckgng IcI0rcs nd 0Ihcr n0nc0rc busncsscs
0wncd by c0mpncs 0pcrIng n Ihc d0wnsIrcm sccI0r 0I Ihc pcIr0lcum
ndusIry sh0uld bc scprIcly dscl0scd.
Thc IrnsIcr prcng mcIh0ds d0pIcd sh0uld bc dscl0scd.
0n 3sI 0cccmbcr 20xb, 0ncc PcIr0lcum Rcs0urccs LId, ncurrcd 27 mll0n
n Ihc Iurnr0und mnIcnncc (TAM) 0I Is rcIncry n P0rI Hrc0urI. Thc ncxI
Iurn r0und mnIcnncc s cxpccIcd n 1nury 20x9. Y0u rc cxpccIcd I0
sh0w h0w Ihs IrnscI0n w0uld bc IrcIcd by Ihc c0mpny n Is Inncl
sIIcmcnIs I0r Ihc ycr cndcd 3 0cccmbcr 20x7.
Thc c0sI ncurrcd n Ihc Iurnr0und mnIcnncc w0uld bc cpIlscd nd
m0rIscd 0vcr Ihrcc ycrs n cc0rdncc wIh SAS 7 pr. 47.
Annul m0rIsI0n w0uld bc 27/3 = 9m
ExIrcIs 0I Fnncl SIIcmcnIs 0I Ihc c0mpny I 3sI 0cccmbcr 20x7, wll
ppcr s I0ll0ws:
Am0rIsI0n 0I Ihc c0sI 0I TAM 9m
TAM lcss m0rIsI0n 8
27
A sIIcmcnI 0I csh Il0ws pr0vdcs nI0rmI0n b0uI csh rcccpIs nd
pymcnIs 0I n cnIcrprsc 0vcr gvcn pcr0d. !I ndcIcs Ihc pIIcrn 0I csh
gcncrI0n nd uIlzI0n. !I rcvcls h0w csh s gcncrIcd Ir0m 0pcrI0ns 0r
Ihr0ugh ncw cpIl rscd nd h0w pymcnIs rc mdc I0r Ixcs, dvdcnds,
ncw nvcsImcnIs nd dcbIs. !I s dcsgncd I0 shcd lghI 0n n cnIcrprsc's
Inncl sIrcngIh.
Thc I0ll0wng Icrms rc uscd n Ihs sIIcmcnI wIh Ihc mcnngs spccIcd:
() c0mprscs csh 0n hnd nd dcmnd dcp0sIs dcn0mnIcd n
Nr nd I0rcgn currcnccs.
(b) rc sh0rIIcrm, hghly lqud nvcsImcnIs IhI rc
rcdly c0nvcrIblc I0 kn0wn m0unI 0I csh nd whch rc sub|ccI I0
n nsgnIcnI rsk 0I chngcs n vluc.
(c) rc nIl0ws nd 0uIIl0ws 0I csh nd csh cquvlcnIs.
() A rcp0rIng cnIcrprsc sh0uld prcprc SIIcmcnI 0I Csh Fl0ws n lnc
wIh Ihc pr0vs0ns 0I Ihs sIndrd s n nIcgrl prI 0I Is Inncl
sIIcmcnIs.
(b) Thc sIIcmcnI 0I Csh Fl0ws sh0uld ncludc ll csh nIl0ws nd 0uIIl0ws
0I Ihc cnIcrprsc durng rcp0rIng pcr0d. !I sh0uld h0wcvcr, cxcludc
csh Il0ws 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 Ihc csh Il0ws sh0uld bc gr0upcd undcr Ihc br0d
hcdngs 0I 0pcrIng cIvIcs, nvcsIng cIvIcs nd Inncng
cIvIcs.
(d) An cnIcrprsc sh0uld usc cIhcr Ihc drccI 0r ndrccI mcIh0d n prcprng
Is SIIcmcnI 0I Csh Fl0ws. H0wcvcr, Ihc drccI mcIh0d s prcIcrrcd.
(c) Thc SIIcmcnI 0I Csh Il0ws sh0uld rcp0rI gr0ss csh Il0ws cxccpI n Ihc
nsInccs whcrc ncI csh Il0ws w0uld 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 rpd nd Ihc I0Il
v0lumc 0I IrnscI0ns s lrgc.
() !nIcrcsI pd sh0uld bc clssIcd s csh Il0w Ir0m Inncng cIvIcs
whlc nIcrcsI rcccvcd sh0uld bc clssIcd s csh Il0w Ir0m nvcsIng
cIvIcs. Thc nIcrcsI clcmcnI 0I Inncc lcsc rcnIl pymcnIs sh0uld
bc sh0wn scprIcly by Ihc lcsscc.
272
(b) !nIcrcsI rcccvcd 0r pd sh0uld bc rcp0rIcd gr0ss 0I Ixcs. !nIcrcsI
cpIlscd sh0uld ls0 bc rcp0rIcd n Ihc SIIcmcnI 0I Csh Fl0ws.
() 0vdcnds rcccvcd sh0uld bc clssIcd s csh Il0ws Ir0m nvcsIng
cIvIcs cxccpI n cscs whcrc Ihc nvcsI0rc0mpny hs sgnIcnI
c0nIr0l 0vcr Ihc nvcsIccc0mpny nd h0lds I lcsI 20 pcrccnI 0I Ihc
cquIy. !n such cscs, dvdcnds rcccvcd sh0uld rcccvcd sh0uld bc
clssIcd s csh Il0ws Ir0m 0pcrIng cIvIcs.
(b) 0vdcnds pd nd 0Ihcr dsIrbuI0ns I0 0wncrs sh0uld bc clssIcd
s csh Il0ws Ir0m Inncng cIvIcs.
Csh Il0ws rcsulIng Ir0m currcncy IrnscI0ns sh0uld bc IrnslIcd usng Ihc
rIcs pplcblc I Ihc Imc Ihcy 0ccur. 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 Il0ws wcrc uscd.
() Thc I0Il m0unI 0I nc0mc Ixcs pd sh0uld bc clssIcd s 0pcrIng
csh 0uIIl0ws nd sh0uld bc scprIcly dscl0scd.
(b) Thc ncI m0unI pd 0r rcccvcd wIh rcspccI I0 \luc Addcd Tx nd
0Ihcr slcs Ixcs sh0uld bc sh0wn scprIcly s csh Il0ws Ir0m
0pcrIng cIvIcs.
(c) 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 Ihcm.
Csh Il0ws n rcspccI 0I cxccpI0nl Icms wh0sc cIIccIs rc ncludcd n Ihc
pr0II nd l0ss cc0unI, sh0uld bc rcp0rIcd undcr ppr0prIc hcdngs
0pcrIng, nvcsIng nd Inncng cIvIcs -cc0rdng I0 Ihc nIurc 0I cch
Icm. Thcrc sh0uld bc suIIccnI dscl0surc 0I Ihc nIurc 0I csh Il0ws rclIng
I0 cxccpI0nl nd cxIr0rdnry Icms, by wy 0I n0Ic I0 Ihc Inncl
sIIcmcnIs.
Thc csh Il0w cIIccIs 0I cqusI0ns nd dsp0sls 0I subsdrcs nd 0Ihcr
busncss unIs sh0uld bc clssIcd s nvcsIng cIvIcs nd prcscnIcd
scprIcly n Ihc sIIcmcnI 0I csh Il0ws. Thc dcIls rcqurcd sh0uld bc
prcscnIcd n ggrcgIc I0r ll cnIIcs cqurcd 0r dsp0scd 0II durng Ihc
Inncl ycr.
N0nCsh IrnscI0ns 0I rcp0rIng cnIIy sh0uld n0I bc nc0rp0rIcd n Ihc
SIIcmcnI 0I Csh Fl0ws. H0wcvcr, such IrnscI0ns sh0uld bc dscl0scd n
Ihc n0Ics I0 Ihc Inncl sIIcmcnIs n wy IhI pr0vdcs ll Ihc rclcvnI
nI0rmI0n b0uI Ihcr csh Il0w mplcI0ns.
273
Thc I0ll0wng, h0wcvcr clssIcd, shll bc dscl0scd scprIcly n Ihc SIIcmcnI
0I Csh Fl0ws:
() nIcrcsI rcccvcd,
(b) dvdcnds rcccvcd,
(c) nIcrcsI pd,
(d) dvdcnds pd, nd
(c) nc0mcs Ixcs pd.
Fnncl nsIIuI0ns sh0uld prcprc SIIcmcnI 0I Csh Fl0ws s prI 0I
Ihcr Inncl sIIcmcnIs. H0wcvcr, such 0rgnzI0ns sh0uld rcp0rI csh Il0ws
Ir0m 0pcrI0ns 0n ncI bss. F0r nsIncc, rIhcr Ihn rcp0rIng Ihc gr0ss
m0unI 0I Ircsh l0ns nd l0n rcpymcnIs, Ihc ncI ncrcsc 0r dccrcsc n
l0ns sh0uld bc rcp0rIcd.
whcrc ncccssry, n cnIcrprsc sh0uld sh0w by wy 0I n0Ic, rcc0nclI0n 0I
Ihc m0unIs n Is SIIcmcnIs 0I Csh Fl0ws wIh cquvlcnI Icms rcp0rIcd n
Ihc pr0II nd l0ss cc0unI nd Ihc blncc shccI. !I sh0uld ls0 sh0w by wy 0I
n0Ic rcc0nclI0n 0I csh Il0ws Ir0m 0pcrIng cIvIcs I0 0pcrIng pr0II
0r l0ss IIcr nc0mc Ix s rcp0rIcd n Ihc pr0II nd l0ss cc0unI. Fnlly, Ihc
SIIcmcnI 0I Csh Fl0ws sh0uld ncludc rcc0nclI0n 0I Ihc ncrcsc nd
dccrcsc n csh nd csh cquvlcnIs durng Ihc rcp0rIng pcr0d wIh Ihc
0pcrIng nd cl0sng blnccs.
Ths sIndrd dscusscs Ihc c0mpuII0n nd prcscnII0n 0I Ihc dIIcrcnI Ixcs
mp0scd 0n busncss c0mpncs, such s, c0mpny nc0mc Ix, pcIr0lcum
pr0IIs Ix, vluc ddcd Ix, nd cpIl gns Ix. !I ls0 c0vcrs cducI0n Ix
nd dcIcrrcd Ixcs.
Thc I0ll0wng Icrms rc uscd n Ihs sIIcmcnI wIh Ihc mcnngs spccIcd:
() Ths s Ihc ggrcgIc pr0II 0r l0ss I0r Ihc
pcr0d s rcp0rIcd n Ihc !nc0mc sIIcmcnI ncludng cxccpI0nl nd
cxIr0rdnry Icms.
(b) Thcsc rc gns rsng 0n Ihc dsp0sl 0I chrgcblc
sscI.
(c) Ths s Ix (lblIcs 0r sscIs) IIrbuIblc I0 Imng
dIIcrcnccs.
274
(d) Thcsc rc Ihc m0unI 0I Ixcs rcc0vcrblc n
IuIurc pcr0ds whch rc IIrbuIblc I0 Ihc I0ll0wng:
() 0cducIblc Icmp0rry dIIcrcncc such s unuscd cpIl
ll0wncc,
() Crry I0rwrds 0I unuscd Ix l0sscs, nd
() Crry I0rwrds 0I unuscd Ix crcdIs.
(c) Thcsc rc Ihc Ixcs pyblc n IuIurc
cc0unIng pcr0ds IIrbuIblc I0 Imng dIIcrcnccs.
(I) Ths s Ihc Ix pd 0n g00ds nd scrvccs purchscd.
(g) Ths s Ihc crcdI pr0vdcd 0n ncurrng qulIyng
cpIl cxpcndIurc by Ixpycr. !I scrvcs s crcdI gnsI Ihc Ix
pyblc by such Ixpycr n Ihc rclcvnI ycr.
(h) Ths s Ihc Ix c0llccIcd by Ixblc pcrs0n Ir0m
0Ihcr prIcs I0r g00ds nd scrvccs supplcd.
() Thcsc rc dIIcrcnccs bcIwccn Ixblc nd
cc0unIng nc0mc I0r pcr0d, IhI rc n0I cxpccIcd I0 rcvcrsc n
subscqucnI pcr0ds.
(|) Ths s Ihc I0Il 0I currcnI nd dcIcrrcd
Ixcs chrgcd gnsI 0r crcdIcd I0 Ihc nc0mc 0I Ihc cc0unIng pcr0d.
(k) Thcsc rc Ihc dIIcrcnccs bcIwccn Ihc m0unI
n sscI 0r lblIy s crrcd n Ihc blncc shccI nd Is Ix bsc.
Tcmp0rry dIIcrcnccs my bc cIhcr:
() Txblc dIIcrcnccs, IhI wll rcsulI n Ixblc m0unI n
dcIcrmnng Ixblc pr0II (Ix l0ss) 0I IuIurc pcr0ds whcn Ihc
crryng m0unI 0I Ihc sscI 0r lblIy s rcc0vcrcd 0r scIIlcd,
0r
() 0cducIblc dIIcrcnccs IhI wll rcsulI n m0unI IhI rc
dcducIblc n dcIcrmnng Ixblc pr0II (Ix l0ss) 0I IuIurc
pcr0ds whcn Ihc crryng m0unI 0I Ihc sscI 0r lblIy s
rcc0vcrcd 0r scIIlcd.
(l) Ths s Ihc m0unI IIrbuIcd
I0 IhI sscI 0r lblIy I0r Ix purp0sc.
(m) Thcsc rc dIIcrcnccs bcIwccn Ihc cc0unIng
nc0mc nd Ixblc nc0mc whch rsc bccusc Ihc pcr0ds n whch
s0mc Icms 0I rcvcnuc nd cxpcnsc rc rcccvcd 0r Ikc plcc rc
ncludcd n Ixblc nc0mc. Such dIIcrcnccs 0rgnIc n 0nc pcr0d
nd rc cxpccIcd I0 rcvcrsc n 0nc 0r 0Ihcr subscqucnI pcr0ds. whlc
ll Imng dIIcrcnccs rc Icmp0rry dIIcrcnccs, n0I ll Icmp0rry
dIIcrcnccs rc Imng dIIcrcnccs, I0r cxmplc, Ih0sc Icmp0rry
dIIcrcnccs IhI rsc whcn:
() Thc crryng m0unI 0I n sscI 0r lblIy 0n nIl rcc0gnI0n
dIIcrs Ir0m Is Ix bsc,
() N0nm0ncIry sscI nd lblIy rc rcsIIcd undcr Inncl
rcp0rIng n n nIlI0nry cnvr0nmcnI, nd
() Thc n0nm0ncIry sscIs nd lblIcs 0I I0rcgn 0pcrI0n
IhI s nIcgrl I0 Ihc 0pcrI0ns 0I Ihc rcp0rIng cnIIy rc
IrnslIcd I hsI0rcl cxchngc rIcs.
275
(n) Ths s Ix pyblc 0n supply 0I Ixblc
g00ds nd scrvccs. Thc Ix crysIllzcs s g00ds nd scrvccs pss Ir0m
0nc pcrs0n I0 n0Ihcr n Ihc pr0ducI0n nd dsIrbuI0n chn.
(0) Ths s n dvncc pymcnI 0I Ix 0n nc0mc by
dcducI0n I s0urcc.
() 0cIcrrcd Ixcs sh0uld bc c0mpuIcd usng Ihc lblIy mcIh0d
(b) 0nly Ihc Imng dIIcrcnccs IhI rc cxpccIcd I0 rcvcrsc durng Ihc pcr0d
ll0wcd by Ihc Ix lw sh0uld bc c0nsdcrcd n c0mpuIng dcIcrrcd Ixcs
I0r IrcImcnI cIhcr s n sscI 0r s chrgc I0 Ihc dcIcrrcd Ix cc0unI.
(c) Full pr0vs0n sh0uld bc mdc I0r dcIccrcd Ixcs
(d) 0cIcrrcd Ixcs rclIng I0 0rdnry cIvIcs sh0uld bc sh0wn s prI 0I
Ihc Ix 0n pr0II 0r l0ss rcsulIng Ir0m 0rdnry cIvIcs.
(c) 0cIcrrcd Ix rclIng I0 cxIr0rdnry cIvIcs sh0uld bc sh0wn s prI
0I Ihc Ix 0n cxIr0rdnry cIvIcs.
(C0T)
() C0T sh0uld bc ncludcd n Ihc Ix cxpcnsc I0r Ihc pcr0d
(b) whcrc C0T rclIcs I0 dsp0sl IrcIcd s n cxIr0rdnry Icm, I
sh0uld bc sIIcd s dcducI0n Ir0m Ihc Icm.
Thc Ix crcdI sh0uld bc uscd s scI0II gnsI nc0mc Ix pyblc. whcrc Ihc
Ix crcdI s c0nsdcrcd rrcc0vcrblc, I sh0uld bc wrIIcn 0II s prI 0I Ihc Ix
chrgc I0r Ihc ycr.
F0r Ihc cc0unIng IrcImcnI 0I \AT nd pymcnI 0I I0rcgn Ix, plcsc rcIcr
I0 Ihc sIndrd.
Tx sh0uld bc rcc0gnzcd s n cxpcnsc (nc0mc) nd ncludcd n Ihc pr0II
nd l0ss cc0unI I0r Ihc cc0unIng pcr0d s scprIc lnc Icm. Thc I0ll0wng
c0mp0ncnIs 0I Ix cxpcnsc (nc0mc) sh0uld bc dscl0scd by wy 0I n0Ics:
() C0mpny nc0mc Ix,
(b) PcIr0lcum pr0IIs Ix,
(c) CpIl gns Ix,
(d) EducI0n Ix,
(c) 0cIcrrcd Ix, nd
(I) Txcs 0n cxIr0rdnry Icms nd pr0r ycr d|usImcnI (nc0mc 0r
cxpcnscs) sh0uld bc dcducIcd Ir0m 0r ddcd I0 Ihc rclIcd Icms nd
dscl0scd by wy 0I n0Ics.
0cIcrrcd Ixcs, 0Ihcr Ihn Ih0sc rclIng I0 cxIr0rdnry Icms 0r pr0r ycr
d|usImcnIs, sh0uld bc sh0wn scprIcly Ir0m Ihc Icms nd dscl0scd by wy
0I n0Ics.
27b
0cIcrrcd Ix Igurcs sh0uld bc prcscnIcd n Ihc blncc shccI scprIcly. !n
Ihc csc 0I lblIy, Ihcy sh0uld bc sh0wn bcIwccn l0ngIcrm nd currcnI
lblIcs nd, n Ihc csc 0I sscIs, bcIwccn Ixcd nd currcnI sscIs. Tx
sscIs nd lblIcs sh0uld bc dscl0scd scprIcly n Ihc blncc shccI.
M0vcmcnIs n Ihcsc cc0unIs sh0uld bc sh0wn by wy 0I n0Ics s I0ll0ws:
()
() lnccs I Ihc bcgnnng 0I Ihc pcr0d,
() Tx chrgc 0r crcdI I0r Ihc pcr0d,
() PymcnIs mdc durng Ihc pcr0d,
(v) Tx crcdIs rcccvcd durng Ihc pcr0d, nd
(v) lncc I Ihc cnd 0I Ihc pcr0d.
(b)
() lncc I Ihc bcgnnng 0I Ihc pcr0d,
() CurrcnI ycr pr0vs0n(rcvcrsl), nd
() lncc I Ihc cnd 0I Ihc pcr0d.
Thc Ix cIIccI rclIng I0 Ihc ncrcsc n Ihc crryng vluc 0I rcvlucd
sscI sh0uld bc dcIcrmncd nd chrgcd 0r crcdIcd drccIly I0 cquIy.
(c)
whcrc pr0vs0n s n0I mdc I0r cpIl gns Ix bccusc 0I r0ll 0vcr
rclcI, Ihc IcI 0I n0npr0vs0n nd Ihc m0unI 0I cpIl gns Ix
nv0lvcd sh0uld bc dscl0scd.
() Thc I0ll0wng s Ihc summry 0I Ihc Ixcd sscIs 0I Ngcr LId I0r Ihc
ycrs, 20X4 I0 20X8 nd Ihc rcsdul vlucs 0I Ihc sscIs n Ih0sc ycrs,
C0sI I sI 1n ,400 ,800 2,500 2,50 3,450
AddI0n 700 ,200 ,300
0sp0sls (300) (500) (350) ___ __
C0sI I 3sI 0cc ,800 2,500 2,50 3,450 3,450
0cprccI0n I
sI 1n 250 350 530 b80 ,490
Chrgc I0r Ihc yr 350 520 450 80 350
0sp0sls (50) (340) (300) _ _
0cp. I 3sI 450 530 b80 ,490 ,840
N\ ,350 .970 ,470 ,9b0 ,b0
277
(b)
Rcsdul
vluc b/I 980 900 ,80 9b0 ,7b0
AddI0ns durng
Ihc ycr 700 ,200 ,300
0sp0sls durng
Ihc ycr (80) (240) (00) __ __
,500 ,8b0 ,080 2,2b0 ,7b0
All0wnccs:
!nIl (30) (450) (350)
Annul (290) (230) (20) (50) (90)
Rcsdul \luc I
cnd 0I ycr 900 ,80 9b0 ,7b0 ,570
Usng 0nly Ihc nI0rmI0n gvcn b0vc, c0mpuIc Ihc dcIcrrcd IxI0n I0r Ihc
ycrs 20X4 I0 20X8 nd Ihc m0unIs I0 bc chrgcd I0 Ihc pr0II nd l0ss cc0unI
I0r Ihc ycrs. Assumc n vcrgc Ix rIc 0I 30.
NcI 00k vluc
0I AsscIs I
cnd 0I ycr ,350 ,970 ,470 ,9b0 ,b0
Rcsdul vluc
0I AsscIs I
cnd 0I ycr 900 ,80 9b0 ,7b0 ,570
lncng
Chrgc 450 790 50 200 40
0cIIcrcd
Ix I 30 35 237 53 b0 2
T0 bc chrgcd I0
Pr0II &
L0ss A/C 35 02 (84) (93) (48)
278
Undcr SccI0n 355 0I Ihc C0mpncs nd Allcd MIIcrs AcI, Cp. C20 LFN 2004,
c0mpncs rc ll0wcd I0 publsh brdgcd Inncl sIIcmcnIs I Ihcy wsh.
Thc AcI, h0wcvcr, d0cs n0I spccIy ny mnmum dscl0surc rcqurcmcnI 0I
such sIIcmcnIs. SAS 20 hs Illcd Ihc gp by spccIyng Ihc mnmum c0nIcnIs
0I such Inncl sIIcmcnIs.
() A c0mpny nccd n0I publsh Abrdgcd Inncl sIIcmcnIs. !I I d0cs,
h0wcvcr, such Inncl sIIcmcnIs sh0uld c0mply wIh Ihs sIndrd.
(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 Iull Inncl sIIcmcnIs 0I Ihc
c0mpny,
() Ihc brdgcd Inncl sIIcmcnIs cnn0I bc cxpccIcd I0 pr0vdc
s Iull n undcrsIndng 0I Ihc Inncl pcrI0rmncc, Inncl
p0sI0n, nd Inncng nd nvcsIng cIvIcs 0I Ihc 0rgnzI0n
s Ihc Iull Inncl sIIcmcnIs, nd
(v) c0pcs 0I Ihc Iull Inncl sIIcmcnIs cn bc 0bIncd Ir0m Ihc
rcgsIrrs 0I Ihc c0mpny.
(c) A c0mpny wh0sc Inncl sIIcmcnIs I0r pcr0d rc qulIcd by Is
udI0rs, sh0uld n0I publsh Abrdgcd Fnncl SIIcmcnIs I0r IhI
pcr0d.
(d) Abrdgcd Fnncl SIIcmcnIs musI ncludc Ihc I0ll0wng, s n Ihc
Iull Inncl sIIcmcnIs:
() Acc0unIng p0lccs,
() Pr0II nd l0ss cc0unI I0r Ihc Inncl ycr,
() lncc shccI s I Ihc cnd 0I Ihc Inncl ycr,
(v) SIIcmcnI 0I csh Il0w 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.
(c) 0Ihcr nI0rmI0n I0 bc ncludcd n n brdgcd Inncl sIIcmcnIs
rc:
() N0Icc 0I Annul 0cncrl MccIng,
() Nmcs 0I 0rccI0rs durng Ihc ycr nd Ihcr shrch0ldngs,
() Rcp0rI 0I AudI C0mmIIcc whch sh0uld c0nIrm IhI Ihc udI0rs'
rcp0rI s unqulIcd,
(v) Fnncl hghlghIs (RcsulI I glncc), nd
(v) 0vdcnds pd 0r pr0p0scd nd dIc 0I pymcnI.
279
() Thc I0ll0wng Icms sh0uld bc dscl0scd:
() mIcrl cvcnIs 0ccurrng IIcr Ihc blncc shccI dIc, nd
() whcrc Ihcrc s chngc n cc0unIng p0lcy 0r csImIcs Ir0m
Ih0sc uscd n Ihc prcccdng Inncl ycr whch hs mIcrl
cIIccI n Ihc currcnI Inncl ycr 0r s cxpccIcd I0 hvc
mIcrl cIIccI n subscqucnI Inncl ycr, Ihc nI0rmI0n
b0uI such chngc n cc0rdncc wIh SAS N0 b,
(b) whcrc c0mpny s prcnI c0mpny, Ihs SIIcmcnI 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.
(c)
!nI0rmI0n I0r Ihc prcccdng c0rrcsp0ndng Inncl ycr whch
c0rrcsp0nds I0 Ihc dscl0surcs mdc n cc0rdncc wIh Ihs sIndrd
I0r currcnI Inncl ycr musI bc dscl0scd.
Ernngs pcr shrc (EPS) s 0nc 0I Ihc mp0rInI rI0s uscd by cxsIng nd
p0IcnIl nvcsI0rs I0 sscss busncsscs. EPS s s0 mp0rInI IhI Ihc NAS
nd Ihc !AS hvc snglcd I 0uI I0r sIndrdsI0n. Thc sgnIcncc 0I Ihs
rI0 sIcms Ir0m Is uscIulncss n clculIng prcc/crnngs rI0, nd Ihc
bss I0r c0mprs0n bcIwccn c0mpncs nd rclcvnI pcr0ds.
Thc I0ll0wng Icrms rc uscd n Ihs sIIcmcnI wIh Ihc mcnngs spccIcd:
()
Ths rcIcrs I0 Ihc Igurc crrcd n Inncl sIIcmcnI s crnngs pcr
ycr I0r prcv0us ycrs IIcr rcclculIng Ihc EPS 0I such ycrs, usng
Ihc 0uIsIndng shrcs 0I Ihc c0mpny s I Ihc lIcsI blncc shccI
dIc s c0mm0n dcn0mnI0r ll Ihc ycrs.
(b)
sc crnngs pcr shrc s Ihc m0unI 0I crnngs pcr shrc bscd 0n
Ihc wcghIcd vcrgc numbcr 0I shrcs 0uIsIndng durng Ihc rcp0rIng
pcr0d.
(c)
A b0nus shrc s shrc n rcspccI 0I whch purchsc c0nsdcrI0n s
sIsIcd by cpIlsng cxsIng rcscrvcs, whch lrcdy bcl0ng I0 Ihc
shrch0ldcrs. !I s Ihc I0rml rcc0gnI0n 0I Ihc ncrcsc n Ihc cpIl
nvcsIcd by Ih0sc shrch0ldcrs. !I s ls0 rcIcrrcd I0 s sI0ck dvdcnd.
(d)
C0nvcrIblc sccurIcs rc Inncl nsIrumcnIs IhI c0nIcr h0ldcrs wIh
Ihc rghI I0 rcccvc dcIcrmnblc numbcr 0I 0rdnry shrcs 0r 0Ihcr
280
sccurIcs n sIsIcI0n 0I Ihcr clm I dcIcrmnblc IuIurc dIcs 0r
pcr0d.
(c)
0luIcd crnngs pcr shrc s Ihc m0unI 0I crnngs pcr shrc IIcr
d|usIng I0r Ihc cIIccI 0I ll p0IcnIl 0rdnry shrcs.
(I)
An 0pI0n s Ihc rghI I0 dcl n Ihc sccurIy 0I n cnIIy I Ixcd prcc
durng spccIc pcr0d 0I Imc. An 0pI0n cn cIhcr bc cll 0pI0n 0r
puI 0pI0n:
() s rghI gvcn by 0nc prIy I0 n0Ihcr I0 buy
sccurIy I Ixcd prcc durng spccIc pcr0d 0I Imc.
() s rghI gvcn by 0nc prIy I0 n0Ihcr I0 scll
sccurIy I Ixcd prcc durng spccIc pcr0d 0I Imc. A wrrnI
s ccrIIcIc by c0mpny, whch gvcs Is h0ldcrs Ihc rghI I0
purchsc Is shrcs I Ixcd prcc wIhn spccIc pcr0d 0I Imc.
wrrnIs rc pr0hbIcd n Ngcr by SccI0n 49() 0I Ihc CAMA,
Cp. C20 LFN, 2004.
(g)
An 0rdnry shrc rcprcscnIs unI 0I Ihc 0wncrshp nIcrcsI n
c0mpny, whch cnIIlcs Is h0ldcr I0 prIcpIc n Ihc crnngs,
dvdcnds nd sscIs 0I Ihc c0mpny IIcr 0Ihcr nIcrcsIs hvc bccn
scIIlcd.
(h)
A p0IcnIl 0rdnry shrc s Inncl nsIrumcnI 0r ny 0Ihcr c0nIrcI,
whch c0uld:
() bc c0nvcrIcd nI0 n 0rdnry shrc, 0r
() rcsulI n Ihc cllng 0I, 0r subscrpI0n I0r, 0rdnry shrc cpIl
I Ixcd prcc wIhn spccIcd pcr0d 0I Imc.
()
A prcIcrcncc shrc s n cquIy nsIrumcnI IhI hs clm I0 c0mpny's
crnngs, dvdcnds nd sscIs bcI0rc Ihc 0rdnry shrc buI IIcr Ihc
dcbI 0blgI0ns nd c0uld bc rcdccmcd wIh0uI c0urI 0rdcr 0r Ihc
dss0luI0n 0I Ihc c0mpny cIhcr by wndng up 0r lqudI0n.
(|)
A publcly Irdcd shrc s shrc 0I c0mpny whch cn bc IrnsIcrrcd
wIh0uI Ihc pr0r c0nscnI 0I Is drccI0rs nd my 0r my n0I bc lsIcd
0n rcc0gnscd sI0ck cxchngc 0r 0Ihcr publc sccurIcs mrkcI.
(k)
A rghI ssuc s prvlcgcd ssuc 0I Ihc sccurIcs 0I c0mpny, I
prcc, I0 Is cxsIng shrch0ldcrs 0n Ihc bss 0I Ihcr cxsIng
shrch0ldngs.
()
Shrc c0ns0ldI0n, ls0 cllcd rcvcrsc splI, Ikcs plcc whcn Ihc
numbcr 0I Ihc 0uIsIndng shrcs n c0mpny s rcduccd by ncrcsng
Ihc pr (n0rml) vluc 0I cch shrc.
28
(m) Shrc splI Ikcs plcc whcn Ihc numbcr 0I Ihc 0uIsIndng
shrcs n c0mpny s ncrcscd by rcducng Ihc pr vluc 0I cch
shrc.
() !n clculIng crnngs pcr shrc n cnIrcprsc sh0uld n0I ncludc
cxIr0rdnry Icms bcI0rc rrvng I pr0II IIcr Ix .
(b) 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.
(c) 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 ncI
l0ss I0r Ihc pcr0d IIrbuIblc I0 0rdnry shrch0ldcrs.
(d) !n 0rdcr I0 dcIcrmnc crnngs I0r EPS clculI0n, Ihc Iull dvdcnd I0r
Ihc ycr 0n cummulIvc 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 cummulIvc prcIcrcncc shrcs sh0uld bc dcducIcd
Ir0m Ihc ncI pr0II.
(c) A wcghIcd vcrgc numbcr 0I shrcs 0uIsIndng durng Ihc pcr0d
sh0uld bc uscd s dcn0mnI0r I0r Ihc crnngs pcr shrc clculI0n.
Shrcs ssucd durng Ihc ycr ncludcd n Ihc wcghIcd vcrgc numbcr
0I shrcs sh0uld rcIlccI Ihc dIc Ihc c0nsdcrI0n ws rcccvcd.
(I) !n clculIng dluIcd crnngs pcr shrc, Ihc numbcr 0I shrcs sh0uld
bc dcIcrmncd s Ihc I0Il 0I Ihc I0llwng:
() 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 dlluIvc, 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 Inncl
ycr.
(v) p0IcnIl 0rdnry shrcs 0uIsIndng durng Ihc Inncl ycr
IhI rc dluIvc nd hvc bccn c0nvcrIcd 0r hvc lpscd 0r
cnccllcd durng Ihc ycr, wcghIcd by rcIcrcncc I0 Ihc numbcr
0I dys Ir0m Ihc bcgnnng 0I Ihc Inncl ycr I0 Ihc dIc 0I
c0nvcrs0n lpsc 0r cnccllI0n.
2,000,000 0rdnry shrcs 0I 2:00 cch 4,000,000
RcIncd Ernngs 8,500,000
0 0cbcnIurcs 2,500,000
5,000,000
282
!n Ihc lsI Ihrcc m0nIhs, Ihc mrkcI vluc 0I Ihc c0mpny's shrcs hs
rcmncd I 5:00 pcr shrc. !Is currcnI ycr's pr0II IIcr Ix s 0,000,000.
Egg0n Plc hs dccdcd I0 py 25 sI0ck dvdcnd I0 Is shrch0ldcrs Ir0m Ihc
currcnI ycr's pr0II.
Y0u rc rcqurcd I0 sh0w Ihc cIIccI 0I Ihs 0n:
() Ihc mrkcI prcc 0I Ihc c0mpny's shrc, nd
() Ihc crnngs pcr shrc.
() EIIccI 0I Ihc sI0ck dvdcnd 0n Ihc mrkcI prcc 0I Ihc c0mpny's shrc
wll bc:
CurrcnI mrkcI prcc pcr shrc s 5:00
T0Il mrkcI vluc 0I Ihc shrcs s 2,000,000 x 5.00 (.c 0,000,000)
25 SI0ck 0vdcnd = 25 0I 0,000,000 = 2,500,000
= 2,500,000 .c ,250,000 ncw shrcs I 2:00 pcr shrc
2
wIh sI0ck dvdcnds, Ihc I0Il numbcr 0I shrcs bcc0mcs 3,250,000.
Sncc Ihc I0Il mrkcI vluc s 0,000,000, Ihc mrkcI prcc pcr shrc
wll bc
0,000,000
3,250,000 pcr shrc
.c. 3:08 pcr shrc
MrkcI prcc pcr s cxpccIcd I0 rcducc I0 3:08
() EIIccI 0n Ernngs pcr shrc wll bc s I0ll0ws:
EPS pr0r I0 sI0ck dvdcnd = 0,000,000 = 5:00 pcr shrc
2,000,000
EPS IIcr sI0ck dvdcnd wll bc: 7,500,000 = 2:3
3,250,000
,c EPS hs Illcn Ir0m 5 00 I0 2:3
Rcscrch rcIcrs I0 Ihc 0rgnl nd plnncd nvcsIgI0n undcrIkcn wIh Ihc
pr0spccI 0I gnng ncw sccnIIc 0r Icchncl kn0wlcdgc nd undcrsIndng.
0cvcl0pmcnI s Ihc pplcI0n 0I rcscrch Indngs 0r 0Ihcr kn0wlcdgc I0
pln 0r dcsgn I0r Ihc pr0ducI0n 0I ncw 0r subsInIl mpr0vcd mIcrls,
dcvccs, pr0ducIs, pr0ccsscs, sysIcms 0r scrvccs pr0r I0 Ihc c0mmcnccmcnI 0I
c0mmcrcl pr0ducI0n 0r usc. !I I s p0ssblc I0 dsIngush Ihc rcscrch phsc
Ir0m Ihc dcvcl0pmcnI phsc 0I n nIcrnl pr0|ccI, Ihc cnIIy IrcIs Ihc
cxpcndIurc 0n IhI pr0|ccI s I I wcrc ncurrcd 0n Ihc rcscrch phsc 0nly.
283
C0sI 0I clcmcnIs sh0uld bc scprIcd nI0:
() rcscrch c0sIs, nd
(b) dcvcl0pmcnI c0sI.
ncludc:
() Ihc c0sIs (ncludng \AT) 0I mIcrls nd scrvccs c0nsumcd n rcscrch
cIvIy,
(b) spccIc lb0ur c0sIs IIrbuIvc I0 rcscrch cIvIy,
(c) Ihc c0sI 0I s0IIwrc nd cqupmcnI cqurcd I0r rcscrch purp0scs,
(d) Ihc c0sI 0I b0rr0wcd rghIs,
(c) Ihc c0sI 0I nI0rmI0n 0r Icchncl scrvccs,
(I) Ihc dcprccI0n chrgc I0r cqupmcnI nd IclIcs I0 Ihc cxIcnI IhI
Ihcy rc uscd I0r rcscrch cIvIcs,
(g) Ihc m0rIsI0n chrgc I0r 0Ihcr sscIs, such s pIcnIs nd lccnccs,
I0 Ihc cxIcnI IhI Ihcy rc rclIcd I0 rcscrch, nd
(h) shrcd c0sIs 0nly n Icrms 0I bcncIIs I0 Ihc prIcs shrng Ihc c0sIs 0r
c0sIs grccd by Ihc smc prIcs I0r rcscrch bscd 0n rcqucsIs.
ncludc:
() Ihc c0sI 0I cvluIng pr0ducIs 0r pr0ccss lIcrnIvcs,
(b) Ihc c0sI 0I dcsgn, c0nsIrucI0n, nd IcsIng 0I prcpr0ducI0n 0r prcusc
pr0I0Iypcs nd m0dcls,
(c) Ihc c0sI 0I dcsgn 0I I00ls, |gs, m0ulds, nd dcs nv0lvng ncw
Icchn0l0gy,
(d) Ihc c0sI 0I dcsgn, c0nsIrucI0n, nd 0pcrI0n 0I pl0I plnI IhI s n0I
0I sclc cc0n0mclly Icsblc I0r pr0ducI0n, nd
(c) Ihc c0sI 0I dcsgn, c0nsIrucI0n nd IcsIng 0I ch0scn lIcrnIvc I0r
ncw 0r mpr0vcd mIcrls, dcvccs, pr0ducIs, pr0ccsscs, sysIcms 0r
scrvccs.
!I I s n0I p0ssblc I0 dsIngush Ihc rcscrch phsc Ir0m Ihc dcvcl0pmcnI
phsc 0I n nIcrnl pr0|ccI, Ihc cnIIy shll IrcI Ihc cxpcndIurc 0n Ihc pr0ducI
s I I wcrc ncurrcd n Ihc rcscrch phsc 0nly.
() Rcscrch nd 0cvcl0pmcnI c0sIs shll bc scprIcd nI0 rcscrch c0sIs
nd dcvcl0pmcnI c0sIs. Thc m0unI 0I rcscrch c0sIs shll bc cxpcnscd
n Ihc pcr0d n whch Ihcy rc ncurrcd nd dcvcl0pmcnI c0sIs sh0uld
bc dcIcrrcd I0 Ihc cxIcnI IhI Ihcy mccI Ihc crIcr I0r dcIcrrl.
(b) F0r n cnIIy I0 dcIcr dcvcl0pmcnI c0sIs, Ihc I0ll0wng crIcr musI bc
sIsIcd:
() Ihc pr0ducI 0r pr0ccss s clcrly dcIncd nd Ihc c0sIs
IIrbuIblc I0 Ihc pr0ducI 0r pr0ccss cn bc scprIcly
dcnIIcd nd mcsurcd rclbly,
() Ihc Icchncl IcsblIy 0I Ihc pr0ducI 0r pr0ccss hs bccn
dcm0nsIrIcd,
() Ihc mngcmcnI 0I Ihc cnIIy hs ndcIcd Is nIcnI0n I0
pr0ducc nd mrkcI, 0r usc, Ihc pr0ducI 0r pr0ccss,
284
(v) dcquIc rcs0urccs cxsI , 0r rc rcs0nbly cxpccIcd I0 bc
vlblc, I0 c0mplcIc Ihc pr0|ccI nd mrkcI Ihc pr0ducI 0r
pr0ccss.
(v) Ihc currcnI nd IuIurc c0sI I0 bc dcIcrrcd rc mIcrl, nd
(v) Ihcrc s rcs0nblc ndcI0n IhI currcnI c0sIs, IuIurc rcscrch
nd dcvcl0pmcnI c0sIs I0 bc ncurrcd, I0gcIhcr wIh unm0rIzcd
dcIcrrcd c0sIs n rclI0n I0 IhI pr0|ccI, rc cxpccIcd bcy0nd
ny rcs0nblc d0ubI I0 bc rcc0vcrblc.
(c) A rcp0rIng cnIIy shll sIIc Is cc0unIng p0lcy wIh rcspccI I0
Rcscrch nd 0cvcl0pmcnI c0sIs. whcrc n cc0unIng p0lcy 0I
dcIcrrl 0I dcvcl0pmcnI c0sIs s d0pIcd, I shll bc pplcd I0 ll such
pr0|ccIs IhI mccI Ihc crIcr.
(d) whcrc dcvcl0pmcnI c0sIs 0I pr0|ccI rc dcIcrrcd, Ihcy shll bc
ll0cIcd 0n sysIcmIc bss I0 IuIurc cc0unIng pcr0ds by
rcIcrcncc I0 cIhcr Ihc sclc 0r usc 0I Ihc pr0ducI 0r pr0ccss 0r I0 Ihc
pcr0d 0vcr whch Ihc pr0ducI 0r pr0ccss s cxpccIcd I0 bc s0ld 0r uscd.
(c) whcrc dcvcl0pmcnI c0sIs rc dcIcrrcd,Ihc m0rIsI0n shll n0I
cxcccd Ivc ycrs Ir0m Ihc nccpI0n 0I Ihc bcncIIs,
(I) Thc dcIcrrcd dcvcl0pmcnI c0sIs 0I pr0|ccI shll bc rcvcwcd I Ihc
cnd 0I cch cc0unIng pcr0d, nd Ihc I0ll0wng sIcps Ikcn:
() whcn Ihc crIcr rc n0 l0ngcr mcI, Ihc unm0rIzcd blncc
shll bc wrIIcn 0II s n cxpcnsc mmcdIcly,
() whcn Ihc 0Ihcr crIcr I0r dcIcrrl c0nInuc I0 bc mcI buI IhI
m0unI 0I unm0rIzcd blncc 0I Ihc dcIcrrcd dcvcl0pmcnI
c0sIs nd 0Ihcr rclcvnI c0sIs cxcccd Ihc cxpccIcd IuIurc
rcvcnucs 0r bcncIIs rclIc IhcrcI0, such cxccss shll chrgcd s
cxpcnsc mmcdIcly, nd
() !I I0r ny rcs0n, rcscrch nd/0r dcvcl0pmcnI cIvIcs rc
suspcndcd 0r p0sIp0ncd 0n cc0unI 0I lck 0I rcs0urccs, Imc 0r
0Ihcr c0nIngcnccs, Ihc unm0rIzcd blncc shll bc wrIIcn
0II mmcdIcly.
() whcrc grnI s rcccvcd 0r rcccvblc n rclI0n I0 rcscrch nd
dcvcl0pmcnI c0sI whch hvc bccn chrgcd I0 Ihc pr0II nd l0sI
cc0unI durng Ihc pcr0d 0r n pr0r Inncl ycr, Ihc grnI shll bc
crcdIcd I0 Ihc pr0II nd l0ss cc0unI,
(b) whcrc grnI s rcccvcd 0r rcccvblc n rclI0n I0 dcvcl0pmcnI c0sIs
whch hvc bccn dcIcrrcd, Ihc grnI shll bc dcducIcd Ir0m Ihc
unm0rIzcd blncc, nd
(c) 0cvcl0pmcnI c0sIs whch dd n0I prcv0usly mccI Ihc crIcr I0r
dcIcrrl nd wcrc chrgcd I0 Ihc pr0II nd l0ss cc0unI shll n0I bc
wrIIcn bck n Ihc lghI 0I subscqucnI cvcnIs.
285
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I SAS 2, Ihc Inncl sIIcmcnIs 0I
n cnIIy shll dscl0sc:
() Ihc cc0unIng p0lccs d0pIcd I0r Rcscrch nd 0cvcl0pmcnI C0sIs,
(b) Ihc m0unI 0I rcscrch c0sIs nd dcvcl0pmcnI rcc0gnscd s n
cxpcnsc n Ihc pcr0d,
(c) Ihc m0rIsI0n mcIh0ds uscd s rcgrds dcvcl0pmcnI c0sIs,
(d) Ihc uscIul lvcs 0r m0rIsI0n rIcs uscd, nd
(c) rcc0nclI0n 0I Ihc unm0rIzcd dcvcl0pmcnI c0sIs I Ihc bcgnnng
nd cnd 0I Ihc pcr0d, sh0wng:
() dcvcl0pmcnI c0sIs rcc0gnscd s n sscI,
() dcvcl0pmcnI c0sIs rcc0gnscd s n cxpcnsc,
() dcvcl0pmcnI c0sIs ll0cIcd I0 0Ihcr sscI cc0unIs, nd
(I) Ihc grnIs rcccvcd n rcspccI 0I rcscrch nd dcvcl0pmcnI, Ihc m0unI
rcccvcd 0r rcccvblc nd Ihc s0urcc(s).
M|0r 0l Plc s b0uI I0 cqurc n0Ihcr 0l c0mpny, PcnuIs 0l LmIcd, I0r
700 mll0n. Thc c0nsdcrI0n ncludcs purchsc 0I I0ur ycrs' pr0IIs. Y0u
rc ls0 gvcn Ihc I0ll0wng nI0rmI0n:
Slcs 70 42 94 270
Expcnscs (75) (72) (08) (2) (30)
NcI Pr0II/(L0ss) (75) (2) 34 73 40
Fxcd AsscIs 270 274 302 30 300
CurrcnI AsscIs 35 29 35 00 220
305 303 337 40 520
!n 2004, PcnuIs LId spcnI 2 mll0n n 0bInng lccncc I0 pr0spccI I0r 0l
n Ngcr I0r n nIl pcr0d 0I 20 ycrs. !n 200b, Ihc c0mpny I0rmulIcd
brnd 0I cngnc 0l I0r 24 mll0n I0 lcd Ihc mrkcI. !ndusIry nlysIs
prcdcIcd IhI Ihs brnd 0I cngnc 0l w0uld rcmn d0mnnI I0r 0 ycrs.
Thc lccnsng nd brnd dcvcl0pmcnI c0sIs wcrc wrIIcn 0II n Ihc ycr 0I
cxpcndIurc.
Y0u rc rcqurcd I0:
() Advsc 0n Ihc IrcImcnI 0I lccnsng nd dcvcl0pmcnI c0sIs n Ihc
cc0unIs nd drII suIblc cc0unIng p0lcy I0r Ihc Iw0 Icms.
(b) Asscss Ihc 0IIcr 0I 700 mll0n I0r Ihc c0mpny by M|0r 0l Plc.
28b
() !I s n0I pr0pcr I0 wrIc 0II lccnsng nd brnd dcvcl0pmcnI c0sIs n Ihc
ycr 0I cxpcndIurc.
Thc pr0pcr IrcImcnI sh0uld bc I0 wrIc 0II lccnsng c0sIs 0vcr 20 ycrs
nd brnd dcvcl0pmcnI c0sI 0vcr 0 ycrs.
() Acc0unIng P0lccs
Thcsc rc wrIIcn 0II 0vcr Ihc cxpccIcd uscIul lIc 0I Ihc lccncc
0n sIrghI lnc bss.
() Rcscrch nd 0cvcl0pmcnI
Rcscrch c0sIs rc wrIIcn 0II n Ihc ycr 0I cxpcndIurc nd
dcvcl0pmcnI c0sIs rc m0rIscd 0vcr Ihc csImIcd uscIul lIc
0I Ihc pr0ducI.
(b) AsscssmcnI 0I Ihc 0IIcr 0I 700 mll0n:
Sncc lccnsng Iccs nd brnd dcvcl0pmcnI c0sIs sh0uld bc sprcd 0vcr
Ihcr uscIul lvcs, Ihc cc0unIs sh0uld bc rcc0nIrucIcd.
() Lccnsng Iccs wrIIcn 0II 0vcr 20 ycrs
2m = b00,000 pcr nnum
20
() rnd dcvcl0pmcnIs c0sIs wrIIcn 0II 0vcr 0 ycrs
24 = 2,400,000 pcr nnum
0
NcI pr0II (75) (2) 34 73 40
Add bck 2 24
Lcss (0.b) (0.b) (3) (3) (3)
(75.b) (2.b) 3 70 37
\luc 0I nIngblc sscIs
Lccnsc =2m (0.b x 5)= 9 m
rnd dcvcl0pmcnIs =(24m 2.4 m x 3)= b.8
T0Il = 9 m + b.8 m= 25.8m
ThcrcI0rc ncI sscIs n 2008 bcc0mcs
NcI AsscIs 520m
Add !nIngblc AsscIs 25.8m
Ad|usIcd ncI sscIs 545.8m
F0ur ycrs purchsc 0I g00dwll
Avcrgc pr0II = (75.b) + (2.b) +3 + 70 + 37 = 3.9b m
5
287
F0ur ycrs purchsc = 3.9bm x 4 = 27.84m
ThcrcI0rc Ir purchsc c0nsdcrI0n = ncI sscIs + g00dwll
ThI s= (545.8m + 27.84m) = b73.b4m
!I s, IhcrcI0rc, n0I Ir brgn I PcnuIs 0l LmIcd c0uld bc cqurcd I0r
0nly 700m.
Thc prcscnI vluc 0I Ihc c0mpny s 2b.3b mll0n l0wcr Ihn Ihc purchsc
c0nsdcrI0n.
Pr0vs0ns rc lblIcs IhI hvc rscn 0r rc lkcly I0 rsc n rcspccI 0I
prcv0us 0r currcnI Inncl ycr. Such lblIcs rc chrgcs gnsI nc0mcs
nd Ihcy 0IIcn hvc subsInIl cIIccI 0n n cnIIy's Inncl p0sI0n nd
pcrI0rmncc.
0uc I0 Ihc unccrInIcs surr0undng Ihc Imng 0I cvcnIs IhI my gvc rsc I0
pr0vs0ns nd cIul m0unI 0I lblIcs nv0lvcd, Ihcrc s nccd I0 cnsurc
unI0rmIy nd c0mplcIcncss n Ihc mnncr n whch such pr0vs0ns rc
rcc0gnscd nd mcsurcd n Inncl sIIcmcnIs. !I s ls0 0I uIm0sI mp0rIncc
IhI suIIccnI nI0rmI0n s pr0vdcd n Ihc Inncl sIIcmcnIs I0 cnblc
uscrs undcrsInd Ihcr nIurc, Imng nd m0unIs.
All pr0vs0ns rc usully c0nIngcnI sncc Ihcy rc unccrIn n Imng 0r
m0unI. Thc Icrm, `c0nIngcnI', s uscd I0r lblIcs s wcll s I0r sscIs,
wh0sc cxsIcncc wll bc c0nIrmcd 0nly by Ihc 0ccurrcncc 0r n0n0ccurrcncc 0I
0nc 0r m0rc unccrIn IuIurc cvcnIs n0I wh0lly wIhn Ihc c0nIr0l 0I Ihc cnIIy.
Thc Icrm, c0nIngcnI lblIy, s uscd I0r lblIcs, IhI d0 n0I mccI Ihc
rcc0gnI0n crIcr 0I pr0vs0n.
A c0nIngcnI lblIy s cIhcr p0ssblc 0blgI0n rsng Ir0m psI cvcnIs,
wh0sc cxsIcncc wll bc c0nIrmcd 0nly by Ihc 0ccurrcncc 0r n0n0ccurrcncc 0I
0nc 0r m0rc unccrIn IuIurc cvcnIs n0I wh0lly wIhn Ihc cnIIy's c0nIr0l, 0r
prcscnI 0blgI0n IhI rscs Ir0m psI cvcnIs IhI I s pr0bblc Ihc IrnsIcr
0I cc0n0mc bcncII wll bc rcqurcd I0 scIIlc Ihc 0blgI0n 0r bccusc Ihc
m0unI 0I Ihc 0blgI0n cn n0I bc mcsurcd wIh suIIccnI rclblIy.
A pr0vs0n shll bc rcc0gnscd whcn:
() n cnIIy hs prcscnI 0blgI0n (lcgl 0r c0nsIrucIvc) s rcsulI 0I
psI cvcnI,
(b) I I s pr0bblc IhI n 0uIIl0w 0I rcs0urccs cmb0dyng cc0n0mc bcncIIs
wll bc rcqurcd I0 scIIlc Ihc 0blgI0n, nd
(c) rclblc csImIc cn bc mdc 0I Ihc m0unI 0I Ihc 0blgI0n.
288
!I Ihcsc c0ndI0ns rc n0I mcI, n0 pr0vs0n shll bc rcc0gnscd.
Thc m0unI rcc0gnscd s pr0vs0n shll bc Ihc bcsI csImIc 0I Ihc
cxpcndIurc rcqurcd I0 scIIlc Ihc prcscnI 0blgI0n I Ihc blncc shccI dIc.
Thc rsks nd unccrInIcs IhI ncvIbly surr0und mny cvcnIs nd
crcumsInccs shll bc Ikcn nI0 cc0unI n rrvng I Ihc bcsI csImIc 0I
Ihc pr0vs0n.
whcrc Ihc cIIccI 0I Ihc Imc vluc 0I m0ncy s mIcrl, Ihc m0unI 0I pr0vs0n
shll bc Ihc prcscnI vluc 0I Ihc cxpcndIurc cxpccIcd I0 scIIlc Ihc 0blgI0n.
A c0nIngcnI lblIy s
() p0ssblc 0blgI0n IhI rscs Ir0m psI cvcnIs nd wh0sc cxsIcncc
wll bc c0nIrmcd 0nly by Ihc 0ccurrcncc 0r n0n0ccurrcncc 0I 0nc 0rm0rc
unccrIn IuIurc cvcnIs n0I wh0lly wIhn Ihc c0nIr0l 0I Ihc cnIIy,
0r
(b) prcscnI 0blgI0n IhI rscs Ir0m psI cvcnIs buI s n0I rcc0gnscd
bccusc Ihc m0unI 0I Ihc 0blgI0n cnn0I bc mcsurcd wIh suIIccnI
rclblIy 0r I s n0I pr0bblc IhI n 0uIIl0w 0I rcs0urccs cmb0dyng
cc0n0mc bcncIIs wll bc rcqurcd I0 scIIlc Ihc 0blgI0n.
C0nIngcnI lblIcs sh0uld n0I bc pr0vdcd I0r n Ihc cc0unIs. !I I s pr0bblc
IhI IrnsIcr 0I cc0n0mc bcncIIs wll bc rcqurcd I0 scIIlc IhI 0blgI0n nd
Ihc m0unI 0I Ihc 0blgI0n cn bc mcsurcd wIh suIIccnI lblIcs,
dscl0surc sh0uld bc mdc n Ihc Inncl sIIcmcnIs.
A C0nIngcnI sscI s p0ssblc sscI IhI rscs Ir0m psI cvcnI(s) nd wh0sc
cxsIcncc wll bc c0nIrmcd 0nly by Ihc 0ccurrcncc 0r n0n0ccurrcncc 0I 0nc 0r
m0rc unccrIn IuIurc cvcnIs n0I wh0lly wIhn Ihc c0nIr0l 0I Ihc cnIIy.
An cnIIy sh0uld n0I rcc0gnsc c0nIngcnI sscI n Is Inncl sIIcmcnIs. !I
I s pr0bblc IhI IuIurc cc0n0mc bcncIIs wll Il0w, Ihc cnIIy nd Ihc m0unI
cn bc mcsurcd wIh suIIccnI rclblIy, dscl0surc sh0uld bc mdc n Ihc
Inncl sIIcmcnIs.
() !I n cnIIy hs c0nIrcI IhI s 0ncr0us, Ihc prcscnI 0blgI0n undcr
Ihc c0nIrcI sh0uld bc rcc0gnscd nd mcsurcd s pr0vs0n.
(b) A c0nsIrucIvc 0rgnsI0n I0 rcsIrucIurc rscs 0nly whcn n cnIIy:
() hs dcIlcd I0rml pln I0r Ihc rcsIrucIurng, dcnIIyng I
lcsI,
Ihc busncss 0r prI 0I Ihc busncss c0nccrncd,
Ihc prncpl l0cI0ns IIccIcd,
Ihc l0cI0n, IuncI0n nd ppr0xmIc numbcr 0I
cmpl0yccs
wh0 wll bc c0mpcnsIcd I0r IcrmnIng Ihcr scrvccs,
Ihc cxpcndIurc IhI wll bc undcrIkcn, nd
289
whcn Ihc pln wll bc mplcmcnIcd, nd
() hs rscd vld cxpccII0n n Ih0sc IIccIcd.
AcIvIcs 0I mny 0rgnzI0ns cuI cr0ss dIIcrcnI clsscs 0I busncsscs nd
gc0grphcl b0undrcs. !I s cxpccIcd IhI Ihcr Inncl rcp0rIs sh0uld gvc
rcs0nblc nI0rmI0n b0uI Ihc clsscs nd gc0grphcl b0undrcs 0I Ihcr
busncsscs, whcrc such busncsscs rc sgnIcnIly IIccIcd by Ihc dIIcrcnI
clsscs 0r gc0grphcl b0undrcs.
Fnncl sIIcmcnIs rc mcns 0I c0mmuncIng nI0rmI0n 0n Ihc
rcs0urccs, 0blgI0ns, nd pcrI0rmncc 0I rcp0rIng cnIIy. ThcrcI0rc, Ihc
nI0rmI0n c0nIncd Ihcrcn, sh0uld cnblc uscrs I0 undcrsInd Ihc rsks
nd c0ndI0ns whch hvc IIccIcd 0r my IIccI Ihc pcrI0rmncc nd Inncl
p0sI0n 0I Ihc cnIIy.
Ths sIIcmcnI pplcs I0 ll cnIIcs IhI crry 0n dIIcrcnI clsscs 0I busncsscs
0r 0pcrIc n dIIcrcnI gc0grphcl rcs.
mcns dsIngushblc c0mp0ncnI 0I n cnIIy, whcrc
such c0mp0ncnI s cnggcd n pr0vdng pr0ducI 0r scrvcc, 0r gr0up 0I
rclIcd pr0ducIs 0r scrvccs IhI s sub|ccI I0 rsks nd rcIurns, IhI rc dIIcrcnI
Ir0m Ih0sc 0I 0Ihcr clsscs 0I busncsscs.
s dsIngushblc c0mp0ncnI 0I n cnIIy IhI
s cnggcd n pr0vdng pr0ducIs 0r scrvccs wIhn prIculr cc0n0mc
cnvr0nmcnI IhI s sub|ccI I0 rsks nd rcIurns, IhI rc dIIcrcnI Ir0m Ih0sc 0I
c0mp0ncnIs 0pcrIng n 0Ihcr cc0n0mc cnvr0nmcnIs.
!n dcIcrmnng busncss scgmcnIs, rcp0rIng cnIIy w0uld nccd I0 c0nsdcr
IcI0rs whch ncludc:
() cxsIng pr0II ccnIrcs,
(b) Ihc nIurc 0I Ihc pr0ducI 0r scrvcc,
(c) Ihc nIurc 0I Ihc pr0ducI0n pr0ccss,
(d) mrkcIs nd mrkcIng mcIh0ds, nd
(c) Ihc nIurc 0I Ihc rcgulI0ry cnvr0nmcnI, I0r cxmplc, bnks, nsurncc,
0l nd gs, publc uIlIcs, cIc.
0rgnzI0nl gr0upngs such s dvs0ns, subsdrcs, 0r brnchcs, rc
0rdnrly crcIcd cc0rdng I0 mngcmcnI rcqurcmcnIs. Such gr0upngs
0IIcn c0rrcsp0nd wIh Ihc dcIcrmnblc scgmcnIs 0I Ihc cnIIy, Ihus IclIIng
scgmcnI rcp0rIng. whcrc Ihs s n0I Ihc csc, scgmcnI rcp0rIng my rcqurc
rcclssIcI0n 0I dI.
290
!I s rclcvnI I0 c0nsdcr Ihc nIcrrclI0nshps m0ng n cnIIy's cIvIcs.
F0r cxmplc, I my bc p0IcnIlly mslcdng I0 rcp0rI s scprIc busncss
scgmcnIs, prIs 0I n cnIIy's cIvIcs IhI rc sgnIcnIly nIcgrIcd 0r
nIcrdcpcndcnI.
0pcrI0ns 0I rcp0rIng cnIIy wll 0nly bc clssIcd s 0pcrI0ns 0I
gc0grphcl scgmcnI I Ihcy cxIcnd bcy0nd IclIIng cxp0rI slcs 0r scrvccs
Ir0m Ihc rcp0rIng cnIIy's d0mcsIc 0pcrI0ns. !I Ihc pr0ducI wcrc subsInIlly
mnuIcIurcd, sscmblcd 0r cqurcd n Ihc 0vcrscs c0unIy, Ihc cIvIcs
w0uld bc clssIcd s gc0grphcl scgmcnI.
FcI0rs IhI rc usully c0nsdcrcd n dcnIIyng gc0grphcl scgmcnIs
ncludc:
() smlrIy 0I cc0n0mc nd p0lIcl c0ndI0ns,
(b) rclI0nshps bcIwccn 0pcrI0ns n dIIcrcnI gc0grphcl rcs,
(c) pr0xmIy 0I 0pcrI0ns,
(d) spccl rsks ss0cIcd wIh 0pcrI0ns n prIculr rc,
(c) cxchngc c0nIr0l rcgulI0ns, nd
(I) Ihc undcrlyng currcncy rsks.
AIIcr n cnIIy hs bccn dvdcd nI0 busncss nd gc0grphcl scgmcnIs, I
s ncccssry I0 dccdc whcIhcr prIculr scgmcnIs rc mIcrl nd s0 wrrnI
scprIc rcp0rIng. Thc mIcrlIy 0I scgmcnI I0 Ihc cnIIy s wh0lc, cn
bc mcsurcd n Icrms 0I Is rcvcnuc, rcsulIs, 0r sscIs cmpl0ycd. A scgmcnI
w0uld bc c0nsdcrcd mIcrl I 0nc 0r m0rc 0I Ihc I0ll0wng c0ndI0ns pply:
() Is rcvcnuc s 0 pcr ccnI 0r m0rc 0I Ihc I0Il rcvcnuc 0I ll scgmcnIs, 0r
(b) Is scgmcnI rcsulI, whcIhcr pr0II 0r l0ss, s 0 pcr ccnI 0r m0rc 0I Ihc
c0mbncd rcsulI 0I ll scgmcnIs n pr0II 0r Ihc c0mbncd rcsulI 0r ll
scgmcnIs n l0ss, whchcvcr s Ihc grcIcr n bs0luIc m0unI, 0r
(c) Is sscIs rc 0 pcr ccnI 0r m0rc 0I Ihc I0Il sscIs 0I ll scgmcnIs, 0r
(d) whcrc I s rcqurcd by rcgulI0ry uIh0rIcs.
T0 pr0vdc n dcquIc nsghI nI0 Ihc cnIIy's 0pcrI0ns, I s ncccssry I0r
Ihc mIcrl scgmcnIs I0 rcprcscnI subsInIl pr0p0rI0n 0I I0Il 0pcrI0ns.
Ths s dccmcd I0 bc Ihc csc whcrc Ihc I0Il rcvcnuc Ir0m slcs 0I ll mIcrl
scgmcnIs I0 Ihc scgmcnIs 0uIsdc cusI0mcrs, c0nsIIuIcs 75 pcr ccnI 0r m0rc 0I
Ihc cnIIy's cxIcrnl rcvcnuc. whcrc Ihs mIcrlIy IcsI hs n0I bccn mcI, Ihc
cnIIy sh0uld dcnIIy m0rc scgmcnIs, cvcn I Ihc ddI0nl scgmcnIs d0 n0I
mccI Ihc Icn pcr ccnI Ihrcsh0ld s spccIcd b0vc.
!I n cnIIy hs Iw0 0r m0rc clsscs 0I busncsscs, 0r 0pcrI0ns n Iw0 0r m0rc
gc0grphcl scgmcnIs whch dIIcr subsInIlly Ir0m cch 0Ihcr, I sh0uld
dcInc Is clsscs 0I busncsscs nd gc0grphcl scgmcnIs n Is Inncl
sIIcmcnIs, nd I shll rcp0rI wIh rcspccI I0 cch clss 0I busncss nd
gc0grphcl scgmcnI, Ihc I0ll0wng Inncl nI0rmI0n:
() rcvcnuc 0r Iurn0vcr, dsIngushng bcIwccn:
29
() rcvcnuc 0r Iurn0vcr dcrvcd Ir0m cxIcrnl cusI0mcrs, nd
() rcvcnuc 0r Iurn0vcr dcrvcd Ir0m 0Ihcr scgmcnIs,
(b) rcsulI, bcI0rc cc0unIng I0r IxI0n, mn0rIy nIcrcsIs nd
cxIr0rdnry Icms, nd
(c) ncI sscIs.
A busncss 0r gc0grphcl scgmcnI shll bc dcnIIcd s rcp0rIblc scgmcnI
I m|0rIy 0I Is rcvcnuc s crncd Ir0m slcs I0 cxIcrnl cusI0mcrs nd:
() Is rcvcnuc Ir0m slcs I0 cxIcrnl cusI0mcrs nd Ir0m IrnscI0ns wIh
0Ihcr scgmcnIs s 0 pcr ccnI 0r m0rc 0I Ihc I0Il rcvcnuc, cxIcrnl 0r
nIcrnl , 0I ll scgmcnIs, 0r
(b) Is scgmcnI rcsulI, whcIhcr pr0II 0r l0ss, s 0 pcr ccnI 0r m0rc 0I Ihc
c0mbncd rcsulI 0I ll scgmcnIs n pr0II 0r Ihc c0mbncd rcsulI 0I ll
scgmcnIs n l0ss, whchcvcr s grcIcr n bs0luIc m0unI, 0r
(c) Is sscIs rc 0 pcr ccnI 0r m0rc 0I Ihc I0Il sscIs 0I ll scgmcnIs.
Thc I0Il 0I Ihc m0unIs dscl0scd by scgmcnIs(s) sh0uld grcc wIh Ihc rclIcd
I0Il n Ihc cnIIy's Inncl sIIcmcnIs. 0Ihcrwsc, Ihc rcp0rIng cnIIy shll
pr0vdc rcc0nclI0n bcIwccn Ihc Iw0 m0unIs. Rcc0nclng Icms shll bc
pr0pcrly dcnIIcd nd dcquIcly dscl0scd.
Rcvcnuc Ir0m b0Ih cxIcrnl nd nIcrnl s0urccs shll bc dscl0scd wIh Ihc
lIIcr sh0wn 0n Ihc bss 0I nIcrnl IrnsIcr prccs. Any chngc n Ihc bss
I0r such IrnsIcr prccs shll ls0 bc dscl0scd.
whcrc nIcrscgmcnI slcs nd IrnsIcrs c0nsIIuIc mIcrl prI 0I Ihc I0Il
rcvcnuc 0I Ihc rcp0rIblc scgmcnIs, Ihcy shll bc nlyzcd scgmcnIlly nd
sh0wn scprIcly. Thc gc0grphcl nlyss 0I nIcrh0rIIcrm !nvcsImcnIs 0r
Iurn0vcr shll bc dscl0scd.
P0l0 PLC 0pcrIcs n Ivc gc0grphcl scgmcnIs nd Icn busncss scgmcnIs.
0I rclIng I0 Ihc gc0grphcl scgmcnIs I0r Ihc ycr cndcd 3 0cccmbcr
20X9, rc s I0ll0ws:
T0Il rcvcnuc Ir0m slcs b,000 2,000 8,000 9,000 7,000
Slcs I0 cxIcrnl cusI0mcrs 4,000 ,200 3,500 b,000 4,000
Slcs I0 0Ihcr scgmcnIs 2,000 800 4,500 3,000 3,000
ScgmcnI rcsulIs 9,b00 3,000 9,700 9,200 (b,000)
AsscIs 9,800 2,00 9,200 7,00 4,800
!dcnIIy Ihc rcp0rIblc gc0grphcl scgmcnI n cc0rdncc wIh SAS 24.
Thc IrsI sIcp n dcIcrmnng rcp0rIblc scgmcnI s I0 dcnIIy Ihc scgmcnIs
IhI crn m|0rIy 0I Ihcr rcvcnuc Ir0m slcs I0 cxIcrnl cusI0mcrs.
292
ScgmcnI 0I slcs I0 cxIcnl cusI0mcrs ulIy!
Ab 4,000 / b,000 x 00 = b7 Ycs
0b0k0 ,200 / 2,000 x 00 = b0 Ycs
Ed0 3,500 / 8,000 x 00 = 44 N0
wrr b,000 / 9,000 X 00 = b7 Ycs
Kn0 4,000 / 7,000 X 00 = 57 Ycs
Apply Ihc 0 Rulc
Thc ncxI sIcp s I0 pply Ihc 0 rulc cc0rdng I0 SAS 24.40
0 0I I0Il rcvcnuc: 0/00 x 32,000 3,200
Hghcr 0I 0 0I I0Il pr0II nd I0Il l0ss:
0 0I I0Il pr0II (0. x (9,b00+3,000+9,700+9,200) 3,50 3,50
0 0I I0Il l0ss (0. x b,000) b00
0 x 33,000 3,300
ScgmcnIs IhI mccI Ihc 0 rulc rc Ab, wrr nd Kn0.
Apply Ihc 75 Rulc
Thc I0Il rcvcnuc 0I Ihc Ihrcc rcp0rIblc scqmcnIs bscd 0n sIcp 2 s 22mll0n
(bm + 9m + 7m). Ths s 0nly b8 0I Ihc I0Il rcvcnuc, clculIcd s I0ll0ws:
22/32 x 00.
SAS 24.22 rcqurcs IhI I Ihc pr0p0rI0n 0I rcp0rIblc scgmcnIs' rcvcnuc s
n0I up I0 75, m0rc scgmcnIs sh0uld bc dcnIIcd cvcn Ih0ugh Ihcy d0 n0I
mccI Ihc 0 rulc.
ThcrcI0rc, Ihc rcp0rIblc scgmcnIs wll ncludc 0b0k0.
Thc subsInIl m0unI 0I rcs0urccs dcpl0ycd n Ihc Iclcc0mmunI0ns ndusIry
nd Ihc pcculrIy 0I Is 0pcrI0ns ncccssIIc Ihc dcvcl0pmcnI 0I n
cc0unIng sIndrd I0 cnsurc unI0rmIy n Ihc rcp0rIng pIIcrn 0I cnIIcs
cnggcd n I.
Thc prcscnI vluc 0I mngcmcnI's bcsI csImIc (bscd 0n nnul pr0bblIy
nlyss) 0I Ihc c0sI 0I dcc0mmss0nng nd dsmnIlng sIc I Ihc Imc 0I
nsIllI0n, shll bc ncludcd n Ihc c0sI 0I n Icm 0I pr0pcrIy, plnI nd
cqupmcnI. Any subscqucnI chngc I0 Ihs csImIc shll bc ddcd I0, 0r
dcducIcd Ir0m, Ihc Icm's c0sI. Thc crryng m0unI shll Ihcn bc subscqucnIly
dcprccIcd 0vcr Is rcmnng uscIul lIc.
293
0vcr Ihc pssgc 0I Imc, Ihc c0rrcsp0ndng lblIy shll bc d|usIcd I0r Ihc
Imc vluc 0I m0ncy. Such ncrcscs n Ihc lblIy shll bc rcc0gnzcd s n
nIcrcsI cxpcnsc n Ihc pr0II nd l0ss cc0unI 0I cch pcr0d. Thc lblIy
shll ls0 bc d|usIcd I0 rcc0rd Ihc cIIccIs 0I ny rcnsIIcmcnIs/dsp0sls nd
Ihc c0rrcsp0ndng pymcnIs/rclzI0n 0I dcc0mmss0nng c0sIs.
Thc mngcmcnI 0I NEwTEL LId hs csImIcd IhI dcc0mmss0nng c0sI
0I bb5,500 wll bc ncurrcd I Ihc cnd 0I Ihrcc ycrs n rcspccI 0I ncw
cqupmcnI nsIllcd 0n 1nury 20X5. Thc mngcmcnI hs IurIhcr csImIcd
IhI dsc0unI rIc 0I 0 wll gvc Ihc prcscnI vluc 0I Ihc dcc0mmss0nng
c0sI I 1nury 20X5.
Y0u rc rcqurcd I0:
() C0mpuIc Ihc prcscnI vluc 0I Ihc dcc0mmss0nng c0sI I0 bc ncludcd
n Ihc pr0pcrIy, plnI nd cqupmcnI 0I NEwTEL LId 0n 1nury 20x5.
(b) C0mpuIc Ihc lblIy I Ihc cnd 0I cch ycr nd chngcs n lblIy I0
bc rcc0gnscd s n nIcrcsI cxpcnsc n pr0II 0r l0ss s rcqurcd by
SAS 25.
() 0vcn dsc0unI rIc 0I 0 nd Ihrcc ycr pcr0d, Ihc prcscnI vluc
0I bb5,500 w0uld bc / (.)
3
x bb5,500 = / .33 x bb5,500
500,000.
ThcrcI0rc, 500,000, wll bc ncludcd n Ihc c0sI 0I cqupmcnI 0I NEwTEL
LId 0n 1nury 20X5 nd Ihc crryng m0unI 0I Ihc cqupmcnI wll
bc dcprccIcd 0vcr Is uscIul lIc s rcqurcd by SAS 25,
(b) ls0 rcqurcs IhI Ihc rcp0rIng cnIIy sh0uld rcc0gnsc
c0rrcsp0ndng lblIy whch sh0uld bc d|usIcd I0r Ihc Imc vluc 0I
m0ncy. Thc ncrcscs n lblIy sh0uld bc rcc0gnscd s nIcrcsI cxpcnsc
n Ihc nc0mc sIIcmcnI I0r cch pcr0d.
0nc wy I0 csly 0bIn Ihc lblIy I Ihc cnd 0I Ihc ycr nd Ihc
ncrcscs n lblIy, s I0 unwnd Ihc nIcrcsI s I0ll0ws:
LblIy I 1nury 20 x 5 500,000
0sc0unI I0r 20 x 5 (0 x 500,000) 50,000
LblIy I 3 0cccmbcr 20 x 5 550,000
0sc0unI I0r 20 x b (0 x 550,000) 55,000
LblIy I 3 0cccmbcr 20 x b b05,000
0sc0unI I0r 20 x 7 (0 x b05,000) b0,500
LblIy I 3 0cccmbcr 20 x 7 bb5,500
294
0bscrvc IhI Ihc lblIy ncrcscs wIh Ihc pssgc 0I Imc. SAS 25 rcqurcs
IhI Ihc ncrcscs sh0uld bc rcc0gnscd s nIcrcsI cxpcnsc n Ihc pr0II nd
l0ss cc0unI 0I cch pcr0d. Thus, Ihc m0unI I0 bc rcc0gnscd s nIcrcsI
cxpcnsc cch ycr w0uld bc: 20x5, 50,000, 20xb, 55,000 nd 20x7,
b0,500.
0cprccI0n 0I ncIw0rk sscIs shll c0mmcncc whcn n sscI s vlblc I0r
usc, rrcspccIvc 0I whcIhcr I s cIully uscd 0r n0I.
Ech prI 0I n Icm 0I pr0pcrIy, plnI nd cqupmcnI wIh c0sI IhI s
sgnIcnI n rclI0n I0 Ihc I0Il c0sI 0I Ihc Icm shll bc scprIcly dcprccIcd.
An cnIIy shll ll0cIc Ihc m0unI nIlly rcc0gnzcd n rcspccI 0I n Icm 0I
pr0pcrIy, plnI nd cqupmcnI I0 Is sgnIcnI prIs nd dcprccIc Ihcm
scprIcly.
A sgnIcnI prI 0I n Icm 0I pr0pcrIy, plnI nd cqupmcnI IhI hs uscIul
lIc nd dcprccI0n mcIh0ds IhI rc Ihc smc s Ih0sc 0I n0Ihcr sgnIcnI
prI 0I IhI smc Icm, shll bc gr0upcd n dcIcrmnng Ihc dcprccI0n chrgc.
T0 Ihc cxIcnI IhI n cnIIy dcprccIcs scprIcly s0mc prIs 0I n Icm 0I
pr0pcrIy, plnI nd cqupmcnI, I ls0 shll dcprccIc scprIcly Ihc rcmndcr
0I Ihc Icm. Thc rcmndcr c0nssIs 0I Ihc prIs 0I Ihc Icm IhI rc ndvdully
n0I sgnIcnI. !I n cnIIy hs vryng cxpccII0ns 0I Ihcsc prIs,
ppr0xmI0n Icchnqucs shll bc pplcd I0 dcprccIc Ihc rcmndcr n
mnncr IhI IIhIully rcprcscnIs Ihc c0nsumpI0n pIIcrn nd/0r uscIul lIc 0I
Ihc prIs.
SIndby cqupmcnI nd sIrIcgc sprcs shll bc dcprccIcd 0vcr Ihc cxpccIcd
uscIul lIc 0I smlr cqupmcnI n usc.
All Pc0plcs NcIw0rk, ncwly csIblshcd Iclcc0mmuncI0n c0mpny n
Ngcr, cqurcd spccl Iclcc0mmuncI0n cqupmcnI I0r 500 mll0n 0n
1nury 20X7. Thc cqupmcnI hs Ihrcc m|0r c0mp0ncnIs, whch I0r csc 0I
rcIcrcncc, my bc rcIcrrcd I0 s C0mp0ncnI A, C0mp0ncnI , nd C0mp0ncnI C.
Thc csImIcd uscIul lIc 0I Ihc cnIrc c0mp0ncnI s 20 ycrs, buI C0mp0ncnI A
wll nccd I0 bc rcplccd IIcr 5 ycrs, C0mp0ncnI IIcr 7 ycrs nd C0mp0ncnI
C IIcr 0 ycrs. Thc c0sI prcc 0I 500 mll0n ncludcd 20 mll0n, 42
mll0n nd 50 mll0n, I0r c0mp0ncnIs A, , nd C, rcspccIvcly..
Y0u rc rcqurcd I0 clculIc Ihc dcprccI0n chrgc 0n Ihc cqupmcnI I0r
20X7.
rcqurcs scprIc dcprccI0n chrgc I0r cch m|0r c0mp0ncnI 0I
n Icm 0I pr0pcrIy, plnI nd cqupmcnI.
295
ThcrcI0rc, Ihc dcprccI0n chrgc 0n Ihc cqupmcnI wll bc clculIcd s
I0ll0ws:
Nm
20m/ 5ycrs 4
42m/ 7ycrs b
50m /0 5
Thc rcsI 0I Ihc cqupmcnI N338/ 20 ycrs 9.4
whcrc subscrbcr cqusI0n c0sIs rclIc cxclusvcly I0 n cxplcI c0nIrcI,
Ihcy my bc cpIlzcd I nd 0nly I:
() Ihc 0pcrI0r c0nIr0ls by mcns 0I n cnI0rccblc c0nIrcI, IuIurc
cc0n0mc bcncIIs s rcsulI 0I Ihc c0sIs ncurrcd,
(b) I s pr0bblc IhI Ih0sc IuIurc cc0n0mc bcncIIs wll cvcnIuIc, nd
(c) Ihc c0sIs rc spccIc I0 Ihc prIculr c0nIrcI nd cn bc mcsurcd
rclbly.
Subscrbcr cqusI0n c0sIs, 0Ihcr Ihn Ih0sc dclI wIh b0vc, shll bc
cxpcnscd s ncurrcd.
CpIlzcd cqusI0n c0sIs shll bc m0rIzcd 0vcr Ihc spccIc pcr0d 0I Ihc
c0nIrcI. !I c0nIrcI I0r whch subscrbcr cqusI0n c0sIs hvc bccn
cpIlzcd s IcrmnIcd crly, Ihcn Ihc ncI b00k vluc 0I Ihc nIngblc sscI
shll bc rcgrdcd s mprcd.
Am0rIzI0n 0I lccncc Icc my c0mmcncc Ir0m cIhcr Ihc dIc 0I ssuncc 0I
lccncc 0r dIc 0I c0mmcrcl lunch. H0wcvcr, Ihc m0rIzI0n pcr0d shll
n0I cxcccd cxprI0n dIc 0I Ihc lccncc nd shll bc clculIcd 0n Ihc sIrghI
lnc bss 0vcr Ihc csImIcd pcr0d.
!I Ihc rcc0vcrblc m0unI 0I n sscI, such s lccncc Icc, s lcss Ihn Is crryng
m0unI, Ihc crryng m0unI 0I Ihc sscI shll bc rcduccd I0 Is rcc0vcrblc
m0unI. ThI rcducI0n s n mprmcnI l0ss.
An mprmcnI l0ss shll bc rcc0gnzcd mmcdIcly n Ihc pr0II nd l0ss
cc0unI. AIIcr Ihc rcc0gnI0n 0I n mprmcnI l0ss, Ihc m0rIzI0n chrgc
I0r Ihc sscI shll bc d|usIcd n IuIurc pcr0ds I0 ll0cIc Ihc sscI's rcvscd
crryng m0unI, lcss Is rcsdul vluc (I ny), 0n sysIcmIc bss 0vcr I
rcmnng uscIul lIc.
A scllcr 0I rghI I0 usc cpcIy shll n0I rcp0rI Ihc IrnscI0n s slc 0I n
sscI, 0r 0I c0mp0ncnI 0I lrgc sscI, buI s rcnIl nc0mc whch s
rcc0gnzcd 0n sIrghI lnc bss 0vcr Ihc pcr0d 0I Ihc !ndcIcsblc RghI I0
Usc (!RU), unlcss:
29b
() Ihc purchscr's rghI 0I usc s cxclusvc nd rrcv0cblc,
(b) Ihc sscI c0mp0ncnI s spccIc nd scprblc (such IhI Ihc buycr's
cxclusvIy s gurnIccd nd Ihc scllcr hs n0I rghI I0 subsIIuIc 0Ihcr
sscIs),
(c) Ihc Icrm 0I Ihc c0nIrcI s I0r m|0r prI 0I Ihc sscI's uscIul lIc,
(d) Ihc IIrbuIblc c0sI 0r crryng vluc cn bc mcsurcd rclbly, nd
(c) n0 sgnIcnI rsks, s ndcIcd n prgrph 30, rc rcIncd by Ihc
scllcr.
!nIcrc0nnccI0n c0sI shll bc clculIcd I Ihc grccd rcgulIcd rIc 0I Ihc
chrgcs (gr0ss) nd rcc0gnzcd by Ihc 0rgnIng 0pcrI0r (wh0 hs n
0blgI0n I0 py IcrmnIng 0pcrI0r I0r IcrmnIng clls 0n Is ncIw0rk)
s ncurrcd.
An cnIIy IhI sclls cpcIy 0n Is ncIw0rk I0 n0Ihcr cnIIy, shll rcc0gnzc
Ihc rcvcnuc (gr0ss) s crncd. Smlrly, n cnIIy IhI purchscs cpcIy 0n
Ihc ncIw0rk 0I n0Ihcr cnIIy, shll rcc0gnzc Ihc c0sI (gr0ss) s ncurrcd. whcrc
Ihcrc s cxchngc 0I rImc I0r ny IrnscI0n 0I Inncl nIurc, buI wIh0uI
nIl0w 0r 0uIIl0w 0I csh, such cxchngc shll bc g0vcrncd by wrIIcn
grccmcnI nd cc0unIcd I0r by Ihc IrnscIng prIcs.
whcrc Ihc cxchngc 0r rccpr0cl IrnscI0ns cnIcrcd nI0 I0r cpcIy s such
IhI Ihc IrnscIng prIcs hd n0 currcnI nccd nd whcrc Ihc sub|ccI 0I Ihc
IrnscI0n wll 0Ihcrwsc bc slcblc, n0ncc0unIng rcc0gnI0n shll bc
gvcn.
Thc rcvcnuc rcc0gnI0n crIcr shll bc pplcd scprIcly I0 cch IrnscI0n.
H0wcvcr, n ccrIn crcumsInccs, whcrc I s ncccssry I0 pply Ihc rcc0gnI0n
crIcr I0 Ihc scprIcly dcnIIblc c0mp0ncnIs 0I snglc IrnscI0n n
0rdcr I0 rcIlccI Ihc subsIncc 0I Ihc IrnsI0n, Ihc bundlcd pr0ducIs shll bc
pr0pcrly Icmzcd nd rcvcnuc rcc0gnI0n crIcr shll pply I0 Ihcm
scprIcly.
whcrc Ihcrc s dsc0unI 0n bundlcd pr0ducI, Ihc dsc0unI shll bc pr0rIcd
nd pplcd 0n ll Ihc clcmcnIs 0I Ihc bundlcd pr0ducI's c0sI.
() A Tclcc0mmuncI0n Scrvcc Pr0vdcr (TSP) hs Ihrcc pr0ducIs nmcd
HndscIs, Sm Pck nd Ar Tmc. Thc prcc pcr unI I0r cch pr0ducI s
5,000, 2,000 nd 500, rcspccIvcly..
Thc Tclcc0mmuncI0n Scrvcc Pr0vdcr n prcprI0n I0r Is IrsI ycr
nnvcrsry 0I c0mmcnccmcnI 0I Is 0pcrI0ns, dccdcd I0 bundlc Ihcsc
pr0ducIs nd 0IIcrcd Ihc ncw pr0ducI (.c. undlcd pr0ducI) I0r b,000.
297
() SIIc h0w Ihc dsc0unI 0IIcrcd Ihc subscrbcrs w0uld bc IrcIcd
n Ihc c0mpny's b00ks n lnc wIh Ihc pr0vs0ns 0I SAS 25.
() Apply Ihc b0vc prncplc I0 Ihc dsc0unI.
(b) TcllI0nc LId s Tclcc0mmuncI0n AcIvIcs Scrvcc Pr0vdcr rcgsIcrcd
wIh b0Ih NCC nd CAC. !ncludcd n Is Icms 0I Ixcd sscIs rc Ihc
I0ll0wng:
MsIs 0,000
SwIchng Mchnc 3,750
0cncrI0r ,250
TrnsI0rmcr 5,000
SIndby cqupmcnI rc:
SwIchng Mchnc 2,750
0cncrI0r ,000
Thc sIndby cqupmcnI wcrc dlc I0r Ihc pcr0d s Ihcrc ws n0
brckd0wn 0I Ihc sscI n Is I0ur (4) ycrs 0I 0pcrI0ns.
Thc c0mpny's p0lcy s I0 dcprccIc cqupmcnI I Ihc I0ll0wng rIcs.
MsIs 0
SwIchng Mchnc 20
0cncrI0r 25
TrnsI0rmcr 0
MsIs, SwIchng mchnc nd TrnsI0rmcr c0uld bc Irdcd I0r
2mll0n, 0.5mll0n nd mll0n, rcspccIvcly IIcr Ihc cxprI0n
0I Ihc lIc spn 0I Ihc lccncc pr0curcd I0r 4 ycrs.
Prcprc Ihc Ixcd sscIs schcdulc n lnc wIh Ihc pr0vs0ns 0I SAS 3 nd SAS
25 I0 rcIlccI mprmcnI l0sscs. (I ny).
() () whcrc Ihcrc s dsc0unI 0n bundlcd pr0ducI, Ihc dsc0unI shll bc
pr0rIcd nd pplcd 0n ll Ihc c0sI clcmcnIs 0I Ihc bundlcd pr0ducIs.
()
HndscI 5,000
Sm pck 2,000
Ar Imc (Ircc) 500
undlcd I (b,000)
0sc0unI
298
0sc0unI pr0rIcd vz:
5,000 2 x ,500
HndscI 7,500 = 3 = ,000
2,000 40 x ,500
Sm pck 7,500 50 = 400
500 x ,500
Ar Imc 7,500 = 5 = 00
,500
0sc0unIcd prccs I0 cusI0mcrs:
HndscI Sm pck ArT T0Il
!nIl c0sI 5,000 2,000 500 7,500
Lcss pr0rIcd dsc0unI ,000 400 00 ,500
undlcd prccs 4,000 ,b00 400 b,000
(b)
Fxcd sscIs schcdulc
TrnsI0rmcr MsIs SwIchng 0cncrI0r T0Il
Mchnc
'm 'm 'm 'm 'm
C0sI 5 0 3.75 .25 20.00
SIndby cqupmcnI 2.75 .00 3.75
T0Il ()
0cprccI0n rIc 0 0 20 25
0cprccI0n pcr ycr 0.5 .3 0.5b25 3.3b25
AccumulIcd dcp. I0r 4yrs 2 4 5.2 2.25 3.45
Rcsdul vlucs 2 0.5 3.5
Crryng m0unI () 3 b 5.7 2.25 b.95
!mprmcnI l0sscs ( )
!n ddI0n I0 Ihc dscl0surc rcqurcmcnIs 0I 0Ihcr pplcblc sIIcmcnIs 0I
Acc0unIng SIndrds, cnIIcs cnggcd n Iclcc0mmuncI0ns cIvIcs shll
ls0 dscl0sc Ihc I0ll0wng:
() dcscrpI0n 0I h0w rcvcnucs Ir0m vr0us Iypcs 0I Iclcc0mmuncI0ns
cIvIcs rc rcc0gnzcd,
(b) dcscrpI0n 0I h0w dcIcrrcd rcvcnuc s clculIcd,
(c) dcscrpI0n 0I h0w ny cxprcd dcIcrrcd rcvcnuc s IrcIcd n Ihc
Inncl sIIcmcnIs,
(d) dcscrpI0n 0I h0w subscrbcr cqusI0n c0sIs rc IrcIcd n Ihc
Inncl sIIcmcnIs,
c) dcscrpI0n 0I Ihc m0rIzI0n mcIh0ds uscd I0r nIngblc sscIs
(ncludng lccnsc Iccs),
299
(I) Ircc rImc gvcn nd Ihc m0vcmcnI Ihcrc0I,
(g) IrcImcnI 0I dsmnIlng, rcm0vl nd sIc rcsI0rI0n c0sIs, nd
(h) Ihc mcIh0d, ssumpI0ns, cxIcrnl vlucrs nv0lvcd (pr0Icss0nl
dcIls), p0lcy 0n Ircqucncy, nIurc 0I ndccs uscd I0r pr0bblIy
nlyss by mngcmcnI n rrvng I Ihc prcscnI vluc 0I Ihc bcsI
csImIc 0I dcc0mmss0nng c0sIs.
0n 3 0cccmbcr 20x9, P0wdcr Plc, cqurcd 2 mll0n shrcs 0I Ihc 5 mll0n
shrcs 0I SwccI Plc I0r 30 mll0n. 0n IhI dIc, Ihc cqurcc, SwccI Plc, hd
rcIncd crnngs m0unIng I0 4 mll0n nd Ihc Ir vluc 0I Is ncI sscIs
ws 9 mll0n. Y0u rc rcqurcd I0 clculIc Ihc g00dwll 0n cqusI0n n
cc0rdncc wIh SAS 2b.
Pr0p0rI0n 0I nIcrcsI cqurcd by P0wdcr Plc s 80 0bIncd s I0ll0ws:
2 mll0n shrcs 5 mll0n shrcs 00.
Thc rcmndcr 0I Ihc pr0p0rI0n bcl0ngs I0 Ihc n0nc0nIr0llng nIcrcsI. ThcrcI0rc
NC! s 20 (00 80).
N0nc0nIr0llng nIcrcsI n Ihc cquIy 0I Ihc cqurcc s clculIcd s I0ll0ws:
'000
0rdnry shrcs 5,000
RcIncd crnngs 4,000
T0Il cquIy 9,000
NC! = 9m x 20 = 3.8m
'000
C0nsdcrI0n IrnsIcrrcd 30,000
N0nc0nIr0llng nIcrcsI 3,800
33,800
NcI sscIs cqurcd 9,000
4,800
S0mc chngcs n Ihc Ir vluc 0I c0nIngcnI c0nsdcrI0n IhI Ihc cqurcr
rcc0gnscs IIcr Ihc cqusI0n dIc my bc Ihc rcsulI 0I ddI0nl nI0rmI0n
IhI Ihc cqurcr 0bIncd IIcr IhI dIc b0uI IcIs nd crcumsInccs IhI
cxsIcd I Ihc cqusI0n dIc.
300
Such chngcs rc mcsurcmcnI pcr0d d|usImcnIs n cc0rdncc wIh
prgrphs 4549 0I SAS 2b. H0wcvcr, chngcs rcsulIng Ir0m cvcnIs IIcr Ihc
cqusI0n dIc, such s mccIng n crnngs IrgcI, rcchng spccIcd shrc
prcc 0r rcchng mlcsI0nc 0n rcscrch nd dcvcl0pmcnI pr0|ccI, rc n0I
mcsurcmcnI pcr0d d|usImcnIs.
A busncss c0mbnI0n s Ihc brngng I0gcIhcr 0I scprIc cnIIcs 0r
busncsscs nI0 0nc rcp0rIng cnIIy. Thc rcsulI 0I ncrly ll busncss
c0mbnI0ns s IhI 0nc cnIIy, Ihc cqurcr, 0bIns c0nIr0l 0I 0nc 0r m0rc
0Ihcr busncsscs, Ihc cqurccs.
All busncss c0mbnI0ns shll bc cc0unIcd I0r by pplyng Ihc cqusI0n
mcIh0d.
An cqurcr shll bc dcnIIcd I0r ll busncss c0mbnI0ns. Thc cqurcr s
Ihc c0mbnng cnIIy IhI 0bIns c0nIr0l 0I Ihc 0Ihcr c0mbnng cnIIcs 0r
busncsscs.
whcn busncss c0mbnI0n grccmcnI pr0vdcs I0r n d|usImcnI I0 Ihc
c0sI 0I Ihc c0mbnI0n c0nIngcnI 0n IuIurc cvcnIs, Ihc cqurcr shll ncludc
Ihc m0unI 0I IhI d|usImcnI n Ihc c0sI 0I Ihc c0mbnI0n I Ihc cqusI0n
dIc I Ihc d|usImcnI s pr0bblc nd cn bc mcsurcd rclbly.
Thc cqurcr shll, I Ihc cqusI0n dIc:
() rcc0gnzc g00dwll cqurcd n busncss c0mbnI0n s n sscI, nd
(b) Ihc cqurcr shll rcc0gnzc g00dwll s 0I Ihc cqusI0n dIc mcsurcd
s Ihc cxccss 0I () 0vcr () bcl0w:
() Ihc ggrcgIc 0I:
Ihc c0nsdcrI0n IrnsIcrrcd, mcsurcd n cc0rdncc
wIh Ihs SIndrd, whch gcncrlly rcqurcs cqusI0n
dIc Ir vluc,
Ihc m0unI 0I ny n0nc0nIr0llng nIcrcsI n Ihc cqurcc,
mcsurcd n cc0rdncc wIh Ihs SIndrd , nd
n busncss c0mbnI0n chcvcd n sIgcs, Ihc
cqusI0ndIc Ir vluc 0I Ihc cqurcr's prcv0usly
hcld cquIy nIcrcsI n Ihc cqurcc.
() Ihc ncI 0I Ihc cqusI0ndIc m0unIs 0I Ihc dcnIIblc sscIs
cqurcd nd Ihc lblIcs ssumcd mcsurcd, n cc0rdncc
wIh Ihs SIndrd.
30
.
Thc cqurcr shll cc0unI I0r chngcs n Ihc Ir vluc 0I c0nIngcnI
c0nsdcrI0ns IhI rc n0I mcsurcmcnI pcr0d d|usImcnIs s I0ll0ws:
() C0nIngcnI c0nsdcrI0n clssIcd s cquIy shll n0I bc rcmcsurcd
nd Is subscqucnI scIIlcmcnI shll bc cc0unIcd I0r wIhn cquIy.
(b) C0nIngcnI c0nsdcrI0n clssIcd s n sscI 0r lblIy s IrcIcd,
Ihus:
() As Inncl nsIrumcnI, I s mcsurcd I Ir vluc, wIh ny
rcsulIng gn 0r l0ss rcc0gnzcd cIhcr n pr0II 0r l0ss 0r n 0Ihcr
c0mprchcnsvc nc0mc, 0r
() Acc0unIcd I0r n cc0rdncc wIh SAS 23 - Pr0vs0ns, C0nIngcnI
LblIcs nd C0nIngcnI AsscIs 0r 0Ihcr SASs s ppr0prIc.
An cqurcr shll dscl0sc nI0rmI0n IhI cnblcs uscrs 0I Is Inncl
sIIcmcnIs I0 cvluIc Ihc nIurc nd Inncl cIIccI 0I busncss c0mbnI0ns
IhI wcrc cIIccIcd durng Ihc pcr0d.
An cqurcr shll dscl0sc nI0rmI0n IhI cnblcs uscrs 0I Is Inncl
sIIcmcnIs I0 cvluIc Ihc nIurc nd Inncl cIIccI 0I busncss c0mbnI0ns
IhI wcrc cIIccIcd IIcr Ihc blncc shccI dIc buI bcI0rc Ihc Inncl
sIIcmcnIs rc uIh0rzcd I0r ssuc.
T0 gvc cIIccI I0 Ihc prncplc n prgrph 85, Ihc cqurcr shll dscl0sc Ihc
I0ll0wng nI0rmI0n I0r cch busncss c0mbnI0n IhI ws cIIccIcd durng
Ihc pcr0d:
() Ihc nmcs nd dcscrpI0ns 0I Ihc c0mbnng cnIIcs 0r busncss,
(b) Ihc cqusI0n dIc,
(c) Ihc pcrccnIgc 0I v0Ing cquIy nsIrumcnIs cqurcd,
(d) Ihc c0sI 0I Ihc c0mbnI0n nd dcscrpI0n 0I Ihc c0mp0ncnIs 0I IhI
c0sI, nd
(c) cqusI0n rclIcd c0sIs.
rc c0vcrcd n chpIcrs b, 7 nd 8
!nIcrm Inncl rcp0rIs sh0uld bc prcprcd I0 pr0vdc currcnI updIcs 0n Ihc
Inncl p0sI0n, rcsulIs 0I 0pcrI0ns nd chngcs n csh Il0ws 0I Ihc
Inncl ycr, Ir0m Ihc bcgnnng 0I Ihc cc0unIng ycr I0 dIc.
An nIcrm Inncl rcp0rI sh0uld ncludc, I mnmum, Ihc I0ll0wng
c0mp0ncnIs:
() c0ndcnscd sIIcmcnI 0I cc0unIng p0lccs.
(b) C0ndcnscd blncc shccI,
(c) C0ndcnscd pr0II nd l0ss cc0unI,
(d) C0ndcnscd sIIcmcnI 0I csh Il0ws, nd
(c) SclccIcd n0Ics I0 Ihc cc0unIs,
302
Thc !nIcrm Fnncl Rcp0rI sh0uld crry sIIcmcnI ndcIng whcIhcr 0r
n0I Ihc !nIcrm Fnncl SIIcmcnIs rc udIcd. whcrc Ihcy rc udIcd, Ihc
udI0rs' rcp0rI shll bc ncludcd.
Thc scI 0I c0ndcnscd Inncl sIIcmcnIs whch n cnIIy publshcs n Is
nIcrm Inncl rcp0rI shll ncludc, I mnmum, cch 0I Ihc hcdngs
nd subI0Ils IhI wcrc ncludcd n Is m0sI rcccnI nnul Inncl sIIcmcnIs
nd Ihc sclccIcd cxplnI0ry n0Ics s rcqurcd by Ihs SIndrd. AddI0nl
lnc Icms 0r n0Ics shll bc ncludcd I Ihcr 0mss0n w0uld mkc Ihc c0ndcnscd
nIcrm Inncl sIIcmcnIs mslcdng.
An cnIIy shll pply Ihc smc cc0unIng p0lccs nd prncplcs n Is nIcrm
Inncl sIIcmcnIs s rc pplcd n Is nnul Inncl sIIcmcnIs, cxccpI
I0r cc0unIng p0lcy chngcs mdc IIcr Ihc dIc 0I Ihc m0sI rcccnI nnul
Inncl sIIcmcnIs nd rc I0 bc rcIlccIcd n Ihc ncxI nnul Inncl
sIIcmcnIs. H0wcvcr, Ihc Ircqucncy 0I n cnIIy's rcp0rIng (nnul, hlIycrly,
0r qurIcrly) shll n0I IIccI Ihc mcsurcmcnI 0I Is nnul rcsulIs. T0 chcvc
IhI 0b|ccIvc, mcsurcmcnIs I0r nIcrm rcp0rIng purp0scs shll bc mdc 0n
ycrI0dIc bss.
ExccpI0nl nd cxIr0rdnry Icms shll bc rcc0gnzcd nd dscl0scd n Ihc
pr0II nd l0ss cc0unI 0I Ihc nIcrm pcr0d n whch Ihcy 0ccur n cc0rdncc
wIh SAS b - ExIr0rdnry !Icms nd Pr0r Ycr Ad|usImcnIs.
SgnIcnI m0vcmcnIs n kcy ndcI0rs 0I Ihc cnIIy's Inncl p0sI0n shll
bc cxplncd by wy 0I n0Ics.
A rcc0nclI0n 0I ncI nc0mc I0 ncI csh pr0vdcd by 0pcrIng cIvIcs shll
bc gvcn n suIIccnI dcIl I0r uscrs I0 pprccIc Is mn c0mp0ncnIs.
!nIcrm Inncl rcp0rIs shll ncludc nIcrm Inncl sIIcmcnIs (c0ndcnscd
0r c0mplcIc) I0r pcr0ds s I0ll0ws:
() blncc shccI s 0I Ihc cnd 0I Ihc currcnI nIcrm pcr0d nd
c0mprIvc blncc shccI s 0I Ihc cnd 0I Ihc mmcdIcly prcccdng
Inncl ycr,
(b) pr0II nd l0ss cc0unI I0r Ihc currcnI nIcrm pcr0d nd cumulIvcly
I0r Ihc currcnI Inncl ycr I0 dIc, wIh c0mprIvc pr0II nd l0ss
cc0unI I0r Ihc mmcdIcly prcccdng Inncl ycr, nd
(c) csh Il0w sIIcmcnI cumulIvcly I0r Ihc currcnI Inncl ycr I0 dIc,
wIh c0mprIvc sIIcmcnI I0r Ihc c0mprblc ycrI0dIc pcr0d
0I Ihc mmcdIcly prcccdng Inncl ycr.
Sub|ccI I0 Ihc Icw cxccpI0ns n0Icd n Ihs SIIcmcnI, dscl0surcs rcqurcd by
SIIcmcnIs 0I Acc0unIng SIndrds rc n0I gcncrlly rcqurcd n Ihc
prcscnII0n 0I nIcrm Inncl rcp0rIs.
H0wcvcr, 0Ihcr dscl0surcs spccIc I0 nIcrm Inncl rcp0rIs IhI rc hclpIul
I0 uscrs n sscssng Ihc rclcvncc nd rclblIy wIh whch Ihc rcp0rIs mghI
bc uscd, nd whch shll bc dscl0scd rc:
303
() Ihc pcr0d c0vcrcd by Ihc rcp0rI,
(b) Ihc dIc 0n whch I s ppr0vcd by Ihc 0rd 0I 0rccI0rs,
(c) Ihc cxIcnI I0 whch Ihc nI0rmI0n I c0nIns hs bccn udIcd 0r
rcvcwcd, nd
(d) Ihc Ircqucncy wIh whch Ihc 0rgnzI0n prcscnIs nIcrm rcp0rIs.
!nIcrm Inncl rcp0rIs shll bc mdc vlblc wIhn I0rIhIvc dys 0I Ihc
cnd 0I Ihc nIcrm rcp0rIng pcr0d.
!I n csImIc 0I n m0unI rcp0rIcd n n nIcrm pcr0d s chngcd
sgnIcnIly durng Ihc Inl nIcrm pcr0d 0I Ihc Inncl ycr buI scprIc
Inncl rcp0rI s n0I publshcd I0r IhI Inl nIcrm pcr0d, Ihc nIurc nd
m0unI 0I IhI chngc n csImIc shll bc dscl0scd n n0Ic I0 Ihc nnul
Inncl sIIcmcnIs I0r Ihc Inncl ycr.
A rcvscd !AS ws ssucd n ScpIcmbcr 2007 by Ihc !AS. Sncc Ihs SIndrd
dcls wIh Ihc I0rm nd c0nIcnIs 0I Inncl sIIcmcnIs, spccIs 0I Ihc bsc
rcqurcmcnIs rc lrcdy ddrcsscd by ,
nd SAS 2, . H0wcvcr,
Ihcrc rc s0mc Inncl sIIcmcnIs nIr0duccd by Ihs SIndrd IhI
pr0Icss0nl cc0unIng sIudcnIs sh0uld bc Imlr wIh. Thcsc Inncl
sIIcmcnIs rc:
() sIIcmcnI 0I Inncl p0sI0n, nd
(b) sIIcmcnI 0I c0mprchcnsvc nc0mc
Thc I0rmIs 0I Ihc Iw0 sIIcmcnIs rc prcscnIcd bcl0w:
N0n currcnI sscIs
Pr0pcrIy, plnI nd cqupmcnI 350,700 3b0,020
000dwll 80,800 9,200
0Ihcr nIngblc sscIs 227,470 227,470
!nvcsImcnIs n ss0cIcs 00,50 0,770
Avlblc I0r slc Inncl sscIs 42,500 5b,000
() 90,b20 945,4b0
CurrcnI sscIs
!nvcnI0rcs 35,30 32,500
Trdc rcccvblcs 9,b00 0,800
0Ihcr currcnI sscIs 25,b50 2,540
Csh nd csh cquvlcnIs 32,400 322,900
(b) 5b4,780 578,740
T0Il AsscIs ( + b) ,4bb,400 ,524,200
304
EquIy nd lblIcs
EquIy IIrbuIblc I0 0wncrs 0I Ihc prcnI
Shrc cpIl b50,000 b00,000
RcIncd crnngs 243,500 b,700
0Ihcr c0mp0ncnIs 0I cquIy 0,200 2,200
903,700 782,900
N0n c0nIr0llng nIcrcsI 70,050 48,b00
T0Il EquIy () 973,750 83,500
N0n currcnI lblIcs
L0ng Icrm b0rr0wngs 20,000 b0,000
0cIIcrcd Ix 28,800 2b,040
L0ng Icrm pr0vs0ns 28,850 52,240
T0Il n0n currcnI lblIcs (b) 77,b50 238,280
CurrcnI lblIcs
Trdc nd 0Ihcr pyblcs 5,000 87,b20
Sh0rI Icrm b0rr0wngs 50,000 200,000
CurrcnI p0rI0n 0I lng Icrm b0rr0wngs 0,000 20,000
CurrcnI Ix pyblc 35,000 42,000
Sh0rI Icrm pr0vs0ns 5,000 4,800
T0Il currcnI lblIcs (c) 35,000 454,420
T0Il lblIcs (d) 492,b50 b92,700
T0Il cquIy nd lblIcs ( + d) ,4bb,400 ,524,200
Rcvcnuc 390,000 355,000
C0sI 0I Slcs (245,000) (230,000)
0r0ss pr0II 45,000 25,000
0Ihcr nc0mc 20,bb7 ,300
0sIrbuI0n c0sIs (9,000) (8,700)
AdmnsIrI0n cxpcnscs (20,000) (2,000)
0Ihcr cxpcnscs (2,00) (,200)
Fnncc c0sIs (8,00) (7,500)
Shrc 0I pr0II 0I ss0cIcs 35,200 30,00
Pr0II bcI0rc Ix b,bb7 28,000
!nc0mc Ix cxpcnscs (40,47) (32,000)
Pr0II I0r Ihc ycr Ir0m c0nInung 0pcrI0ns 2,250 9b,000
L0ss I0r Ihc ycr Ir0m dsc0nInucd 0pcrI0ns (30,500)
Pr0II I0r Ihc ycr 2,250 b5,500
305
0Ihcr c0mprchcnsvc nc0mc:
Exchngc dIIcrcnccs 0n IrnslIng
I0rcgn 0pcrI0ns 5,334 0,bb7
Avlblc I0r slc Inncl sscIs (24,000) 2b,bb7
Csh Il0w hcdgcs (bb7) (4,000)
0ns 0n pr0pcrIy rcvluI0n 993 3,3b7
AcIurl gns (l0sscs) 0n dcIncd
bcncII pcns0n plns (727) ,333
Shrc 0I 0Ihcr c0mprchcnsvc nc0mc
0I ss0cIcs 400 (700)
!nc0mc Ix rclIng I0 c0mp0ncnIs 0I
0Ihcr c0mprchcnsvc nc0mc 4,bb7 (9,334)
0Ihcr c0mprchcnsvc nc0mc I0r
Ihc ycr, ncI 0I Ix (4,000) 28,000
T0Il c0mprchcnsvc nc0mc I0r Ihc ycr 07,250 93,500
Pr0II IIrbuIblc I0:
0wncrs 0I Ihc prcnI 97,000 52,400
N0n c0nIr0llng nIcrcsI 24,250 3,00
2,250 b5,500
T0Il c0mprchcnsvc nc0mc IIrbuIblc I0:
0wncrs 0I Ihc prcnI 85,800 74,800
N0n c0nIr0llng nIcrcsI 2,450 8,700
07,250 93,500
Ernngs pcr shrc (n currcncy unIs) 0.4b 0.30
As cn bc rcdlly sccn Ir0m Ihc I0rmIs, sIIcmcnI 0I Inncl p0sI0n s
Ihc cquvlcnI 0I blncc shccI. Thc I0rmI 0I Ihs sIIcmcnI s, h0wcvcr,
slghIly dIIcrcnI Ir0m Ihc Iw0 blncc I0rmIs n Ihc scc0nd schcdulc 0I Ihc
C0mpncs nd Allcd MIIcrs AcI, CAP C 20, LFN 2004. Thc sIIcmcnI 0I
Inncl p0sI0n 0bscrvcs Ihc currcnI /n0ncurrcnI dsIncI0n, whcrcby n0n
currcnI sscIs s prcscnIcd bcI0rc currcnI sscIs n Ihc sscI sdc 0I Ihc blncc
shccI, nd n0ncurrcnI lblIcs s smlrly prcscnIcd bcI0rc currcnI lblIcs
n Ihc 0Ihcr sdc 0I Ihc blncc shccI.
Thc sIIcmcnI 0I c0mprchcnsvc nc0mc s Ihc cquvlcnI 0I pr0II nd l0ss
cc0unI 0r nc0mc sIIcmcnI s I s s0mcImcs cllcd. ll0ws rcp0rIng
cnIIy I0 prcscnI Ihc nc0mc sIIcmcnI cIhcr n snglc sIIcmcnI 0I
c0mprchcnsvc nc0mc s sh0wn b0vc, 0r n Iw0 scprIc sIIcmcnIs: 0nc
sIIcmcnI dsplyng c0mp0ncnIs 0I pr0II 0r l0ss nd Ihc 0Ihcr sIIcmcnI
bcgnnng wIh pr0II 0r l0ss nd dsplyng c0mp0ncnIs 0I 0Ihcr c0mprchcnsvc
nc0mc.
s Iv0urblc 0r unIv0urblc cvcnI
IhI 0ccurs bcIwccn Ihc cnd 0I Ihc rcp0rIng pcr0d nd Ihc dIc IhI Ihc
Inncl sIIcmcnIs rc uIh0rzcd I0r ssuc.
30b
EvcnIs IIcr Ihc blncc shccI dIc rc br0dly
cIcg0rzcd nI0 Iw0: d|usIng cvcnIs nd n0nd|usIng cvcnIs.
s n cvcnI IIcr Ihc rcp0rIng pcr0d IhI pr0vdcs IurIhcr
cvdcncc 0I c0ndI0ns IhI cxsIcd I Ihc cnd 0I Ihc rcp0rIng pcr0d, ncludng
n cvcnI IhI ndcIcs IhI Ihc g0ng c0nccrn ssumpI0n n rclI0n I0 Ihc
wh0lc 0r prI 0I Ihc cnIcrprsc s n0 l0ngcr ppr0prIc. Exmplc 0I d|usIng
cvcnI s Ihc bnkrupIcy 0I cusI0mcr Icw wccks IIcr Ihc blncc shccI
dIc.
s n cvcnI IIcr Ihc rcp0rIng pcr0d IhI s ndcIvc
0I c0ndI0n IhI r0sc IIcr Ihc cnd 0I Ihc rcp0rIng pcr0d. Supp0sc Ihc
IcI0ry 0I mnuIcIurng c0mpny ws dcsIr0ycd by Irc 0n 3
Ih
Fcbrury
20x7. !I Ihc rcp0rIng dIc 0I Ihc c0mpny s 3
sI
0cccmbcr, nd Ihc Inncl
sIIcmcnIs wcrc uIh0rzcd I0r ssuc 0n 0
Ih
Aprl 20x8, Ihc dcsIrucI0n 0I Ihc
IcI0ry 0n 3
Ih
Fcbrury 20x7, s n0nd|usIng cvcnI.
Thc Inncl sIIcmcnIs 0I rcp0rIng cnIIy sh0uld bc d|usIcd whcn n
d|usIng cvcnI 0ccurs. !I dcbI0r wh0 0wcd N5m ws dcclrcd bnkrupI,
dcquIc pr0vs0ns sh0uld bc mdc I0r bd dcbIs by rcducng Ihc Irdc dcbI0rs
s wcll s Ihc rcIncd pr0II Igurc.
Thc Inncl sIIcmcnIs 0I Ihc rcp0rIng cnIIy sh0uld n0I bc d|usIcd I0r
n0nd|usIng cvcnIs.
Undcr !AS 0, I dvdcnd s dcclrcd IIcr Ihc rcp0rIng pcr0d, I sh0uld n0I
bc rcc0gnzcd s lblIy I Ihc cnd 0I Ihc rcp0rIng pcr0d. !I s n d|usIng
cvcnI.
N0nd|usIng cvcnIs sh0uld bc dscl0scd I Ihcy rc mIcrl. Thc dscl0surc
sh0uld ncludc Ihc nIurc 0I Ihc cvcnI nd n csImIc 0I Is Inncl cIIccI. !I
rcs0nblc csImIc cnn0I bc 0bIncd, IhI IcI musI bc sIIcd. Exmplcs
0I mIcrl n0nd|usIng cvcnI rc: () m|0r busncss c0mbnI0n IIcr
Ihc rcp0rIng dIc (b) Abn0rml IlucIuI0n n cxchngc rIcs, nd (c) ssuc 0I
shrcs 0r dcbcnIurcs IIcr Ihc rcp0rIng dIc.
!AS 8 prcscrbcs Ihc cc0unIng IrcImcnI I0r rcvcnuc rsng Ir0m slc 0I
g00ds nd 0Ihcr 0pcrIng cIvIcs 0I Ihc cnIcrprsc. 0cncrlly, rcvcnuc s
rcc0gnzcd whcn I s pr0bblc IhI IuIurc cc0n0mc bcncIIs wll Il0w I0 n
cnIcrprsc, nd Ihc m0unI 0I rcvcnuc cn bc mcsurcd wIh rclblIy.
307
Rcvcnuc s Ihc gr0ss nIl0ws 0I cc0n0mc bcncIIs durng Ihc pcr0d, rsng n
Ihc c0ursc 0I Ihc 0rdnry cIvIcs 0I n cnIcrprsc whcn Ih0sc nIl0ws rcsulI
n ncrcscs n cquIy nd n0I c0nIrbuI0n Ir0m cquIy prIcpnIs.
Rcvcnuc sh0uld bc mcsurcd I Ihc Ir vluc 0I Ihc c0nsdcrI0n rcccvblc.
whcn g00ds 0r scrvccs rc cxchngcd I0r 0Ihcr g00ds 0r scrvccs 0I smlr
nIurc nd vluc, Ihc IrnscI0n s n0I rcc0gnzcd s rcvcnuc undcr !AS. uI
whcn dssmlr Icms rc cxchngcd, Ihc IrnscI0n s rcgrdcd s gcncrIng
rcvcnuc.
Rcvcnuc Ir0m slc 0I g00ds sh0uld bc rcc0gnzcd 0nly whcn ll 0I Ihc I0ll0wng
c0ndI0ns rc mcI:
() Thc scllcr hs IrnsIcrrcd I0 Ihc buycr Ihc sgnIcnI rsk nd rcwrd 0I
0wncrshp,
(b) Thc scllcr rcIns n0 c0nInung mngcrl nv0lvcmcnI I0 Ihc dcgrcc
usully ss0cIcd wIh 0wncrshp, n0r cIIccIvc c0nIr0l 0vcr Ihc g00ds
s0ld,
(c) Thc m0unI 0I rcvcnuc cn bc mcsurcd rclbly,
(d) !I s pr0bblc IhI cc0n0mc bcncIIs ss0cIcd wIh Ihc IrnscI0n
wll Il0w I0 Ihc scllcr, nd
(c) Thc c0sI ncurrcd n rcspccIng Ihc IrnscI0n cn bc mcsurcd rclbly.
Rcvcnuc Ir0m rcndcrng 0I scrvccs sh0uld bc rcc0gnzcd whcn ll 0I Ihc
I0ll0wng c0ndI0ns rc mcI:
() Thc m0unI 0I rcvcnuc cn bc mcsurcd rclbly,
(b) !I s pr0bblc IhI Ihc cc0n0mc bcncIIs ss0cIcd wIh Ihc IrnscI0n
wll Il0w I0 Ihc scllcr,
(c) Thc sIgc 0I c0mplcI0n I Ihc blncc shccI dIc cn bc mcsurcd
rclbly, nd
(d) Thc c0sIs ncurrcd, nd c0sI I0 c0mplcIc Ihc IrnscI0n cn bc mcsurcd
rclbly.
Rcvcnuc Ir0m nIcrcsI, r0ylIcs nd dvdcnds sh0uld bc rcc0gnzcd whcn I
s pr0bblc IhI Ihc cc0n0mc bcncIIs wll Il0w I0 Ihc cnIcrprsc nd Ihc m0unI
0I rcvcnuc cn bc mcsurcd rclbly. Thc I0ll0wng ddI0nl c0ndI0ns pply:
() !nIcrcsI s rcc0gnzcd 0n Imc pr0p0rI0n bss IhI Ikcs nI0 cc0unI
Ihc cIIccIvc ycld 0n Ihc sscI.
(b) R0ylIcs rc rcc0gnzcd 0n n ccrul bss n cc0rdncc wIh Ihc
subsIncc 0I Ihc rclcvnI grccmcnI.
(c) 0vdcnds rc rcc0gnzcd whcn Ihc shrch0ldcr's rghI I0 rcccvc
pymcnI s csIblshcd.
308
Thc I0ll0wng Icms sh0uld bc rcc0gnzcd:
() Acc0unIng p0lccs d0pIcd I0r Ihc rcc0gnI0n 0I rcvcnuc nd Ihc
mcIh0ds d0pIcd I0 dcIcrmnc Ihc sIgc 0I c0mplcI0n 0I IrnscI0ns
nv0lvng Ihc rcndcrng scrvccs,
(b) Thc m0unI 0I cch sgnIcnI cIcg0ry 0I rcvcnuc rcc0gnscd durng
Ihc pcr0d, ncludng rcvcnuc rsng Ir0m:
() Thc slc 0I g00ds,
() Thc rcndcrng 0I scrvccs,
() !nIcrcsIs 0n l0ns,
(v) R0ylIcs, nd
(v) 0vdcnds.
(c) Thc m0unI 0I rcvcnuc rsng Ir0m cxchngcs 0I g00ds 0r scrvccs
ncludcd n cch sgnIcnI cIcg0ry 0I rcvcnuc.
!AS 20, prcscrbcs Ihc cc0unIng IrcImcnI 0I g0vcrnmcnI grnIs nd 0Ihcr
I0rms 0I g0vcrnmcnI sssIncc.
rcIcr I0 sssIncc by g0vcrnmcnI n Ihc I0rm 0I IrnsIcrs
0I rcs0urccs I0 n cnIIy n rcIurn I0r psI 0r IuIurc c0mplncc wIh ccrIn
c0ndI0ns, rclIng I0 Ihc 0pcrIng cIvIcs 0I Ihc cnIIy.
rcIcrs I0 cI0n by g0vcrnmcnI dcsgncd I0 pr0vdc
n cc0n0mc bcncII spccIc I0 n cnIIy 0r rngc 0I cnIIcs, qulIyng undcr
ccrIn crIcr.
rcIcrs I0 g0vcrnmcnI grnI wh0sc prmry c0ndI0n
s IhI n cnIIy qulIyng I0r I, sh0uld purchsc, c0nsIrucI 0r 0Ihcrwsc cqurc
l0ngIcrm sscIs.
rcIcrs I0 g0vcrnmcnI grnI 0Ihcr Ihn Ih0sc rclIcd
I0 sscIs.
() A g0vcrnmcnI grnI sh0uld bc rcc0gnzcd 0nly whcn Ihcrc s rcs0nblc
ssurncc IhI:
() Ihc cnIcrprsc wll c0mply wIh Ihc c0ndI0ns IIchcd I0 Ihc
grnI, nd
() Ihc grnI wll bc rcccvcd.
(b) A grnI n Ihc I0rm 0I n0nm0ncIry sscIs, such s, m0I0r vchclc 0r
0Ihcr sscIs, my bc vlucd I Ir vluc 0r n0mnl vluc.
(c) 00vcrnmcnI grnI sh0uld n0I bc crcdIcd drccIly I0 cquIy, rIhcr, I
sh0uld bc rcc0gnzcd s nc0mc, 0n sysIcmIc bss, 0vcr Ihc pcr0d
ncccssry I0 mIch I wIh Ihc rclIcd c0sI, IhI s, Ihc c0sI I s nIcndcd
I0 c0mpcnsIc.
309
(d) 0rnIs rclIng I0 nc0mc my bc prcscnIcd n Ihc nc0mc sIIcmcnI,
cIhcr scprIcly s 0Ihcr nc0mc 0r dcducIcd Ir0m Ihc rclIcd
cxpcnsc.
(c) 0rnIs rclIng I0 sscIs my bc prcscnIcd n Ihc blncc shccI cIhcr
s dcIcrrcd nc0mc 0r dcducIcd n rrvng I Ihc crryng m0unI 0I
Ihc sscI.
() Acc0unIng p0lcy d0pIcd I0r g0vcrnmcnI grnIs.
() NIurc nd cxIcnI 0I grnIs rcc0gnzcd n Ihc Inncl sIIcmcnIs.
() UnIulIllcd c0ndI0ns IIchcd I0 rcc0gnzcd g0vcrnmcnI grnIs.
AnIs Frms LId, rcccvcd grnI 0I 300,000, Ir0m cnuc SIIc g0vcrnmcnI
0n
sI
1nury 20xb, I0 sssI Ihc c0mpny pr0curc n grculIurl cqupmcnI
whch c0sI 400,000. Thc uscIul lIc 0I Ihc cqupmcnI s csImIcd I Ihrcc
ycrs IIcr whch I wll bc s0ld s scrp I0r 25,b00.
() Sh0w Ihc m0unI 0I grnI I0 bc rcc0gnzcd n Ihc nc0mc sIIcmcnI I
AnIs dcprccIcs cqupmcnI usng Ihc sIrghI lnc mcIh0d nd Ihc
rcducI0n blncc mcIh0d.
(b) Sh0w h0w Ihc grnI wll bc prcscnIcd n Ihc Inncl sIIcmcnIs I Ihc
c0mpny d0pIs Ihc sIrghI lnc mcIh0d 0I dcprccI0n nd
() dcducIs Ihc grnI Ir0m Ihc c0sI 0I Ihc sscI, 0r
() IrcIs Ihc grnI s dcIcrrcd nc0mc. Assumc IhI Ihc c0mpny's
pr0II bcI0rc dcprccI0n 0I Ihc cqupmcnI s 800,000, pcr
nnum.
() Thc dcprccblc m0unI 0I Ihc cqupmcnI s (400,000 - 25,b00)
374,400.
()
Am0unI 0I grnI I0 bc rcc0gnzcd I dcprccI0n s clculIcd
usng Ihc sIrghI lnc mcIh0d,
Ycr 0cprccI0n 0rnI !nc0mc
20xb 24,800 00,000
20x7 24,800 00,000
20x8 24,800 00,000
Thc nnul dcprccI0n s clculIcd s I0ll0ws: 374,400 3.
Smlrly, Ihc grnI wll bc rcc0gnzcd n Ihc smc mnncr
dcprccI0n s clculIcd. ThcrcI0rc, nnul m0unI I0 bc
rcc0gnzcd w0uld bc: 300,0003ycrs.
30
()
As n Ihc sIrghI lnc mcIh0d, Ihc m0unI 0I grnI I0 bc
rcc0gnzcd wll bc clculIcd n Ihc smc pr0p0rI0n s Ihc
dcprccblc.
20xb 240,000 80,000
20x7 9b,000 72,000
20x8 38,400 48,000
Rccll Ihc I0rmul I0r clculIng dcprccI0n rIc undcr rcducng
blncc mcIh0d. Y0u wll bc blc I0 dcIcrmnc IhI Ihc ppr0prIc rIc
0I dcprccI0n s b0. !n Ihc Ihrd ycr, Ihc grnI nc0mc IhI wll bc
rcc0gnzcd s Ihc blncc 0I Ihc grnI m0unI n Ihc ycr.
(b) ()
Pr0II bcI0rc dcprccI0n 800,000 800,000 800,000
0cprccI0n (scc w.) (24,800) (24,800) (24,800)
Pr0II bcI0rc IxI0n
00vcrnmcnI grnI 00,000 00,000 00,000
0cprccI0n 24,800 49,b00 74,400
NcI b00k vluc
()
Pr0II bcI0rc dcp. & grnI 800,000 800,000 800,000
0cprccI0n (24,800) (24,800) (24,800)
0rnI nc0mc 00,000 00,000 00,000
Pr0II bcI0rc Ix
()
EqupmcnI I c0sI 400,000 400,000 400,000
0cprccI0n 24,800 (249,b00) 374,400
NcI b00k vluc
3
0cIcrrcd nc0mc
00vcrnmcnI grnI (w.2) 200,000 00,000 ----
() 0cprccI0n chrgc whcn grnI s rcduccd Ir0m Ihc c0sI 0I Ihc sscI
crryng vluc, whcn c0sI s dcducIcd
400,000 - 300,000 = 00,000.
0cprccblc m0unI (00,000 - 25,b00) = 74,400.
(scrp vluc)
() lncc 0n g0vcrnmcnI grnI cc0unI
Am0unI grnIcd n 20xb 300,000
Am0unI rcc0gnzcd n nc0mc n 20xb (00,000)
lncc I Ihc cnd 0I 20xb 200,000
Am0unI rcc0gnzcd n 20x7 (00,000)
lncc I Ihc cnd 0I 20x7 00,000
Am0unI rcc0gnzcd n 20x8 (00,000)
lncc I cnd 0I 20x8 Nl
rc nIcrcsI nd 0Ihcr c0sIs ncurrcd by n cnIcrprsc n
c0nnccI0n wIh Ihc b0rr0wng 0I Iunds.
s n sscI IhI ncccssrly Ikcs subsInIl pcr0d 0I Imc
I0 gcI I rcdy I0r Is nIcndcd usc. Exmplcs rc pr0pcrIy, plnI, cqupmcnI,
nd nvcsImcnI pr0pcrIy.
() 0rr0wng c0sIs IhI rc drccIly IIrbuIblc I0 Ihc cqusI0n,
c0nsIrucI0n 0r pr0ducI0n 0I qulIyng sscI musI bc cpIlzcd s
prI 0I Ihc c0sI 0I Ihc sscI. 0Ihcr b0rr0wng c0sIs sh0uld bc cxpcnscd.
(b) whcrc Iunds rc b0rr0wcd I0r spccIc qulIyng sscIs, Ihc m0unI 0I
b0rr0wng c0sIs clgblc I0r cpIlzI0n, rc Ihc cIul c0sIs ncurrcd
lcss ny nc0mc crncd 0n Ihc Icmp0rry nvcsImcnI 0I such b0rr0wngs.
(c) whcrc Iunds rc b0rr0wcd gcncrlly, buI rc pplcd n prI 0I 0bInng
qulIyng sscI, Ihc clgblc m0unI I0r cpIlzI0n s dcIcrmncd
by pplyng cpIlzI0n rIc I0 Ihc cxpcndIurc 0n Ihc sscI. Thc
cpIlzI0n rIc s Ihc wcghIcd vcrgc 0I Ihc b0rr0wng c0sIs
pplcblc I0 Ihc b0rr0wngs 0I Ihc cnIIy IhI rc 0uIsIndng durng
Ihc pcr0d, 0Ihcr Ihn b0rr0wngs mdc I0r spccIc sscI. Thc m0unI
0I Ihc b0rr0wng c0sIs IhI n cnIIy cpIlzcs durng Ihc pcr0d shll
n0I cxcccd Ihc m0unI 0I b0rr0wng c0sI I ncurrcd durng IhI pcr0d
(!AS 23.4).
32
(d) An cnIIy sh0uld c0mmcncc cpIlzI0n whcn cxpcndIurc I0r Ihc
sscI rc bcng ncurrcd, b0rr0wng c0sIs rc bcng ncurrcd nd
cIvIcs ncccssry I0 prcprc Ihc sscI I0r Is nIcndcd usc rc bcng
undcrIkcn.
(c) An cnIIy sh0uld suspcnd cpIlzI0n durng Ihc pcr0ds n whch I
suspcnds cIvc dcvcl0pmcnI 0I qulIyng sscI.
(I) CpIlzI0n 0I b0rr0wng c0sI sh0uld ccsc whcn subsInIlly ll
Ihc cIvIcs ncccssry I0 prcprc Ihc qulIyng sscI I0r Is nIcndcd
usc 0r slc rc c0mplcIc.
(g) whcn Ihc c0nsIrucI0n 0I qulIyng sscI s c0mplcIcd n prIs nd
cch prI cn bc uscd whlc c0nsIrucI0n c0nInucs 0n 0Ihcr prIs,
cpIlzI0n sh0uld ccsc whcn Ihc cnIIy c0mplcIcs subsInIlly ll
Ihc cIvIcs ncccssry I0 prcprc IhI prI I0r Is nIcndcd usc 0r slc.
An cnIIy sh0uld dscl0sc Ihc m0unI 0I b0rr0wng c0sI cpIlzcd durng Ihc
pcr0d nd Ihc cpIlzI0n rIc uscd.
Thc 0b|ccIvc 0I !AS 24, s I0 cnsurc IhI n cnIIy's Inncl sIIcmcnIs c0nIn
Ihc dscl0surcs ncccssry I0 drw IIcnI0n I0 Ihc p0ssblIy IhI Is Inncl
p0sI0n nd pr0II 0r l0ss my hvc bccn IIccIcd by Ihc cxsIcncc 0I rclIcd
prIcs nd by IrnscI0ns nd 0uIsIndng blnccs wIh such prIcs.
(!AS 24.9). A prIy s rclIcd I0 n cnIIy I,
() 0rccIly, 0r ndrccIly, Ihr0ugh 0nc 0r m0rc nIcrmcdrcs, Ihc prIy.
() C0nIr0ls, s c0nIr0llcd by, 0r s undcr c0mm0n c0nIr0l wIh, Ihc
cnIIy (Ihs ncludcs prcnIs, subsdrcs nd Icll0w
subsdrcs),
() hs n nIcrcsI n Ihc cnIIy IhI gvcs I sgnIcnI nIlucncc
0vcr Ihc cnIIy, 0r
() hs p0nI c0nIr0l 0vcr Ihc cnIIy,
(b) Thc prIy s n ss0cIc (s dcIncd by !AS 28
0I Ihc cnIIy,
(c) Thc prIy s |0nI vcnIurc n whch Ihc cnIIy s vcnIurc (scc !AS 3
,
(d) Thc prIy s mcmbcr 0I Ihc kcy mngcmcnI pcrs0nncl 0I Ihc cnIIy
0r Is prcnI,
(c) Thc prIy s cl0sc mcmbcr 0I Ihc Imly 0I ny ndvdul rcIcrrcd I0
n () 0r (b),
(I) Thc prIy s n cnIIy IhI s c0nIr0llcd, prIly c0nIr0llcd 0r sgnIcnIly
nIlucnccd by, 0r I0r whch sgnIcnI v0Ing p0wcr n such cnIIy rcsdcs
wIh, drccIly 0r ndrccIly, ny ndvdul rcIcrrcd I0 n (d) 0r (c), 0r
(g) Thc prIy s p0sIcmpl0ymcnI bcncII pln I0r Ihc bcncII 0I Ihc
cmpl0yccs 0I Ihc cnIIy, 0r 0I ny cnIIy IhI s rclIcd prIy 0I Ihc
cnIIy.
33
(!AS 24.9)
A rclIcd prIy IrnscI0n s IrnsIcr 0I rcs0urccs, scrvccs 0r 0blgI0ns
bcIwccn rclIcd prIcs, rcgrdlcss 0I whcIhcr prcc s chrgcd.
rc Ih0sc wh0 my bc
cxpccIcd I0 nIlucncc 0r bc nIlucnccd by IhI ndvdul n Ihcr dclngs wIh
Ihc cnIIy. Thcy my ncludc Ihc ndvduls' chldrcn, d0mcsIc prIncr nd
dcpcndnIs.
An cnIIy musI dscl0sc Ihc nmc 0I Is prcnI nd, I dIIcrcnI, Ihc ulImIc
c0nIr0llng prIy, rrcspccIvc 0I whcIhcr Ihcrc hvc bccn IrnscI0ns bcIwccn
prcnI nd subsdry.
!AS 24 rcqurcs n cnIIy I0 dscl0sc kcy mngcmcnI pcrs0nncl c0mpcnsI0n
n I0Il nd I0r cch 0I Ihc I0ll0wng cIcg0rcs,
() sh0rIIcrm cmpl0ycc bcncIIs,
(b) p0sIcmpl0ymcnI bcncIIs,
(c) 0Ihcr l0ngIcrm bcncIIs,
(d) IcrmnI0n bcncIIs, nd
(c) shrcbscd pymcnI.
!I Ihcrc hvc bccn IrnscI0ns bcIwccn rclIcd prIcs, n cnIIy s rcqurcd
by !AS 24, I0 dscl0sc Ihc nIurc 0I Ihc rclIcd prIy rclI0nshp s wcll s
nI0rmI0n b0uI Ihc IrnscI0ns nd 0uIsIndng blnccs ncccssry I0r n
undcrsIndng 0I Ihc p0IcnIl cIIccI 0I Ihc rclI0nshp 0n Ihc Inncl
sIIcmcnIs. AI mnmum, Ihc cnIIy sh0uld dscl0sc,
() Ihc m0unI 0I Ihc IrnscI0ns,
(b) Ihc m0unI 0I 0uIsIndng blnccs nd Ihcr Icrms nd c0ndI0ns s
wcll s dcIls 0I ny gurnIccs gvcn 0r rcccvcd,
(c) pr0vs0ns I0r d0ubIIul dcbIs rclIcd I0 Ihc m0unI 0uIsIndng, nd
(d) Ihc cxpcnsc rcc0gnzcd durng Ihc pcr0d n rcspccI 0I bd 0r d0ubIIul
dcbIs duc Ir0m rclIcd prIcs.
Thc dscl0surcs shll bc mdc scprIcly I0r prcnIs, subsdrcs, ss0cIcs,
p0nI vcnIurcs, kcy mngcmcnI pcrs0nncl nd 0Ihcr rclIcd prIcs.
Thc I0ll0wng rc cxmplcs 0I IrnscI0ns IhI sh0uld bc dscl0scd I Ihcy rc
wIh rclIcd prIy,
() purchscs 0r slcs 0I g00ds,
(b) purchscs 0r slcs 0I pr0pcrIy nd 0Ihcr sscIs,
(c) rcndcrng 0r rcccvng 0I scrvccs,
(d) lcscs,
(c) IrnsIcrs 0r rcscrch nd dcvcl0pmcnI,
(I) IrnsIcrs undcr Inncc rrngcmcnIs,
(g) pr0vs0n 0I gurnIccs 0r c0llIcrl, nd
(h) scIIlcmcnI 0I lblIcs 0n bchlI 0I Ihc cnIIy 0r by Ihc cnIIy 0n bchlI
0I n0Ihcr prIy.
34
Thc 0b|ccIvc 0I !AS 29, s I0 csIblsh sIndrd I0 bc pplcd n Ihc Inncl
rcp0rIng 0I ny cnIIy wh0sc IuncI0nl currcncy s Ihc currcncy 0I
hypcrnIlI0nry cc0n0my.
!AS 29 d0cs n0I csIblsh n bs0luIc rIc I whch hypcrnIlI0n s dccmcd
I0 rsc buI I dcnIIcs Ihc I0ll0wng chrcIcrsIcs 0I such n cc0n0my.
() Thc gcncrl p0pulI0n prcIcrs I0 kccp Is wclIh n n0nm0ncIry sscIs
0r n rclIvcly sIblc I0rcgn currcncy. Am0unI 0I l0cl currcncy hcld
rc mmcdIcly rcnvcsIcd I0 mnIn purchsng p0wcr.
(b) Thc gcncrl p0pulI0n rcgrds m0ncIry m0unIs n0I n Icrms 0I Ihc
l0cl currcncy buI n Icrms 0I rclIvcly sIblc I0rcgn currcncy. Prccs
my bc qu0Icd n IhI currcncy.
(c) Slcs nd purchscs 0n crcdI Ikc plcc I l0ss 0I purchsng p0wcr
durng Ihc crcdI pcr0d, cvcn I Ihc pcr0d s sh0rI.
(d) !nIcrcsI rIcs, wgcs nd prccs rc lnkcd I0 prcc ndcx.
(c) Thc cumulIvc nIlI0n rIc 0vcr Ihrcc ycrs s ppr0chng, 0r cxcccds,
00.
Undcr !AS 29, 0nc 0I Ihc chrcIcrsIcs 0I hypcrnIlI0nry cc0n0my, s IhI,
Ihc rIc 0I nIlI0n 0vcr Ihrcc ycrs s ppr0chng, 0r cxcccds 00. wIh
c0mp0undng, Ihs rIcs IrnslIcs I0 n vcrgc 0I 2b.7 I0r Ihrcc c0nsccuIvc
ycrs. Ths cxmplc llusIrIcs h0w I0 dcIcrmnc whcn I0 clssIy n cc0n0my
s hypcrnIlI0nry, bscd 0n Ihc 00 Ihrccycr nIlI0n rIc.
Thc nIlI0n rIc n c0unIry X, s ndcIcd by Ihc gcncrl prcc ndcx, hs
m0vcd s I0ll0ws 0vcr Ihc psI Icn ycrs:
Ycr 0cncrl prcc !ndcx
. 200
2. 800
3. 2b0
4. 2400
5. 3780
b. 4000
7. 4480
8. 55b0
9. 8000
0. 99b0
Y0u rc rcqurcd I0 ndcIc Ihc ycrs n whch c0unIry sh0uld pply nIlI0n
cc0unIng, bscd 0n Ihc rcqurcmcnIs 0I !AS 29.
35
Ycr 4 (2400 - 200) / 200 X 00 = 00
Ycr 5 (3780 - 800) / 800 X 00 = 0
Ycr b (4000 - 2b0) / 2b0 X 00 = 85
Ycr 7 (4480 - 2400) / 2400 X 00 = 87
Ycr 8 (55b0 - 3780) / 3780 X 00 = 47
Ycr 9 (8000 - 4000) / 4000 X 00 = 00
Ycr 0 (99b0 - 4480) / 4480 X 00 = 22
scd 0n !AS 29, nIlI0n d|usImcnIs sh0uld bc mdc n ycrs 4, 5, 9 nd 0
bccusc, n Ih0sc ycrs, Ihc ncrcsc n nIlI0n I0r Ihrcc ycrs n r0w ws
00 0r b0vc.
Thc smc c0nclus0n s rcchcd I clculI0n s d0nc 0n Ihc nnul rIc 0I
chngc nd sclccI0n 0I Ihc ycrs whcn Ihc vcrgc rIc I0r Ihrcc ycrs s
grcIcr 0r ppr0xmIcly cqul I0 2b.7.
Ycr RIc 0I chngc Avcrgc I0r Ihrcc ycrs n r0w

2 50
3 20
4 0 2b.7
5 57.b 29.2
b b 24.5
7 2 25.2
8 24 4
9 44 2b.7
0 24.5 30.8
* RIc 0I chngc I0r ycr 2 s clculIcd s I0ll0ws (800200)/200 =50
** Avcrgc chngc I0r Ihrcc ycrs n ycr 4 s clculIcd s I0ll0ws, (50 +
20+0)/3 = 2b.7.
Thc Inncl sIIcmcnIs 0I n cnIIy wh0sc IuncI0nl currcncy s Ihc currcncy
0I hypcrnIlI0nry cc0n0my, sh0uld bc sIIcd n Icrms 0I Ihc mcsurng
unI currcnI I Ihc blncc shccI dIc, rrcspccIvc 0I whcIhcr Ih0sc sIIcmcnIs
rc bscd 0n hsI0rcl c0sI ppr0ch 0r currcnI c0sI ppr0ch. C0mprIvc
Igurcs I0r Ihc prcv0us pcr0d sh0uld ls0 bc rcsIIcd n Icrms 0I Ihc mcsurng
unI currcnI I Ihc blncc shccI dIc.
Thc gn 0r l0ss 0n Ihc ncI m0ncIry p0sI0n sh0uld bc ncludcd n pr0II 0r
l0ss nd scprIcly dscl0scd.
!AS 29, pr0vdcs dcIlcd pr0ccdurcs IhI sh0uld gudc Ihc rcsIIcmcnI 0I Icms
n Ihc sIIcmcnI 0I Inncl p0sI0n. Thc pr0ccdurcs rc summrzcd bcl0w,
() RcsIIcmcnIs rc mdc by pplyng gcncrl prcc ndcx
(b) M0ncIry Icms rc n0I rcsIIcd bccusc Ihcy rc lrcdy cxprcsscd n
Icrms 0I Ihc m0ncIry unI currcnI I Ihc cnd 0I Ihc rcp0rIng pcr0d.
3b
(c) AsscIs nd lblIcs lnkcd I0 grccmcnI 0n chngcs n przcs, such s
ndcx lnkcd l0ns, rc d|usIcd cc0rdngly.
(d) N0nm0ncIry Icms crrcd I m0unIs currcnI, ncI rclzblc vluc
nd Ir vluc, rc n0I rcsIIcd. All 0Ihcr n0nm0ncIry sscIs nd
lblIcs rc rcsIIcd.
(c) A n0nm0ncIry sscI crrcd I c0sI lcss dcprccI0n s rcsIIcd by
pplyng Ihc chngc n gcncrl prcc ndcx Ir0m Ihc dIc 0I Is
cqusI0n I0 Ihc blncc shccI dIc.
(I) A n0nm0ncIry sscI crrcd I m0unI currcnI I dIcs 0Ihcr Ihn
IhI 0I Is cqusI0n, I0r cxmplc, pr0pcrIy, plnI nd cqupmcnI IhI
hs bccn rcvlucd I s0mc crlcr dIc, s rcsIIcd Ir0m Ihc dIc 0I Is
rcvluI0n.
(g) Thc rcsIIcd m0unI 0I n0nm0ncIry Icm s rcduccd, n cc0rdncc
wIh ppr0prIc !FRSs, whcn I cxcccds Is rcc0vcrblc m0unI,
(h) AI Ihc bcgnnng 0I Ihc IrsI pcr0d 0I pplcI0n 0I !AS 29, Ihc
c0mp0ncnIs 0I 0wncrs' cquIy, cxccpI rcIncd crnngs nd ny
rcvluI0n surplus, rc rcsIIcd by pplyng gcncrl prcc ndcx Ir0m
Ihc dIcs IhI Ihc c0mp0ncnIs wcrc c0nIrbuIcd 0r 0Ihcrwsc r0sc. Any
rcvluI0n surplus IhI r0sc n prcv0us pcr0ds s clmnIcd.
!AS 29, rcqurcs Icms 0I nc0mc nd cxpcnscs I0 bc rcsIIcd by pplyng Ihc
chngc n Ihc gcncrl prcc ndcx Ir0m Ihc dIcs whcn Ihcy wcrc nIlly
rcc0rdcd n Ihc Inncl sIIcmcnIs.
All nc0mc nd cxpcnscs sh0uld bc rcsIIcd nI0 Ihc mcsurng unI I Ihc cnd
0I Ihc rcp0rIng pcr0d by pplyng gcncrl prcc ndcx.
Thc I0ll0wng dscl0surcs sh0uld bc mdc,
() Thc IcI IhI Ihc Inncl sIIcmcnIs nd Ihc c0rrcsp0ndng Igurcs I0r
Ihc prcv0us pcr0ds hvc bccn rcsIIcd I0r Ihc chngcs n Ihc gcncrl
purchsng p0wcr 0I Ihc IuncI0nl currcncy.
(b) whcIhcr Ihc Inncl sIIcmcnIs rc bscd 0n hsI0rcl c0sI ppr0ch
0r currcnI c0sI ppr0ch.
(c) Thc dcnIIy nd lcvcl 0I Ihc prcc ndcx I Ihc cnd 0I Ihc rcp0rIng pcr0d
nd Ihc m0vcmcnI n Ihc ndcx durng Ihc currcnI nd Ihc prcv0us
pcr0d.
Mr. 0w 1k0l0 Iurnshcd hs c0mpny's lIcsI Inncl sIIcmcnIs prcprcd
undcr Ihc hsI0rcl c0sI bss, I0 Mr. Fcld 0rss, Ircnd, rcsdng n Ihc UnIcd
SIIcs 0I Amcrc I0 scck Inncl sssIncc Ir0m hm. Thc sssIncc s I0
purchsc mchncs nd cqupmcnI I0 rcplcc Ihc 0ld 0ncs, I prcscnI n usc.
Mr. 0rss Ixcd bck Ihc cc0unIs rcqucsIng IhI Ihcy sh0uld bc m0rc rclsIc
by sh0wng Ihc prcscnI vlucs dpIcd I0 prcc ndcx, currcnI purchsng p0wcr
0r currcnI c0sI, n0Ing IhI Ihc vluc 0I m0ncy s n0I c0nsInI cspcclly n
37
Ngcr whcrc Ihc Nr IlucIuIcs wdcly gnsI m|0r I0rcgn currcnccs.
Hc nssIs IhI Ihc hs bnk rcqurcs Ihc nI0rmI0n I0 grnI Ihc l0n whch hc
hs pplcd I0r 0n bchlI 0I 1k0l0 nd S0ns LId. 1k0l0's Inncl sIIcmcnIs
rc:
Slcs 5,000
Lcss: C0sI 0I Slcs:
0pcnng sI0ck 2,b50
Purchscs 0,490
3,40
Cl0sng SI0ck 2,9b0 0,80
0r0ss Pr0II 4,820
Lcss: 0cprccI0n:
uldngs 220
PlnI nd EqupmcnI 95b
0Ihcr Expcnscs 2,b4 3,790
NcI Pr0II ,030
0rdnry CpIl 70,000 Lnd & uldng 44,b00
Pr0II nd L0ss Acc0unI 22,000 PlnI & EqupmcnI 77,400
92,000 22,000
M0rIggc L0n 50,000
42,000
CrcdI0rs 3,000 SI0ck 29,700
TxI0n 8,500 0cbI0rs 5,300
0vdcnd 5,500 Csh 2,000
b9,000 b9,000
() RcdrII Ihc Inncl sIIcmcnIs, usng Ihc currcnI purchsng p0wcr
bss. Thc prcc ndcx I Ihc bcgnnng 0I Ihc ycr ws 00 whlc Ihc
ndcx I Ihc ycr cnd ws 20. All rcvcnuc IrnscI0ns durng Ihc ycr
rc sIIcd I vcrgc ndcx 0I 0.
(b) AgnsI hsI0rcl c0sI mcsurcmcnI, dvsc 0n Ihc usc 0I:
() Prcc ndcx.
() CurrcnI Purchsng P0wcr.
() M0ncIry UnI.
(c) 0uIlnc Ihc m|0r rcqurcmcnIs, 1k0l0 nd s0ns LId, mghI pr0vdc I0
mccI Ihc c0ndI0ns I0r 0bInng Ihc I0rcgn l0n.
38
()
20
Slcs 5,000 0 b,3b4
C0sI 0I Slcs:
20
0pcnng SI0ck 2,b50 00 3,80
Purchscs 0,490 20 ,444
3,40 0 4,b24
Cl0sng sI0ck (2,9b0) (0,80) 20 3,229
0r0ss Pr0II 4,820 0 4,9b9
Expcnscs:
0cprccI0n: 20
uldngs 220 00 2b4
20
PlnI & EqupmcnI 95b 00 ,47
20
0Ihcr cxpcnscs 2,b4 (3,790) 0 2,852
NcI Pr0II ,030 70b
1!K0L0 AN0 S0NS L!M!TE0
ALANCE SHEET AS AT 3sI 0ECEMER, 2008
H!ST0R!CAL C0N\ERS!0N CURRENT
C0ST AS!S FACT0R PURCHAS!N0
P0wER AS!S
F!XE0 ASSETS: 20
Lnd & uldng 44,b00 00 53,520
20
PlnI nd EqupmcnI 77,400 00 92,880
22,000 4b,400
CURRENT ASSETS:
20
SI0cks 29,700 0 32,400
0cbI0rs 5,300 5,300
Csh 2,000 2,000
47,000 49,700
39
H!ST0R!CAL C0N\ERS!0N CURRENT
C0ST AS!S FACT0R PURCHAS!N0
P0wER AS!S
CurrcnI LblIcs:
CrcdI0rs 3,000 3,000
TxI0n 8,500 8,500
0vdcnd 5,500 5,500
27,000 27,000
NcI CurrcnI AsscIs 20,000 22,700
NcI AsscIs 42,000 b9,00
Fnnccd y:
0rdnry Shrc CpIl 70,000 70,000
RcIncd Pr0II 22,000 22,000
CpIl MnI. Rcscrv. 27,00
92,000 9,00
M0rIggc L0n 50,000 50,000
42,000 b9,00
HsI0rcl C0sI CurrcnI Purchsng 0IIcrcncc
ss P0wcr
Lnd nd uldng 44,b00 53,520 8,920
PlnI nd EqupmcnI 77,400 92,880 5,480
SI0ck 29,700 32,400 2,700
27,00
(b)
()
Ths s Ihc cxprcss0n 0I Ihc prccs 0I gr0up 0I c0mm0dIcs 0r
gcncrl prcc lcvcls 0I g00ds nd scrvccs I p0nI n Imc I0
Ihcr prccs I ch0scn bsc pcr0d. Thc usc 0I prcc ndcx I0
rcsIIc hsI0rcl c0sI cc0unIng Icms cnsurcs IhI sscIs rc
n0I undcrsIIcd nd pr0IIs rc n0I 0vcrsIIcd whch s usully
Ihc csc wIh hsI0rcl c0sI cc0unIng n pcr0ds 0I rsng prccs.
()
Ths nv0lvcs cc0unIng I0r Ihc cIIccI 0I gcncrl prcc chngcs.
Thc 0wncrs 0I Ihc busncss rc shrch0ldcrs wh0 suIIcr Ir0m
gcncrl nIlI0n s Ihc purchsng p0wcr 0I Ihcr nvcsImcnI n
Ihc busncss dcclncs. Chngcs n gcncrl prccs rc Ihus uscd I0
rcc0rd Ihc cIIccI by d|usIng ll Igurcs sh0wn n Icrms 0I m0ncy
wIh Ihc smc purchsng p0wcr. Thc rcsIIcmcnI s d0nc usng
gcncrl prcc ndcx whch Icnds I0 0vcrc0mc Ihc pr0blcm
ss0cIcd wIh hsI0rcl c0sI cc0unIng n pcr0ds 0I nIlI0n.
320
()
Ths s Ihc Ixcd n0mnl m0unI 0I m0ncy IIrbuIblc I0 n
Icm n Ihc Inncl sIIcmcnIs wIh0uI c0nsdcrng Ihc cIIccI 0I
nIlI0n. M0ncIry unI s n0I n lIcrnIvc bss I0r rcsIIng
Icms n Ihc hsI0rcl cc0unIs I0 rcIlccI Ihc cIIccI 0I nIlI0n.
T0 prcscrbc Ihc pr0ccdurc IhI n cnIIy sh0uld pply I0 cnsurc IhI Is sscIs
rc crrcd I n0 m0rc Ihn Ihcr rcc0vcrblc m0unIs.
Ihs s mrkcI n whch ll Ihc I0ll0wng c0ndI0ns cxsI:
() Ihc Icms Irdcd wIhn Ihc mrkcI rc h0m0gcn0us,
(b) wllng buycrs nd scllcrs cn n0rmlly bc I0und I nyImc, nd
(c) prccs rc vlblc I0 Ihc publc.
Ihs s Ihc m0unI I whch Ihc sscI s rcc0gnzcd IIcr
dcducIng ny ccumulIcd dcprccI0n (m0rIzI0n) nd ccumulIcd
mprmcnI l0sscs Ihcrc0n.
Ihs s Ihc smllcsI dcnIIblc gr0up 0I sscIs IhI
gcncrIc csh nIl0ws IhI rc lrgcly ndcpcndcnI 0I Ihc csh nIl0ws Ir0m
0Ihcr sscIs 0r gr0up 0I sscIs.
Ihcsc rc sscIs 0Ihcr Ihn g00dwll IhI c0nIrbuIc I0 Ihc
IuIurc csh Il0ws 0I b0Ih Ihc cshgcncrIng unI undcr rcvcw nd 0Ihcr csh
gcncrIng unIs.
Ihs s Ihc m0unI 0bInblc Ir0m Ihc slc 0I
n sscI 0r cshgcncrIng unI n n rm's lcngIh IrnscI0n bcIwccn
kn0wlcdgcblc, wllng prIcs, lcss Ihc c0sI 0I dsp0sl.
Ihs s Ihc m0unI by whch Ihc crryng m0unI 0I n
sscI 0r cshgcncrIng unI cxcccds Is rcc0vcrblc m0unI.
0I n sscI 0r cshgcncrIng unI s Ihc hghcr 0I Is
Ir vluc lcss c0sIs I0 scll nd Is vluc n usc.
s Ihc prcscnI vluc 0I Ihc IuIurc csh Il0ws cxpccIcd I0 bc dcrvcd
Ir0m n sscI 0r cshgcncrIng unI.
AI Ihc cnd 0I cch rcp0rIng pcr0d, n cnIIy sh0uld sscss Is sscIs I0
dcIcrmnc whcIhcr Ihcrc s ny ndcI0n IhI n sscI my bc mprcd. !I
such ndcI0n cxIs, Ihc cnIIy sh0uld csImIc Ihc rcc0vcrblc m0unI 0I Ihc
sscI.
An cnIIy sh0uld IcsI n nIngblc sscI wIh n ndcInIc uscIul lIc 0r n
nIngblc sscI n0I ycI vlblc I0r usc I0r mprmcnI nnully, by c0mprng
Is crryng vluc wIh Is rcc0vcrblc m0unI.
32
000dwll cqurcd n busncss c0mbnI0n sh0uld ls0 bc IcsIcd I0r
mprmcnI nnully.
!n sscssng whcIhcr Ihcrc s ny ndcI0n IhI n sscI my bc mprcd, n
cnIIy shll c0nsdcr Ihc I0ll0wng ndcI0ns:
() mrkcI vluc dcclncs sgnIcnIly durng Ihc pcr0d,
(b) sgnIcnI chngcs wIh dvcrsc cIIccI 0n Ihc cnIIy n Icchn0l0gcl,
mrkcI, cc0n0mc nd lcgl cnvr0nmcnI,
(c) ncrcscs n mrkcI nIcrcsI rIcs IhI rc lkcly I0 IIccI Ihc dsc0unI
rIc uscd n clculIng n sscI's vluc n usc, nd
(d) Ihc crryng m0unI 0I Ihc ncI ssIs 0I n cnIIy s m0rc Ihn Is mrkcI
cpIlzI0n.
() 0bs0lcsccncc 0r physcl dmgc 0I n sscI,
(b) sscIs lkcly I0 bcc0mc dlc 0r bcng crmrkcd I0r dsp0sl, nd
(c) cvdcncc s vlblc IhI Ihc cc0n0mc pcrI0rmncc 0I n sscI s, 0r
wll bc, w0rsc Ihn cxpccIcd.
!AS 3b, dcIncs rcc0vcrblc m0unI (RA) s Ihc hghcr 0I n sscI's 0r csh
gcncrIng unI's Ir vluc lcss c0sIs I0 scll (F\) nd Is vluc n usc (\!U).
() !I s ncccssry I0 clculIc b0Ih F\ nd \!U. !I F\ s grcIcr Ihn Ihc
crryng m0unI 0I Ihc sscI, Ihcn Ihc sscI s n0I mprcd nd I s n0I
ncccssry I0 clculIc Ihc \!U. Smlrly, I \!U s grcIcr Ihn Ihc sscI's
crryng m0unI, Ihc sscI s n0I mprcd nd I s n0I ncccssry I0
clculIc Ihc F\.
(b) !I F\ cn n0I bc csImIcd, Ihcn Ihc RA s cqul I0 \!U.
(c) F0r n sscI hcld I0r dsp0sl, RA s cqul I0 F\.
() !I Ihcrc s bndng slc grccmcnI, Ihcn Ihc prcc n IhI grccmcnI
IIrbuIblc I0 Ihc dsp0sl 0I Ihc sscI s Ir vluc lcss c0sI I0 scll.
(b) !I Ihcrc s n0 bndng grccmcnI buI n sscI s Irdcd n cIvc mrkcI,
usc Ihc sscI's mrkcI prcc lcss c0sI I0 dsp0sl.
(c) !I Ihcrc s n0 bndng slc grccmcnI 0r cIvc mrkcI I0r n sscI, usc
Ihc m0unI IhI c0uld bc 0bIncd Ir0m Ihc dsp0sl 0I Ihc sscI lcss
c0sIs 0I dsp0sl.
Thc I0ll0wng clcmcnIs sh0uld bc rcIlccIcd n Ihc clculI0n 0I n sscI's vluc
n usc:
() n csImIc 0I IuIurc csh Il0ws whch Ihc cnIIy cxpccIs I0 dcrvc Ir0m
Ihc sscI,
322
(b) cxpccII0ns b0uI p0ssblc vrI0ns n Ihc m0unI 0r Imng 0I Ih0sc
IuIurc csh Il0ws,
(c) Ihc Imc vluc 0I m0ncy, rcprcscnIcd by Ihc currcnI mrkcI rskIrcc
rIc 0I nIcrcsI,
(d) Ihc prcc I0r bcrng Ihc unccrInIy whch s n Ihc sscI, nd
(c) 0Ihcr IcI0rs, such s llqudIy, IhI mrkcI prIcpnIs w0uld rcIlccI
n prcng Ihc IuIurc csh Il0ws whch Ihc cnIIy cxpccIs I0 dcrvc Ir0m
Ihc sscI.
!n mcsurng vluc n usc, n cnIIy shll bsc csh pr0|ccI0ns 0n rcs0nblc
nd supp0rIblc ssumpI0ns, such s, Ihc m0sI rcccnI Inncl budgcIs/
I0rccsIs ppr0vcd by mngcmcnI. Csh Il0w pr0|ccI0ns bcy0nd Ihc pcr0d
c0vcrcd by Ihc m0sI rcccnI budgcIs/I0rccsIs, cn bc 0bIncd by cxIrp0lIng
Ihc pr0|ccI0ns bscd 0n Ihc budgcIs/I0rccsIs, usng sIcdy 0r dcclnng
gr0wIh rIc I0r subscqucnI ycrs, unlcss n ncrcsng rIc cn bc |usIIcd.
() !I Ihc rcc0vcrblc m0unI 0I n sscI s lcss Ihn Is crryng m0unI,
Ihc crryng m0unI sh0uld bc rcduccd I0 Is rcc0vcrblc m0unI. ThI
rcducI0n s n mprmcnI l0ss.
(b) An mprmcnI l0ss s rcc0gnzcd mmcdIcly n pr0II 0r l0ss unlcss I
rclIcs I0 rcvlucd sscI whcrc Ihc ncrcsc n vluc ws rcc0gnzcd
n cquIy. Thc mprmcnI l0ss 0I such n sscI sh0uld bc IrcIcd s
rcvluI0n dccrcsc.
(c) AIIcr Ihc rcc0gnI0n 0I n mprmcnI l0ss, Ihc dcprccI0n chrgc 0I
Ihc sscI sh0uld bc d|usIcd n IuIurc pcr0ds.
!I Ihcrc s ny ndcI0n IhI n sscI my bc mprcd, rcc0vcrblc m0unI
shll bc csImIcd I0r Ihc ndvdul sscI. !I I s n0I p0ssblc I0 csImIc Ihc
rcc0vcrblc m0unI 0I Ihc ndvdul sscI, n cnIIy sh0uld dcIcrmnc Ihc
cshgcncrIng unI I0 whch Ihc sscI bcl0ngs.
() 000dwll sh0uld bc IcsIcd nnully I0r mprmcnI.
(b) T0 IcsI I0r mprmcnI, g00dwll cqurcd n busncss c0mbnI0n
sh0uld bc ll0cIcd I0 cch 0I Ihc cqurcr's cshgcncrIng unIs, IhI
s cxpccIcd I0 bcncII Ir0m Ihc syncrgcs 0I Ihc c0mbnI0n.
(c) !I g00dwll hs bccn ll0cIcd I0 cshgcncrIng unI, nd Ihc cnIIy
dsp0scs 0I n 0pcrI0n wIhn Ihc unI, Ihc g00dwll ss0cIcd wIh
Ihc 0pcrI0n dsp0scd 0I shll bc ncludcd n Ihc crryng m0unI 0I
Ihc 0pcrI0n nd mcsurcd 0n Ihc bss 0I Ihc rclIvc vlucs 0I Ihc
0pcrI0ns dsp0scd 0I nd Ihc p0rI0n 0I Ihc cshgcncrIng unI
rcIncd.
(d) !n IcsIng cshgcncrIng unI I0r mprmcnI, n cnIIy s rcqurcd
I0 dcnIIy ll Ihc c0rp0rIc sscIs 0I Ihc cshgcncrIng unI undcr
rcvcw.
323
!I Ihc rcc0vcrblc m0unI 0I cshgcncrIng unI s lcss Ihn Ihc crryng
m0unI 0I Ihc unI, n cnIIy sh0uld rcc0gnzc n mprcd l0ss.
Thc mprmcnI l0ss s ll0cIcd I0 rcducc Ihc crryng m0unI 0I Ihc sscIs 0I
Ihc unI n Ihc I0ll0wng 0rdcr:
() FrsI, I0 rcducc Ihc crryng m0unI 0I ny g00dwll ll0cIcd I0 Ihc
cshgcncrIng unI (gr0up 0I unIs), nd
(b) Scc0nd, I0 Ihc 0Ihcr sscIs 0I Ihc unI (gr0up 0I unIs) pr0 rI 0n Ihc
bss 0I Ihc crryng m0unI 0I cch sscI 0I Ihc unI (gr0up 0I unIs).
Thcsc rcducI0ns n m0unIs rc IrcIcd s mprmcnI l0sscs 0n Ihc ndvdul
sscIs nd rcc0gnzcd mmcdIcly n Ihc pr0II 0r l0ss, 0r cquIy, I Ihc sscI s
crrcd I rcvlucd m0unI.
AIIcr n mprmcnI IcsI 0n 3 0cccmbcr 20X8, 0gcncnc H0Icls LId, c0ncludcd
IhI 0nc 0I Is cshgcncrIng unIs hs bccn mprcd.
Thc rcc0vcrblc m0unI 0I Ihc cshgcncrIng unI ws b00m, whlc Ihc
crryng m0unI 0I Ihc unI's ncI sscIs I Ihc dIc 0I mprmcnI IcsI ws
800m.
AsscIs nd lblIcs 0I Ihc cshgcncrIng unI 0n 3 0cccmbcr 20X8
c0mprscd:
m
000dwll 50
Pr0pcrIy 480
PlnI nd cqupmcnI 80
M0I0r vchclcs 40
NcI m0ncIry sscIs 50
Sh0w h0w Ihc mprmcnI l0ss w0uld bc ll0cIcd I0 rcducc Ihc crryng
m0unI 0I Ihc sscIs.
m
Crryng m0unI 0I Ihc unI's dcnIIblc sscIs
(50 + 3b0 + 20 + 40 + 284 54) 800
Rcc0vcrblc m0unI (b00)
!mprmcnI l0ss 200
AsscIs Crryng !mprmcnI !mprcd
vlucs( m) l0ss( m) vlucs( m)
000dwll 50 50 Nl
Pr0pcrIy (w.) 480 20 3b0
PlnI (w.) 80 20 b0
M0I0r vchclcs 40 0 30
NcI m0ncIry
AsscIs 50 __ 50
324
w0rkngs All0cI0n 0I mprmcnI l0ss
Pr0pcrIy 480/b00 x 50 = 20
PlnI 80/b00 x 50 = 20
M0I0r vchclcs 40/b00 x 50 = 0
FrsI, Ihc crryng m0unI 0I g00dwll s rcduccd, nd Ihc rcmnng m0unI
0I mprmcnI l0ss 50m (200m lcss 50m IhI s, I0Il mprmcnI l0ss lcss
Ihc crryng m0unI 0I g00dwll) s ll0cIcd I0 pr0pcrIy, plnI nd m0I0r
vchclcs 0n pr0 rI bss s rcqurcd by !AS 3b.04.
N0 mprmcnI l0ss s IIrbuIblc I0 Ihc ncI m0ncIry sscIs s Ihcy wll bc
rclzcd n Iull. M0ncIry Icms rc m0ncy hcld nd 0Ihcr Icms I0 bc rcccvcd
0r pd n m0ncy.
() An cnIIy s rcqurcd by !AS 3b, I0 sscss I cch blncc shccI dIc,
whcIhcr Ihcrc s ny ndcI0n IhI n mprmcnI l0ss rcc0gnzcd n
pr0r pcr0ds I0r n sscI my n0 l0ngcr cxsI 0r my hvc dccrcscd. !I
such ndcI0n cxsIs, Ihc cnIIy s rcqurcd I0 clculIc Ihc rcc0vcrblc
m0unI 0I Ihc sscI. !I Ihc rcc0vcrblc m0unI s grcIcr Ihn Ihc
mprcd vluc, Ihc mprmcnI l0ss sh0uld bc rcvcrscd nd Ihc rcvcrsl
sh0uld bc rcc0gnzcd mmcdIcly n Ihc nc0mc sIIcmcnI.
(b) An ncrcscd crryng m0unI duc I0 rcvcrsl 0I n mprmcnI l0ss,
sh0uld n0I cxcccd whI Ihc vluc w0uld hvc bccn I Ihc mprmcnI
hd n0I bccn rcc0gnzcd I0r Ihc sscI n pr0r ycrs.
(c) 0cprccI0n chrgc I0r Ihc sscI sh0uld bc d|usIcd n IuIurc pcr0ds
I0 ll0cIc Ihc sscI's crryng m0unI lcss Is rcsdul vluc (I ny),
0n sysIcmIc bss 0vcr Is rcmnng uscIul lIc.
(d) Rcvcrsl 0I n mprmcnI l0ss rcc0gnzcd I0r g00dwll s dcbrrcd.
(c) Rcvcrsl 0I unwndng 0I dsc0unI s ls0 pr0hbIcd. (!AS 3b.b)
An cnIIy sh0uld dscl0sc Ihc I0ll0wng I0r cch clss 0I sscIs:
() mprmcnI l0sscs rcc0gnzcd n pr0II 0r l0ss, nd
(b) rcvcrsl 0I mprmcnI l0sscs rcc0gnzcd n pr0II 0r l0ss.
Smlr dscl0surcs sh0uld bc mdc I0r cch rcp0rIblc scgmcnI. (!AS 3b.29)
F0r cch mIcrl mprmcnI l0ss, n cnIIy s rcqurcd I0 dscl0sc:
() Ihc cvcnIs nd crcumsInccs IhI lcd I0 Ihc mprmcnI l0ss 0r rcvcrsl
0I Ihc l0ss,
(b) Ihc m0unI 0I Ihc mprmcnI l0ss,
(c) n Ihc csc 0I ndvdul sscIs, Ihc nIurc 0I l0ss nd Ihc rcp0rIblc
scgmcnI nv0lvcd,
325
(d) I0r cshgcncrIng unI, dcscrpI0n 0I Ihc unI nd Ihc m0unI 0I
mprmcnI l0ss rcc0gnzcd 0r rcvcrscd, nd
(c) whcIhcr Ihc rcc0vcrblc m0unI 0I Ihc sscI s Is Ir vluc lcss c0sIs I0
scll 0r Is vluc n usc.
0bun LId s nI0 Cr Hrc Scrvccs. Thc n0Ics rclIng I0 Ihc Fxcd AsscIs Igurc
n Ihc Inncl sIIcmcnIs I0r Ihc ycr cndcd 3 0cccmbcr 20Xb, sh0wcd Ihc
I0ll0wng:
'000 '000
C0sI 0I cqusI0n 2,000
AccumulIcd dcprccI0n:
AI 1nury 20Xb 4,800
Chrgc I0r Ihc ycr 2,400 (7,200)
NcI 00k \luc s I 3 0cc. 20Xb 4,800
Thc crs 0n hrc rc bcng wrIIcn 0II I Ihc rIc 0I 20 pcr nnum. H0wcvcr,
Ihc cr hrc mrkcI hs slumpcd, nd s rcsulI, I wll 0nly bc blc I0 gcncrIc
2.5 mll0n nc0mc pcr nnum I0r Ihc ycr 20X7 nd 20X8 0nly. AlIcrnIvcly,,
Ihc cr c0uld bc s0ld mmcdIcly (3 0cccmbcr 20Xb) I0r Is Ir vluc 0I
2.8 mll0n, buI scllng c0sI 0I 80,000, wll bc ncurrcd. Thc c0sI 0I cpIl
s 5.
Rcqurcd:
() ClculIc Ihc mprmcnI s I 3 0cccmbcr 20Xb.
() Prcprc rcvscd n0Ic I0 Ihc Ixcd sscIs.
() Sh0w Ihc n0Ic I0 Ihc Fxcd AsscI I0r Ihc ycr cndcd 3 0cccmbcr 20X7
(v) Assumng Ihc mrkcI I0r Cr Hrc Scrvcc pckcd up, nd Ihc crs n0w
hvc rcc0vcrblc m0unI 0I 3.9 mll0n, y0u rc rcqurcd I0 drII
Ihc n0Ic I0 Ihc cc0unIs I0r Ihc ycr cndcd 3 0cccmbcr 20X7.
(!CAN N0v 200b)
() ClculI0n 0I mprmcnI l0ss s I 3 0cccmbcr 20Xb.
'000 '000
NcI b00k vluc 4,800
Rcc0vcrblc m0unI
Thc hghcr 0I:
Fr vluc lcss c0sIs I0 scll (2.8m 0.8) 2,b20
nd \luc n usc ( 2.5m x 0.8b) 2,50
( 2.5m x 0.74) ,850 4,000 4,000
!mprmcnI l0ss 800
32b
() Rcvscd n0Ics I0 Ihc Ixcd sscIs cc0unI s I 3 0cccmbcr 20Xb
'000 '000
C0sI 2,000
0cprccI0n
//20X3 4,800
Chrgc I0r Ihc ycr 2,400 (7,200)
NcI b00k vluc 4,800
!mprmcnI l0ss (800)
Crryng m0unI 4,000
() N0Ic I0 Ixcd sscIs cc0unI s I 3 0cccmbcr 20X7
'000
Crryng vluc 0I sscIs I //20X7 4,000
0cprccI0n chrgc I0r Ihc ycr ( 4,000 / 2) 2,000
Crryng vluc I 3/2/20X7 2,000
(v) Rcvscd n0Ic I0 Ixcd sscIs cc0unI s I 3 0cccmbcr 20X4
'000 '000
C0sI 2,000
0cprccI0n //20X4 7,200
Chrgc I0r Ihc ycr 4m / 2 2,000
Rcvcrsl 0I mprmcnI l0ss 400
AccumulIcd dcprccI0n I n0 mprmcnI l0ss
l0ss hd bccn rcc0gnscd
(2m x 20 x 4 ycrs) (9,b00)
Crryng vluc
!AS 3b rcqurcs IhI n Ihc cvcnI 0I rcvcrsl 0I n mprmcnI l0ss, Ihc
ncrcscd crryng m0unI 0I Ihc sscI sh0uld n0I cxcccd Ihc crryng m0unI
IhI w0uld hvc bccn dcIcrmncd (ncI 0I dcprccI0n), hd n0 mprmcnI
l0ss bccn rcc0gnscd I0r Ihc sscI n pr0r ycrs. Thus Ihc rcvcrsl hs bccn
rcsIrcIcd I0 such m0unI IhI wll cnsurc IhI Ihc crryng m0unI 0I Ihc sscI
d0cs n0I cxcccd Ihc cclng scI by !AS 3b.7.
s Ihc bcgnnng 0I Ihc crlcsI pcr0d I0r whch
n cnIIy prcscIs Iull c0mprIvc nI0rmI0n undcr !FRSs n Is IrsI !FRS
Inncl sIIcmcnIs.
An m0unI uscd s surr0gIc I0r c0sI 0r dcprccIcd c0sI I
gvcn dIc.
Thc IrsI Inncl sIIcmcnIs n whch n
cnIIy d0pI nIcrnI0nl Inncl rcp0rIng sIndrds (!FRSs), by n cxplcI
nd unrcscrvcd sIIcmcnI 0I c0mplncc wIh !FRSs.
327
s Ihc lIcsI rcp0rIng pcr0d c0vcrcd by n
cnIIy's IrsI !FRS Inncl sIIcmcnIs.
SIndrds nd
nIcrprcII0ns d0pIcd by Ihc !nIcrnI0nl Acc0unIng SIndrds 0rd
(!AS). Thcy c0mprsc:
() !nIcrnI0nl Fnncl Rcp0rIng SIndrds,
(b) !nIcrnI0nl Acc0unIng SIndrds, nd
(c) !nIcrprcII0ns dcvcl0pcd by Ihc nIcrcI0nl Fnncl Rcp0rIng
!nIcrprcII0ns C0mmIIcc (!FR!C) 0r Ihc I0rmcr SIndng !nIcrprcII0ns
C0mmIIcc(S!C).
An cnIIy's sIIcmcnI 0I Inncl p0sI0n I Ihc dIc 0I IrnsI0n I0 !FRSs.
Ihc bns 0I c0unIng IhI IrsIImc d0pIcr uscd mmcdIcly
bcI0rc d0pIng !FRSs.
Thc 0b|ccIvc 0I !FRS s I0 cnsurc IhI n cnIIy's IrsI !FRS Inncl sIIcmcnIs,
nd Is nIcrm Inncl rcp0rIs I0r prI 0I Ihc pcr0d c0vcrcd by Ih0sc Inncl
sIIcmcnIs, c0nIn hgh qulIy nI0rmI0n IhI,
() s IrnsprcnI I0r uscrs nd c0mprblc 0vcr ll pcr0ds prcscnIcd,
(b) pr0vdcs suIblc sIrIng p0nI I0r cc0unIng n cc0rdncc wIh !FRSs,
nd
(c) cn bc gcncrIcd I c0sI IhI d0cs n0I cxcccd Ihc bcncIIs.
An cnIIy s, IhcrcI0rc, rcqurcd I0 pply !FRS , n Is IrsI !FRS Inncl
sIIcmcnIs nd cch nIcrm Inncl rcp0rI I0r Ihc prI 0I Ihc pcr0d c0vcrcd
by Is IrsI !FRS Inncl sIIcmcnIs.
Fnncl sIIcmcnIs prcprcd by n cnIIy n cc0rdncc wIh !FRSs rc Ihc
cnIIy's IrsI !FRS Inncl sIIcmcnIs. !I Ihc cnIIy:
() PrcscnIcd Is m0sI rcccnI prcv0us Inncl sIIcmcnIs n cc0rdncc
wIh nI0nl rcqurcmcnIs IhI rc prIlly c0nssIcnI 0r I0Illy
nc0nssIcnI wIh !FRSs,
(b) Prcprcd Inncl sIIcmcnIs n cc0rdncc wIh !FRSs I0r nIcrnl usc
0nly,
(c) Prcprcd rcp0rIng pckgc I0r c0ns0ldI0n purp0scs 0nly 0r,
(d) 0d n0I prcscnI Inncl sIIcmcnIs I0r prcv0us pcr0ds.
An cnIIy s rcqurcd I0 usc Ih0sc cc0unIng p0lccs IhI c0mply wIh !FRSs,
cIIccIvc I Ihc cnd 0I Is !I FrsI
dccdcs I0 prcprc Is Inncl sIIcmcnIs usng !FRSs, wIh cIIccI Ir0m
Ihc rcp0rIng pcr0d cndng 0n 3
sI
0cccmbcr, 20x9, n:
() prcprng nd prcscnIng Is 0pcnng !FRS sIIcmcnI 0I Inncl p0sI0n
I 1nury 20x8, nd
328
(b) prcprng nd prcscnIng Is sIIcmcnI 0I Inncl p0sI0n I0r 3
sI
0cccmbcr 20x9 (ncludng c0mprIvc m0unIs I0r 20x8), sIIcmcnI
0I c0mprchcnsvc nc0mc, sIIcmcnI 0I chngcs n cquIy nd sIIcmcnI
0I csh Il0ws I0r Ihc ycr I0 3
sI
0cccmbcr 20x9 (ncludng c0mprIvc
m0unIs I0r 20x8) nd dscl0surcs (ncludng c0mprIvc nI0rmI0n
I0r 20x8).
Thc bnk's dIc 0I IrnsI0n I0 !FRSs s
sI
1nury 20x8.
!n Is 0pcnng !FRS sIIcmcnI 0I Inncl nd cnIIy sh0uld,
() rcc0gnzc ll sscIs nd lblIcs wh0sc rcc0gnI0n s rcqurcd by
!FRSs,
(b) n0I rcc0gnzc Icms s sscIs 0r lblIcs I !FRSs d0 n0I pcrmI such
rcc0gnI0n,
(c) rcclssIy Icms I rcc0gnzcd n cc0rdncc wIh prcv0us 0AAP whcrc
ppr0prIc, nd
(d) pply !FRSs n mcsurng ll rcc0gnzcd sscIs nd lblIcs.
!FRS ll0ws IrsIImc d0pIcr s0mc cxcmpI0ns n cc0unIng I0r ccrIn
IrnscI0ns, such s, shrcbscd pymcnI IrnscI0n, nsurncc c0nIrcIs,
lcscs, c0mp0und Inncl nsIrumcnIs nd b0rr0wng c0sI (scc ppcndx 0
0I !FRS I0r dcIls.
An cnIIy s rcqurcd I0 cxpln h0w Ihc IrnsI0n Ir0m prcv0us 0AAP I0 !FRSs
IIccIcd Is rcp0rIcd Inncl p0sI0n, Inncl pcrI0rmncc nd csh Il0ws.
T0 c0mply wIh Ihs, IrsIImc d0pIcr s rcqurcd I0 ncludc Ihc I0ll0wng n
Is IrsI !FRS Inncl sIIcmcnIs.
() Rcc0nclI0ns 0I Is cquIy rcp0rIcd n cc0rdncc wIh prcv0us 0AAP,
I0 Is cquIy n cc0rdncc wIh !FRSs, I0r b0Ih Ihc dIc 0I IrnsI0n nd
0I Ihc lIcsI pcr0d, prcscnIcd n Ihc cnIIy's m0sI rcccnI Inncl
sIIcmcnIs n cc0rdncc wIh prcv0us 0AAP.
(b) A rcc0nclI0n I0 Is I0Il c0mprchcnsvc nc0mc, n cc0rdncc wIh
!FRSs I0r Ihc lIcsI pcr0d, n Ihc cnIIy's m0sI rcccnI nnul Inncl
sIIcmcnIs.
(c) !I Ihc cnIIy rcc0gnzcd 0r rcvcrscd ny mprmcnI l0sscs I0r Ihc IrsI
Imc n prcprng Is 0pcnng !FRS sIIcmcnI 0I Inncl p0sI0n, Ihc
dscl0surcs IhI !AS3b w0uld hvc rcqurcd I
Ihc cnIIy hd rcc0gnzcd Ih0sc !mprmcnI l0sscs 0r rcvcrsls n Ihc
pcr0d bcgnnng wIh Ihc dIc 0I IrnsI0n I0 !FRSs.
329
EnIIcs 0IIcn grnI shrcs 0r shrc 0pI0ns I0 cmpl0yccs 0r 0Ihcr prIcs. Shrc
plns nd shrc 0pI0n plns rc c0mm0n IcIurcs 0I cmpl0ycc rcmuncrI0n
I0r drccI0rs, scn0r cxccuIvcs nd mny 0Ihcr cmpl0yccs. S0mc cnIIcs ssuc
shrcs 0r shrc 0pI0ns I0 py supplcrs, such s supplcrs 0I pr0Icss0nl
scrvccs, Ihc 0b|ccIvc 0I !FRS 2 s I0 spccIy Ihc Inncl rcp0rIng by n cnIIy
whcn I undcrIkcs .
A c0nIrcI IhI cvdcnccs rcsdul nIcrcsI 0n Ihc sscIs
0I n cnIIy IIcr dcducIng ll Is lblIcs.
A IrnscI0n n whch Ihc cnIIy
rcccvcs g00ds 0r scrvccs s c0nsdcrI0n I0r cquIy nsIrumcnIs 0I Ihc cnIIy
(ncludng shrcs 0r shrc 0pI0ns), 0r cqurcs g00ds 0r scrvccs by ncurrng
lblIcs I0 Ihc supplcr 0I Ih0sc g00ds 0r scrvccs I0r m0unI IhI rc bscd
0n Ihc prcc 0I Ihc cnIIy's shrc 0r 0Ihcr cquIy nsIrumcnIs 0I Ihc cnIIy.
: Ths s Ihc dIc I whch Ihc cnIIy nd n0Ihcr prIy (ncludng
n cmpl0ycc) grcc I0 shrcbscd pymcnI rrngcmcnI.
Thc dIIcrcncc bcIwccn Ihc Ir vluc 0I Ihc shrcs I0 whch
Ihc c0unIcrprIy hs Ihc rghI I0 subscrbc 0r rcccvc nd Ihc prcc Ihc
c0unIcrprIy s rcqurcd I0 py I0r Ih0sc shrcs.
Thc dIc I whch Ihc Ir vluc 0I Ihc cquIy nsIrumcnIs
grnIcd s mcsurcd I0r Ihc purp0scs 0I !FRS 2.
A IcIurc IhI pr0vdcs I0r n uI0mIc grnI 0I ddI0nl
shrc 0pI0ns whcncvcr Ihc 0pI0n h0ldcr cxcrcscs prcv0usly grnIcd 0pI0ns
usng Ihc cnIIy's shrcs, rIhcr Ihn csh, I0 sIsIy Ihc cxcrcsc prcc.
A ncw shrc 0pI0n grnIcd whcn shrc s uscd I0 sIsIy
Ihc cxcrcsc prcc 0I prcv0us shrc 0pI0n.
A c0nIrcI IhI gvcs Ihc h0ldcr Ihc rghI buI n0I Ihc 0blgI0n,
I0 subscrbc I0 Ihc cnIIy's shrcs I Ixcd 0r dcIcrmnblc prcc I0r spccIcd
pcr0d 0I Imc.
T0 bcc0mc n cnIIlcmcnI, undcr shrc -bscd pymcnI rrngcmcnI,
c0unIcrprIy's rghI I0 rcccvc csh, 0Ihcr sscIs 0r cquIy nsIrumcnIs 0I Ihc
cnIIy vcsIs whcn Ihc c0unIcrprIy's cnIIlcmcnI s n0 l0ngcr c0ndI0nl 0n
Ihc sIsIcI0n 0I ny vcsIng c0ndI0n.
Thc c0ndI0ns IhI dcIcrmnc whcIhcr Ihc cnIIy rcccvcs
Ihc scrvccs IhI cnIIlc Ihc c0unIcrprIy I0 rcccvc csh, 0Ihcr sscIs 0r cquIy
nsIrumcnIs 0I Ihc cnIIy, undcr shrcbscd pymcnI rrngcmcnI.
Thc pcr0d durng whch ll Ihc spccIcd vcsIng c0ndI0ns
0I shrcbscd pymcnI rrngcmcnI rc I0 bc sIsIcd.
330
A shrc bscd pymcnI
IrnscI0n n whch Ihc cnIIy rcccvcs g00ds 0r scrvccs s c0nsdcrI0n I0r
cquIy nsIrumcnIs 0I Ihc cnIIy (ncludng shrcs 0r shrc 0pI0ns).
A shrcbscd pymcnI
IrnscI0n n whch Ihc cnIIy cqurcs g00ds 0r scrvccs by 0Ihcr sscIs I0 Ihc
supplcr 0I Ih0sc g00ds 0r scrvccs I0r m0unIs IhI rc bscd 0n Ihc prcc (0r
vluc) 0I Ihc cnIIy's shrcs 0r 0Ihcr cquIy nsIrumcnIs 0I Ihc cnIIy.
Typclly, shrcs, shrc 0pI0ns 0r 0Ihcr cquIy nsIrumcnIs rc grnIcd I0
cmpl0yccs s prIy 0I Ihcr rcmuncrI0n pckgc, n ddI0n I0 csh slry
nd 0Ihcr cmpl0ymcnI bcncIIs. Usully, I s n0I p0ssblc I0 mcsurc drccIly
Ihc scrvccs rcccvcd I0r prIculr c0mp0ncnI 0I Ihc cmpl0ycc bcncIIs. y
grnIng shrcs nd shrc 0pI0ns, n ddI0n I0 0Ihcr rcmuncrI0n, Ihc cnIIy
s pyng ddI0nl cnumcrI0n I0 0bIn ddI0nl bcncII. EsImIng Ihc
Ir vluc 0I Ih0sc ddI0nl bcncIIs s lkcly I0 bc dIIculI. !n vcw 0I Ihc
dIIculIy 0I mcsurng drccIly Ihc Ir vluc 0I Ihc scrvccs rcccvcd, Ihc cnIIy
mcsurcs Ihc Ir vluc by rcIcrcncc I0 Ihc Ir vluc 0I Ihc cquIy nsIrumcnI
grnIcd. (!FRS 2.5).
() An cnIIy sh0uld rcc0gnzc Ihc g00ds 0r scrvccs rcccvcd 0r cqurcd n
shrcbscd pymcnI IrnscI0n s sscIs I Ihcy qulIy I0r
rcc0gnI0n s such, 0Ihcrwsc, Ihcy sh0uld bc rcc0gnzcd s cxpcnscs.
(b) An cnIIy sh0uld rcc0gnzc Ihc g00ds nd scrvccs rcccvcd 0r cqurcd
n shrcbscd pymcnI IrnscI0n whcn I 0bIns Ihc g00ds 0r s
Ihc scrvccs rc rcccvcd. Thc cnIIy shll rcc0gnzc c0rrcsp0ndng
ncrcsc n cquIy I Ihc g00ds 0r scrvccs wcrc rcccvcd n n cquIy
scIIlcd shrcbscd pymcnI IrnscI0n, 0r lblIy I Ihc g00ds 0r
scrvccs wcrc cqurcd n cshscIIlcd shrcbscd pymcnI
IrnscI0n.
0n 1nury 20xb, M0zunm Plc, grnIcd 000 shrc 0pI0ns I0 cch 0I Is 20
cxccuIvcs 0n Ihc mngcmcnI Icm. Ech grnI s c0ndI0nl up0n cch
cxccuIvc bcng 0n Ihc mngcmcnI Icm unIl 3
sI
0cccmbcr 20x8. !n 0Ihcr
w0rds, Ihc 0pI0ns vcsI I Ihc cnd 0I Ihrcc ycr pcr0d. Thc Ir vluc 0I cch
shrc 0pI0n s N50 nd Ihc c0mpny cxpccIs IhI ll Ihc shrc 0pI0ns wll bc
vcsI rcqurcd,
() ClculIc Ihc m0unI I0 bc rcc0gnzcd s cxpcnsc I0r cch 0I Ihc Ihrcc
ycrs nd sh0w Ihc d0ublc cnIry I Ihc cnd 0I Ihc IrsI ycr.
(b) Supp0sc Ihc c0mpny csImIcd IhI 20 cIully lcII I Ihc cnd 0I Ihc
Ihrd ycr, clculIc Ihc m0unI I0 bc rcc0gnzcd s cxpcnsc I0r cch 0I
Ihc Ihrcc ycrs.
33
() !I ll Ihc 0pI0ns vcsI, Ihc nnul cxpcnsc s clculIcd s I0ll0ws: 000
0pI0ns x 20 cxccuIvcs x 50 x /3 = N333,333
Thc d0ublc cnIrcs I Ihc cnd 0I 20xb, w0uld bc s I0ll0ws:
0r Pr0II 0r l0ss N333,333
Cr EquIy N333,333
(b) !I 20 s csImIcd I0 lcvc buI 25 cIully lcII n Ihc Ihrd ycr, Ihc
nnul cxpcnsc w0uld bc clculIcd s I0ll0ws:
CumulIvc Expcnscs I0r
Expcnscs Ihc ycr
Ycr N
N
20xb 000 x 20 x 50 x 80 x /3 2bb,bb7 2bb,bb7
20x7 000 x 20 x 50 x 80 x 2/3 533,333 2bb,bbb
20x8 000 x 5 x 50 750,000 2b,bb7
() F0r cquIyscIIlcd shrcbscd IrnscI0ns, Ihc cnIIy shll
mcsurc Ihc g00ds nd scrvccs rcccvcd, nd Ihc c0rrcsp0ndng
ncrcsc n cquIy, drccIly, I Ihc Ir vluc 0I Ihc g00ds nd
scrvccs rcccvcd.
(b) !I Ihc cnIIy cnn0I csImIc rclbly Ihc Ir vluc 0I Ihc g00ds
nd scrvccs rcccvcd, Ihc cnIIy shll mcsurc Ihcr vluc, nd
Ihc c0rrcsp0ndng ncrcsc n cquIy, ndrccIly, by rcIcrcncc I0
Ihc Ir vluc 0I Ihc cquIy nsIrumcnIs grnIcd.
Smply puI, Ihc Ir vluc 0I cquIyscIIlcd IrnscI0ns s dcIcrmncd
n Iw0 wys: () drccIly, I Ihc Ir vluc 0I Ihc g00ds 0r scrvccs
rcccvcd, nd (2) ndrccIly, by rcIcrcncc I0 Ihc vluc I0 shrcs ssucd.
Thc mngcmcnI 0I Agudm Fshcs Plc cnc0unIcrcd s0mc pr0blcms
wIh Is Ish lkc n ycls SIIc. T0 s0lvc Ihc pr0blcm, Ihc c0mpny
s0ughI I0r nd 0bIncd Ihc spcclsI dvcc 0I Pr0Icss0r T. P0p00l, n
cnvr0nmcnIl b0l0gsI, n 0nc 0I Ihc nI0n's prcmcr unvcrsIcs. T0
py I0r hs scrvccs, Ihc c0mpny gvc hm 20,000 0I Is 50k shrcs
wIh mrkcI vluc 0I N2.80 cch.
Y0u rc rcqurcd I0 sh0w h0w Ihs IrnscI0n w0uld bc cc0unIcd I0r n
cc0rdncc wIh !FRS 2.
Undcr !FRS 2, n cquIyscIIlcd IrnscI0n IhI cnn0I bc mcsurcd
drccIly I Ihc Ir vluc 0I Ihc scrvccs rcccvcd, sh0uld bc mcsurcd
ndrccIly by rcIcrcncc I0 Ihc Ir vluc 0I Ihc cquIy nsIrumcnIs grnIcd.
Thc I0rml cnIrcs w0uld bc s I0ll0ws:
332
0r shrc cpIl N0,000
Cr shrc prcmum N4b,000
F0r cshscIIlcd shrcbscd pymcnI IrnscI0ns, Ihc cnIIy sh0uld
mcsurc Ihc g00ds 0r scrvccs cqurcd nd Ihc lblIy ncurrcd I Ihc
Ir vluc 0I Ihc lblIy. UnIl Ihc lblIy s scIIlcd, Ihc cnIIy sh0uld
rcmcsurc Ihc Ir vluc 0I Ihc lblIy I Ihc cnd 0I cch rcp0rIng
pcr0d nd I Ihc dIc 0I scIIlcmcnI, wIh ny chrgcs n Ir vluc
rcc0gnzcd n pr0II 0r l0ss.
An cnIIy sh0uld dscl0sc nI0rmI0n IhI wll cnblc uscrs I0
undcrsInd:
() Ihc cIIccI 0I shrcbscd pymcnI IrnscI0ns 0n Ihc cnIIy's
pr0II 0r l0ss I0r Ihc pcr0d nd 0n Is Inncl p0sI0n,
(b) h0w Ihc Ir vluc 0I Ihc g00ds 0r scrvccs rcccvcd, 0r Ihc Ir
vluc 0I Ihc cquIy nsIrumcnIs grnIcd, durng Ihc pcr0d ws
dcIcrmncd, nd
(c) Ihc nIurc nd cxIcnI 0I shrcbscd pymcnI rrngcmcnIs IhI
cxsIcd durng Ihc pcr0d.
!FRS 5 spccIcs Ihc cc0unIng IrcImcnI 0I sscIs hcld I0r slcs, nd
Ihc prcscnII0n nd dscl0surc 0I dsc0nInucd !n
prIculr, Ihc sIndrd rcqurcs,
() sscIs IhI mccI Ihc crIcr I0 bc clssIcd s, hcld I0r slc I0 bc
mcsurcd I Ihc l0wcr 0I crryng m0unI nd Ir vluc lcss
c0sIs I0 scll, nd dcprccI0n 0n such sscIs I0 ccsc, nd
(b) AsscIs IhI mccI Ihc crIcr I0 bc prcscnIcd scprIcly n Ihc
sIIcmcnI 0I Inncl p0sI0n nd Ihc rcsulIs 0I dsc0nInucd
0pcrI0ns I0 bc prcscnIcd scprIcly n Ihc sIIcmcnI 0I
c0mprchcnsvc nc0mc.
A n0ncurrcnI sscI 0r dsp0sl gr0up sh0uld bc clssIcd s, hcld I0r
slc I Is crryng m0unI wll bc rcc0vcrcd prncplly Ihr0ugh slc
0I IrnscI0n rIhcr Ihn Ihr0ugh c0nInung usc.
Thc sIndrd rcqurcs Ihc I0ll0wng c0ndI0ns I0 bc mcI I0r such
clssIcI0n I0 Ikc plcc:
() Ihc sscI musI bc vlblc I0r mmcdIc slc n Is prcscnI
c0ndI0n,
(b) mngcmcnI musI bc c0mmIIcd I0 pln I0 scll Ihc sscI 0r
dsp0sl gr0up,
333
(c) n cIvc pr0grmmc I0 l0cIc buycr nd c0mplcIc I I
rcs0nblc prcc musI hvc bccn nIIcd,
(d) slc s cxpccIcd I0 bc c0mplcIcd wIhn 0nc ycr, nd
(c) I s unlkcly IhI sgnIcnI chngcs I0 Ihc pln wll bc mdc 0r
IhI Ihc pln wll bc wIhdrwn.
whcn n0ncurrcnI sscI 0r dsp0sl gr0up s cqurcd cxclusvcly wIh
vcw I0 Is subscqucnI dsp0sl wIhn 0nc ycr, I sh0uld bc clssIcd
s hcld I0r slc. (!FRS 5.).
() A n0ncurrcnI sscI 0r dsp0sl gr0up hcld I0r slc sh0uld bc
mcsurcd I Ihc l0wcr 0I Is crryng m0unI nd Ir vluc lcss
c0sI I0 scll.
(b) A n0ncurrcnI sscI 0r dsp0sl gr0up clssIcd s hcld I0r
dsIrbuI0n I0 0wncrs sh0uld bc mcsurcd I crryng m0unI
nd Ir vluc lcss c0sIs I0 dsIrbuIc.
(c) Thc cnIIy sh0uld rcc0gnzc n mprmcnI l0ss I0r ny nIl 0r
subscqucnI wrIcd0wn 0I Ihc sscI (0r dsp0sl gr0up), I0 Ir
vluc lcss c0sIs I0 scll. Any subscqucnI ncrcsc n Ir vluc
lcss c0sI I0 scll sh0uld bc rcc0gnzcd s gn.
(d) Thc mprmcnI l0ss (0r ny subscqucnI gn) rcc0gnzcd I0r
dsp0sl gr0up, sh0uld bc ll0cIcd I0 Ihc crryng m0unI 0I
Ihc sscIs n cc0rdncc wIh !AS 3b.
wcrs H0Icls Plc plns I0 dsp0sc 0I gr0up 0I Is sscIs n Km, s
n sscI slc. Thc sscIs c0nsIIuIc dsp0sl gr0up nd hd Ihc
I0ll0wng vlucs:
Crryng m0unI I Ihc crryng m0unI s
cnd 0I Ihc rcp0rIng rcmcsurcd mmcdIcly
pcr0d bcI0rc clssIcI0n bcI0rc clssIcI0n s
s hcld I0r slc hcld I0r slc
'000 '000
000dwll 5,b00 5,b00
Pr0pcrIy, plnI &
EqupmcnI crrcd
I rcvlucd m0unI 0,700 9,000
Pr0pcrIy, plnI & cqup. 0,000 8,000
uldng c0nsIrucI0n
n pr0grcss 8,b00 8,000
SI0ck 4,00 3,800
Thc c0mpny csImIcs IhI Ir vluc lcss c0sI I0 scll 0I Ihc dsp0sl
gr0up m0unIs I0 30.4mll0n.
334
Y0u rc rcqurcd I0 sh0w h0w Ihc mprmcnI l0ss wll bc ll0cIcd I0
n0ncurrcnI sscIs. (
Thc mprmcnI l0ss s Ihc dIIcrcncc bcIwccn Ihc crryng m0unI
N39mll0n nd Ihc Ir vluc lcss c0sI I0 scll, 30.4mll0n
Acc0rdng I0 !AS 3b, Ihc mprmcnI l0ss wll IrsI rcducc Ihc g00dwll.
Thc rcsdul l0ss wll bc ll0cIcd I0 Ihc 0Ihcr n0ncurrcnI sscIs pr0rIc,
bscd 0n Ihcr crryng m0unIs.
All0cI0n schcdulc.
Crryng !mprmcnI !mprcd
Am0unI l0ss vlucs
'000 '000 N'000
000dwll 5,b00 5,b00 0
PPE (I rcvlucd m0unI) 9,000 ,080 9
PPE (I c0sI) 8,000 9b0
C0nsIrucI0n w0rk!nPr0grcss 8,000 9b0
SI0ck 3,800 __ 3,800
A dsc0nInucd 0pcrI0n s c0mp0ncnI 0I n cnIIy IhI cIhcr hs
bccn dsp0scd 0I 0r s clssIcd s hcld I0r slc nd,
() rcprcscnIs scprIc m|0r lnc 0I busncss 0r gc0grphcl rc
0I 0pcrI0ns,
(b) s prI 0I snglc c00rdnIcd pln I0 dsp0sc 0I scprIc m|0r
lnc 0I busncss 0r gc0grphcl rc 0I 0pcrI0n, 0r
(c) s subsdry cqurcd cxclusvcly wIh vcw I0 rcscllng.
!FRS 5 rcqurcs Ihc I0ll0wng dscl0surcs c0nccrnng dsc0nInucd
0pcrI0ns,
() An cnIIy shll dscl0sc snglc m0unI n Ihc sIIcmcnI 0I
c0mprchcnsvc nc0mc c0mprsng Ihc I0Il 0I:
() Ihc p0sIIx pr0II 0r l0ss 0I dsc0nInucd 0pcrI0ns nd
() Ihc p0sIIx gn 0r l0ss rcc0gnzcd 0n Ihc mcsurcmcnI
I0 Ir vluc lcss c0sIs I0 scll 0r 0n Ihc dsp0sl 0I Ihc sscIs
0r dsp0sl gr0up(s) c0nsIIuIng Ihc dsc0nInucd
0pcrI0n.
(b) An nlyss 0I Ihc snglc m0unI n () nI0 ,
() Thc rcvcnuc, cxpcnscs nd prcIx pr0II 0r l0ss 0I
dsc0nInucd 0pcrI0ns,
() Thc rclIcd Ix
335
() Thc gn 0r l0ss rcc0gnzcd 0n Ihc mcsurcmcnI I0 Ir
vluc lcss c0sIs I0 scll 0r 0n Ihc dsp0sl 0I Ihc dsc0nInuc
0pcrI0n, nd
(v) Thc rclIcd nc0mc Ix cxpcnsc.
Thc I0ll0wng prcscnII0n nd dscl0surcs rc rcqurcd n rcspccI 0I
sscIs clssIcd s hcld I0r slc:
() An cnIIy sh0uld prcscnI n0ncurrcnI sscI clssIcd s hcld
I0r slc nd Ihc sscIs 0I dsp0sl gr0up clssIcd s hcld I0r
slc scprIcly Ir0m 0Ihcr sscIs n Ihc sIIcmcnI 0I Inncl
p0sI0n.
(b) Thc cnIIy sh0uld dscl0sc Ihc I0ll0wng nI0rmI0n n Ihc n0Ics
I0 Ihc Inncl sIIcmcnIs 0I Ihc pcr0d:
() A dcscrpI0n 0I Ihc n0ncurrcnI sscIs,
() A dcscrpI0n 0I Ihc IcIs nd crcumsInccs 0I Ihc slc,
nd
() !I pplcblc, Ihc rcp0rIblc scgmcnI n whch Ihc n0n
currcnI sscI s prcscnIcd.
As rcsulI 0I IrcqucnI dsrupI0n 0I Is 0pcrI0ns n ZrmI, 0pucnc
0l Scrvccs LId dccdcd I0 scll 0II Is busncss n IhI gc0grphcl rc.
Thc ncI sscIs 0I Ihc c0mpny's busncsscs n ZrmI I 3
sI
0cccmbcr
20x8 m0unIcd I0 208mll0n, buI Is Ir vluc lcss c0sI I0 scll hs
bccn csImIcd I N98mll0n. Thc c0mpny s c0nIdcnI IhI I c0uld
cIIccI Ihc dsp0sl wIhn 0nc ycr s wllng buycrs hvc sIrIcd
ndcIng nIcrcsI.
0urng Ihc ycr cndcd 3
sI
0cccmbcr, 20x8 Ihc busncsscs n ZrmI
rcp0rIcd Ihc I0ll0wng. Rcvcnuc 0pcrIng cxpcnscs 2bmll0n nd
csImIcd nc0mc Ix, 5mll0n.
Thc rcsI 0I Ihc 0Ihcr busncsscs 0I 0pucnc 0l Scrvccs LId hd Ihc
I0ll0wng nc0mc nd cxpcnscs.
'm
Rcvcnuc 2,980
C0sI 0I slcs (,020)
0r0ss pr0II ,9b0
0Ihcr nc0mc 420
0sIrbuI0n c0sIs (580)
AdmnsIrIvc cxpcnscs (800)
0Ihcr cxpcnscs (390)
Fnncc c0sIs (20)
Pr0II bcI0rc Ix 590
!nc0mc Ix cxpcnsc (2)
Pr0II I0r Ihc pcr0d 478
33b
Y0u rc rcqurcd I0 prcprc sIIcmcnI 0I c0mprchcnsvc nc0mc I0r
Ihc ycr cndcd 3
sI
0cccmbcr 20x8 n cc0rdncc wIh !FRS 5. !gn0rc
c0mprIvc Igurcs.
C0nInung 0pcrI0ns
'm
Rcvcnuc 2,980
C0sI 0I slcs (,020)
0r0ss pr0II ,9b0
0Ihcr nc0mc 420
0sIrbuI0n c0sIs (580)
AdmnsIrIvc cxpcnscs (800)
0Ihcr cxpcnscs (390)
Fnncc c0sIs (20)
Pr0II bcI0rc Ix 590
!nc0mc Ix cxpcnsc (2)
Pr0II I0r Ihc pcr0d 478
N0Ic I0 Ihc nc0mc sIIcmcnI
0sc0nInucd 0pcrI0ns
'm
Rcvcnuc 40
0pcrIng cxpcnscs (2b)
!mprmcnI l0ss (20898) (0)
0pcrIng pr0II 4
!nc0mc Ix cxpcnsc (5)
L0ss I0r Ihc ycr
Ths chpIcr cxmncd Ihc cc0unIng sIndrds ssucd by Ihc NAS nd Ihc
!AS, wIh llusIrIvc cxmplcs.
. whch 0I Ihcsc s n0I dscl0surc rcqurcmcnI 0I SAS 25,
() A dcscrpI0n 0I h0w dcIcrrcd rcvcnuc s clculIcd
(b) Frcc rImc gvcn nd Is m0vcmcnI
(c) TrcImcnI 0I dsmnIlng nd sIc rcsI0rI0n c0sIs
(d) Fr vluc lcss p0nI 0I scll c0sIs dcIcrmncd
(c) A dcscrpI0n 0I Ihc m0rIzI0n mcIh0d uscd.
337
2. whch 0I Ihc I0ll0wng s n0I IcI0r I0 bc c0nsdcrcd n dcIcrmnng
busncss scgmcnIs n cc0rdncc wIh SAS 24,
() ExsIng c0sI ccnIrcs
(b) ExsIng pr0II ccnIrcs
(c) Thc nIurc 0I Ihc pr0ducI 0r scrvcc
(d) Thc nIurc 0I pr0ducI0n pr0ccss
(c) MrkcIs nd mrkcIng mcIh0ds.
3. Undcr SAS 23,
whch 0I Ihc I0ll0wng s n0I n cxmplc IhI Ills undcr Ihc dcInI0n 0I
rcsIrucIurng!
() Chngcs n mngcmcnI sIrucIurc
(b) Slc 0r IcrmnI0n 0I busncss lnc
(c) Thc cl0surc 0I busncss l0cI0ns n c0unIry
(d) Thc pp0nImcnI 0I ncw mngcmcnI Icm
(c) Rcl0cI0n 0I busncss cIvIy Ir0m 0nc c0unIry I0 n0Ihcr.
4. whch 0I Ihc I0ll0wng s n0I c0mp0ncnI 0I n nIcrm Inncl rcp0rI
undcr SAS 30,
() C0ndcnscd cxIcrnl udI0rs' rcp0rI
(b) C0ndcnscd blncc shccI
(c) C0ndcnscd sIIcmcnI 0I csh Il0ws
(d) C0ndcnscd sIIcmcnI 0I cc0unIng p0lccs
(c) SclccIcd n0Ics I0 Ihc cc0unIs.
5. whch 0I Ihcsc s n cxmplc 0I rcscrch c0sIs n cc0rdncc wIh SAS 22,
() Thc c0sI 0I cvluIng pr0ducIs
(b) Thc c0sI 0I IcsIng prcpr0ducI0n pr0I0Iypcs
(c) Thc c0sI 0I Icchncl scrvcc
(d) Thc c0sI 0I dcsgn 0I dcs nv0lvng ncw Icchn0l0gy
(c) Thc c0sI 0I dcsgn 0I pl0I plnI.
b. !n clculIng crnngs pcr shrc, whcn sh0uld p0IcnIl 0rdnry shrcs
bc IrcIcd s dluIvc!
7. H0w sh0uld cpIl gns Ix bc IrcIcd n Ihc nc0mc sIIcmcnI 0I rcp0rIng
cnIIy n Ngcr!
8. H0w sh0uld nIcrcsI pd 0r rcccvcd bc rcp0rIcd n sIIcmcnI 0I csh
Il0ws!
9. !n cc0unIng I0r d0wnsIrcm cIvIcs n Ihc pcIr0lcum ndusIry, h0w
sh0uld sIndby cqupmcnI bc dcprccIcd!
0. 0cInc brcIly cnd0wmcnI p0lcy n Ihc c0nIcxI 0I SAS b: Acc0unIng I0r
!nsurncc usncss.
338
339
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Kn0w Ihc sIIuI0ry d0cumcnIs IhI g0vcrn Inncl cc0unIng n Ngcr.
UndcrsInd Ihc cc0unIng rcqurcmcnIs 0I C0mpncs nd Allcd MIIcrs AcI,
CAP C20, Lws 0I Ihc FcdcrI0n 0I Ngcr, 2004.
Expln Ihc cc0unIng rcqurcmcnIs 0I Ihc !nsurncc AcI 2003, 0F!A 99, nd
nvcsImcnI nd SccurIcs AcI, 999.
0scuss Ihc cc0unIng mcIh0ds rcc0mmcndcd by Pcns0n RcI0rm AcI 2004.
Undcr SccI0n 2 0I CAMA 2004, n nc0rp0rIcd c0mpny my bc ny 0I Ihc
I0ll0wng.
() . Ths s c0mpny whcrc Ihc lblIy
0I cch mcmbcr I0 c0nIrbuIc I0 Ihc sscIs 0I Ihc c0mpny n Ihc cvcnI
0I wndngup 0r lqudI0n s lmIcd by Ihc Mcm0rndum nd ArIclcs
0I Ass0cI0n I0 Ihc m0unI, I ny, unpd 0n Ihc shrcs hcld by hm.
(b) !n Ihs Iypc 0I rcgsIcrcd c0mpny,
Ihc lblIy 0I cch mcmbcr I0 c0nIrbuIc I0 Ihc sscIs 0I Ihc c0mpny
n Ihc cvcnI 0I wndng up, s lmIcd by Ihc Mcm0rndum nd ArIclcs
0I Ass0cI0n I0 Ihc m0unI whch Ihc mcmbcr undcrIkcs I0 py. Unlkc
c0mpncs lmIcd by shrcs, c0mpny lmIcd by gurnIcc, shll
n0I bc rcgsIcrcd wIh shrc cpIl (scc SccI0n 2b 0I Ihc CAMA 2004).
Such c0mpncs rc usully I0rmcd I0 pr0m0Ic c0mmcrcc, rI, sccncc,
cducI0n, rcscrch nd smlr 0b|ccIs. Thc nmc 0I c0mpny LmIcd
by gurnIcc shll cnd wIh Ihc w0rd 0r
(c) !n n UnlmIcd c0mpny, Ihcrc s n0 lmI 0n
Ihc lblIy 0I Is mcmbcrs. Thc nmc 0I Ihc c0mpny shll cnd wIh
0r , (scc SccI0n 29 0I CAMA 2004).
Any 0I Ihc I0rcg0ng Iypcs 0I c0mpny my bc :
() PrvIc LmIcd LblIy C0mpny, 0r
(b) Publc LmIcd LblIy C0mpny,
340
SccI0n 22 0I CAMA dcIncs
prvIc c0mpny s 0nc whch s sIIcd n Is Mcm0rndum nd
ArIclcs 0I Ass0cI0n I0 bc prvIc c0mpny nd whch Is ArIclcs 0I
Ass0cI0n:
() rcsIrcIs Ihc rghI I0 IrnsIcr Is shrcs,
(b) lmIs Ihc numbcr 0I Is mcmbcrs I0 IIIy,
(c) pr0hbIs ny nvII0n I0 Ihc publc I0 subscrbc I0r ny shrcs
0r dcbcnIurcs 0I Ihc c0mpny,
(d) rcqurcs IhI pp0nImcnI 0I 0rccI0rs my bc d0nc by n 0rdnry
rcs0luI0n, nd
(c) rcqurcs IhI Ihc nmc 0I Ihc c0mpny shll cnd wIh Ihc w0rd
0r (scc SccI0n 29).
A publc c0mpny s ny 0Ihcr
Ihn prvIc lmIcd lblIy c0mpny. !I, h0wcvcr, hs Ihc I0ll0wng
chrcIcrsIcs:
() Thc w0rd publc s sIIcd n Is Mcm0rndum 0I Ass0cI0n ,
(b) 00cs n0I rcsIrcI Ihc rghI I0 IrnsIcr Is shrcs,
(c) 00cs n0I lmI Ihc numbcr 0I Is mcmbcrs,
(d) Mkcs Is cc0unIs publc I0r ll I0 scc,
(c) Plccs nvII0n I0 Ihc publc I0 subscrbc I0r ny shrcs 0r
dcbcnIurcs 0I Ihc c0mpny,
(I) App0nImcnI 0I drccI0rs my bc d0nc ndvdully 0n scprIc
rcs0luI0ns. N0Ic, h0wcvcr, IhI 0nc 0I Is mcmbcrs my m0vc
IhI ll drccI0rs bc pp0nIcd by 0nc rcs0luI0n nd whcrc Ihs
s n0I 0pp0scd, Ihcn Ihc publc c0mpny's drccI0rs my bc
pp0nIcd by snglc rcs0luI0n,
(g) Any publc c0mpny cn ssuc Is shrcs nd dcbcnIurcs by wy
0I pr0spccIus 0r sIIcmcnI n lcu 0I pr0spccIus n ppr0prIc
crcumsInccs IIcr prcscnII0n I0 Ihc SccurIcs nd Exchngc
C0mmss0n, nd
(I) Thc nmc 0I Ihc c0mpny shll cnd wIh w0rd
0r .
Thc cpIl sIrucIurc 0I c0mpny c0nssIs 0I 0rdnry shrcs, prcIcrcncc shrcs
nd dcbcnIurcs. Undcr Ihcsc sIrucIurcs, Ihcrc rc dIIcrcnI Iypcs,
Ths s Ihc nIl cpIl wIh whch Ihc c0mpny s rcgsIcrcd. !I d0cs
n0I chngc wIhn sh0rI Imc cxccpI whcrc Ihc cpIl s ncrcscd. !I
s, IhcrcI0rc, Ihc mxmum cpIl I ny gvcn Imc. Thcrc rc spccIcd
mnmum cpIls s sIpulIcd by lw. Thc uIh0rzcd mnmum shrc
cpIl 0I prvIc c0mpny s N0,000.00 nd N500,000.00 I0r publc
c0mpny. Thc subscrbcrs 0I Ihc Mcm0rndum musI I0gcIhcr Ikc shrcs
0I vluc n0I lcss Ihn 25 0I Ihc uIh0rzcd cpIl.
34
Thc p0rI0n 0I Ihc n0mnl cpIl 0r uIh0rzcd cpIl ssucd 0r mdc
vlblc I0 shrch0ldcrs. !I musI n0I I ny Imc bc lcss Ihn 25 0I
Ihc uIh0rzcd cpIl.
Ths s IhI prI 0I Ihc shrc cpIl whch hs bccn ssucd I0 nd pd
I0r by Ihc shrch0ldcrs.
!I s IhI p0rI0n 0I uncllcd cpIl whch c0mpny
lmIcd by shrcs hs, by spccl rcs0luI0n, dcIcrmncd IhI I wll n0I
bc cpblc 0I bcng cllcd up cxccpI I0r Ihc purp0sc 0I wndng up Ihc
c0mpny.
N0Ic IhI n unlmIcd c0mpny, whch rcs0lvcs I0 bc rcgsIcrcd s
lmIcd c0mpny, my pr0vdc I0r rcscrvc shrc cpIl 0n
rcrcgsIrI0n.
Ths mcns shrc 0Ihcr Ihn prcIcrcncc shrc, whch d0cs n0I crry
Ixcd rcIurn 0n nvcsImcnI, I0r cxmplc, 0rdnry shrcs.
Any c0mpny, whcrc uIh0rzcd by Is ArIclcs, Ihc AcI 0r ny 0Ihcr lw,
my ssuc dIIcrcnI clsscs 0I shrcs. Such shrc musI n0I hvc m0rc
Ihn 0nc v0Ic 0r n0 v0Ic I ll. A c0mpny my, h0wcvcr, sub|ccI I0 Ihc
b0vc prncplc, ssuc shrcs hvng prcIcrrcd, dcIcrrcd 0r 0Ihcr spccl
rghIs 0r rcsIrcI0ns, such s, rcgrds dvdcnds 0r rcIurn 0I cpIl.
Thc usul clsscs 0I shrcs rc:
Thcy hvc n0 spccl rghIs nd crry n0 Ixcd rIc 0I rcIurn 0n Ihc
cpIl. Thcy bcr Ihc m|0r Inncl rsk 0I Ihc c0mpny nd rc
IhcrcI0rc 0IIcn cllcd Ihc 0I Ihc c0mpny. An spccI 0I
0rdnry shrc whch s kn0wn s hs
Ihc pymcnI 0I dvdcnds nd rcIurn 0I cpIl dcIcrrcd unIl pymcnI
hs bccn mdc n rcspccI 0I 0Ihcr clsscs 0I shrcs. Thcy rc s0 cllcd
bccusc Ihc I0undcrs 0I Ihc c0mpny usully Ikc Ihcm up. Thcy c0sI
much lcss Ihn Ihc 0rdnry shrcs nd prcIcrcncc shrcs. !n v0Ing
mIIcrs, dcIcrrcd shrch0ldcrs rc m0rc I n dvnIgc c0mprcd
wIh prcIcrcncc shrch0ldcrs wh0 rc rcgrdcd s nvcsI0rs.
Ths my bc n csh 0r I uIh0rzcd by Ihc ArIclcs, by pr0pcrIy 0r scrvccs
nd, I pymcnI s n0I n csh, Ihc c0nsdcrI0n musI bc vlucd by n
cxpcrI. Scc SccI0n 3537 0I CAMA (2004). !I sh0uld bc n0Icd IhI I
I0rmI0n 0I c0mpny, Ihcrc s cIul pymcnI I0r Ihc shrcs.
Mcmbcrshp 0I Ihc c0mpny s mdc up 0I:
342
() Subscrbcrs wh0 rc dccmcd I0 hvc grccd I0 bcc0mc mcmbcrs
nd wh0sc nmcs musI bc cnIcrcd n Ihc rcgsIcr 0I mcmbcrs.
(b) Evcry 0Ihcr pcrs0n wh0 grccs n wrIng I0 bcc0mc mcmbcr
by pymcnI nd ll0ImcnI 0I shrcs nd such pcrs0n's nmc s
cnIcrcd n Ihc rcgsIcr 0I mcmbcrs.
0nly publc c0mpncs cn ssuc Ihcr shrcs 0r dcbcnIurcs I0 Ihc publc,
usully by wy 0I pr0spccIus buI whcrc n0 pr0spccIus s ssucd,
sIIcmcnI n lcu 0I pr0spccIus s Ilcd. Flng Ihc pr0spccIus s n0 l0ngcr
prcrcqusIc I0r Ihc I0rmI0n 0I publc c0mpny. Thc c0mpny my
n0w bc I0rmcd whlc w0rk 0n Ihc pr0spccIus s crrcd 0n, pursunI I0
ssuncc 0I shrcs.
Shrcs rc sd I0 bc ssucd I prcmum whcrc Ihc prcc I whch Ihcy
rc ssucd s hghcr Ihn Ihc pr (n0mnl) vluc 0I Ihc shrc. Thus, Ihc
shrcs 0I c0mpny wIh n0mnl 0r pr vluc 0I N.00 pcr shrc my
bc ssucd I N.20. whcn c0mpny ssucs shrcs I prcmum, Ihc
sum cqul I0 Ihc ggrcgIc m0unI 0r vluc 0I Ihc prcmum 0n Ih0sc
shrcs musI bc IrnsIcrrcd I0 n cc0unI cllcd
Ths cc0unI cnn0I bc uscd I0 py dvdcnd buI cn bc uscd
I0r Ihc I0ll0wng:
() Pyng up unssucd shrcs 0I Ihc c0mpny I0 bc ssucd I0
mcmbcrs s Iully pd b0nus shrcs,
(b) wrIng 0II Ihc prclmnry cxpcnscs 0I Ihc c0mpny 0r Ihc
cxpcnscs 0I 0r c0mmss0n pd 0r dsc0unI ll0wcd 0n ny ssuc
0I shrcs 0I Ihc c0mpny, nd
(c) Pr0vdng I0r Ihc prcmum pyblc 0n rcdcmpI0n 0I rcdccmblc
prcIcrcncc shrcs 0I Ihc c0mpny.
Shrcs my bc ssucd I dsc0unI whch mcns IhI Ihc m0unI pd
by Ihc pplcnIs / subscrbcrs s lcss Ihn Ihc pr (n0mnl) vluc 0I
Ihc shrc. Ths c0uld bc p0ssblc 0nly whcrc rcs0luI0n:
() AuIh0rscs Ihc ssuc 0I shrcs I dsc0unI, 0r
(b) SpccIcs Ihc mxmum rIc 0I dsc0unI I whch Ihc shrcs rc
I0 bc ssucd, nd
(c) SIpulIcs Ihc Imc Irmc 0I Ihc ssuc whch musI bc wIhn Ihc
m0nIh IIcr Ihc dIc 0n whch Ihc ssuc s sncI0ncd by Ihc c0urI
0r wIhn such cxIcndcd Imc s Ihc c0urI my ll0w.
Sub|ccI I0 Ihc pr0vs0ns 0I Ihc !nvcsImcnI nd SccurIcs AcI, Ihc p0wcr
I0 ll0I shrcs s vcsIcd n Ihc c0mpny whch I my dclcgIc I0 Ihc
drccI0rs, sub|ccI I0 Ihc c0ndI0ns 0r drccI0ns IhI my bc mp0scd
by Ihc ArIclcs 0r Ir0m Imc I0 Imc by Ihc c0mpny n 0cncrl MccIngs.
343
Thc mcIh0d 0I pplcI0n I0r ll0ImcnI s dcpcndcnI 0n Ihc Iypc 0I
c0mpny. !n Ihc csc 0I prvIc c0mpny 0r publc c0mpny, whcrc
Ihc c0mpny ssucs shrcs nd mcmbcr ndcIcs Ihc numbcr 0I shrcs
whch hc wshcs I0 purchsc. !n Ihc csc 0I publc c0mpny, whcrc Ihc
ssuc 0I shrcs s publc, sub|ccI I0 ny c0ndI0n IhI my bc mp0scd
by Ihc SccurIcs nd Exchngc C0mmss0n, Ihc pplcI0n I0r
ll0ImcnI s mdc by c0mplcIng nd rcIurnng I0 Ihc c0mpny Ihc I0rm
0I pplcI0n s prcscrbcd by Ihc ArIclcs.
Up0n Ihc rcccpI 0I n pplcI0n, c0mpny shll, whcrc I wh0lly 0r
prIlly cccpIs Ihc pplcI0n, mkc n ll0ImcnI I0 Ihc pplcnI
nd wIhn 42 dys IIcr Ihc ll0ImcnI, n0IIy Ihc pplcnI 0I Ihc IcI 0I
Ihc ll0ImcnI nd numbcr 0I shrcs ll0IIcd I0 hm. Thc pplcI0n s
n 0IIcr I0 Ikc shrcs nd ll0ImcnI m0unIs I0 n cccpIncc. An
pplcnI shll hvc Ihc rghI I ny Imc bcI0rc ll0ImcnI, I0 wIhdrw
Ihc pplcI0n by wrIIcn n0Icc I0 Ihc c0mpny.
SccI0n b0(2) 0I CAMA sIIcs Ihc rcs0ns why c0mpny my wsh I0
purchsc 0r 0wn Is shrcs. Thcy ncludc:
() scIIlng 0r c0mpr0msng dcbI 0r clm sscrIcd by 0r gnsI Ihc
c0mpny,
(b) clmnIng IrcI0nl shrcs,
(c) IulIllng Ihc Icrms 0I n0n - ssgnblc grccmcnI undcr whch Ihc
c0mpny s 0blgcd I0 cqurc Ir0m n 0IIccr 0r cmpl0ycc 0I Ihc
c0mpny,
(d) sIsIyng Ihc clm 0I dsscnIng shrch0ldcr, nd
(c) c0mplyng wIh c0urI 0rdcr.
() Thc shrcs 0I c0mpny shll bc purchscd 0nly 0uI 0I Ihc
c0mpny's pr0IIs whch w0uld 0Ihcrwsc bc vlblc I0r
dvdcnd 0r Ihc pr0cccds 0I Ircsh ssuc 0I shrcs, mdc I0r Ihc
purp0sc 0I Ihc purchsc.
(b) Rcdccmblc shrcs shll n0I bc purchscd I prcc grcIcr
Ihn Ihc l0wcsI prcc I whch Ihcy rc rcdccmblc 0r shll bc
rcdccmblc I Ihc ncxI dIc IhcrcIIcr I whch Ihcy rc duc 0r
lblc I0 bc rcdccmcd.
SccI0n b5 0I CAMA, ll0ws subsdry I0 cqurc 0r rcIn Ihc shrcs
0I Is h0ldng c0mpny, undcr Ihc I0ll0wng c0ndI0ns:
() Thc subsdry c0mpny my cqurc Ihc shrcs 0I Is h0ldng
c0mpny s pcrs0nl rcprcscnIIvc 0r IrusIcc 0I Is h0ldng
c0mpny, nd
344
(b) A subsdry c0mpny whch hd cqurcd Ihc shrcs 0I Is
h0ldng c0mpny bcI0rc 990, shll c0nInuc I0 rcIn such
shrcs buI shll n0I bc cnIIlcd I0 v0Ic I Ihc mccIngs 0I Is
h0ldng c0mpny, nd shll n0I cqurc IurIhcr shrcs n Ihc
h0ldng c0mpny, prIculrly whcrc Ihcr sccurIy my bc n
dngcr.
Ths s n ckn0wlcdgcmcnI 0I ndcbIcdncss ssucd by c0mpny I0 lcndcr
nd I s n0rmlly by wy 0I dccd.
Ths s c0llIcrl gvcn by dcbI0r I0 sccurc l0n nd I s mcnI I0r
pr0IccI0n nd ssurncc IhI Ihc l0n wll bc pd whcn duc.
() Ths s dcbcnIurc IhI s mdc rrcdccmblc
0r rcdccmblc I vcry l0ng pcr0d 0I Imc.
(b) Ths s Iypc IhI my bc c0nvcrIcd I0 Ihc
shrcs 0I Ihc c0mpny whch ssucd I. Scc S. 72 0I CAMA 2004.
(c) SccurIy hcrc my cIhcr bc Ixcd 0r
Il0Ing. Scc S. 73 0I CAMA 2004.
(d) Ths my bc rcdccmcd I ny Imc. Scc S.
74 0I CAMA 2004.
F0r dcIlcd pr0vs0ns 0I Ihc CAMA 0n Ihc crcI0n 0I 0cbcnIurcs nd 0cbcnIurc
sI0ck, plcsc rcIcr I0 SccI0ns bb I0 20 0I Ihc AcI.
Shrch0ldcrs' Fund s mdc up 0I 0rdnry Shrc CpIl, PrcIcrcncc Shrc
CpIl nd Rcscrvcs.
As crlcr dscusscd b0vc, Ihcy rc prI 0I Ihc shrc cpIl 0I Ihc c0mpny,
wIh dIIcrcnI rghIs I0 dvdcnd nd cpIl rcpymcnI n cc0rdncc wIh Ihc
ArIclcs 0I Ass0cI0n 0I Ihc C0mpny.
!I s n ppr0prI0n 0I Ihc c0mpny's pr0II durng Inncl ycr.
A rcvcnuc rcscrvc s whcrc n m0unI hs bccn v0lunIrly IrnsIcrrcd Ir0m
Ihc pr0II nd l0ss ppr0prI0n cc0unI by dcbIng I, Ihus rcducng Ihc m0unI
0I pr0IIs lcII vlblc I0r csh dvdcnd purp0scs. !I mghI bc I0r s0mc
prIculr purp0sc, 0r Ihc m0unI c0uld bc cllcd up n IuIurc I0 hclp swcll Ihc
pr0II sh0wn n Ihc pr0II & l0ss ppr0prI0n cc0unI, s bcng vlblc I0r
dvdcnd purp0scs.
345
A c0mpny mghI crcIc gcncrl rcscrvc cc0unI I0 Ikc crc 0I unI0rcsccn
crcumsInccs, nsIcd 0I pyng 0uI ll Ihc m0unI n I0rm 0I dvdcnd.
Ths s rcscrvc IhI s n0I rcdly vlblc I0r IrnsIcr I0 Ihc pr0II nd l0ss
ppr0prI0n cc0unI, I0 swcll Ihc pr0II sh0wn s vlblc I0r csh dvdcnd
purp0sc.
Thc I0ll0wng Iypcs 0I cpIl rcscrvcs rc crcIcd n cc0rdncc wIh Ihc AcI:
() CpIl RcdcmpI0n Rcscrvc Fund s crcIcd by lw I0 mccI Ihc
I0ll0wng:
() Pyng up unssucd shrcs 0I Ihc c0mpny s Iully pd b0nus
ssucs, nd
() Applcd n rcdccmng prcIcrcncc shrcs 0r dcbcnIurcs.
(b) Shrc Prcmum Acc0unI: Ths s n cc0unI crcIcd Ir0m ssung shrcs
I n m0unI hghcr Ihn Ihc n0mnl vluc. Thc cc0unI s uscd I0
mccI Ihc I0ll0wng:
() wrIng 0II prclmnry cxpcnscs,
() wrIng 0II cxpcnscs nd c0mmss0n pd 0n Ihc ssuc 0I shrcs
nd dcbcnIurcs,
() wrIng 0II dsc0unI 0n shrcs 0r dcbcnIurcs ssucd, nd
(v) Pr0vdng I0r ny prcmum pyblc 0n rcdcmpI0n.
(c) RcvluI0n Acc0unI: A rcvluI0n cc0unI s usully crcIcd whcn Ihc
vluc 0I cxsIng sscIs rc cIhcr ncrcscd 0r dccrcscd n lnc wIh
Ihc dcIIcs 0I Ihc mrkcI.
Evcry c0mpny musI kccp cc0unIng
rcc0rds IhI wll bc suIIccnI I0 sh0w nd cxpln Ihc IrnscI0ns 0I Ihc
c0mpny s0 s I0:
() 0scl0sc wIh rcs0nblc ccurcy, I ny p0nI n Imc, Ihc Inncl
p0sI0n 0I Ihc c0mpny, nd
(b) Enblc Ihc drccI0rs I0 cnsurc IhI Ihc Inncl sIIcmcnIs c0mply wIh
Ihc rcqurcmcnIs 0I SccI0n 33 0I CAMA 2004 s I0 I0rm nd c0nIcnIs
0I Ihc c0mpny's Inncl sIIcmcnIs.
() EnIrcs Ir0m dy I0 dy 0I ll sums 0I m0ncy rcccvcd nd cxpcndcd by
Ihc c0mpny nd Ihc mIIcrs n rcspccI 0I whch Ihcy Ikc plcc,
(b) A rcc0rd 0I Ihc sscIs nd lblIcs 0I Ihc c0mpny.
Thc cc0unIng rcc0rds 0I c0mpny dclng n g00ds shll c0nIn, m0ngsI
0Ihcr Ihngs:
() SIIcmcnIs 0I sI0ck hcld I Ihc cnd 0I Ihc Inncl ycr,
(b) SIIcmcnIs 0I sI0ck Ikngs Ir0m whch Ihc nnul sIIcmcnIs 0I sI0cks
n () b0vc rc prcprcd, nd
(c) SIIcmcnIs 0I ll g00ds s0ld nd purchscd 0Ihcr Ihn by rcIl Irdc.
34b
Thc cc0unIng rcc0rds
shll bc kcpI I Ihc c0mpny's rcgsIcrcd 0IIcc 0r such 0Ihcr plcc n Ngcr
s Ihc drccI0rs Ihnk II nd wll I ll Imcs bc 0pcn I0 nspccI0n by 0IIccrs
0I Ihc c0mpny. A c0mpny s rcqurcd I0 kccp Ihc cc0unIng rcc0rds I0r
pcr0d 0I sx (b) ycrs Ir0m Ihc dIc 0n whch Ihcy wcrc mdc.
Thc drccI0rs musI prcprc
Inncl sIIcmcnIs I0r Ihc rclcvnI cc0unIng pcr0d. AI Ihc IrsI mccIng 0I
Ihc 0rd IIcr nc0rp0rI0n, Ihc drccI0rs musI dcIcrmnc I0 whI dIc cch
ycr, Ihc Inncl sIIcmcnIs shll bc mdc up nd n0IIy Ihc C0mmss0n
wIhn 4 dys 0I Ihc dcIcrmnI0n.
(SccI0n 334) Thc Inncl
sIIcmcnIs 0I c0mpny sh0uld ncludc:
() SIIcmcnI 0I Ihc cc0unIng p0lccs,
(b) Thc blncc shccI s I Ihc lsI dy 0I Ihc Ihc c0mpny's cc0unIng
ycr,
(c) A pr0II nd l0ss cc0unI 0r n Ihc csc 0I c0mpny n0I Irdng
I0r pr0II, nd nc0mc nd cxpcndIurc cc0unI I0r Ihc ycr,
(d) N0Ics 0n Ihc cc0unIs,
(c) Thc udI0rs' rcp0rI,
(I) Thc drccI0rs' rcp0rI,
(g) A csh Il0w sIIcmcnI,
(h) A vlucddcd sIIcmcnI I0r Ihc ycr,
() A Ivcycr Inncl summry, nd
(|) !n Ihc csc 0I h0ldng c0mpny, Ihc gr0up Inncl sIIcmcnIs.
H0wcvcr, Ihc Inncl sIIcmcnIs 0I prvIc c0mpny nccd n0I ncludc mIIcrs
sIIcd n prgrphs (), (g), (h), nd () b0vc.
Thc 0rccI0rs 0I c0mpny shll n rcspccI 0I cch ycr,
prcprc rcp0rI:
() C0nInng Ir vcw 0I Ihc dcvcl0pmcnI 0I Ihc c0mpny nd Is
subsdrcs durng Ihc Inncl ycr, nd
(b) SIIng Ihc m0unI, I ny, whch Ihcy rcc0mmcnd sh0uld bc pd s
dvdcnd nd Ihc m0unI Ihcy pr0p0sc I0 crry I0 rcscrvc.
Undcr SccI0n 35 0I CAMA 2004, c0mpny qulIcs s smll c0mpny n
ycr, I n IhI ycr, Ihc I0ll0wng c0ndI0ns rc sIsIcd.
() Thc c0mpny s prvIc c0mpny hvng shrc cpIl.
(b) !Is Iurn0vcr I0r IhI ycr s n0I m0rc Ihn N2 mll0n 0r such m0unI s
my bc Ixcd by Ihc C0rp0rIc AIIrs C0mmss0n.
(c) Thc c0mpny's ncI sscIs vluc s n0I m0rc Ihn N mll0n 0r
such m0unI s my bc Ixcd by Ihc C0mmss0n.
(d) N0nc 0I Is mcmbcrs s n lcn.
347
(c) N0nc 0I Is mcmbcrs s 00vcrnmcnI 0r 00vcrnmcnI c0rp0rI0n 0r
gcncy 0r Is n0mncc.
(I) Thc drccI0rs h0ld n0I lcss Ihn 5 0I Ihc c0mpny's cquIy
shrc cpIl.
Thc AcI ll0ws smll c0mpny I0 dclvcr whch s
n bbrcvIcd vcrs0n 0I Ihc Iull blncc shccI. A smll c0mpny s n0I
rcqurcd I0 dclvcr Is pr0II nd l0ss cc0unI I0 Ihc C0rp0rIc AIIrs
C0mmss0n.
Evcry c0mpny shll, I lcsI, 0ncc n cvcry ycr, mkc nd dclvcr I0 Ihc
C0mmss0n, n nnul rcIurn buI Ihc c0mpny nccd n0I mkc rcIurn n Ihc
ycr 0I Is nc0rp0rI0n. Thc nnul rcIurn 0I c0mpny hvng shrcs 0Ihcr
Ihn smll c0mpny shll c0nIn, m0ng 0Ihcr Ihngs, rcgsIcr 0I mcmbcrs
nd dcbcnIurc h0ldcrs, ndcbIcdncss 0I Ihc c0mpny, psI nd prcscnI mcmbcrs
nd drccI0rs.
SccI0n C 0I Ihc Scc0nd Schcdulc 0I Ihc AcI, pr0vdcs Iw0 blncc shccI I0rmIs
nd I0ur nc0mc sIIcmcnI I0rmIs. A rcp0rIng cnIIy s rcqurcd I0 ch00sc
ny 0I Ihc I0rmIs n prcscnIng Is blncc shccI nd pr0II nd l0ss cc0unIs.
!n Ihs sccI0n 0I Ihs chpIcr, wc prcscnI 0nly Ihc I0rmI rclIng I0 0r0up
C0mpncs.
S/N0 0cscrpI0ns Am0unI
Turn0vcr X
2 C0sI 0I Slcs (X)
3 0sIrbuI0n cxpcnscs (X)
4 AdmnsIrI0n cxpcnscs (X)
5 0pcrIng nc0mc X
b 0Ihcr 0pcrIng nc0mc X
7 !nc0mc Ir0m shrcs n gr0up c0mpncs X
8 !nc0mc Ir0m shrcs n rclIcd c0mpncs X
9 !nc0mc Ir0m 0Ihcr Ixcd sscI nvcsImcnI X
0 0Ihcr nIcrcsI rcccvblcs nd smlr nc0mc X
Am0unIs wrIIcn 0II nvcsImcnIs (X)
2 Accrucd nIcrcsI cxpcnscs nd smlr chrgcs (X)
3 Tx 0n pr0II & l0ss 0n 0rdnry cIvIcs (X)
4 Pr0II & l0ss 0n 0rdnry cIvIcs IIcr IxI0n X
5 ExIr0rdnry nc0mc X
b ExIr0rdnry chrgcs (X)
7 ExIr0rdnry pr0II 0r l0ss X
8 Tx 0n cxIr0rdnry pr0II & l0ss (X)
9 0Ihcr Ixcs undcr Ihc b0vc Icms (X)
348
20 Pr0II 0r l0ss I0r Ihc Inncl ycr X
2 Ernngs pcr shrc X
22 0vdcnd pcr shrc X
Cllcd Up Shrc CpIl n0I pd X
2 Fxcd AsscIs: X
. Lnd & buldng X
b. PlnI & Mchncry X
c. FxIurcs, FIIngs, T00ls & EqupmcnI X
d. C0nsIrucI0n n pr0grcss X
c. Prc pymcnI I0r sI0cks n IrnsI X
XX
3 L0ngTcrm !nvcsImcnIs:
. Shrcs n gr0up c0mpncs X
b. L0n I0 gr0up c0mpncs X
c. Shrcs n rclIcd c0mpncs X
d. L0n I0 rclIcd c0mpncs X
c. 0Ihcr nvcsImcnIs 0Ihcr Ihn l0n X
I. 0Ihcr l0ns X
g. 0wn shrcs X
h. 0nds, 0cbcnIurcs nd Fcdcrl 00vcrnmcnI 0cvcl0pmcnI SI0cks X
XX
4 0cIcrrcd Chrgcs:
. 0cvcl0pmcnI c0sI X
b. C0nccss0ns, PIcnIs, Lccnccs, Frnchsc, Trdc mrks nd
smlr rghI X
c. 000dwll X
d. PrcpymcnI I0r scrvccs I0 bc rcccvcd X
XX
5 CurrcnI AsscIs:
. SI0cks X
b. Rw mIcrls nd c0nsumblcs X
c. w0rk n pr0grcss X
d. Fnshcd g00ds nd g00ds wIng slcs X
c. PrcpymcnI I0r sI0cks n IrnssI X
X
b 0cbI0rs:
. Trdc dcbI0rs X
b. Am0unI 0wcd by Ihc gr0up c0mpncs X
c. Am0unI 0wcd by rclIcd c0mpncs X
d. 0Ihcr dcbI0rs X
c. Cllcd Up shrc cpIl n0I pd X
I. Prc-pymcnI nd ccrucd nc0mc X
X
349
7 Sh0rI Tcrm !nvcsImcnIs:
. Shrcs n gr0up c0mpncs X
b. 0wn shrcs X
c. 0Ihcr nvcsImcnI X
X
8 Csh I bnk nd n hnd X
X
9 Prc - pymcnIs nd ccrucd nc0mc X
X
0 CrcdI0rs, m0unI Illng duc wIhn 0nc ycr:
. 0cbcnIurc l0ns X
b. nk l0ns/ 0vcrdrIIs X
c. PymcnIs rcccvcd 0n cc0unI X
d. Trdc crcdI0rs X
c. lls 0I cxchngc pyblc X
I. Am0unIs 0wcd I0 gr0up c0mpncs X
g. Am0unIs 0wcd I0 rclIcd c0mpncs X
h. 0Ihcr crcdI0rs ncludng IxI0n nd PAYE X
. Accruls nd dcIcrrcd nc0mc X
XX
NcI currcnI sscIs /(lblIcs) X
2 T0Il sscIs lcss currcnI lblIcs XX
3 CrcdI0rs: m0unI Illng duc IIcr m0rc Ihn 0nc ycr:
. 0cbcnIurc l0ns X
b. nk l0ns nd 0vcrdrIIs X
c. PymcnI rcccvcd 0n cc0unI X
d. Trdc crcdI0rs X
c. lls 0I cxchngc pyblc X
I. Am0unI 0wcd I0 gr0up c0mpncs X
g. Am0unI 0wcd I0 rclIcd c0mpncs X
h. 0Ihcr crcdI0rs ncludng IxI0n X
. Accruls nd dcIcrrcd nc0mc X
X
4 Pr0vs0ns I0r lblIcs nd chrgcs:
. Pcns0ns nd smlr 0blgI0ns X
b. TxI0n, ncludng dcIcrrcd IxI0n X
c. 0Ihcr pr0vs0ns X
X
5 Accruls nd dcIcrrcd nc0mc X
XX
b CpIl nd rcscrvcs:
. Cllcd Up shrc cpIl X
b. Shrc prcmum cc0unI X
c. RcvluI0n rcscrvcs X
350
d. 0Ihcr rcscrvcs:
() CpIl rcdcmpI0n rcscrvcs X
() Rcscrvcs I0r 0wn shrcs X
() Rcscrvcs pr0vdcd I0r by Ihc rIclcs 0I ss0cI0n X
(v) 0Ihcr rcscrvcs X
c. Pr0II & l0ss cc0unI X
XX
Thc sIIuI0ry bckng I0r Ihc csIblshmcnI nd rcgulI0n 0I nks nd 0Ihcr
N0nnk Fnncl !nsIIuI0ns (0sc0unI H0uscs, Fnncc H0uscs, c.I.c cxccpI
!nsurncc C0mpncs) n Ngcr s Ihc nks nd 0Ihcr Fnncl !nsIIuI0ns
AcI, 99 (s mcndcd). S0mc 0I Ihc cc0unIng rcqurcmcnIs 0I Ihc AcI rc
sIIcd bcl0w.
Thc PrcsdcnI shll 0n Ihc dvcc 0I Ihc CcnIrl nk 0I Ngcr (CN) dcIcrmnc,
Ir0m Imc I0 Imc, Ihc ppr0prIc mnmum pd up shrc cpIl 0I cch
cIcg0ry 0I bnks sub|ccI I0 subsccI0n () 0I Ihs SccI0n. Thc mnmum
shrch0ldcrs' Iund 0I bnkng nsIIuI0ns shll n rcspccI 0I:
() Unvcrsl nks bc N25 bll0n
(b) urcu dc Chngc bc N500 mll0n
(c) Mcr0 Inncc bnks bc N20 mll0n
(d) M0rIggc !nsIIuI0ns bc N2 bll0n
Thc 0F!A rcqurcs cvcry bnk I0 mnIn wIh Ihc CN, csh rcscrvcs nd
spccl dcp0sI nd h0ld spccIcd lqud sscIs 0r sIblzI0n sccurIcs, s
Ihc csc my bc, s prcscrbcd by Ihc CcnIrl nk by vrIuc 0I SccI0n 39 0I
CcnIrl nk 0I Ngcr AcI, 99 (s mcndcd) whcrc b0Ih sscIs nd
lblIcs rc duc.
F0r Ihc purp0sc 0I Ihs sccI0n, spccIcd lqud sscIs rc:
() Currcncy n0Ics nd c0ns whch rc lcgl Icndcr n Ngcr,
(b) lnccs I Ihc bnk,
(c) NcI blnccs I ny lccnscd bnk nd m0ncy I cll n Ngcr,
(d) Trcsury blls nd Ircsury ccrIIcIcs ssucd by Ihc Fcdcrl 00vcrnmcnI
(c) !nlnd blls 0I cxchngc nd pr0mss0ry n0Ics rc dsc0unIblc I Ihc
CcnIrl nk,
(I) SI0ck ssucd by Ihc Fcdcrl 00vcrnmcnI wIh such dIcs 0I mIurIy s
my bc ppr0vcd by Ihc CcnIrl nk, nd
(g) Ncg0Iblc CcrIIcIc 0I dcp0sI ppr0vcd by Ihc CcnIrl nk.
(h) Such 0Ihcr ncg0Iblc nsIrumcnIs s my Ir0m Imc I0 Imc bc ppr0vcd
by Ihc CcnIrl nk.
35
Thc AcI ls0 rcqurcs cvcry bnk I0 mnIn rcscrvc Iund. Ech ycr, bnk
musI IrnsIcr n m0unI I0 Ihc rcscrvc Iund, cqul I0 nd n0I lcss Ihn 30 0I
Ihc pr0II IIcr Ix, I Ihc m0unI n Ihc rcscrvc s lcss Ihn Ihc pd - up shrc
cpIl, nd 5 0I Ihc pr0II IIcr Ix, I Ihc m0unI n Ihc rcscrvc Iund s
cqul 0r grcIcr Ihn Ihc pd - up shrc cpIl.
N0 bnk shll py dvdcnd unIl:
() All Is prclmnry cxpcnscs, 0rgnzI0nl cxpcnscs, shrc scllng
cxpcnscs, br0kcrgc, l0sscs ncurrcd nd 0Ihcr cpIlzcd cxpcnscs
n0I rcprcscnIcd by Ingblc sscIs hvc bccn wrIIcn-0II,
(b) AdcquIc pr0vs0n hs bccn mdc I0r c0nIngcnI l0sscs 0n rsk sscIs,
lblIcs, 0II blncc shccI c0mmImcnI, nd
(c) !I hs c0mplcd wIh cpIl rI0 rcqurcmcnI spccIcd by SccI0n 3()
0I Ihc AcI.
CN M0ncIry nd CrcdI P0lccs rcqurc cch nk I0 scI sdc 0 pcr
ccnI 0I Is pr0IIs I0r Ihc Inncng nd pr0m0I0n 0I Smll Sclc
!ndusIrcs n Ngcr.
PrudcnIl gudclncs ssucd by Ihc CN rcqurc bnks I0 clssIy
n0npcrI0rmng l0ns nd dvnccs, nd I0 pr0vdc I0r l0n mprmcnI
s I0ll0ws:
90 dys buI lcss Ihn 80 dys SubsIndrd 0
80 dys buI lcss Ihn 3b0 dys 00ubIIul 50
3b0 dys nd 0vcr L0sI 00
Thc rcgulI0ry b0dy I0r Ihc !nsurncc !ndusIry s Ihc NI0nl !nsurncc
C0mmss0n (NA!C0M), whlc Ihc rcgulI0ry sIIuIc s Ihc !nsurncc AcI, 2003
(s mcndcd). RclcvnI sccI0ns 0I Ihc sIIuIc rc summrscd bcl0w:
(SccI0n 9 () )
Thc AcI mndIcs cvcry nsurncc busncss n Ngcr I0
mnIn spccIcd mnmum pd up cpIl whch hs bccn rcvcwcd by
NA!C0M s I0ll0ws:
() LIc !nsurncc n0I lcss Ihn N2 bll0n,
(b) 0cncrl !nsurncc n0I lcss Ihn N3 bll0n,
(c) C0mp0sIc !nsurncc usncss n0I lcss Ihn N5 bll0n,
(d) Rcnsurncc busncss n0I lcss Ihn N0 bll0n.
352
(SccI0n 0)
Ths SccI0n rcqurcs IhI:
() An nsurcr nIcndng I0 c0mmcncc nsurncc busncss n Ngcr, IIcr
Ihc c0mmcnccmcnI 0I Ihc AcI, shll dcp0sI Ihc cquvlcnI 0I 50 pcr
ccnI 0I Ihc PdUp Shrc CpIl, rcIcrrcd I0 b0vc, wIh Ihc CcnIrl
nk 0I Ngcr. Ths dcp0sI s cllcd SIIuI0ry 0cp0sI.
(b) Up0n rcgsIrI0n s n nsurcr, 80 pcr ccnI 0I Ihc sIIuI0ry dcp0sI shll
bc rcIurncd wIh nIcrcsI n0I lIcr Ihn b0 dys IIcr rcgsIrI0n.
(c) !n Ihc csc 0I cxsIng c0mpncs, n cquvlcnI 0I 0 pcr ccnI 0I Ihc
mnmum pdup shrc cpIl sIpulIcd n SccI0n 9, shll bc
dcp0sIcd wIh Ihc CN.
(d) SIIuI0ry 0cp0sI shll IIrcI nIcrcsI I Ihc mnmum lcndng rIc by
Ihc CN 0n cvcry 1nury 0I cch ycr.
(c) Any sh0rI Ill n Ihc sIIuI0ry dcp0sI musI bc rcplcnshcd wIhn 30
dys.
(SccI0ns 7 nd 8)
SccI0n 7(), rcqurcs n nsurcr I0 kccp nd mnIn I Is prncpl 0IIcc,
Ihc I0ll0wng rcc0rds:
() Thc Mcm0rndum nd ArIclcs 0I Ass0cI0n 0r 0Ihcr cvdcncc 0I Ihc
C0nsIIuI0n 0I Ihc nsurcr,
(b) A rcc0rd c0nInng Ihc nmcs nd ddrcsscs 0I Ihc 0wncrs 0I Ihc
nsurncc busncss, whcIhcr kn0wn s, 0r cllcd shrch0ldcrs 0r
0Ihcrwsc.
(c) Thc mnuIcs 0I ny mccIng 0I Ihc 0wncrs nd 0I Ihc p0lcy mkng
cxccuIvcs (whcIhcr kn0wn s 0r cllcd Ihc 0rd 0I 0rccI0rs)
(d) A rcgsIcr 0I ll p0lccs, n whch shll bc cnIcrcd, n rcspccI 0I cvcry
p0lcy ssucd, Ihc nmcs nd ddrcsscs 0I Ihc p0lcyh0ldcrs, Ihc dIc
whcn p0lcy ws cIIccIcd nd rcc0rd 0n ny IrnsIcr, ssgnmcnI 0r
ny IrnsIcr, ssgnmcnI 0r n0mnI0n 0I whch Ihc nsurcr hs n0Icc.
(c) A rcgsIcr 0I clms, n whch shll bc cnIcrcd, cvcry clm mdc I0gcIhcr
wIh Ihc dIc 0I clm, Ihc nmcs nd ddrcsscs 0I Ihc clmnI nd
Ihc dIc 0n whch Ihc clm ws scIIlcd, 0r n Ihc csc 0I clm whch s
rcpudIcd, Ihc gr0unds I0r Ihc rc|ccI0n 0r n Ihc csc 0I lIgI0n, Ihc
prIculrs 0I Ihc lIgnIs nd Ihc c0urI n Ihs mIIcr.
(I) A rcgsIcr 0I nvcsImcnIs, sh0wng Ih0sc whch rc IIrbuIblc I0 Ihc
nsurncc Iunds nd Ih0sc whch rc n0I, nd ls0 ny lIcrI0n n
Ihcr vlucs, Ir0m Imc I0 Imc.
(g) A rcgsIcr 0I Is sscIs.
(h) A rcgsIcr 0I rcnsurncc ccdcd, sh0wng scprIcly Ih0sc ccdcd n
Ngcr nd Ih0sc ccdcd 0uIsdc Ngcr.
() A csh b00k.
(|) A currcnI cc0unI b00k.
(k) A rcgsIcr 0I 0pcn p0lccs, n rcspccI 0I mrnc nsurncc IrnscI0ns,
nd mngcmcnI rcp0rI by cxIcrnl udI0rs.
353
SccI0n 7(2), rcqurcs lIc nsurncc busncss, I0 mnIn nd kccp Ihc
I0ll0wng ddI0nl rcc0rds:
() A rcgsIcr 0I ssurcd, undcr gr0up p0lccs,
(b) A rcgsIcr 0I l0ns 0n p0lccs,
(c) A rcgsIcr 0I csh surrcndcrcd vlucs, nd
(d) A rcgsIcr 0I lpscd nd cxprcd p0lccs.
SccI0n 8(), mndIcs rcnsurncc busncss, I0 kccp nd mnIn I Is
prncpl 0IIcc, Ihc I0ll0wng rcc0rds:
() Thc Mcm0rndum nd ArIclcs 0I Ass0cI0n 0r 0Ihcr cvdcncc 0I Ihc
C0nsIIuI0n 0I Ihc rcnsurcr,
(b) Rcc0rds c0nInng Ihc nmcs nd ddrcsscs 0I Ihc 0wncrs 0I Ihc
rcnsurcr (whcIhcr kn0wn s 0r cllcd shrch0ldcrs 0r 0Ihcrwsc),
(c) MnuIcs 0I ny mccIng 0I Ihc 0wncrs nd 0I Ihc p0lcy mkng
cxccuIvcs (whcIhcr kn0wn s Ihc b0rd 0I drccI0rs 0r 0Ihcrwsc),
(d) A rcgsIcr 0I ll IrcIcs, n whch shll bc cnIcrcd, n rcspccI 0I cvcry
IrcIy ssucd, Ihc nmc 0I Ihc ccdnI, nd Ihc dIc whcn Ihc IrcIy ws
cIIccIcd,
(c) A rcgsIcr 0I ll clms, n whch shll bc cnIcrcd, cvcry clm mdc
I0gcIhcr wIh Ihc dIc 0I clm, Ihc nmc 0I Ihc ccdnI 0r nsurcd, Ihcr
pr0p0rI0nIc shrc nd Ihc dIc Ihc clm s scIIlcd,
(I) A rcgsIcr 0I cvcnIs, sh0wng Ih0sc whch rc IIrbuIblc I0 Ihc nsurncc
Iunds nd Ih0sc whch rc n0I nd ls0 ny lIcrI0n n vluc Ir0m
Imc I0 Imc,
(g) A rcgsIcr 0I AsscIs,
(h) A rcgsIcr 0I busncss 0r rcIr0ccss0n, sh0wng scprIcly Ih0sc ccdcd
wIhn nd 0uIsdc Ngcr,
() A rcgsIcr 0I Ncw nd ExsIng ClcnIs,
(|) A csh b00k, nd
(k) 00mcsIc 0r mngcmcnI rcp0rI prcprcd by Ihc cxIcrnl udI0rs.
A lIc rcnsurncc busncss, shll kccp Ihc I0ll0wng ddI0nl rcc0rds:
() A rcgsIcr 0I ssurcd, undcr gr0up p0lccs,
(b) A rcgsIcr 0I cnccllcd, lcscd nd cxprcd p0lccs, nd
(c) A rcgsIcr 0I clms, sh0wng Ihc nmcs 0I Ihc ccdnI nd whcn Ihc
clm s scIIlcd.
SccI0n 9(), rcqurcs cvcry nsurcr, wh0 crrcs 0n Ihc Iw0 clsscs 0I nsurncc
busncss, I0 cnIcr ll rcccpIs 0I cch 0I Ih0sc clsscs 0I nsurncc busncss, n
scprIc nd dsIncI cc0unI. ScprIc nsurncc Iunds rc ls0 rcqurcd
I0r cch clss 0I nsurncc busncss nd, n Ihc csc 0I lIc nsurncc busncss,
Ihcrc sh0uld bc:
() Ihc ndvdul lIc nsurncc busncss Iund,
(b) Ihc gr0up lIc nsurncc busncss nd pcns0n Iund, nd
(c) hclIh nsurncc busncss.
354
SccI0n 9(2), c0nIns Ihc I0ll0wng ddI0nl rcqurcmcnIs:
() !n Ihc csc 0I lIc nsurncc busncss, Ihc lIc busncss Iunds, shll bc
sum n0I lcss Ihn Ihc mIhcmIcl rcscrvc, nd
(b) !n Ihc csc 0I gcncrl nsurncc busncss, Ihc nsurcr s rcqurcd I0
mnIn pr0vs0ns I0r uncxprcd rsk nd pr0vs0ns I0r 0uIsIndng
clms, ncludng n Ihc csc 0I Ihc lIIcr, pr0vs0ns csImIcd I0 pr0vdc
I0r Ihc cxpcnscs 0I d|usImcnI 0r scIIlcmcnI 0I such clms.
Thc nsurncc Iund 0I cch prIculr clss, shll:
() bc bs0luIcly Ihc sccurIy 0I Ihc p0lcy h0ldcrs 0I IhI clss, s Ih0ugh I
bcl0ngs I0 n nsurcr crryng 0n 0Ihcr busncss Ihn nsurncc busncss
0I IhI clss,
(b) n0I bc lblc I0r ny c0nIrcI 0I Ihc nsurcr I0r whch I w0uld n0I hvc
bccn lblc, hd Ihc busncss 0I Ihc nsurcr bccn 0nly IhI 0I prIculr
nsurncc clss, nd
(c) n0I bc pplcd drccIly 0r ndrccIly, I0r purp0sc 0Ihcr Ihn Ih0sc 0I
Ihc clss 0I busncss, I0 whch Ihc Iund s pplcblc.
(SccI0ns 20 23)
SccI0n 20(), rcqurcs n nsurcr, n rcspccI 0I Is gcncrl busncss, I0 csIblsh
nd mnIn Ihc I0ll0wng pr0vs0ns pplcblc n rcspccI 0I cch clss 0I
nsurncc busncss:
() whch shll bc clculIcd 0n Imc
pp0nImcnI bss 0I Ihc rsks cccpIcd n Ihc ycr.
(b) whch shll bc crcdIcd wIh n m0unI
cqul I0 Ihc I0Il csImIcd m0unI 0I ll 0uIsIndng clms wIh
IurIhcr m0unI rcprcscnIng 0 pcr ccnI 0I Ihc csImIcd Igurc I0r
0uIsIndng clms n rcspccI 0I clms ncurrcd buI n0I rcp0rIcd I Ihc
cnd 0I Ihc ycr undcr rcvcw nd
Undcr SccI0n 2
() An nsurcr shll csIblsh nd mnIn c0nIngcncy rcscrvcs I0 c0vcr
IlucIuI0ns n sccurIcs nd vrI0ns n sIIsIcl csImIcs.
(b) Thc c0nIngcncy rcscrvcs shll bc crcdIcd wIh n m0unI n0I lcss Ihn
3 pcr ccnI 0I Ihc I0Il prcmum 0r 20 pcr ccnI 0I Ihc ncI pr0II (whch
cvcr s grcIcr) nd Ihc m0unI shll ccumulIc unIl I rcchcs Ihc
m0unI 0I Ihc mnmum pd up cpIl 0r 50 pcr ccnI 0I Ihc 0I Ihc ncI
prcmum (whch cvcr s grcIcr).
SccI0n 22(), rcqurcs n nsurcr mnIn Ihc I0ll0wng rcscrvcs n rcspccI
0I Is lIc nsurncc busncss.
() A whch shll bc crcdIcd wIh n m0unI cqul I0
Ihc ncI lblIcs 0n p0lccs n I0rcc I Ihc Imc 0I Ihc cIurl vluI0n
nd n ddI0nl 25 pcr ccnI 0I ncI prcmum I0r cvcry ycr bcIwccn
vluI0n dIc, nd
(b) A whch shll bc crcdIcd wIh n m0unI
cqul I0 pcr ccnI 0I Ihc gr0ss prcmum 0r 0 pcr ccnI 0I Ihc pr0IIs
(whch cvcr s grcIcr) nd ccumulIcd unIl I rcchcs Ihc m0unI 0I
Ihc mnmum pd up cpIl.
355
A rcnsurcr shll csIblsh gcncrl rcscrvc Iund whch shll bc crcdIcd wIh
n m0unI:
() N0I lcss Ihn 50 pcr ccnI 0I Ihc rcnsurcr's gr0ss pr0II I0r Ihc ycr, whcrc
Ihc Iund s lcss Ihn Ihc uIh0rscd cpIl 0I Ihc nsurcr, nd
(b) N0I lcss 25 pcr ccnI 0I Ihc rcnsurcr's gr0ss pr0II I0r Ihc ycr, whcrc Ihc
Iund s cqul I0 0r cxcccds Ihc uIh0rscd cpIl 0I Ihc rcnsurcr.
(SccI0n 24 () )
Thc AcI IurIhcr rcqurcs n nsurcr I0 mnIn I ll Imcs, n rcspccI 0I Is
gcncrl busncss, mrgn 0I s0lvcncy, bcng Ihc cxccss 0I Ihc vluc 0I Is
dmssblc sscIs n Ngcr 0vcr Is lblIcs n Ngcr, c0nssIng 0I:
() Pr0vs0n I0r uncxprcd rsks,
(b) Pr0vs0ns I0r 0uIsIndng clms,
(c) Pr0vs0n I0r clms ncurrcd buI n0I ycI rcp0rIcd, nd
(d) Funds I0 mccI 0Ihcr lblIcs.
Thc mrgn 0I s0lvcncy shll n0I bc lcss Ihn 5 pcr ccnI 0I Ihc gr0ss prcmum
nc0mc lcss rcnsurncc prcmum pd 0uI durng Ihc ycr undcr rcvcw 0r Ihc
mnmum pd up cpIl, whchcvcr s grcIcr.
Thc AcI dcIncs dmssblc sscIs s Ih0sc dcsgnIcd s dmssblc sscIs,
c0nssIng 0I Ihc I0ll0wng,
() csh nd bnk blnccs,
(b) qu0Icd nvcsImcnI I mrkcI vluc,
(c) unqu0Icd sI0ck I c0sI,
(d) lnd nd buldngs,
(c) IurnIurc nd IIIngs,
(I) 0IIcc cqupmcnI,
(g) m0I0r vchclcs,
(h) prcprcd cxpcnscs mdc I0 mcmbcrs 0I sIII,
() m0unI duc Ir0m rcIr0ccss0n,
(|) sIII l0ns nd dvnccs, nd
(k) clms rcccvblc.
An nsurcr, shll I ll Imcs, n rcspccI 0I Ihc nsurncc IrnscIcd by I n
Ngcr, nvcsI nd h0ld n Ngcr sscIs cquvlcnI I0 n0I lcss Ihn Ihc m0unI
0I p0lcy h0ldcrs' Iunds n such nsurncc busncss, s sh0wn n Ihc blncc
shccI nd Ihc rcvcnuc cc0unI 0I Ihc nsurcr.
Sub|ccI I0 Ihc pr0vs0ns 0I Ihs SccI0n, Ihc p0lcy h0ldcrs' Iunds, shll n0I bc
nvcsIcd n pr0pcrIy nd sccurIcs cxccpI,
() shrcs 0I lmIcd lblIy c0mpncs,
(b) shrcs n 0Ihcr sccurIcs 0I c00pcrIvc s0ccIy
rcgsIcrcd undcr lw 0I rclIng I0 c00pcrIvc s0ccIcs,
(c) l0ns I0 buldng s0ccIcs ppr0vcd by Ihc C0mmss0n,
(d) l0ns 0n rcl pr0pcrIy, mchncry nd plnI n Ngcr,
(c) l0ns 0n lIc p0lccs wIhn Ihcr surrcndcr vlucs,
35b
(I) csh dcp0sI n blls 0I cxchngc cccpIcd by lccnsc bnks, nd
(g) such nvcsImcnIs s my bc prcscrbcd by Ihc C0mmss0n.
N0 nsurcr, shll:
() n rcspccI 0I Is gcncrl nsurncc busncss, nvcsI m0rc Ihn 25 pcr
ccnIum 0I Is sscIs n rcl pr0pcrIy, 0r
(b) n rcspccI 0I Is lIc nsurncc busncss, nvcsI m0rc Ihn 35 pcr ccnIum
0I Is sscIs s dcIncd n subsccI0n (), n rcl pr0pcrIy.
() SccI0ns 20, 2, nd 22 0I !nsurncc AcI, 2003, rcqurc n nsurcr I0
kccp ccrIn Icchncl rcscrvcs. LsI nd dscuss:
() Thc rcscrvcs wIh rcspccI I0 gcncrl nsurncc busncss, nd
() Thc rcscrvcs wIh rcspccI I0 LIc nsurncc busncss.
() SccI0n 20 () An nsurcr shll, n rcspccI 0I Is gcncrl busncss,
csIblsh nd mnIn Ihc I0ll0wng pr0vs0ns pplcblc n rcspccI
0I cch clss 0I nsurncc busncss:
() Pr0vs0ns I0r uncxprcd rsks, whch shll bc clculIcd 0n
Imc pp0nImcnI bss 0I Ihc rsks cccpIcd n Ihc ycr,
() Pr0vs0ns I0r 0uIsIndng clms, whch shll bc crcdIcd wIh
n m0unI cqul I0 Ihc I0Il csImIcd m0unI 0I ll 0uIsIndng
clms, wIh IurIhcr m0unI rcprcscnIng 0 pcr ccnI 0I Ihc
csImIcd Igurc I0r 0uIsIndng clms n rcspccI 0I clms
ncurrcd buI n0I rcp0rIcd I Ihc cnd 0I Ihc ycr undcr rcvcw,
nd
() Pr0vs0n I0r 0uIsIndng clms.
SccI0n 2() An nsurcr, shll csIblsh nd mnIn c0nIngcnI rcscrvcs I0
c0vcr IlucIuI0ns n sccurIcs nd vrI0ns n sIIsIcl csImIcs.
SccI0n 2(2) Thc c0nIngcncy rcscrvcs shll bc crcdIcd wIh n m0unI n0I
lcss Ihn 3 pcr ccnI 0I Ihc I0Il prcmum 0r 20 pcr ccnI 0I Ihc ncI pr0II (whch
cvcr s grcIcr) nd Ihc m0unI shll ccumulIc unIl I rcchcs Ihc m0unI
0I Ihc mnmum pd up cpIl 0r 50 pcr ccnI 0I Ihc 0I Ihc ncI prcmum
(whchcvcr s grcIcr).
SccI0n 22() An nsurcr, shll n rcspccI 0I Is lIc nsurncc busncss, mnIn
Ihc I0ll0wng rcscrvcs:
() A gcncrl rcscrvc Iund, whch shll bc crcdIcd wIh n m0unI cqul
I0 Ihc ncI lblIcs 0n p0lccs n I0rcc I Ihc Imc 0I Ihc cIurl
vluI0n nd n ddI0nl 25 pcr ccnI 0I ncI prcmum I0r cvcry ycr
bcIwccn vluI0n dIc, nd
(b) A c0nIngcncy rcscrvcs Iund, whch shll bc crcdIcd wIh n m0unI
cqul I0 pcr ccnI 0I Ihc gr0ss prcmum 0r 0 pcr ccnI 0I Ihc pr0IIs
(whchcvcr s grcIcr) nd ccumulIcd unIl I s cqul I0 Ihc mnmum
pd up cpIl.
357
!n m0sI |ursdcI0ns, Ihc SccurIcs nd Exchngc C0mmss0n (SEC) cxsIs s
Ihc pcx cpIl mrkcI nsIIuI0n, pr0vdng Ihc rghI rcgulI0ry Irmcw0rk
I0r 0rdcrly dcvcl0pmcnI 0I Ihc mrkcI, cnsurng Ihc nIcgrIy 0I sccurIcs
busncss nd pr0IccI0n 0I ll prIcpnIs, prIculrly Ihc nvcsI0rs. Thc cxIcnI
0I p0wcrs nd sc0pc 0I rcgulI0ry rcsp0nsblIcs c0nIcrrcd 0n Ihc C0mmss0n
dcpcnds 0n cnblng lws. !n Ngcr, Ihc C0mmss0n cmc nI0 Iull cxsIcncc
I0ll0wng Ihc cncImcnI 0I SccurIcs nd Exchngc C0mmss0n AcI 979,
rccncIcd s AcI 29 0I 988. HsI0rclly, I grcw 0uI 0I Ihc CpIl !ssucs
C0mmIIcc, h0uscd undcr Ihc CcnIrl nk 0I Ngcr n Ihc sxIcs.
Ths C0mmIIcc lcd I0 Ihc csIblshmcnI 0I CpIl !ssucs C0mmss0n nd
subscqucnIly Ngcrn SccurIcs Exchngc C0mmss0n (NSEC), whch plycd
kcy r0lc n Ihc ndgcnzI0n cr 0I 973-977 pcr0d. R0lcs ssgncd I0 Ihc
C0mmss0n cn bc br0dly clssIcd nI0 dcvcl0pmcnIl nd survcllncc
r0lcs.
Thcsc rclIc I0 cII0rIs mcd I ncrcsng Ihc dcpIh nd brcdIh 0I sccurIcs
busncss nd ncludc IclIIng Ihc csIblshmcnI 0I mp0rInI cpIl mrkcI
nsIIuI0ns such s SI0ck nd C0mm0dIy Exchngcs, CpIl Trdc P0nIs,
RIng Agcnccs. Thcsc r0lcs whch rc lrgcly by SEC n dcvcl0png mrkcIs
ls0 ncludc dcvcl0pmcnI 0I nn0vIvc nsIrumcnIs such s dcrvIvcs nd
IclIIng kn0wlcdgc nd wrcncss 0I sccurIcs.
Thc ncludcs 0vcrsghI rcsp0nsblIcs n
cnsurng IhI cxsIng nsIIuI0ns nd prIcpnIs c0nI0rm I0 rulcs nd
rcgulI0ns. 0rgnlly, Ihc I0ll0wng spccIc IuncI0ns wcrc Ikcn up by Ihc
C0mmss0n.
() - F0ll0wng dcrcgulI0ns 0I Ihc mrkcI, Ihs
IuncI0n hs bccn IrnsIcrrcd I0 Ihc !ssung H0usc.
(b) - Ths s I0 cnsurc IhI Ihc mrkcI s n0I gluIIcd wIh
shrcs I ny p0nI n Imc.
(c) - 0I mrkcI 0pcrI0rs ncludng Ihc sI0ck
cxchngcs.
(d) I0 mcmbcrs 0I Ihc publc.
(c) ssucd wIh Ihc p0ssblIy 0I IrnsIcr I0
pcrs0ns 0Ihcr Ihn Ih0sc nIlly 0IIcrcd.
(I) Thc C0mpncs nd Allcd MIIcrs AcI, Cp. C20 LFN 2004, ls0
cmp0wcrs Ihc C0mmss0n I0
ncludng unI IrusI nd smlr schcmcs.
Thc cnblng AcI I0r Ihc cIvIcs 0I Ihc SccurIcs nd Exchngc C0mmss0n
s Ihc !nvcsImcnI nd SccurIcs AcI, 999.
358
Thc SccurIcs nd Exchngc C0mmss0n s cmp0wcrcd by Ihc !nvcsImcnI nd
SccurIcs AcI (!SA) 999, I0 dmnsIcr sccurIcs lws nd rcgulIc nvcsImcnI
nd sccurIcs busncss n Ngcr. Thc AcI rcqurcs c0mprchcnsvc scI 0I
cc0unIng rcc0rds nd cc0unIng rcp0rIs n numbcr 0I crcumsInccs,
ncludng busncss c0mbnI0ns, c0nIcnI 0I pr0spccIus, nd rcc0rds 0I sccurIy
dclcrs. A Icw 0I Ihcsc rcqurcmcnIs rc sIIcd bcl0w.
SccI0n 37() rcqurcs sccurIy dclcr I0 kccp 0r cusc I0 bc kcpI such
cc0unIng nd 0Ihcr rcc0rds:
() s shll suIIccnIly cxpln Ihc IrnscI0ns nd Inncl p0sI0n 0I
Is busncss cc0unIs nd blncc shccIs I0 bc prcprcd, Ir0m Imc I0
Imc, nd
(b) n such mnncr s I0 cnblc Ihcm I0 bc c0nvcncnIly nd pr0pcrly
udIcd.
A sccurIy dclcr shll bc dccmcd n0I I0 hvc c0mplcd wIh subsccI0n () 0I
Ihs SccI0n n rclI0n I0 rcc0rds unlcss Ihc cc0unIng nd 0Ihcr rcc0rds:
() rc kcpI n suIIccnI dcIls I0 sh0w prIculrs 0I:
() ll m0ncy rcccvcd 0r pd by Ihc sccurIy dclcr ncludng m0ncy
pd I0 0r dcducIcd Ir0m IrusI cc0unI,
() ll purchscs nd slcs 0I sccurIcs mdc by Ihc sccurIy dclcr,
Ihc chrgcs nd crcdIs rsng Ir0m Ihcm, nd Ihc nmcs 0I cch
0I Ihcsc sccurIcs,
() ll nc0mc rcccvcd Ir0m c0mmss0ns, nIcrcsI nd 0Ihcr s0urccs
nd ll cxpcnscs, c0mmss0ns nd nIcrcsI pd I0r by Ihc
sccurIy dclcr,
(v) ll Ihc sscIs nd lblIcs (ncludng c0nIngcnI lblIcs) 0I
Ihc sccurIy dclcr,
(v) All sccurIcs whch rc Ihc pr0rIy 0I Ihc sccurIy dclcr, sh0wng
by wh0m Ihc sccurIcs 0r d0cumcnIs 0I Ihc IIlc I0 Ihc sccurIy
rc hcld nd, whcrc Ihcy rc hcld by n0Ihcr pcrs0n, whcIhcr 0r
n0I Ihcy rc hcld s sccurIy gnsI l0ns 0r dvnccs,
(v) All sccurIcs IhI rc n0I Ihc pr0pcrIy 0I Ihc sccurIy dclcr nd
I0r whch Ihc dclcr 0r ny n0mncc c0nIr0llcd by Ihc sccurIy
dclcr s cc0unIblc, sh0wng by wh0m, nd I0r wh0m, Ihc
sccurIcs rc hcld nd Ihc cxIcnI I0 whch Ihcy rc cIhcr hcld
I0r sIc cusI0dy 0r dcp0sIcd wIh Ihrd prIy s sccurIy I0r
l0ns 0r dvnccs mdc I0 Ihc sccurIy dclcr,
(v) All purchscs nd slcs 0I 0pI0ns mdc by Ihc sccurIy dclcr
nd ll Iccs (bcng 0pI0ns m0ncy) rsng Ir0m Ihcm, nd
(v) All undcrwrIng IrnscI0ns cnIcrcd nI0 by Ihc sccurIy dclcr.
(b) rc kcpI n suIIccnI dcIls I0 sh0w scprIcly prIculrs 0I ll
IrnscI0ns by Ihc sccurIy dclcr.
359
(c) spccIy Ihc dy 0n whch 0r Ihc pcr0d durng whch cch IrnscI0n by
Ihc sccurIy dclcr I00k plcc, nd
(d) c0nIn c0pcs 0I ckn0wlcdgcmcnIs 0I Ihc rcccpI 0I sccurIcs 0r 0I
d0cumcnIs 0I IIlc I0 sccurIcs rcccvcd by Ihc sccurIy dclcr Ir0m
clcnIs I0r slc 0r sIc cusI0dy, clcrly sh0wng Ihc nmc 0r nmcs n
whch Ihc prIculr sccurIcs rc rcgsIcrcd.
SccI0n 52 0I !SA 999, rcqurcs SccurIy Exchngc 0r CpIl Trdc P0nI I0
csIblsh nd kccp pr0pcr b00ks 0I cc0unIs n rclI0n I0 Is !nvcsI0rs Pr0IccI0n
Fund nd prcprc nc0mc nd cxpcndIurc cc0unI nd blncc shccI n0I
lIcr Ihn 30Ih Aprl I0ll0wng cch 3sI 0cccmbcr.
SccI0n 7 0I Ihc 3rd Schcdulc, rcqurcs Ihc rcp0rI 0I cc0unInIs I0 bc c0nIncd
n Ihc pr0spccIus 0I c0mpny wshng I0 ssuc shrcs 0r dcbcnIurcs. Thc
rcp0rI sh0uld c0vcr () Ihc pr0IIs nd l0sscs 0I Ihc busncss I0r Ihc Ivc ycrs
prcccdng Ihc ssuc 0I Ihc pr0spccIus nd (b) Ihc sscIs nd lblIcs 0I Ihc
busncss I Ihc lsI dIc I0 whch Ihc cc0unIs 0I Ihc busncss wcrc mdc.
PrI 2 0I Schcdulc 4, ls0 rcqurcs cc0unInIs' rcp0rI whcrc Ihcrc s pr0p0sl
I0 cqurc busncss 0r subsdry.
SccI0n 0I Ihc Pcns0n RcI0rm AcI 2004, mndIcs Ihc csIblshmcnI 0I
C0nIrbuI0ry Pcns0n Schcmc I0r Ihc pymcnI 0I rcIrcmcnI bcncIIs 0I w0rkcrs
n Ngcr. SccI0n 2 0I Ihc AcI nssIs IhI Ihc rcqurcmcnI s pplcblc I0
cmpl0yccs n b0Ih prvIc nd publc sccI0rs, Ihcrcby scIIng sdc Ihc usc 0I
dcIncd bcncII pln pcrmIIcd by SAS 8,
Ths chpIcr hghlghIs Ihc rclcvnI pr0vs0ns 0I:
() C0mpncs nd Allcd MIIcrs AcI CAP C 20 LFN 2004,
() !nsurncc AcI 2003,
() 0F!A 99 nd !nvcsImcnI nd SccurIcs AcI 999, nd
(v) Pcns0n RcI0rm AcI 2004,
s Ihcy g0vcrn Inncl cc0unIng n Ngcr.
3b0
. Thc CusI0dn 0I Ihc C0mpncs nd Allcd MIIcrs AcI, CAP C20 LFN 2004
s!
() C0rp0rIc C0mpncs !nc0rp0rIcd undcr Ihc AcI.
(b) MnsIcr 0I Trdc nd C0mmcrcc.
(c) C0rp0rIc AIIrs C0mmss0n.
(d) MnsIcr 0I Fnncc.
(c) Ngcrn SI0ck Exchngc.
2. Thc I0ll0wng rc ll0wcd undcr CAMA, 2004, cxccpI
() 0cclrI0n 0I dvdcnd Ir0m rcscrvcs.
(b) AcqusI0n 0I 0wn shrcs by c0mpny.
(c) RcducI0n 0I cpIl wIh0uI c0urI pcrmss0n.
(d) C0nvcrs0n 0I dcbcnIurcs I0 shrcs.
(c) Rccpr0cl cqusI0n 0I prcnI c0mpny's shrcs by subsdry.
3. Thc I0ll0wng rc pr0vdcd I0r by CAMA, cxccpI........
() C0ndI0ns I0r ssung shrcs I dsc0unI.
(b) C0ndI0ns I0r IrnsIcr 0I shrcs n PrvIc c0mpncs
(c) 0rccI0rs' rcIrcmcnI gc.
(d) C0ndI0n I0r rcducI0n 0I CpIl.
(c) C0nIcnI 0I Ihc nnul rcIurns 0I smll c0mpny
4. 0nc 0I Ihc I0ll0wng nsIIuI0ns s n0I c0vcrcd undcr 0F!0 99!
() CcnIrl nk 0I Ngcr
(b) C0mmcrcl nks
(c) 0sc0unI H0uscs
(d) !nsurncc r0kcrs
(c) urcx 0cChngc
5. 0nc 0I Ihc I0ll0wng s n0I ll0wcd s lqud sscI I0r bnks n Ngcr.
() Trcsury blls
(b) Shrcs ssucd by Ihc Fcdcrl 00vcrnmcnI
(c) 0nds by SIIc 00vI
(d) C0ns nd N0Ics s Lcgl Tcndcr
(c) lnccs wIh dsc0unI h0uscs
b. SIIc 0nc 0I Ihc rcqurcmcnIs I0r Ihc rcgsIrI0n 0I lmIcd lblIy
c0mpny undcr Ihc C0mpncs nd Allcd MIIcrs AcI, CAP C20 LFN 2004.
7 McnI0n 0nc 0I Ihc m|0r r0lcs 0I SccurIcs nd Exchngc C0mmss0n.
8 0vc 0nc cxmplc 0I dmssblc sscIs undcr Ihc !nsurncc AcI, 2003.
9. SIIc Ihc pcns0n schcmc rcqurcd by Ihc Pcns0n RcI0rm AcI 0I 2004.
0. SIIc Ihc IrsI Icm n Ihc I0rmI 0I Ihc pr0II nd l0ss cc0unI 0I lmIcd
lblIy c0mpny.
3b
b.0
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc Ihc0rcIcl bckgr0und I0r c0ns0ldI0n 0I Inncl sIIcmcnIs.
Kn0w Ihc rcgulI0ry d0cumcnIs I0r Ihc prcprI0n nd prcscnII0n 0I C0ns0ldIcd
Fnncl SIIcmcnIs.
0cscrbc Ihc c0ndI0ns rcqurcd I0r n cnIcrprsc I0 bc subsdry 0r n ss0cIc
0I gr0up 0r |0nI cnIIy.
Expln Ihc rulcs I0r Ihc cxclus0n 0I s0mc subsdrcs Ir0m c0ns0ldI0n.
Kn0w Ihc I0rms 0I gr0up cc0unIs.
UndcrsInd nd dcm0sIrIc Ihc IrcImcnI 0I p0sIvc nd ncgIvc g00dwll rsng
n c0ns0ldIcd cc0unIs.
C0mbnI0ns bscd 0n Ihc purchsc 0I c0nIr0llng shrcs by 0nc c0mpny n
n0Ihcr c0mpny, drccIly 0r ndrccIly, gvc rsc I0 gr0up 0I c0mpncs wIhn
whch Ihc c0mpny IhI purchscd Ihc c0nIr0llng shrcs s cllcd Ihc prcnI
0r `h0ldng c0mpny' nd Ihc c0mpny wh0sc shrcs rc cqurcd s rcIcrrcd
I0 s Ihc 'subsdry c0mpny'.
C0mbnI0ns 0I Ihs nIurc d0 n0I IIccI Ihc cxsIcncc 0I Ihc c0mbncd
c0mpncs, s scprIc lcgl cnIIcs. H0wcvcr, Ihs IrnsIcr 0I c0nIr0l Ir0m
0nc gr0up 0I 0wncrs I0 n0Ihcr IIccI Ihc cc0n0mc subsIncc 0I mcmbcrs 0I
Ihc gr0up. T0 Ihs cIIccI, Ihc 0pcrI0ns 0I gr0up c0mpncs nd Ihc prcprI0n
0I c0ns0ldIcd Inncl sIIcmcnIs rc rcgulIcd by n AcI nd !nIcrnI0nl
Acc0unIng SIndrds.
() Thc 2004, hcrcnIIcr,
cllcd Ihc AcI.
(b) SIIcmcnI 0I Acc0unIng SIndrds (SAS) 2b - 0n usncss
C0mbnI0ns.
3b2
(c) SIIcmcnI 0I Acc0unIng SIndrds (SAS) 27 - 0n C0ns0ldIcd nd
ScprIc Fnncl SIIcmcnIs.
(d) SIIcmcnI 0I Acc0unIng SIndrds (SAS) 28 - 0n !nvcsImcnI n
Ass0cIcs.
(d) !nIcrnI0nl Acc0unIng SIndrd (!AS) 3 0n !nIcrcsIs n 10nI
\cnIurcs
!n Ngcr, Ihc mn rcp0rIng 0blgI0ns 0I drccI0rs 0I prcnI c0mpncs rc
c0nIncd n Ihc C0mpncs nd Allcd MIIcrs AcI 2004. SccI0n 33b 0I Ihc
AcI, rcqurcs Ihc drccI0rs 0I c0mpny IhI hs subsdrcs, I Ihc cnd 0I Ihc
ycr, I0 prcprc Is ndvdul cc0unIs I0r IhI ycr nd Ihc gr0up Inncl
sIIcmcnIs. Thcsc sIIcmcnIs rcp0rI 0n Ihc , Ihc
0I Ihc c0mpny nd Is .
Thc 0b|ccIvc s I0 pr0vdc Ihc shrch0ldcrs 0I Ihc wIh Iull
nI0rmI0n c0nccrnng Ihc cIvIcs 0I Ihc cnIrc n whch Ihcy
hvc nvcsIcd. Ths s chcvcd by c0mbnng ll Ihc sscIs nd lblIcs 0I
Ihc prcnI c0mpny nd Is subsdrcs nI0 snglc blncc shccI s0 s I0
dscl0sc Ihc 0vcrll Inncl p0sI0n 0I Ihc gr0up.
A gr0up s dcIncd s nd Is . 0r0up Inncl
sIIcmcnIs rc Ihc 0I Ihc prcnI c0mpny nd Is
subsdrcs c0mbncd I0 I0rm scI 0I .
C0ns0ldIcd Inncl sIIcmcnIs rc Ihc Inncl sIIcmcnIs 0I gr0up
prcscnIcd s Ih0sc 0I snglc cnIcrprsc.
!n cc0rdncc wIh Ihc AcI, Ihc gr0up's Inncl sIIcmcnIs shll c0nssI 0I
Ihrcc sIIcmcnIs, s I0ll0ws:
() C0ns0ldIcd blncc shccI dclng wIh Ihc sIIc 0I IIrs 0I Ihc
c0mpny nd ll Ihc subsdrcs 0I Ihc c0mpny,
(b) C0ns0ldIcd pr0II nd l0ss cc0unI 0I Ihc c0mpny nd Is subsdrcs,
nd
(c) C0ns0ldIcd sIIcmcnI 0I csh Il0ws 0I Ihc c0mpny nd Is
subsdrcs.
!I s n0I ncccssry I0 publsh Ihc prcnI c0mpny's pr0II nd l0ss cc0unI,
pr0vdcd Ihc c0mpny's c0ns0ldIcd pr0II nd l0ss cc0unIs c0nIns n0Ic
sIIng h0w much 0I Ihc prcnI c0mpny's pr0II nd l0ss s dclI wIh n Ihc
cc0unIs (CAMA 2004).
A h0ldng c0mpny s 0nc IhI hs 0nc 0r m0rc subsdrcs. A subsdry s n
cnIcrprsc IhI s c0nIr0llcd by n0Ihcr cnIcrprsc kn0wn s Ihc prcnI.
3b3
Undcr SccI0n 338 0I Ihc AcI, c0mpny (sy A) shll bc dccmcd I0
bc Ihc subsdry 0I n0Ihcr c0mpny (sy ) I
() Ihc c0mpny ( ) s mcmbcr 0I I nd c0nIr0ls Ihc c0mp0sI0n
0I Is b0rd 0I drccI0rs, 0r
(b) h0lds m0rc Ihn hlI Ihc n0mnl vluc 0I Is cquIy shrc cpIl, 0r
(c) Ihc IrsI mcnI0ncd c0mpny ( ) s subsdry 0I ny c0mpny
whch s subsdry 0I
F0r Ihc purp0sc 0I Ihc AcI, Ihc c0mp0sI0n 0I Ihc b0rd 0I drccI0rs 0I c0mpny,
shll bc dccmcd I0 bc c0nIr0llcd by n0Ihcr c0mpny I IhI 0Ihcr c0mpny
hs Ihc p0wcr I0 rcm0vc ll 0r m|0rIy 0I Ihc drccI0rs wIh0uI Ihc c0nscnI
0r c0ncurrcncc 0I n0Ihcr prIy.
0cncrlly s prcsumcd I0 cxsI whcn Ihc prcnI 0wns, drccIly 0r
ndrccIly, Ihr0ugh subsdrcs m0rc Ihn 0nc hlI 0I Ihc 0I n
cnIcrprsc.
SAS 27, dcIncs c0nIr0l s Ihc p0wcr I0 g0vcrn Ihc
0I n cnIIy s0 s I0 0bIn bcncIIs Ir0m Is cIvIcs. Undcr Ihc
sIndrd, c0nIr0l s ls0 prcsumcd I0 cxsI whcn Ihc prcnI hs:
() P0wcr 0vcr m0rc Ihn hlI Ihc v0Ing rghI by vrIuc 0I grccmcnI wIh
0Ihcr nvcsI0rs.
() P0wcr I0 g0vcrn Ihc 0I Ihc cnIcrprsc
undcr sIIuIc 0r grccmcnI.
() P0wcr I0 pp0nI 0r rcm0vc Ihc m|0rIy 0I Ihc mcmbcrs 0I Ihc b0rd 0I
drccI0rs.
(v) P0wcr I0 csI Ihc m|0rIy 0I v0Ics I mccIng 0I b0rd 0I drccI0rs 0r
cquvlcnI g0vcrnng b0dy nd c0nIr0l 0I Ihc cnIIy s by IhI b0rd 0r
b0dy.
C0mpny X s sd I0 bc subsdry 0I C0mpny Y, whcn:
() C0mpny Y s mcmbcr 0I c0mpny X nd c0nIr0ls Ihc c0mp0sI0n 0I
Ihc 0rd 0I 0rccI0rs (00). Ths mcns IhI C0mpny Y hs Ihc p0wcr
I0 pp0nI 0r rcm0vc ll 0r Ihc m|0rIy 0I mcmbcrs 0I Ihc 00 nd
p0wcr I0 csI m|0rIy 0I v0Ics I Ihc mccIng 0I Ihc 00.
() C0mpny Y 0wns m0rc Ihn 0nc hlI 0I Ihc n0mnl vluc 0I Ihc cquIy
shrc cpIl. Ths s Ihc p0wcr I0 g0vcrn Ihc Inncl nd
0pcrIng p0lccs 0I Ihc cnIcrprsc undcr sIIuIc 0r n
grccmcnI.
() C0mpny X s subsdry 0I n0Ihcr C0mpny Z, whch s IsclI
subsdry 0I c0mpny Y. !n Ihs csc, C0mpny Y w0uld cxcrcsc c0nIr0l
0vcr C0mpny X ndrccIly.
3b4
As much s p0ssblc, sh0uld bc cmpl0ycd by Ihc
mcmbcrs 0I gr0up whcn prcprng Ihc cc0unIs 0I Ihcr ndvdul c0mpncs.
SAS 27 spccIclly rcqurcs n cnIIy I0 usc unI0rm cc0unIng p0lccs I0r
rcp0rIng such IrnscI0ns nd 0Ihcr cvcnIs n smlr crcumsInccs. whcrc
subsdry hs n0I d0pIcd unI0rm p0lcy, ppr0prIc d|usImcnIs sh0uld
bc mdc I0 Is n prcprng Ihc
(scc pr. 38 nd ).
A s rcqurcd I0 prcprc Is 0wn I 0r I0 Ihc
smc dIc s Ihc gr0up.
!I subsdry d0cs n0I prcprc Is 0wn Inncl sIIcmcnIs I Ihc smc dIc
s IhI 0I Ihc gr0up, d|usImcnIs sh0uld bc mdc I0r Ihc cIIccIs 0I sgnIcnI
IrnscI0ns 0r cvcnIs IhI 0ccur bcIwccn IhI dIc nd Ihc dIc d0pIcd by
Ihc prcnI. Thc dIIcrcncc bcIwccn Ihc rcp0rIng dIc 0I Ihc subsdry nd
IhI 0I Ihc prcnI shll n0I bc m0rc Ihn Ihrcc m0nIhs.
whcn I s n0I p0ssblc I0 0bIn such spccl Inncl sIIcmcnIs, ppr0prIc
d|usImcnIs sh0uld bc mdc I0 Ihc c0ns0ldIcd Inncl sIIcmcnIs I0r ny
bn0rml IrnscI0ns n Ihc nIcrvcnng pcr0d. Thc c0ns0ldIcd cc0unIs
sh0uld dscl0sc:
() Thc nmc 0I Ihc subsdry,
() !Is cc0unIng dIc, nd
() Thc rcs0n I0r usng dIIcrcnI dIcs.
SAS 27 prcscrbcs IhI ll busncss c0mbnI0ns shll bc cc0unIcd I0r by
pplyng Ihc purchsc mcIh0d. Thc mcIh0d hs Ihc I0ll0wng IcIurcs:
() AsscIs nd lblIcs 0I Ihc subsdrcs rc mcsurcd I Ir mrkcI
vluc I Ihc dIc 0I cqusI0n.
() Shrcs purchscd nd ssucd n scIIlcmcnI 0I Ihc purchsc rc vlucd
by Ihc prcnI c0mpny I Ir vluc.
() Thc pr0IIs 0I Ihc subsdry rc dvdcd nI0 prccqusI0n nd p0sI
cqusI0n pcr0ds. 0nly Ihc p0sIcqusI0n pr0IIs rc c0ns0ldIcd.
(v) rscs 0n whcn Ihc 0I Ihc c0nsdcrI0n
s dIIcrcnI Ir0m Ihc Ir vluc 0I Ihc ncI sscI cqurcd.
ApplcI0n 0I Ihc purchsc mcIh0d nv0lvcs Ihc I0ll0wng sIcps:
() dcnIIyng n cqurcr. Thc cqurcr s Ihc c0mbnng cnIIy IhI 0bIns
c0nIr0l 0I Ihc 0Ihcr c0mbnng cnIIcs.
(b) mcsurng Ihc c0sI 0I Ihc busncss c0mbnI0n.
(c) ll0cIng Ihc c0sI 0I Ihc busncss c0mbnI0n I0 Ihc sscIs cqurcd
nd lblIcs nd c0nIngcnI lblIcs ssumcd I Ihc cqusI0n dIc.
3b5
SccI0n 33b(5) 0I Ihc AcI sIIcs IhI sh0uld prcprc
n Ihc I0rm 0I snglc scI 0I Inncl sIIcmcnIs. !I h0wcvcr ll0ws
I0r lIcrnIvc I0rms 0I gr0up cc0unIs whcrc n Ihc 0pn0n 0I Ihc drccI0rs,
Ihc 0Ihcr I0rm w0uld prcscnI Ihc smc 0r bcIIcr vcw 0I Ihc gr0up's pcrI0rmncc
nd Inncl p0sI0n.
0Ihcr I0rms 0I cc0unIng I0r gr0up nIcrcsIs vlblc rc:
() m0rc Ihn 0nc scI 0I c0ns0ldIcd Inncl sIIcmcnIs dclng
rcspccIvcly wIh Ihc c0mpny nd 0nc gr0up 0I subsdrcs nd wIh
0Ihcr gr0ups 0I subsdrcs, 0r
(b) scprIc Inncl sIIcmcnIs dclng wIh cch 0I Ihcsubsdrcs, 0r
(c) sIIcmcnIs cxpndng Ihc nI0rmI0n b0uI subsdrcs n ndvdul
Inncl sIIcmcnIs 0I Ihc c0mpny 0r n ny 0Ihcr I0rm.
b..
() Undcr SccI0n 33b(2) 0I Ihc AcI, gr0up cc0unIs nccd n0I bc
prcprcd whcrc Ihc prcnI c0mpny IsclI s I Ihc cnd 0I Is
Inncl ycr wh0lly 0wncd subsdry 0I n0Ihcr c0mpny
nc0rp0rIcd n Ngcr. H0wcvcr, whcrc Ihc ulImIc prcnI
c0mpny s nc0rp0rIcd 0vcrscs, Ihc gr0up cc0unIs sh0uld bc
prcprcd.
(b) Undcr SccI0n 33b(3) 0I Ihc AcI, subsdry my bc 0mIIcd
Ir0m Ihc gr0up cc0unIs I:
() I s mprcIcblc 0r w0uld bc 0I n0 rcl vluc I0 mcmbcrs
bccusc 0I Ihc nsgnIcnI m0unI nv0lvcd,
() I w0uld nv0lvc cxpcnscs 0r dcly 0uI 0I pr0p0rI0n I0 Is
vluc I0 mcmbcrs 0I Ihc c0mpny,
() Ihc rcsulI w0uld bc mslcdng 0r hrmIul I0 Ihc busncss
0I Ihc c0mpny 0r ny 0I Is subsdrcs. F0r nsIncc, I
my bc hrmIul I0 c0ns0ldIc Ihc rcsulI 0I subsdry
wIh 0pcrIng l0sscs, p00r lqudIy p0sI0n nd mssvc
b0rr0wng, 0r
(v) Ihc busncss 0I Ihc prcnI c0mpny nd IhI 0I Ihc
subsdry rc s0 dIIcrcnI IhI Ihcy cnn0I rcs0nbly bc
IrcIcd s snglc undcrIkng.
b..2 Undcr SAS 27 0I Ihc AcI, prcnI nccd n0I prcscnI c0ns0ldIcd Inncl
sIIcmcnIs I, nd 0nly I, ll Ihc I0ll0wng c0ndI0ns pply:
() Thc prcnI s IsclI wh0lly0wncd subsdry, 0r Ihc prcnI s
prIlly0wncd subsdry 0I n0Ihcr cnIIy nd Is 0Ihcr 0wncrs
hvc bccn nI0rmcd b0uI nd d0 n0I 0b|ccI I0 Ihc prcnI n0I
prcprng c0ns0ldIcd Inncl sIIcmcnIs.
(b) Thc prcnI's dcbI 0r cquIy nsIrumcnIs rc n0I Irdcd n publc
mrkcI.
3bb
(c) Thc prcnI dd n0I Ilc n0r s n Ihc pr0ccss 0I Ilng Is Inncl
sIIcmcnIs wIh Ihc SccurIcs nd Exchngc C0mmss0n 0r 0Ihcr
rcgulI0ry 0rgnzI0ns I0r Ihc purp0sc 0I ssung ny clss 0I
nsIrumcnI n publc mrkcI.
(d) Thc ulImIc 0r ny nIcrmcdIc prcnI 0I Ihc prcnI, pr0duccs
Inncl sIIcmcnIs whcn Ihc prcnIs clccI 0r rc rcqurcd by
l0cl rcgulI0ns I0 prcscnI scprIc Inncl sIIcmcnIs.
(c) Thc subsdry s cqurcd wIh Ihc nIcnI0n I0 dsp0sc 0I Ihc
c0mpny nd mngcmcnI s cIvcly
scckng buycr.
(I) whcn Ihc prcnI c0mpny l0scs c0nIr0l. Thc l0ss 0I c0nIr0l cn
0ccur wIh 0r wIh0uI chngc n bs0luIc 0r rclIvc 0wncrshp
lcvcls. F0r cxmplc, whcrc subsdry bcc0mcs sub|ccI I0 Ihc
c0nIr0l 0I g0vcrnmcnI, c0urI, dmnsIrI0r 0r rcgulI0r.
A subsdry s n0I cxcludcd Ir0m c0ns0ldI0n bccusc Is cIvIcs
rc dssmlr Ir0m Ih0sc 0I 0Ihcr cnIIcs wIhn Ihc gr0up. RclcvnI
nI0rmI0n s pr0vdcd by c0ns0ldIng such subsdrcs nd
dscl0sng ddI0nl nI0rmI0n n Ihc c0ns0ldIcd Inncl
sIIcmcnIs b0uI Ihc dIIcrcnI cIvIcs 0I Ihc subsdrcs.
Smlrly, n cnIIy s n0I pcrmIIcd I0 cxcludc Ir0m c0ns0ldI0n
subsdry I c0nInucs I0 c0nIr0l smply bccusc IhI cnIIy s 0pcrIng
undcr scvcrc l0ng Icrm rcsIrcI0ns IhI sgnIcnIly mpr Is blIy
I0 IrnsIcr Iunds I0 Ihc prcnI. C0nIr0l musI bc l0sI I0r cxclus0n I0
0ccur(SAS 27 pr. 2).
whcn n cnIcrprsc ccscs I0 bc subsdry, Ihc nvcsImcnI n Ihc cnIcrprsc
shll bc cc0unIcd I0r n cc0rdncc wIh 0Ihcr SASs Ir0m Ihc dIc whcn c0nIr0l
s l0sI.
b.3.
whcn c0mpny s n0I wh0lly 0wncd subsdry 0I n0Ihcr c0mpny
nc0rp0rIcd n Ngcr, Ihc drccI0rs 0I Ihc c0mpny sh0uld sIIc Ihc
rcs0n I0r Ihc cxclus0n 0I Ihc subsdry Ir0m c0ns0ldI0n. Schcdulc
!! prgrph b8 0I Ihc AcI sIIcs IhI Ihc n0Ics I0 Ihc cc0unIs sh0uld
ncludc:
() Ihc rcs0ns why Ihc subsdrcs rc n0I dclI wIh n gr0up
cc0unIs,
(b) ny qulIcI0ns by Ihc 0I Ihc subsdrcs' cc0unIs
n0I c0vcrcd by Ihc c0mpny's 0wn cc0unIs,
(c) Ihc ggrcgIc m0unI 0I Ihc I0Il 0I Ihc prcnI
c0mpny n Ihc shrcs 0I Ihc subsdrcs, I0r,
3b7
() Ihc Inncl ycr undcr c0nsdcrI0n, nd
() prcv0us ycrs sncc cqusI0n.
(d) such nvcsImcnIs sh0uld bc cc0unIcd I0r usng Ihc cquIy mcIh0d
0I vluI0n.
(c) whcrc ny 0I Ihc nI0rmI0n n () I0 (d) b0vc rc n0I
0bInblc, sIIcmcnI I0 IhI cIIccI shll bc gvcn.
b.3.2 Undcr SAS 27, prcnI IhI s cxcmpIcd Ir0m prcscnIng c0ns0ldIcd
Inncl sIIcmcnIs n cc0rdncc wIh Ihc sIndrd shll prcscnI
scprIc Inncl sIIcmcnIs s Is 0nly sIIcmcnIs.
()
Ths c0mprscs ny whch crrcs Ihc rghI I0
prIcpIc bcy0nd spccIcd m0unI n cIhcr cpIl 0r rcvcnuc
dsIrbuI0n. ThcrcI0rc, I ncludcs ll shrc cpIl 0Ihcr Ihn
.
!n Ihc bscncc 0I nI0rmI0n I0 Ihc c0nIrry, 0rdnry shrcs rc
ssumcd I0 bc whlc rc n0I.
(b)
Ths s mcIh0d 0I cc0unIng whcrc Ihc nvcsImcnI n c0mpny s
sh0wn n Ihc c0ns0ldIcd blncc shccI I:
() Ihc c0sI 0I Ihc nvcsImcnI, plus
() Ihc nvcsIng c0mpny 0r gr0up's shrc 0I Ihc p0sIcqusI0n
rcIncd pr0IIs nd rcscrvcs 0I Ihc c0mpny, lcss
() ny m0unI wrIIcn 0II n rcspccI 0I () nd () b0vc.Thc nvcsIng
c0mpny sh0uld cc0unI scprIcly n Ihc pr0II nd l0ss cc0unI
I0r Is shrc 0I Ihc pr0II bcI0rc Ix, IxI0n nd cxIr0rdnry
Icms 0I Ihc cqurcd c0mpny.
Ths mcIh0d s usully pplcd I0 ss0cIcd c0mpncs undcr
Ihc pr0vs0ns 0I 28.
(c)
Thc AcI dcIncs s ny b0dy c0rp0rIc (0Ihcr Ihn
IhI whch s gr0up c0mpny n rclI0n I0 IhI c0mpny) n whch
IhI c0mpny h0lds 0n l0ngIcrm bss, qulIyng cpIl. !nIcrcsI
I0r Ihc purp0sc 0I sccurng c0nIrbuI0n I0 IhI c0mpny's 0wn
cIvIcs by cxcrcsng c0nIr0l 0r nIlucncc rsng Ir0m IhI nIcrcsI.
RclIcd c0mpncs rc dcscrbcd by SAS 28 s ss0cIcd c0mpncs.
(d)
Ths s n cnIcrprsc n whch Ihc nvcsI0r hs sgnIcnI nIlucncc nd
whch s ncIhcr subsdry n0r |0nI vcnIurc 0I Ihc nvcsI0r.
SgnIcnI nIlucncc s Ihc p0wcr I0 prIcpIc n Ihc Inncl nd
0pcrIng p0lcy dccs0ns 0I Ihc nvcsIcc buI d0cs n0I hvc c0nIr0l 0vcr
3b8
Ih0sc p0lccs. A h0ldng 0I 20 pcrccnI buI lcss Ihn 50 0I Ihc cquIy
v0Ing rghIs s rcgrdcd s Ihc blIy I0 cxcrcsc sgnIcnI nIlucncc
(Ih0ugh n0I n ll crcumsInccs).
(c)
A b0dy c0rp0rIc s IrcIcd s 0I n0Ihcr b0dy
c0rp0rIc, I b0Ih rc subsdrcs 0I Ihc smc c0mpny, buI ncIhcr s
Ihc 0Ihcr's subsdry.
(I)
!I s dcscrbcd s n cc0unI 0pcncd I0 rcc0rd Ihc purchsc 0I busncss
s0 s I0 dcIcrmnc whcIhcr Ihc busncss s bcng purchscd I 'pr0II
0r I l0ss'. !n 0Ihcr w0rds, I s g00dwll cc0unI. A dcbI blncc 0n
Ihc C0sI 0I Acc0unI C0nIr0l cc0unI s rcgrdcd s l0ss 0n purchsc
bccusc Ihc c0sI 0I shrcs cqurcd s grcIcr Ihn Ihc ncI sscIs
cqurcd whlc CrcdI blncc 0n Ihc C0sI 0I C0nIr0l s rcgrdcd s
gn (.c. NcgIvc 000dwll). !n Ihc c0sI 0I c0nIr0l cc0unI, Ihc c0sI 0I
nvcsImcnI s cnccllcd gnsI Ihc ncI sscIs cqurcd I0 dcIcrmnc
g00dwll.
(g)
000dwll s Ihc dIIcrcncc bcIwccn Ihc prcc pd by Ihc prcnI c0mpny
nd Ihc Ir vluc 0I Ihc subsdry's ncI sscIs I Ihc dIc 0I cqusI0n.
!ncludcd n Ihc dcInI0n 0I ncI sscIs rc dcnIIblc sscIs, lblIcs
nd c0nIngcnI lblIcs 0I Ihc subsdrcs.
(h)
!n 0rdcr I0 clculIc rclsIc Igurc I0r g00dwll, I s ncccssry I0
dcIcrmnc Ihc Ir vlucs 0I Ihc sscIs nd lblIcs 0I Ihc subsdry
c0mpny whcn prcprng c0ns0ldIcd cc0unIs. Fr vlucs nccd n0I
bc cc0unIcd I0r n Ihc b00ks 0I Ihc subsdry c0mpny nd uscd I0r
Ihc purp0sc 0I Is lcgl cnIIy bscd cc0unIs, buI Ihcy sh0uld bc uscd
I0r c0ns0ldI0n purp0scs.
Thc Ir vluc 0I n sscI nd lblIy s dcIncd s Ihc m0unI I0r
whch n sscI c0uld bc cxchngcd 0r lblIy scIIlcd bcIwccn
kn0wlcdgcblc, wllng prIcs n n rm's lcngIh (!FRS 3). !I ddI0nl
cvdcncc 0I Ihc Ir vlucs 0I cqurcd sscIs nd lblIcs bcc0mcs
vlblc IIcr Ihc cqusI0n, Ihc c0ns0ldIcd Inncl sIIcmcnIs
sh0uld bc d|usIcd I0 rcIlccI Ihs dcvcl0pmcnI.
()
Thc 2008 mcndmcnIs I0 !AS 27 chngcd Ihc Icrm
I0 ncw phrsc cllcd Acc0rdng I0 Ihc
0IIcl Pr0n0unccmcnIs 0I Ihc !AS s ssucd I 1nury 2009, Ihc
chngc n Icrmn0l0gy rcIlccIs Ihc IcI IhI Ihc 0wncr 0I mn0rIy
nIcrcsI n n cnIIy mghI c0nIr0l IhI cnIIy nd, c0nvcrscly, IhI Ihc
0wncrs 0I m|0rIy nIcrcsI mghI n0I c0nIr0l Ihc cnIIy. !I s Ihc vcw 0I
Ihc !AS IhI n0nc0nIr0llng nIcrcsI s bcIIcr dcscrpI0n Ihn
mn0rIy nIcrcsI 0I Ihc nIcrcsIs 0I Ih0sc 0wncrs wh0 d0 n0I hvc
c0nIr0llng nIcrIcsI n n cnIIy.
3b9
SAS 27 uscs Ihc ncw phrsc nsIcd 0I Ihc n0w
0uIdIcd , nd dcIncs s Ihc
cquIy n subsdry n0I IIrbuIblc, drccIly 0r ndrccIly, I0 prcnI.
whcn Ihc prcnI c0mpny 0wns lcss Ihn 00 cquIy shrcs n Ihc
subsdry, sy 70, Ihc rcmnng 30 s IIrbuIblc I0 Ihc n0n
c0nIr0llng nIcrcsI ( ). N0nc0nIr0llng nIcrcsI shll bc prcscnIcd
n Ihc c0ns0ldIcd blncc shccI wIhn cquIy, scprIcly Ir0m Ihc
prcnI . Mn0rIy nIcrcsI n Ihc pr0II nd l0ss cc0unI
0I Ihc gr0up shll ls0 bc scprIcly dscl0scd bcl0w Ihc pr0II IIcr
Ix.
(|)
SAS 27 rcqurcs n cnIIy I0 IIrbuIc Ihcr shrc 0I 0I c0mprchcnsvc
nc0mc I0 n0nc0nIr0llng nIcrcsI (NC!) cvcn I Ihs wll rcsulI n Ihc
NC! hvng dcIcI blncc.
(k)
Thc pr0IIs 0I subsdry c0mpny rc dsIngushcd bcIwccn
prccqusI0n nd p0sIcqusI0n I0r Ihc purp0sc 0I prcprng
c0ns0ldIcd cc0unIs.
PrccqusI0n rcscrvcs rc Ihc ccumulIcd rcscrvcs crncd by Ihc
subsdry pr0r I0 Is cqusI0n by Ihc prcnI c0mpny. Thcy rc
crcdIcd I0 c0sI 0I c0nIr0l cc0unI s prI 0I Ihc pr0ccss rcqurcd I0 rrvc
I g00dwll rsng 0n c0ns0ldI0n.
P0sIcqusI0n rcscrvcs rc Ihc ccumulIcd rcIncd pr0IIs sncc Ihc
dIc 0I cqusI0n. Thc pr0p0rI0n 0I Ihcsc rcscrvcs crncd by Ihc prcnI
c0mpny s crcdIcd I0 Ihc c0ns0ldIcd cc0unIs. T0 Ihc cxIcnI IhI p0sI
cqusI0n pr0IIs crncd by Ihc subsdry rc IrnsIcrrcd I0 Ihc prcnI
c0mpny by wy 0I , Ihc m0unI I0 bc ggrcgIcd whcn
c0ns0ldI0n Ikcs plcc wll bc rcduccd c0rrcsp0ndngly.
(l)
0Ihcr rcscrvcs 0I subsdry my ncludc shrc prcmum cc0unI,
rcvluI0n surplus 0n Ixcd sscIs nd 0Ihcr rcscrvcs. Thc prncplc 0I
dvdng Ihcm bcIwccn prccqusI0n nd p0sIcqusI0n rcscrvcs
wll pply.
!n Is cxplnI0ry n0Ic, SAS 27 0uIlncs Ihc I0ll0wng c0ns0ldI0n pr0ccdurcs:
() Fnncl sIIcmcnIs 0I Ihc prcnI nd Is subsdrcs rc c0mbncd
0n lnc by lnc bss by ddng I0gcIhcr lkc Icms 0I sscIs, lblIcs,
cquIy, nc0mc nd cxpcnscs.
(b) Thc crryng m0unI 0I Ihc prcnI's nvcsImcnI n cch subsdry nd
Ihc prcnI's p0rI0n 0I cquIy 0I cch subsdry rc clmnIcd.
(c) N0nc0nIr0llng nIcrcsIs n Ihc pr0II 0r l0ss 0I Ihc c0ns0ldIcd
subsdrcs I0r Ihc rcp0rIng pcr0d rc dcnIIcd.
370
(d) N0nc0nIr0llng nIcrcsIs n Ihc ncI sscIs 0I c0ns0ldIcd cnIIcs rc
dcnIIcd nd prcscnIcd n Ihc c0ns0ldIcd blncc wIhn cquIy,
scprIcly Ir0m Ihc shrch0ldcr's Iund.
Thc dscl0surc rcqurcmcnIs rclIng I0 gr0up cc0unIs ncludc Ihc I0ll0wng:
() Thc nIurc 0I Ihc rclI0nshp bcIwccn Ihc prcnI nd subsdry whcn
Ihc prcnI d0cs n0I 0wn drccIly 0r ndrccIly Ihr0ugh subsdrcs m0rc
Ihn hlI 0I Ihc v0Ing p0wcr.
(b) Thc rcs0ns why m0rc Ihn hlI 0I Ihc v0Ing p0wcr n Ihc nvcsIcc d0cs
n0I c0nsIIuIc c0nIr0l.
(c) whcn Ihcrc s sgnIcnI rcsIrcI0n 0n Ihc blIy 0I Ihc subsdrcs
I0 IrnsIcr Iunds I0 Ihc prcnI, Ihc nIurc nd sgnIcncc 0I such
rcsIrcI0ns musI bc dscl0scd.
(d) A lsI 0I nvcsImcnIs n subsdrcs, |0nIly c0nIr0llcd cnIIcs nd
ss0cIcs, ncludng Ihc nmc nd c0unIry 0I nc0rp0rI0n.
(c) whcrc scprIc Inncl sIIcmcnIs rc prcprcd by |0nIly c0nIr0llcd
cnIIy 0r n nvcsI0r n n ss0cIc, Ihc rcs0n I0r prcprng scprIc
Inncl sIIcmcnIs, Ihc lsI 0I sgnIcnI nvcsImcnI nd c0unIry 0I
nc0rp0rI0n 0I Ihc nvcsIcc musI bc dscl0scd.
Rcdcrs rc dvscd I0 sIudy Ihc cxIcnsvc dscl0surc rcqurcmcnIs 0I Ihs
chpIcr Ir0m Ihc NAS Hndb00k 2008/2009.
Ths chpIcr hs Ikcn rcdcrs Ihr0ugh Ihc lcgl nd rcgulI0ry Irmcw0rk n
Ihc prcscnII0n 0I gr0up cc0unIs, wIh prIculr rcIcrcncc I0 Ihc dcIlcd
pr0vs0ns 0I CAMA 2004 nd SAS 27. !I hs ls0 pr0vdcd Ihc0rcIhcl
I0undI0n I0r c0ns0ldI0n cc0unIng.
. whcrc subsdry d0pIs dIIcrcnI cc0unIng p0lcy Ir0m Is prcnI c0mpny,
Ihc rcsulI 0I Ihc subsdry's 0pcrI0n sh0uld:
A. N0I bc c0ns0ldIcd buI Ihc ncI cIIccI 0n Ihc prcnI c0mpny's
rcsulI sh0uld bc dscl0scd.
. c c0ns0ldIcd nd Ihc ncI cIIccI 0I Ihc dIIcrcncc n p0lcy 0n
gr0up rcsulI sh0uld bc dscl0scd.
C. c c0ns0ldIcd wIh n0 IurIhcr dscl0surc 0I ny IcI.
0. c cc0unIcd I0r s 0rdnry nvcsImcnI n Ihc c0mpny's b00ks.
E. c ncludcd n Ihc nvcsI0r's c0mpny s n ss0cIc.
37
2. whch 0I Ihc I0ll0wng cn bc rcgrdcd s Ihc uscIulncss 0I c0ns0ldIcd
Inncl sIIcmcnIs!
A. C0ns0ldIcd cc0unIs pply Ihc prncplc 0I lcgl I0rm 0vcr
c0mmcrcl subsIncc.
. C0ns0ldIcd cc0unIs pply b0Ih Ihc prncplcs 0I lcgl I0rm nd
c0mmcrcl subsIncc.
C. C0ns0ldIcd cc0unIs pply Ihc prncplcs 0I c0mmcrcl subsIncc
0vcr I0rm.
0. Thc c0ns0ldIcd shrch0ldcrs Iund wll bc Ihc sum 0I Ihc
ndvdul c0mpny's shrch0ldcrs Iund.
E. Thc gcrng 0I Ihc gr0up wll bc lcss Ihn Ih0sc 0I Ihc c0nsIIucnI
c0mpncs.
3. AI cqusI0n 0I Ihc Ir vlucs 0I subsdry's dcnIIblc ncI sscIs
cqurcd cxcccdcd Ihc c0sI I0 Ihc nvcsI0r (c0mpny). Thc IrcImcnI I0r
Ihs cxccss s I0 bc rcc0gnzcd by Ihc cqurcr s
A. A crcdI n Ihc pr0II nd l0ss cc0unI.
. A dcIcrrcd crcdI.
C. A dcducI0n Ir0m Ihc Ixcd sscIs 0I Ihc gr0up.
0. An cxIr0rdnry Icm.
E. Pdn cpIl.
4. Pp Plc 0wns 80 0I Ihc cquIy 0I Mm Plc. 0b0 Plc 0wns 20 0I Mm
Plc. !n rclI0n I0 Pp Plc, 0b0 Plc s c0nsdcrcd s
A. An ss0cIc
. A Icll0w subsdry.
C. A prcnI c0mpny.
0. A mn0rIy nIcrcsI.
E. A subsdry n0I c0ns0ldIcd.
5. A prcnI c0mpny's Inncl ycr cnds 3 0cccmbcr, 2008 nd Ihc
subsdry's ycr cnds 3 0cI0bcr, 2008. ThcrcI0rc
A. A c0ns0ldIcd sIIcmcnI cnn0I bc prcprcd I0r prcnI nd
subsdry.
. !I Ihc c0ns0ldIcd sIIcmcnI s pcrmssblc, I wll bc dIcd 3
0cI0bcr, 2008.
C. Subsdry sIIcmcnIs dIc 3 0cI0bcr, 2008 sh0uld bc
c0ns0ldIcd wIh prcnIs 3 0cccmbcr 2008 sIIcmcnIs wIh n0
IurIhcr dscl0surc.
0. Subsdry sIIcmcnIs dIcd 3 0cI0bcr, 2008 sh0uld bc
c0ns0ldIcd wIh prcnIs 3 0cccmbcr, 2004 sIIcmcnIs wIh
IurIhcr dscl0surc 0I mIcrl cvcnIs bcIwccn 3 0cI0bcr nd 3
0cccmbcr, 2008.
E. Thc subsdry sh0uld prcprc n nIcrm cc0unIs I0 3 0cccmbcr,
2004, nd Ihc prcnI sh0uld usc Ihcm I0r c0ns0ldI0n I 3
0cccmbcr, 2008.
b. 0uIlnc 0nc mn pr0blcm wIh gr0up cc0unIng.
7. whI s Ihc rcqurcmcnI 0I SAS 27 0n Ihc c0ns0ldI0n 0r n0nc0ns0ldI0n
0I subsdry wIh cIvIcs IhI rc dssmlr I0 Ihc prcnI nd 0Ihcr
subsdrcs!
372
8. LsI 0nc 0I Ihc gr0unds 0n whch subsdry my bc cxcmpIcd Ir0m
c0ns0ldI0n.
9. C0nIr0l s prcsumcd I0 cxsI whcn Ihc prcnI 0wns, drccIly 0r ndrccIly,
Ihr0ugh subsdrcs m0rc Ihn............ 0I Ihc v0Ing p0wcr 0I n cnIcrprsc.
0. Acc0rdng I0 Ihc ycr 2008 mcndmcnIs I0 !AS 27, Ihc Icrm `mn0rIy
nIcrcsI' s n0w kn0wn s...................
373
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Kn0w h0w I0 pply Ihc bsc prncplcs nd pr0ccdurcs nv0lvcd n blncc shccI
c0ns0ldI0n.
UndcrsInd h0w I0 clculIc nd IrcI g00dwll cqurcd n Ihc c0ns0ldIcd blncc
shccI.
ClculIc unrclzcd pr0IIs 0n nIcrc0mpny slcs 0I sI0ck, Ixcd sscIs nd h0w
I0 cc0unI I0r Ihcm.
Acc0unI I0r nIcrc0mpny Icms such s dvdcnds, Icms n IrnsI, l0ns nd
nIcrcsIs Ihcrc0n.
Acc0unI I0r rcvluI0n rcscrvcs 0n Ixcd sscIs 0I Ihc subsdrcs I cqusI0n
n sIgcs.
Thc csscncc 0I c0ns0ldI0n pr0ccdurcs s Ihc clmnI0n 0I nIcrc0mpny
blnccs nd Ihc ggrcgI0n 0I Ihc rcmnng blnccs.
Thc summrzcd blncc shccIs 0I Nwkn0b Plc nd Is subsdry 0gbucI
Plc I 30cccmbcr 2008 rc s I0ll0ws:
Nwkn0b 0gbucI
Plc Plc
'000 '000
Fxcd AsscIs b3,000 58,000
!nvcsImcnI n 0gbucI Plc 20,000
CurrcnI sscIs: sI0ck 2b,000 22,000
0cbI0rs 22,000 20,000
nk lncc 35,000 30,000
2bb,000 30,000
0rdnry shrcs 0I .00 cch
(Iully pd) 25,000 00,000
RcIncd pr0IIs 40,000 20,000
255,000 20,000
CurrcnI LblIy ,000 0,000
2bb,000 30,000
374
Nwkn0b Plc purchscd Ihc cnIrc shrc cpIl 0I 0gbucI Plc I0r 20mll0n
csh, I Ihc blncc shccI dIc (3/2/08).
Prcprc Ihc c0ns0ldIcd blncc shccI 0I Nwkn0b Plc nd Is subsdry I
3 0cccmbcr 2008.
Nwkn0b 0gbucI C0ns0ldIcd
'000 '000 '000
Fxcd sscIs I b00k vluc b3,000 + 58,000 = 2,000
!nvcsImcnI n 0gbucI PLC 20,000
CurrcnI sscIs: SI0ck 2b,000 + 22,000 = 48,000
0cbI0rs 22,000 + 20,000 = 42,000
nk blncc 35,000 + 30,000 = b5,000
2bb,000 + 30,000 = 27b,000
0rdnry shrc cpIl 25,000 00,000 25,000
RcIncd pr0IIs 40,000 20,000 40,000
255,000 255,000
CurrcnI lblIy ,000 + 0,000 = 2,000
2bb,000 30,000 27b,000
N'000 N'000
Fxcd sscIs I b00k vluc 2,000
CurrcnI sscIs:
SI0ck 48,000
0cbI0rs 42,000
nk blncc b5,000
55,000
Lcss: CurrcnI lblIcs 2,000
NcI currcnI sscIs 34,000
255,000
CpIl nd rcscrvcs:
0rdnry shrc cpIl (N cch) 25,000
RcIncd pr0IIs 40,000
255,000
375
d Plc SnI0s Plc
Fxcd ss cIs b0, 000 b, 000
!nvcsImcnI n SnI0s Plc 40, 000
CurrcnI ss cIs 390, 000 48, 000
590, 000 b4, 000
200, 000 20, 000
Pr0II nd l0ss cc0unI b0, 000 0, 000
CurrcnI lblIcs 330, 000 34, 000
590, 000 b4, 000
'000 '000
Thc nIcrc0mpny blnccs rc cr0sscd 0uI bccusc Ihcy cnccl 0n
c0ns0ldI0n.
Thc b0vc llusIrI0n s n 0vcrsmplIcI0n bccusc 0I Ihc I0ll0wng rcs0ns:
() Thc purchsc prcc my n0I bc cxcIly cqul I0 Ihc shrch0ldcrs' Iund
0I Ihc subsdry. Thc dIIcrcncc wll gvc rsc I0 g00dwll.
(b) Thc prcnI c0mpny my n0I cqurc Ihc cnIrc shrc cpIl 0I Ihc
subsdry c0mpny, hcncc Ihc nccd I0r pr0vs0n I0r n0nc0nIr0llng
nIcrcsI rscs.
(c) Thcrc my bc 0Ihcr I0 bc clmnIcd such
s unrclzcd pr0IIs 0n nIcrc0mpny slcs 0I g00ds nd Ixcd sscIs,
dvdcnd pyblc nd rcccvblc wIhn Ihc gr0up, nIcr c0mpny l0ns
nd nIcrcsI Ihcrc0n nd s0 0n.
(d) P0sI - cqusI0n pr0IIs. AcqusI0n 0I shrcs my n0I 0ccur I lncc
ShccI dIc.
Ad|usImcnIs I0r Ihcsc blnccs rc n0w cxmncd.
000dwll rscs 0n c0ns0ldI0n whcn Ihc prcc pd I0 cqurc Ihc subsdry
s grcIcr Ihn Ihc Ir vluc 0I ncI sscIs cqurcd.
d Plc cqurcd Ihc cnIrc shrc cpIl 0I SnI0s Plc I0r 40mll0n csh
0n 3 0cccmbcr 2008. Thc blncc shccIs 0I Ihc Iw0 c0mpncs I IhI dIc
wcrc s I0ll0ws.
0
.00 pcr shrc
Thcrc s n0 sgnIcnI dIIcrcncc bcIwccn Ihc b00k vluc nd Ihc Ir vluc 0I
SnI0 Plc's sscIs.
() ClculIc Ihc g00dwll.
37b
(b) Prcprc Ihc c0ns0ldIcd blncc shccI 0I d Plc I 3 0cccmbcr
2008.
() 000dwll 0n C0ns0ldI0n
C0sI 0I nvcsImcnI 40,000
Shrc cpIl 20,000
RcIncd pr0IIs 0,000
30,000 x 00 30,000
000dwll 0n c0ns0ldI0n 0,000
(b) C0ns0ldIcd lncc shccI s I 3sI 0cc., 2003
Fxcd sscIs
Tngblc N(b0,000 + b,000) 7b,000
!nIngblc sscIs 000dwll 0,000
8b,000
CurrcnI sscIs N(390,000 + 48,000) 438,000
Lcss: CurrcnI lblIcs N(330,000 + 34,000) 3b4,000
NcI currcnI sscIs 74,000
2b0,000
CpIl nd Rcscrvcs
Shrc cpIl 200,000
RcIncd pr0IIs b0,000
2b0,000
Thc b0vc llusIrI0n ncludcs Iw0 bsc c0nccpIs 0n blncc shccI
c0ns0ldI0n. Thcsc rc:
() 000dwll 0n c0ns0ldI0n
() All Ihc rcscrvcs 0I subsdrcs rc prccqusI0n 0n dIc 0I
c0ns0ldI0n.
Thcsc rc Ihc pr0IIs whch ccrucd I0 Ihc I0rmcr shrch0ldcrs 0I Ihc subsdry
c0mpny. Thcy rc n0I vlblc I0r dsIrbuI0n I0 Ihc shrch0ldcrs 0I Ihc
prcnI c0mpny, rIhcr, Ihcy rc IrcIcd s prI 0I Ihc 0I Ihc
busncss I cqusI0n.
Thc prccqusI0n pr0IIs c0uld ncludc , shrc prcmum nd
0Ihcr cpIl rcscrvcs I cqusI0n. 0Ihcrs rc rcvluI0n surplus, rcc0vcry
0I bd dcbIs wrIIcn 0II bcI0rc cqusI0n nd Ir0m
0I IhI rclIcs I0 .
'000
'000
377
Thc ncrcsc n Ihc rcscrvcs 0I Ihc subsdry whch r0sc IIcr cqusI0n by
Ihc prcnI c0mpny s p0sIcqusI0n rcscrvcs. Ths sh0uld bc ggrcgIcd
wIh Ihc rcscrvcs 0I Ihc prcnI c0mpny I0 0bIn Ihc c0ns0ldIcd rcscrvcs.
Thc blncc shccI 0I PcIcr Plc nd SIu Plc s I 3 0cccmbcr 2008, wcrc s
I0ll0ws:
PcIcr Plc SIu Plc
N'000 N'000
Fxcd sscIs 40,000 32,000
!nvcsImcnI I c0sI 7b,000
CurrcnI AsscIs b0,000 48,000
7b,000 80,000
Shrc cpIl:
0rdnry Shrcs 0I N.00 cch 20,000 40,000
AccumulIcd rcscrvcs 32,000 b,000
52,000 5b,000
CurrcnI LblIcs 24,000 24,000
7b,000 80,000
Thc cnIrc shrc cpIl 0I SIu Plc ws cqurcd whcn Ihc ccumulIcd
rcscrvcs ws 2mll0n.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd blncc shccI 0I PcIcr 0r0up I 3
0cccmbcr 2008.
Prcprc Ihc c0ns0ldI0n schcdulc nd clculIc 000dwll nd c0ns0ldIcd
rcscrvcs.
EquIy 0I SIu Plc T0Il PrccqusI0n P0sIcqusI0n
00
'000 '000 '000
0rdnry shrc cpIl 40,000 40,000
AccumulIcd rcscrvcs b,000 2,000 4,000
5b,000 52,000 4,000
C0sI 0I nvcsImcnI (7b,000)
000dwll 24,000
AccumulIcd rcscrvcs 0I PcIcr 32,000
C0ns0ldIcd rcscrvcs
378
Prcprc Ihc c0ns0ldIcd lncc shccI by ddng Ihc Igurcs 0I sscIs nd
lblIcs 0I Ihc c0mpncs, cxccpI I0r Ihc Igurcs IhI hvc bccn clculIcd n
Ihc c0ns0ldI0n schcdulc b0vc.
'000 '000
Tngblc 72,000
!nIngblc - 000dwll (w) 24,000
9b,000
CurrcnI sscIs 08,000
Lcss: CurrcnI lblIcs 48,000
NcI currcnI sscIs b0,000
5b,000
CpIl nd rcscrvcs
0rdnry shrcs 0I cch Iully pd 20,000
AccumulIcd rcscrvcs (w) 3b,000
5b,000
wc shll n0w pr0cccd I0 sIuI0n whcrc Ihc prcnI c0mpny d0cs n0I cqurc
Ihc cnIrc shrc cpIl 0I Ihc subsdry.
Thc n0nc0nIr0llng nIcrcsI n Ihc shrc cpIl nd rcscrvcs 0I Ihc subsdry
wll bc sh0wn dsIncI Ir0m Ihc shrch0ldcrs' Iund nd 0Ihcr lblIcs n Ihc
c0ns0ldIcd cc0unIs.
Thc IcIs rc s n llusIrI0n 7.3 cxccpI IhI PcIcr Plc cqurcd 0nly 30mll0n
0I Ihc shrc cpIl 0I SIu Plc.
0cIcrmnc Ihc pcrccnIgc cqurcd Ihr0ugh Ihc gr0up sIrucIurc.
PcIcr PLC cqurcd 30000 x 00 = 75
40000
!n SIu PLC
Prcprc Ihc c0ns0ldI0n schcdulc I0 clculIc g00dwll, c0ns0ldIcd
rcscrvcs nd n0nc0nIr0llng nIcrcsI (NC!).
379
T0Il Prc P0sI N0nc0nIr0llng
cqusI0n cqusI0n !nIcrcsI
'000 '000 '000 '000
Shrc cpIl 40,000 30,000 0,000
AccumulIcd rcscrvcs b,000 9,000
()
3,000
(2)
4,000
(3)
5b,000 39,000
C0sI 0I nvcsImcnI (7b,000)
000dwll 37,000
PcIcr's rcscrvcs 32,000
C0ns0ldIcd rcscrvcs 35,000 ______
NC! 4,000
Prcprc Ihc c0ns0ldIcd lncc shccI
'000 '000
Fxcd sscIs
Tngblc 72,000
!nIngblc - 000dwll 37,000
09,000
CurrcnI sscIs 08,000
Lcss: CurrcnI lblIcs 48,000
NcI currcnI sscIs b0,000
b9,000
CpIl nd rcscrvcs:
20mll0n 0rdnry shrcs cch Iully pd 20,000
AccumulIcd rcscrvcs 35,000
55,000
Mn0rIy nIcrcsI 4,000
b9,000
() PrccqusI0n pr0II = 2,000 (s gvcn) x 75 = 9,000
(b) P0sIcqusI0n pr0II = (b,000 - 2,000) x 75= 3,000
(c) N0nc0nIr0llng nIcrcsI = b,000 x 25 = 4,000
b,000
!n clculIng g00dwll, Ir vlucs 0I Ihc Ixcd sscIs rc uscd rIhcr Ihn Ihc
b00k vlucs. Thc rcvluI0n dIIcrcncc s cnIrcly prccqusI0n rcscrvc, I
I s surplus, Ihc Ixcd sscIs cc0unI sh0uld bc dcbIcd nd Ihc prccqusI0n
rcscrvc crcdIcd wIh Ihc dIIcrcncc. 0n Ihc 0Ihcr hnd, I I s dcIcI, Ihc
prccqusI0n rcscrvc w0uld bc dcbIcd nd Ixcd sscIs cc0unI crcdIcd.
380
Thc IrcImcnI rcc0mmcndcd by SAS 2b s IhI b0Ih Ihc gr0up nd
n0nc0nIr0llng nIcrcsI (NC!) shrc 0I rcvluI0n dIIcrcncc sh0uld bc
cc0unIcd I0r.
Thc IcIs rc s n (7.4) b0vc, cxccpI IhI PcIcr Plc cqurcd Ihc shrc cpIl
0I SIu Plc 0n 1nury 2004. Frcch0ld pr0pcrIy, whch ws n0I dcprccIcd,
wIh b00k vluc 0I 8mll0n ws csImIcd I0 hvc Ir vluc 0I
28mll0n 0n 1nury, 2008. N0 d|usImcnI hs bccn mdc n Ihc b00ks 0I
SIu Plc.
Prcprc Ihc c0ns0ldIcd blncc shccI 0I PcIcr gr0up.
Shrch0ldng (s n 7.4 sIcp )
Prcprc Ihc c0ns0ldI0n schcdulc Ikng nI0 c0nsdcrI0n
Ihc cIIccI 0I rcvluI0n rcscrvcs 0I SIu 0n g00dwll.
EquIy 0I SIu T0Il Prc P0sI
cqusI0n cqusI0n NC!
'000 '000 '000 '000
Shrc cpIl 40,000 30,000 0,000
AccumulIcd rcscrvc b,000 9,000 3,000 4,000
RcvluI0n rcscrvcs 0,000 7,500 2,500
bb,000 4b,500
C0sI 0I nvcsImcnI 7b,000
000dwll 29,500
PcIcr's rcscrvcs 32,000
C0ns0ldIcd rcscrvcs 35,000 ______
N0nc0nIr0llng nIcrcsI b,500
Prcprc Ihc c0ns0ldIcd blncc shccI
'000 '000
Fxcd AsscIs (40,000 + 32,000 + 0,000) 82,000
000dwll 29,500
,500
CurrcnI sscIs 08,000
Lcss: CurrcnI lblIcs 48,000
NcI currcnI sscI b0,000
7,500
CpIl nd rcscrvcs
0rdnry shrcs 0I .00 cch Iully pd 20,000
38
AccumulIcd rcscrvcs 35,000
55,000
N0nc0nIr0llng nIcrcsI b,500
7,500
Thc cnhnccd dcprccI0n 0n sscI rcvluI0n rcscrvc s clculIcd
Ir0m Ihc dIc 0I cqusI0n I0 Ihc cc0unIng dIc. Thc vluc 0bIncd
s dcbIcd I0 Ihc pr0II nd l0ss cc0unI nd crcdIcd I0 dcprccI0n
cc0unI.
Thc IcIs rc s n (7.5) cxccpI IhI Ihc pr0pcrIy s dcprccIcd I 2
pcr nnum. ClculIc Ihc ccumulIcd rcscrvc nd Ihc Ixcd sscIs I0
bc ncludcd n Ihc c0ns0ldIcd blncc shccI.
'000
Shrc 0I SIu Plc p0sIcqusI0n rcscrvcs (scc 2.5) 3,000
Enhnccd dcprccI0n n0w wrIIcn 0II 2 x 0,000 ( 200)
00
Add PcIcr Plc rcscrvc 32,000
34,800
As pcr (sIcp 2.5) 82,000
Lcss: cnhnccd dcprccI0n 0n rcvluI0n rcscrvc 200
C0ns0ldIcd m0unI 8,800
!nIcrc0mpny IrnscI0ns wIhn gr0up rc usully dclI wIh n
currcnI cc0unIs mnIncd by Ihc prcnI c0mpny nd Is subsdrcs.
AI Ihc ycrcnd, Ihc blnccs n Ihcsc cc0unIs my n0I grcc 0wng I0
Ihc cxsIcncc 0I g00ds n IrnsI nd csh n IrnsI.
Ad|usImcnIs sh0uld bc mdc I0r Ihcsc Icms 0I dIIcrcnccs, s I0ll0ws:
() !I Ihc g00ds 0r csh rc n IrnsI bcIwccn Ihc prcnI c0mpny
nd Ihc subsdry, Ihc d|usIng cnIry sh0uld bc mdc n Ihc
blncc shccI 0I Ihc prcnI c0mpny, n0 mIIcr Ihc drccI0n 0I
Ihc IrnsIcr.
(b) !I Ihc Icms rc n IrnsI bcIwccn Icll0w subsdrcs, Ihc
d|usIng cnIry sh0uld bc mdc n Ihc b00ks 0I Ihc c0mpny I0
whch Ihc Icms rc n IrnsI, IhI s, rccpcnI c0mpny.
382
AI Ihc ycrcnd, Ihc currcnI cc0unIs n Ihc b00ks 0I H00 Plc nd Sh0 Plc sh0w
Ihc I0ll0wng blnccs, H00 Plc bcng Ihc prcnI c0mpny.
00k 0I H00 Plc - cc0unI wIh Sh0 Plc
b8,000
00k 0I Sh0 Plc - cc0unI wIh H00 Plc
59,000
Thc dIIcrcncc s duc I0 g00ds n IrnsI Ir0m Sh0 Plc I0 H00 Plc.
Expln Ihc cc0unIng IrcImcnI 0I Ihc g00ds n IrnsI.
Ad|usImcnI I0r Icms n IrnsI
0r: SI0ck n IrnsI 9,000
Cr: Sh0 currcnI cc0unI (n H00 blncc shccI) 9,000
Cnccl Ihc currcnI cc0unIs whch rc n0w n grccmcnI.
!ncludc Ihc sI0ck n IrnsI s prI 0I Ihc currcnI sscIs n Ihc
c0ns0ldIcd blncc shccI.
!I currcnI cc0unIs rc n0I mnIncd, nIcrc0mpny ndcbIcdncss n
Ihc I0rm 0I dcbI0rs nd crcdI0rs musI bc cnccllcd I0r Ihc purp0sc 0I
c0ns0ldIcd blncc shccI.
nk 0vcrdrII n ny 0I Ihc gr0up c0mpncs sh0uld n0I bc 0IIscI gnsI
Iv0urblc bnk blnccs n Ihc 0Ihcr gr0up c0mpncs unlcss Ihc bnks
hvc bccn gvcn wrIIcn uIh0rIy I0 mkc such 0IIscI.
C0mpncs wIhn Ihc gr0up n0rmlly supply g00ds nd scrvccs I0 0Ihcr
mcmbcrs 0I Ihc gr0up I pr0II I0 Ihc supplyng c0mpny n 0rdcr n0I
I0 prc|udcc Ihc rghIs 0I Ihc 0uIsdc shrch0ldcrs 0I Ih0sc c0mpncs.
T0 Ihc cxIcnI I0 whch such g00ds rc uns0ld I Ihc cnd 0I Ihc ycr, Ihcrc
wll bc s0mc clcmcnIs 0I unrclzcd pr0II 0n Ihc uns0ld sI0ck, Ir0m Ihc
vcwp0nI 0I Ihc gr0up s wh0lc.
Thc clcmcnI 0I Ihc unrclzcd pr0IIs musI bc clmnIcd
bccusc c0mpny cnn0I mkc pr0II by Irdng wIh IsclI. Thc
I0ll0wng IrcImcnIs rc rcc0mmcndcd:
() F0r wh0lly 0wncd subsdry c0mpny, Ihc unrclzcd pr0II
cn bc d|usIcd n Ihc ndvdul blncc shccI 0I Ihc prcnI
c0mpny by
0r: AccumulIcd pr0IIs
Cr: Cl0sng sI0ck
383
!n prcnI's c0mpny blncc shccI.
0R
0r: C0ns0ldIcd rcscrvcs
Cr: C0ns0ldIcd cl0sng sI0ck
(b) F0r prIly 0wncd subsdry, SAS 27 rcc0mmcnds IhI Ihc wh0lc 0I Ihc
unrclzcd pr0II sh0uld bc clmnIcd Ir0m Ihc gr0up's pr0II nd sI0ck,
rcspccIvcly.
!n prcIcc, Ihs s nIcrprcIcd s I0ll0ws:
() ThI Ihc slcs Ir0m Ihc prcnI c0mpny I0 Ihc subsdry wll
pr0ducc pr0II n Ihc prcnI c0mpny's b00k. C0nscqucnIly, Ihc
rclIcd unrclzcd pr0II sh0uld bc clmnIcd n Iull Ir0m Ihc
gr0up cc0unIs s n () b0vc.
() Slcs Ir0m Ihc subsdry I0 Ihc prcnI c0mpny wll pr0ducc
pr0II I0r Ihc subsdry. Thc unrclzcd pr0II 0n I sh0uld bc
shrcd bcIwccn Ihc gr0up nd mn0rIy n Ihc pr0p0rI0n 0I Ihcr
h0ldngs.
() Thc unrclzcd pr0II my bc gvcn s mrkup 0n c0sI 0r gr0ss
pr0II mrgn.
(b) Thc sIIcmcnI 0I cc0unIng p0lcy 0n Ihc IrcImcnI 0I unrclzcd
pr0II 0n sI0ck sh0uld bc sIIcd n Ihc c0ns0ldIcd cc0unI.
000ds wcrc nv0ccd by prcnI I0 subsdry c0mpny I c0sI plus
mrkup 0I 25. AI Ihc cnd 0I Ihc ycr, ncludcd n Ihc sI0ck 0I Ihc
subsdry ws Ihs nIcrc0mpny slcs 0I 24,000 I nv0ccd prcc.
ClculIc Ihc unrclzcd pr0II 0n sI0ck.
Prcc sIrucIurc:
C0sI 00
Mrk - up 25
!nv0ccd prcc 25
Unrclscd pr0II = 25 x 24,000
25
= 4,800
Thc IcIs rc s n (7.8) b0vc cxccpI IhI Ihc g00ds wcrc nv0ccd I gr0ss
pr0II mrgn 0I 25 I0 Ihc subsdry.
384
!nv0ccd prcc 00
0r0ss pr0II mrgn 25
75
Unrclzcd pr0II = 25 x 24,000 = b,000
00
0vcn bcl0w rc Ihc blncc shccIs 0I Pnm Plc nd Sl0 Plc.
Pnm Plc Sl0 Plc
'000 '000
NcI sscIs (0Ihcr Ihn sI0ck) 88,000 b4,000
!nvcsImcnI n Sl0 Plc 79,000
SI0ck 20,000 b,000
87,000 80,000
0rdnry shrc cpIl 0I cch 0,000 50,000
Rcvcnuc rcscrvcs 77,000 30,000
87,000 80,000
Pnm Plc cqurcd 40mll0n 0rdnry shrcs n Sl0 Plc whcn Ihc rcvcnuc
rcscrvc 0I Sl0 ws 0mll0n. 0urng Ihc ycr, Sl0 mdc sIndrd mrkup
0I 50 0n c0sI. AI 3 0cccmbcr, 2008, 2mll0n 0I Ihcsc g00ds rcmncd n
Ihc sI0ck 0I Pnm Plc.
Prcprc Ihc c0ns0ldIcd blncc shccI s I 3 0cccmbcr 2008. !I s Ihc gr0up
p0lcy I0 mkc ll0wncc I0r Ihc gr0up's shrc nd n0nc0nIr0llng nIcrcsI's
shrc n unrclzcd pr0II.
Pnm n Sl0
40
50 = 80
NC! = 20
00
() Ad|usImcnI I0r unrclzcd pr0II 0n sI0ck
C0sI = 00
Mrk - up = 50
!nv0ccd prcc = 50
385
Unrclzcd pr0II = 50 x 2,000,000
50
= 4,000,000
(b) '000 '000
0r: C0ns0ldIcd rcscrvcs (4000 x 80) 3,200
N0nc0nIr0llng nIcrcsI (4000 x 20) 800
Cr: SI0ck 4,000
Prcprc Ihc c0ns0ldI0n schcdulc I0 clculIc g00dwll,
c0ns0ldIcd rcvcnuc rcscrvcs nd mn0rIy nIcrcsI.
EquIy n Sl0 PLc T0Il PrccqusI0n P0sIcqusI0n NC!
N'000 N'000 N'000 N'000
0rdnry shrcs 50,000 40,000 0,000
Rcvcnuc rcscrvc 30,000 8,000 b,000 b,000
48,000
C0sI 0I shrcs cqurcd 79,000
000dwll 3,000
Pnm's rcscrvc 77,000
Unrclzcd Pr0II 0n SI0ck (3,200) (800)
C0ns0ldIcd rcvcnuc
rcscrvc 89,800
N0n c0nIr0llng nIcrcsI 5,200
Prcprc Ihc c0ns0ldIcd blncc shccI
'000
000dwll 3,000
NcI sscIs (0Ihcr Ihn sI0ck) 52,000
SI0ck (20,000 +b,000 - 4,000) 32,000
25,000
0rdnry shrcs 0I 0,000
Rcvcnuc rcscrvcs 89,800
99,800
N0nc0nIr0llng nIcrcsI 5,200
25,000
All0wncc hs bccn mdc I0r Ihc wh0lc 0I Ihc unrclzcd pr0II 0n
sI0cks 0I whch Ihc gr0up nd Ihc n0nc0nIr0llng nIcrcsI bcr Ihcr 0wn shrcs.
38b
Thc IcIs rc s n (7.0) b0vc cxccpI IhI Ihc qucsI0n ws slcnI 0n Ihc
p0lcy I0r unrclzcd pr0II 0n sI0ck.
SIcp !: s n (7.0) b0vc
SIcp !!: () s n (7.0) b0vc
(b) 10urnl '000 '000
0r: C0ns0ldIcd rcscrvcs 4,000
Cr: SI0ck 4,000
SIcp !!!: P0sIcqusI0n pr0II nd NC! w0uld chngc
P0sIcqusI0n NC!
'000 '000
0rdnry shrcs 0,000
Rcvcnuc rcscrvc b,000 b,000
Pnm rcscrvc 77,000
Unrclzcd pr0II n sI0ck (4,000)
C0ns0ldIcd rcscrvc 89,000 ______
N0nc0nIr0llng nIcrcsI b,000
!n Ihc c0ns0ldIcd blncc shccI, rcplcc rcvcnuc rcscrvc nd n0n
c0nIr0llng nIcrcsI wIh Ihc m0unI 0bIncd n sIcp !!!.
All0wncc hs bccn mdc by Ihc gr0up I0r Ihc wh0lc 0I Ihc unrclzcd
pr0II 0n sI0ck.
As wIh sI0ck, d|usImcnI sh0uld bc mdc I0r unrclzcd pr0IIs. ThI
s, Ihc c0ns0ldIcd rcscrvc musI bc dcbIcd nd Ihc Ixcd sscI cc0unI
crcdIcd wIh Ihc unrclzcd pr0II 0n Ihc sscIs IrnsIcrrcd. Thc 0vcr
chrgc 0I dcprccI0n rsng Ir0m Ihc unrclzcd pr0II musI bc
rcm0vcd by pplyng Ihc rIc 0I dcprccI0n 0n Ihc unrclzcd pr0II.
0lu Plc, s0ld plnI wIh ncI b00k vluc 0I b0,000 I0 Ay0 Plc I0r 90,000.
Thc p0lcy 0I Ihc gr0up s I0 chrgc dcprccI0n 0n plnI I 0 0n c0sI pcr
nnum.
ClculIc Ihc m0unI I0 bc ncludcd n Ihc Ixcd sscI cc0unI nd dcprccI0n
cc0unI nd sh0w Ihc |0urnl cnIrcs.
387
Unrclzcd pr0II (90,000 - b0,000) 30,000
Lcss: 0vcrchrgcd dcprccI0n (0) 3,000
27,000
0r Cr
0cprccI0n cc0unI 3,000
Rcscrvcs cc0unIs 27,000
PlnI cc0unI 30,000
cng unrclzcd pr0II 0n slcs 0I plnIs wrIIcn 0II
7.b.b
Thc pcrccnIgc 0I prcIcrcncc shrcs hcld by Ihc prcnI c0mpny n Ihc
subsdry d0cs n0I dcIcrmnc Ihc h0ldng c0mpny/subsdry
rclI0nshp bccusc Ihcy rc n0I v0Ing shrcs. Thc prcIcrcncc shrcs
sh0uld bc ll0cIcd bcIwccn (IhI s,crcdIcd n) Ihc c0sI 0I c0nIr0l
cc0unI nd Ihc n0nc0nIr0llng nIcrcsIs. Any dIIcrcncc bcIwccn Ihc
c0sI nd n0mnl vluc 0I shrcs cqurcd wll bc rcIlccIcd s g00dwll
0n c0ns0ldI0n.
7.b.7
L0n cpIl nd dcbcnIurcs rc rrclcvnI I0r Ihc purp0sc 0I
dcIcrmnng prcnI c0mpny/subsdry rclI0nshp. whcrc Ihc prcnI
c0mpny h0lds dcbcnIurc 0r l0n sI0ck n Ihc subsdry, Ihc n0mnl
vluc hcld by I, shll bc cnccllcd gnsI Ihc c0sI. Any dIIcrcnccs
bcIwccn Ihc c0sI 0I l0n nd Is n0mnl vluc wll bc rcIlccIcd s
g00dwll 0n c0ns0ldI0n. 0sc0unI s ncgIvc g00dwll nd prcmum
s p0sIvc g00dwll.
Thc l0n sI0ck/dcbcnIurcs 0I subsdrcs hcld 0uIsdc Ihc gr0up rc
dscl0scd n Ihc c0ns0ldIcd blncc shccI s prI 0I Ihc l0ng Icrm
lblIcs.
!n 0rdcr I0 dcIcrmnc Ihc pr0IIs vlblc I0r ppr0prI0n, ll nIcrcsIs
pyblc nd rcccvblc musI bc rcc0rdcd by Ihc c0mpncs wIhn Ihc
gr0up n Ihcr 0wn b00ks 0I cc0unI, bcI0rc Ihc rcsulIs rc ll0cIcd I0r
Ihc purp0sc 0I c0ns0ldI0n.
F0r c0ns0ldIcd blncc shccI purp0scs,Ihc nIcr c0mpny ndcbIcdncss
0n nIcrcsI pyblc nd rcccvblc wll bc cnccllcd 0uI. Thc nIcrcsI
pyblc I0 h0ldcrs 0uIsdc Ihc gr0up wll bc dscl0scd undcr currcnI
lblIcs 0I Ihc gr0up.
388
!n n0 crcumsIncc sh0uld Ihc n0mnl vluc 0I 0r ccrucd nIcrcsI 0n
l0n cpIl hcld 0uIsdc Ihc gr0up bc sh0wn s prI 0I Ihc n0n
c0nIr0llng nIcrcsI.
1mcs Plc cqurcd 9bmll0n 0rdnry shrcs 0I cch, 20mll0n
0I prcIcrcncc shrcs 0I cch nd 25mll0n 0 dcbcnIurcs n
Flcmmng Plc 0n 1nury 2008.
lncc shccIs s I 3 0cccmbcr 2008, wcrc s I0ll0ws:
!nvcsImcnI n Flcmmng Plc:
9bmll0n 0rdnry shrcs I c0sI 30,000
20mll0n prcIcrcncc shrcs I c0sI 2,000
25mll0n dcbcnIurcs I c0sI 23,b00
Sundry ncI sscIs 385,400 3b0,000
5b0,000 3b0,000
0rdnry shrcs cch 400,000 20,000
8 prcIcrcncc shrcs 0 80,000
RcIncd pr0IIs b0,000 b0,000
0 0cbcnIurc ___ 0 00,000
5b0,000 3b0,000
1mcs Plc cqurcd Is nvcsImcnI n Flcmmng Plc whcn Ihc lIIcr's
rcscrvcs m0unIcd I0 24mll0n. Pr0vs0n s I0 bc mdc I0r hlI -
ycr nIcrcsI 0n dcbcnIurc. 0vdcnds wcrc pr0p0scd 0n 0rdnry shrcs
s I0ll0ws:
1mcs Plc 0
Flcmmng Plc b
HlI - ycr dvdcnd s I0 bc pr0vdcd 0n prcIcrcncc shrcs.
Y0u rc rcqurcd I0 Prcprc Ihc c0ns0ldIcd blncc shccI 0I 1mcs
gr0up s I 3 0cccmbcr, 2008.
SIcp !: PcrccnIgc h0ldngs 0I 1mcs Plc n Flcmmng Plc shrc cpIl nd
0cbcnIurc.
0rdnry shrcs PrcIcrcncc shrcs 0cbcnIurc
0r0up 9b = 80 20 = 25 25 = 25
20 80 00
NC!/LblIcs 20 75 75
389
SIcp !!: ClculI0n 0I Ad|usIcd Pr0IIs
1mcs Plc Flcmmng Plc
'000 '000
As pcr drII blncc shccI b0,000 b0,000
!nIcrcsI 0n dcbcnIurc 0 (5,000)
Pr0p0scd dvdcnd 0n 0rdnry shrcs (40,000) (7,200)
PrcIcrcncc dvdcnd ______0 (3,200)
RcIncd Pr0II 20,000 44,b00
T0Il 0r0up CurrcnI LblIcs
'000 '000 '000
!nIcrcsI 0n dcbcnIurc 5,000 (25:75) ,250 3,750
0vdcnd 0n 0rdnry shrcs 7,200 (80:20) 5,7b0 ,440
PrcIcrcncc dvdcnd 3,200 (25:75) 800 2,400
7,80
Flcmng Plc T0Il
Prc
cqusI0n
P0sI
cqusI0n NC !
N'000 N'000 N'000 N'000
0rdnry shrcs 20,000 9b,000 24,000
PrcIcrcncc shrcs 80,000 20,000 b0,000
RcIncd pr0II (sIcp !!) 44,b00 9,200 b,480 8,920
NcI sscIs cqurcd 35,200
C0sI 0I !nvcsImcnIs 5,000
000dwll (5,800)
0sc0unI 0n dcbcnIurc ,400
C0ns0ldIcd g00dwll (4,400)
Add 1mcs' rcIncd pr0II (sIcp !!) 27,80
0r0up rcIncd pr0II 44,290
N0nc0nIr0llng nIcrcsI 92,920
SIcp !\: C0sI 0I !nvcsImcnIs n Flcmmng Plc
'000
!n 0rdnry shrcs 30,000
!n prcIcrcncc shrcs 2,000
5,000
0sc0unI 0n dcbcnIurc (25000 - 23b00)
390
'000 '000
!nIngblc sscIs - 000dwll 4,400
Sundry ncI Ingblc sscIs 745,400
Lcss: CurrcnI lblIcs
Pr0p0scd dvdcnd 0n:
0rdnry shrcs (40,000 + ,440) 4,440
PrcIcrcncc dvdcnd 2,400
!nIcrcsI pyblc 3,750
(47,590)
Tngblc sscIs, lcss currcnI lblIcs
Fnnccd by:
0rdnry shrc cpIl 0I cch 400,000
RcIncd pr0II 44,290
544,290
N0nc0nIr0llng nIcrcsI 92,920
b37,20
0 0cbcnIurc 75,000
whcrc Ihc prcnI c0mpny d0cs n0I h0ld 00 0I Ihc cquIy shrc cpIl, 0nly
prI 0I Ihc dvdcnds pd 0r pyblc by Ihc subsdry wll bc rcccvcd 0r
rcccvblc by Ihc prcnI c0mpny. Thcsc IrnscI0ns n Ihc ndvdul cc0unIs
0I Ihc gr0up mcmbcrs sh0uld bc d|usIcd I0r n Ihc c0ns0ldIcd blncc shccI
dcpcndng 0n Ihc I0ll0wng crcumsInccs.
() 0vdcnds rc pd/pyblc 0uI 0I Ihc p0sIcqusI0n pr0IIs 0I Ihc
subsdry nd
() hvc bccn cc0unIcd I0r by Ihc prcnI c0mpny.
() hvc n0I bccn cc0unIcd I0r by Ihc prcnI c0mpny.
(b) 0vdcnds rc pd/pyblc 0uI 0I Ihc prccqusI0n pr0IIs 0I Ihc
subsdry nd
() hvc bccn cc0unIcd I0r by Ihc prcnI c0mpny.
() hvc n0I bccn cc0unIcd I0r by Ihc prcnI c0mpny.
!n Ihc csc 0I ( b0vc), Ihc prcnI c0mpny hs crcdIcd Is shrc 0I dvdcnds
rcccvcd 0r rcccvblc I0 Is ndvdul cc0unIs. Thc dcbI0rs 0I Ihc prcnI
c0mpny c0mpny wll c0nIn Ihc rclcvnI m0unI rcccvblc Ir0m Ihc
subsdry, I I s dvdcnd rcccvblc.
!n Ihs crcumsIncc, Ihc dcbI0rs cc0unI 0I Ihc prcnI c0mpny 0IIscIs Ihc
pr0p0scd dvdcnd cc0unI 0I Ihc subsdry lcvng Ihc dvdcnd pyblc I0
Ihrd prIcs. Ths dvdcnd pyblc I0 Ihrd prIcs s sh0wn scprIcly s
prI 0I Ihc currcnI lblIcs.
39
!n Ihc csc whcrc Ihc dvdcnds hvc bccn pd, n0 IurIhcr d|usImcnIs rc
rcqurcd n Ihc cc0unIs 0I Ihc prcnI c0mpny.
Kud Plc cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I 0w0 Plc s0mc ycrs g0,
whcn Ihc rcscrvcs 0I Ihc lIIcr ws b0 mll0n. Thc blncc shccIs 0I Ihc Iw0
c0mpncs I 3 0cccmbcr 2008, rc gvcn bcl0w.
Kud Plc 0w0 Plc
m m
!nvcsImcnI n 0w0 Plc 220
AsscIs (cxcludng dcbI0rs) 280 320
0cbI0rs 00 80
b00 400
0rdnry shrc cpIl 300 200
Rcscrvcs 50 90
450 290
CurrcnI LblIcs:
CrcdI0rs 80 70
Pr0p0scd dvdcnds 70 40
b00 400
Kud Plc hs ncludcd Ihc dvdcnd rcccvblc n Is cc0unIs.
Prcprc Ihc c0ns0ldIcd blncc shccI 0I Kud Plc nd Is subsdry s I 3
0cccmbcr, 2008.
0cIcrmnc Ihc dvdcnd rcccvblc by Kud Plc IhI hs bccn ncludcd
n Is dcbI0rs nd rcscrvcs.
m
0vdcnd pyblc by 0w0 Plc 40
Rcccvblc ncludcd n dcbI0rs 80 x 40m (32)
Pyblc I0 0uIsdc prIcs 8
Ad|usImcnI I0r dcbI0rs n Ihc blncc shccI
m
0cbI0rs n Kud Plc 00
0cbI0rs n 0w0 Plc 80
0vdcnds rcccvblc ncludcd n dcbI0rs (32)
0cbI0rs c0ns0ldIcd
392
C0ns0ldIcd blncc shccI schcdulc.
Subsdry PrccqusI0n P0sIcqusI0n Mn0rIy
'm 'm 'm 'm
0rdnry shrcs 200 b0 40
Rcscrvcs 90 48 24 8
208
C0sI 0I nvcsImcnI 220
000dwll 2
Add Kud Plc rcscrvcs 50
C0ns0ldIcd rcscrvcs 74 __
N0nc0nIr0llng nIcrcsI 58
C0ns0ldIcd blncc shccI 0I Kud gr0up s I 3 0cccmbcr 2008
'm 'm
000dwll 2
AsscIs (cxclusvc 0I dcbI0rs) b00
0cbI0rs (sIcp !!) 48
7b0
CurrcnI lblIcs:
CrcdI0rs 50
0vdcnds pyblc:
Kud Plc shrch0ldcrs 70
Mn0rIy shrch0ldcrs (SIcp ) 8 (228)
532
CpIl nd Rcscrvcs
0rdnry shrc cpIl .00 pcr shrc 300
AccumulIcd rcscrvcs 74
474
N0nc0nIr0llng nIcrcsI 58
() whcrc dvdcnds rc pd 0uI 0I p0sIcqusI0n pr0IIs nd Ihc prcnI
hs n0I ycI rcc0gnzcd Is 0wn shrc 0I dvdcnds, Ihc Inncl
sIIcmcnIs 0I Ihc prcnI w0uld bc d|usIcd bcI0rc pr0cccdng wIh Ihc
c0ns0ldI0n.
Thc ncccssry d|usImcnI n Ihc b0vc crcumsIncc s I0,
0r. 0cbI0rs
Cr. Rcscrvcs
Thc IcIs rc s n llusIrI0n 2.4 cxccpI IhI Kud Plc hs n0I cc0unIcd I0r
Is shrc 0I dvdcnd rcccvblc n 0w0 Plc.
393
Ad|usImcnI I0r Kud rcscrvcs.
'm
As pcr drII blncc shccI 50
Add dvdcnd rcccvblc Ir0m 0w0 Plc 32
0cbI0rs Acc0unI
'm
Kud Plc (00 + 32)mll0n 32
0w0 Plc 80
0vdcnds ncludcd n dcbI0rs (32)
0nly Ihc p0sIcqusI0n rcscrvcs w0uld bc IIccIcd n Ihc
c0ns0ldIcd schcdulc Ihus
m (24 + 82 - 2) = 94m
C0ns0ldIcd blncc shccI s I 3 0cccmbcr, 2008
'm
NcI sscIs (cxcludng dcbI0rs) b00
0cbI0rs 80
780
CurrcnI lblIcs (228)
552
0rdnry shrcs 300
Rcscrvcs (sIcp !!!) 94
494
N0n c0nIr0llng nIcrcsI 58
. 0vdcnd rcccvcd by Ihc prcnI Ir0m Ihc prccqusI0n pr0II 0I Ihc
subsdry s 0I prI 0I Ihc sscI cqurcd n Ihc subsdry,
hcncc Ihs dvdcnd musI bc dcducIcd Ir0m Ihc c0sI 0I nvcsImcnI,
() !I Ihc dvdcnd rcccvcd by Ihc prcnI hs bccn crcdIcd I0 Ihc
rcscrvcs (dcbIcd n Ihc csh cc0unI), Ihc I0ll0wng d|usImcnI
wll bc mdc:
0cbI: Rcscrvcs 0I Ihc prcnI c0mpny.
CrcdI: C0sI 0I !nvcsImcnI.
() !I Ihc dvdcnd hs bccn dcducIcd Ir0m c0sI 0I nvcsImcnI, n0
d|usImcnI s mdc.
0vcn bcl0w rc Ihc lncc ShccIs 0I P nd S b0Ih publc lmIcd lblIy
c0mpncs, s I 3 0cccmbcr 2008.
394
P S
'm 'm
Fxcd sscIs 800 500
C0sI 0I nvcsImcnI n S 290 --
CurrcnI sscIs 84 25
CurrcnI LblIcs:
Trdc crcdI0rs (b8) (85)
,20b 540
0rdnry shrc cpIl 722 250
Rcscrvcs 484 290
,20b 540
0n sI 1nury, 2008, P cqurcd 70 0I Ihc 0rdnry shrc cpIl 0I S. Thc
rcscrvc 0I S I Ihs dIc ws 00 mll0n Nr. !n Mrch, 2008, S pd dvdcnd
0I 50 mll0n Ir0m Ihs pr0II. P hs crcdIcd Is shrc 0I dvdcnd I0 pr0II
nd l0ss cc0unI. N0 dvdcnds hvc bccn pd n0r pr0p0scd 0n Ihc pr0IIs I0r
Ihc ycr cndcd 3 0cccmbcr, 2008.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd blncc shccI 0I P gr0up s I 3
0cccmbcr, 2008.
Ad|usI Ihc c0sI 0I nvcsImcnI s I0ll0ws
'm
As pcr drII blncc shccI 290
Lcss: dvdcnds rcccvcd Ir0m prccqusI0n pr0IIs 35
Ad|usIcd c0sI 0I shrc
PrccqusI0n pr0II w0uld bc 'm (00 - 50) = 50m
P0sI cqusI0n pr0II 0I P
'm
As pcr drII 484
Lcss:dvdcnds rcccvcd Ir0m prccqusI0n pr0II 35
449
C0ns0ldI0n schcdulc
Prc P0sI
Subsdry T0Il cqusI0n cqusI0n NC!
N'm 'm 'm
0rdnry shrcs 250 75 75
Rcscrvcs 290 35 b8 87
20
C0sI 0I nvcsImcnI (sIcp ) 225
000dwll (45)
Add P rcscrvcs (sIcp !!) 449
C0ns0ldIcd rcscrvcs b7
N0nc0nIr0llng nIcrcsI b2
'm 'm 'm
395
C0ns0ldIcd blncc shccI s I 3 0cccmbcr, 2008
'mll0n 'mll0n
Fxcd sscIs (P + S) ,300
000dwll (sIcp !!!) 45
CurrcnI sscIs (P + S) 309
CurrcnI lblIcs (P + S) (53)
NcI currcnI sscIs 5b
,50
0rdnry shrc 722
Rcscrvcs (sIcp !!!) b7
,339
N0nc0nIr0llng nIcrcsI (sIcp !!!) b2
,50
() !I dvdcnds rc pr0p0scd 0uI 0I prccqusI0n pr0II 0I Ihc
subsdry buI Ihc prcnI hd n0I cc0unIcd I0r Is 0wn shrc,
Ihc d|usImcnI rcqurcd s I0:
0cbI: 0cbI0rs cc0unI
CrcdI: C0sI 0I !nvcsImcnI cc0unI
whcn prcnI c0mpny cqurcs subsdry durng Ihc ycr undcr rcvcw,
I s ncccssry I0 pp0rI0n Ihc rcIncd pr0II I0r Ihc ycr bcIwccn
prccqusI0n nd p0sIcqusI0n pr0II. !n 0rdcr I0 pp0rI0n pr0II bcIwccn
Ihcsc pcr0ds, nc0mc s dccmcd I0 ccruc cvcnly durng Ihc ycr.
Thc prccqusI0n pr0II s0 dcIcrmncd w0uld bc ddcd I0 Ihc ccumulIcd
pr0IIs br0ughI I0rwrd I Ihc bcgnnng 0I Ihc pcr0d undcr rcvcw.
!nsghI LmIcd cqurcd ll Ihc 0rdnry shrc cpIl 0I As LId 0n Mrch
2008. Thc pr0II br0ughI I0rwrd n Ihc b00ks 0I As LId 0n 0cI0bcr 2007 ws
288,000, whlc Ihc l0ss I0r Ihc ycr cndcd 30 ScpIcmbcr 2008 ws b00,000.
ClculIc Ihc prccqusI0n pr0II 0I As LId I0r Ihc purp0sc 0I prcprng
c0ns0ldIcd blncc shccI I 30 ScpIcmbcr 2008. Enqurcs ndcIc IhI pr0II
nd l0ss ccrucd cvcnly Ihr0ugh0uI Ihc ycr.
0vdc Ihc cc0unIng pcr0d bcIwccn prccqusI0n nd p0sI
cqusI0n pcr0ds, Ir0m 0cI0bcr, 2007 I0 Mrch 2008, s 5
m0nIhs prccqusI0n nd Mrch, 2008, I0 30 ScpIcmbcr 2008,
s 7 m0nIhs p0sIcqusI0n.
0cIcrmnc Ihc pr0II/l0ss I0r Ihc ycr bcIwccn prccqusI0n nd
p0sIcqusI0n pcr0d.
39b
PrccqusI0n = 5 x b00,000
2
= 250, 000 l0ss
P0sIcqusI0n = 7 x b00, 000
2
= 350, 000 l0ss
0cIcrmnc Ihc prccqusI0n pr0IIs 0r l0ss 0I As LId.
AccumulIcd pr0IIs 0n /0/2007 288,000
PrccqusI0n l0ss I0r Ihc ycr (250,000)
PrccqusI0n l0ss 0I As LId 38,000
!I s p0ssblc IhI prcnI c0mpny dd n0I cqurc Ihc wh0lc 0I Ihc cquIy
shrcs n subsdry 0n Ihc smc dIc buI IhI Ihc shrcs rc cqurcd n bIs
(pcccmcl) I dIIcrcnI dIcs. Thc nvcsIng c0mpny my n0I bcc0mc prcnI
c0mpny unIl Ihc scc0nd 0r Ihrd scrcs 0I cqusI0n.
() Thc nIcnI0n 0I Ihc prcnI c0mpny wll bc Ikcn nI0 cc0unI rghI I
Ihc IrsI cqusI0n, whcIhcr I nIcnds I0 gn c0nIr0l lIcr. Thc nvcsIng
c0mpny d0cs n0I gn c0nIr0l unIl I hs cqurcd 50 cquIy, s crlcr
sIIcd.
(b) !I cch purchsc s subsInIl, nd I s Ihc nIcnI0n 0I Ihc prcnI
c0mpny I0 gn ulImIc c0nIr0l, Ihc prccqusI0n rcscrvcs sh0uld
bc clculIcd by rcIcrcncc I0 Ihc pr0p0rI0n 0I shrcs purchscd rclIcd
I0 Ihc blncc 0n Ihc rcscrvc cc0unI I Ihc dIc 0I cch purchsc.
AcqusI0n 0I 20 0I Ihc cquIy cpIl 0I Ihc c0mpny s rcgrdcd s
subsInIl nd I s IhcrcI0rc prcsumcd IhI Ihc cqurng c0mpny
wll gn c0nIr0l.
(c) !I Ihc prcnI c0mpny d0cs n0I nIcnd I0 gn c0nIr0l, Ihc prccqusI0n
pr0II s clculIcd whcrc c0nIr0l s cvcnIully gncd. N0
p0sIcqusI0n pr0IIs w0uld bc IIrbuIcd I0 Ihc gr0up unIl c0nIr0l
hs bccn gncd.
(d) 0vdcnds rcccvcd bcI0rc c0nIr0l s gncd w0uld bc crcdIcd I0 Ihc
nvcsIng c0mpny's pr0II nd l0ss cc0unI s n0rml nc0mc.
lncc shccI 0I Hr0ld LId nd Sulc LId I 3 0cccmbcr 2008
Hr0ld LId Sulc LId
NcI sscIs b45,000 500,000
397
0rdnry shrc cpIl 0I pcr shrc 420,000 400,000
RcIncd pr0IIs 225,000 00,000
b45,000 500,000
Thc shrcs n Sulc LId wcrc cqurcd n Iw0 sIgcs by Hr0ld LId. 00,000
0rdnry shrcs I .25 pcr shrc wcrc cqurcd 0n 1nury, 2005, whcn
Ihc rcIncd pr0IIs 0I Sulc LId I0Illcd 25,000 nd 200,000 0rdnry shrcs
I .75 pcr shrc wcrc cqurcd 0n 5 Fcbrury, 2007, whcn Ihc rcIncd
pr0IIs 0I Sulc LId I0Illcd 75,000.
Y0u rc rcqurcd I0 dcIcrmnc Ihc:
() N0nc0nIr0llng nIcrcsI,
() 000dwll 0n c0ns0ldI0n, nd
() Pr0II nd l0ss cc0unI blnccs I0 bc ncludcd n c0ns0ldIcd blncc
shccI.
Assumc () ThI Ihc prcnI c0mpny nIcnds I0 gn c0nIr0l Ir0m Ihc
IrsI cqusI0n.
(b) ThI Ihc prcnI c0mpny dd n0I nIcnd I0 gn c0nIr0l
nIlly.
Sncc Hr0ld dd n0I nIcnd I0 gn c0nIr0l nIlly, prccqusI0n
pr0II I0r Ihc purp0sc 0I dcIcrmnng g00dwll, w0uld n0I bc c0mpuIcd
unIl Hr0ld Plc cqurcd m0rc Ihn 50 h0ldng,
.c. 25 + 50 = 75.
T0Il Prc P0sI
N0n
c0nIr
cqusI0n cqusI0n !nIcrcsI
N N N N N
Sulc LId 2005 2007
25 50 0
0rdnry shrcs 400,000 00,000 200,000 00,000
RcIncd pr0II 00,000 b,250 37,500 3,250 25,000
NcI sscIs cqurcd 0b,250 237,500
C0sI 0I nvcsImcnI 25,000 350,000
000dwll (8,750) (2,500)
TrnsIcr 8,750 (8,750)
C0ns0ldIcd g00dwll 3,250
N0nc0nIr0llng nIcrcsIs 25,000
Add: Hr0ld rcIncd pr0II 225,000
C0ns0ldIcd rcIncd
pr0II 25b,250
398
Prcprc Ihc c0ns0ldI0n w0rkng schcdulc
Prc P0sI N0nc0nIr
cqusI0n cqusI0n !nIcrcsI
Sulc LId 75
N N N N
0rdnry shrcs 400,000 300,000 00,000
RcIncd pr0II 00,000 5b,250 8,750 25,000
NcI sscIs cqurcd 35b,250
Lcss: C0sI 0I nvcsImcnI 475,000
000dwll 8,750
N0nc0nIr0llng nIcrcsIs 25,000
Add: Hr0ld rcIncd pr0II 225,000
C0ns0ldIcd rcIncd pr0II 243,750
A c0mpny my cqurc m|0rIy cquIy shrc cpIl n m0rc Ihn 0nc
c0mpny such IhI Ih0sc 0Ihcr c0mpncs rc Is subsdrcs buI rc n0I 0nc
n0Ihcr's subsdrcs.
Thc g00dwll cqurcd Ir0m cch subsdry w0uld bc ggrcgIcd I0 snglc
Igurc I0r c0ns0ldI0n.
P LId cqurcd 70 0I Ihc 0rdnry shrcs 0I S LId. Iw0 ycrs g0 I0r 250,000,
whcn Ihc rcscrvcs 0I S LId wcrc 00,000. 0n Ihc smc dIc, P LId cqurcd
80 0I Ihc 0rdnry shrcs nd 20 0I Ihc prcIcrcncc shrcs 0I S LId nd pd
380,000 I0r 0rdnry shrcs nd 5b,000 I0r prcIcrcncc shrcs. 0n Ihs dIc,
Ihc blncc 0n Ihc rcscrvc cc0unI 0I R LId ws 50,000.
Thc blncc shccI 0I Ihc Ihrcc c0mpncs s I 3 0cccmbcr 2007 rc gvcn
bcl0w.
P LId S LId R LId
'000 '000 '000
NcI sscIs 24b 350 800
!nvcsImcnI n SLId I c0sI 250
!nvcsImcnI n R LId I c0sI 43b ___ ___
932 350 800
PrcIcrcncc shrc cpIl 200 00 200
0rdnry shrc cpIl 380 20 400
Pr0II nd l0ss cc0unI 352 30 200
932 350 800
399
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd blncc shccI 0I P gr0up s I 3
0cccmbcr 2007.
Prcprc Ihc c0ns0ldI0n schcdulc, crcIc scprIc c0lumns I0r S LId
nd R LId.
Prcprc Ihc c0ns0ldIcd blncc shccI
C0ns0ldIcd blncc shccI 0I P gr0up s I 3 0cccmbcr, 2007
'000
NcI sscIs ,39b
000dwll 52
0rdnry shrc cpIl 380
PrcIcrcncc shrc cpIl 200
Pr0II nd l0ss cc0unI 43
993
N0nc0nIr0llng nIcrcsI 455
Subsdrcs
Prc
cqusI0n
P0sI
cqusI0n NC!
T0Il S LId R LId
S LId N'000 N'000 N'000 N'000 N'000
PrcIcrcncc Shrcs 00 00
0rdnry shrcs 20 84 3b
Pr0II nd l0ss 30 70 2 39
NcI sscIs cqurcd 54
C0sI 0I nvcsImcnI (250)
000dwll (9b)
R LId
PrcIcrcncc Shrcs 200 40 b0
0rdnry shrcs 400 320 80
Pr0II & l0ss cc0unI 200 20 40 40
NcI sscIs cqurcd 480
C0sI 0I nvcsImcnI (43b)
NcgIvc 000dwll 44
TrnsIcr S LId g00dwll (9b)
C0ns0ldIcd g00dwll (52) ____
N0nc0nIr0llng nIcrcsI 455
Add: P pr0II 352
C0ns0ldIcd Pr0II & l0ss 43
400
A prcnI c0mpny my cxcrcsc ndrccI c0nIr0l 0vcr subsdry Ihr0ugh
subsdry 0n whch I cxcrcscs drccI c0nIr0l. Thc subsdry 0n whch I
cxcrcscs Ihc ndrccI c0nIr0l s cllcd subsubsdry.
Cc0 Plc cqurcd 80 0rdnry shrcs n P0d Plc Icw ycrs g0 nd P0d Plc
cqurcd b0 0I Ihc 0rdnry shrcs 0I C00k Plc Ihc smc ycr. Sh0w Ihc gr0up
sIrucIurc.
Cc0 Plc
80
P0d Plc
b0
C00k Plc
Cc0 Plc cxcrcscs c0nIr0l 0vcr P0d Plc
P0d Plc cxcrcscs c0nIr0l 0vcr C00k Plc
ThcrcI0rc, Cc0 cxcrcscs ndrccI c0nIr0l 0vcr C00k Plc.
Any 0I Ihcsc Iw0 mcIh0ds cn bc d0pIcd I0 c0ns0ldIc Ihc rcsulI 0I Ihc gr0up
mcmbcrs.
() Tw0 sIgcs /ndrccI mcIh0d
(b) 0nc sIgc /drccI mcIh0d.
() Undcr Ihs, Ihc subsubsdry wll IrsI bc c0ns0ldIcd wIh Ihc
subsdry.
Thc g00dwll cqurcd by subsdry n Ihc subsubsdry wll bc
clculIcd.
Thc rcscrvcs 0I Ihc subsdry wll bc ddcd I0 Ihc shrc 0I p0sI
cqusI0n rcscrvcs 0I subsubsdry. Ths m0unI w0uld bc cnccllcd
Ihr0ugh Ihc prccqusI0n pcr0d, p0sIcqusI0n pcr0d nd n0n
c0nIr0llng nIcrcsI n sIgc 'b'.
(b) Thc subsdry nd Ihc prcnI c0mpny wll Ihcn bc c0ns0ldIcd.
Thc g00dwll cqurcd by Ihc prcnI n Ihc subsdry w0uld bc 0bIncd.
Thc g00dwll clculIcd I0r subsubsdry n '' b0vc wll bc shrcd
bcIwccn prccqusI0n nd n0nc0nIr0llng nIcrcsI n Ihc rI0 0I
0rdnry shrcs hcld by Ihc prcnI n Ihc subsdry.
40
() Undcr Ihs mcIh0d, Ihc cIIccIvc pcrccnIgc 0I Ihc shrcs hcld by Ihc
prcnI c0mpny nd n0nc0nIr0llng nIcrcsI n Ihc subsubsdry wll
bc clculIcd.
() T0 0bIn Ihc g00dwll, p0sIcqusI0n rcscrvc nd
n0nc0nIr0llng nIcrcsI, (Ihcsc pcrccnIgcs wll bc pplcd nI0
Ihc shrc cpIl nd rcscrvcs 0I Ihc subsubsdry).
() T0 0bIn Ihc g00dwll, Ihc c0sI 0I shrcs cqurcd by Ihc
subsdry n Ihc subsubsdry wll bc shrcd bcIwccn Ihc
prccqusI0n nd n0nc0nIr0llng nIcrcsI n Ihc rI0 0I Ihc
shrcs hcld n Ihc subsdry by Ihc prcnI c0mpny.
(b) Thc subsdry wll bc c0ns0ldIcd n Ihc gr0up n Ihc usul mnncr.
Thc pplcI0n 0I Ihc mcIh0ds s n0w dcm0nsIrIcd wIh n llusIrI0n.
P S R P S R
N'000 N'000 N'000 N'000 N'000 N'000
N 0rdnry shrcs ,500 b00 300 NcI ssIs ,400 74 420
Pr0II nd l0ss /c b00 390 20 !nvcsImcnI I c0sI bb0 27b
2,00 990 420 2,00 990 420
P cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I S n ycr 2004, I0r bb0,000,
whcn Ihc pr0II nd l0ss cc0unI blncc ws 20,000 nd S cqurcd b0 0I
Ihc 0rdnry shrc cpIl 0I R n ycr 2005, I0r 8b,000, whcn Ihc pr0II nd
l0ss cc0unI blncc ws b0,000.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd blncc shccI 0I P gr0up s I 3
0cccmbcr 2007.
0r0up NC!
80 P n S 80 20
b0 S n R b0 40
S
402
C0ns0ldI0n 0I Ihc subsubsdry wIh Ihc subsdry
Subsdrcs PrccqusI0n P0sIcqusI0n NC!
R N'000 R b0 S 80 N'000 N'000
0rdnry shrcs 300 80 20
Pr0II & l0ss 20 3b 3b 48
2b
C0sI 0I shrcs (8b)
NcgIvc g00dwll 30
Add S rcscrvcs 390 ____
42b b8
PrccqusI0n P0sI
cqusI0n
N0n
c0nIr0llng
nIcrcsI
Subsdry N'000 R S
S = 80 N'000 N'000 N'000 N'000
0rdnry Shrcs b00 480 20.0
Pr0II & L0ss (SIcp !!!) 42b 9b 244.8 85.2
57b
C0sI 0I shrcs cqurcd (bb0)
000dwll (84)
Shrc 0I ncgIvc g00dwll 80:20 24 b.0
C0ns0ldIcd g00dwll b0.0
Add P rcscrvc b00.0
C0ns0ldIcd rcscrvc 844.8
Add mn0rIy nIcrcsI n R b8.0
N0nc0nIr0llng nIcrcsI 379.2
0r0up sIrucIurc
P 0r0up M!
80 P n S 80 20
S
b0 P n S (ndrccI) 48 52
R
403
Evcn Ihr0ugh Ihc ndrccI h0ldng 0I P n R s lcss Ihn 5, R rcmns
subsdry 0I P bccusc S s subsdry 0I P nd R s subsdry 0I S nd P
cxcrcscs ndrccI c0nIr0l 0vcr R
Prcprc Ihc c0ns0ldI0n schcdulc
Subsdry N'000 PrccqusI0n P0sIcqusI0n NC !
R= 48 N'000 N'000 N'000
0rdnry shrcs 300 44.0 5b.0
Pr0II & l0ss 200 28.8 28.8 b2.4
S= 80
0rdnry shrcs b00 480.0 20.0
Pr0II l0ss 90 9b.0 2b.0 78.0
748.8
C0sI 0I nvcsImcnI(sIcp !!!) (808.8) (37.2)
000dwll b0.0
Add P rcscrvc b00.0
C0ns0ldIcd pr0II 844.8 _____
N0nc0nIr0llng nIcrcsI 379.2
() C0sI 0I nvcsImcnI
0r0up M!
N'000 N'000 N'000
P n S 0rccI bb0.0
Pr0II nd l0ss /c (80:20) 8b 48.8 37.2
T0Il 808.8 37.2
(b) Rcc0nclc Ihc c0sI 0I nvcsImcnI n Ihc drII blncc shccI I0 Ihc 0nc
n Ihc n0Ic.
'000 '000
As pcr drII bb0
P c0sI 0I nvcsImcnI 27b
S c0sI 0I nvcsImcnI 93b
As pcr n0Ic: (bb0+8b) 84b
Thc dIIcrcncc s 0rdnry nvcsImcnI 90
Thc d|usImcnI n SIcp !!! (b) sh0uld bc d0nc, whchcvcr 0I Ihc Iw0
mcIh0ds ws uscd.
Prcprc Ihc c0ns0ldIcd blncc shccI
C0ns0ldIcd blncc shccI s I 3 0cccmbcr, 2008
'000
NcI sscIs 2,574
!nvcsImcnI (SIcp !!!)(b) 90
000dwll b0
2,724
404
0rdnry shrcs ,500.0
Pr0II & L0ss cc0unI 844.8
2,344.8
N0nc0nIr0llng nIcrcsI 379.2
2,724.0
wc shll usc Ihc Iw0 mcIh0ds I0 c0ns0ldIc gr0up blncc shccI whcrc Ihc
prcnI c0mpny 0wns shrcs drccIly by IsclI nd ndrccIly Ihr0ugh Ihc
subsdry n Ihc subsubsdrcs.
Thc blncc shccIs 0I P, S nd R I 3 0cccmbcr 2008
P S R P S R
N'000 N'000 N'000 N000 N'000 N'000
N 0rdnry shrcs ,500 b00 300 NcI sscIs ,440 74 420
Pr0II nd l0ss /c b00 300 20 !nvcsImcnI I c0sI bb0 8b
2,00 900 420 2,00 900 420
() P cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I S I0r 570,000 nd 20
0I Ihc 0rdnry shrc cpIl 0I R I0r 90,000, whcn Ihc pr0II nd l0ss
cc0unI blnccs 0I S nd R wcrc 20,000 nd b0,000 rcspccIvcly
n ycr 2008.
(b) Scqurcd b0 0I Ihc 0rdnry shrcs 0I R I0r 8b,000 n 200b whcn
Ihc pr0II nd l0ss cc0unI blncc 0I R ws b0,000.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd lncc shccI 0I P gr0up
s I 3 0cccmbcr, 2008.
0r0up sIrucIurc 0r0up NC!
P n SdrccI 80 20
80 P n R drccI 20 20
b0 S n R b0
T0Il 80 20
0cIcrmnc R prccqusI0n pr0IIs I0 bc 0IIscI gnsI c0sI 0I c0nIr0l
cc0unI.
P n S Ycr 2007
S n R Ycr 200b
405
S hd cqurcd shrcs n R bcI0rc P cqurcd shrcs n S. P wll n0I sIrI I0
c0ns0ldIc Ihc subsubsdry unIl ycr 2007. ThcrcI0rc, Ihc rclcvnI
prccqusI0n rcscrvc 0I R n P gr0up s b0,000.
Prcprc Ihc c0ns0ldIcd schcdulc 0I gr0up usng Ihc IrsI mcIh0d.
C0ns0ldIcd schcdulc
PrccqusI0n P0sIcqusI0n NC!
Subsdry N'000 S n R P n R P n S P S
R b0N'000 20N'000 80 N'000 80N'000 N'000
0rdnry Shrcs 300 80 b0 b0.0
Pr0II & l0ssAcc0unI 20 3b 2 2 3b 24.0
S
0rdnry Shrcs b00 480 20.0
Pr0II & l0ssAcc0unI 300 9b 44 b0.0
TrnsIcr S p0sIAcqusn ___ ___ _____ ____ 28.8 (3b) 7.2
2b 72 57b 84.8 27.2
C0sI 0I cqusI0n 8b 90 570
000dwll 30 8 b
Shrc 0I S n R
NcgIvc 000dwll (30) 24 b
TrnsIcr H n S 000dwll (8)
C0ns0ldIcd NcgIvc 000dwll 2
TrnsIcr 0I NcgIvc g00dwll (2) 2
N0n c0nIr0llng nIcrcsI 277.2
Add P's pr0IIs b00.0
C0ns0ldIcd pr0IIs 79b.8
() Thc shrc cpIl 0I R ws shrcd bcIwccn P, S nd n0nc0nIr0llng
nIcrcsI n rI0 20:b0 nd 20 rcspccIvcly.
(b) Thc pr0II nd l0ss 0I Rws shrcd s I0ll0ws:
S n R = b0,000 x b0 = 3b,000
P n S = b0,000 x 20 = 2,000
P = (20,000 - b0,000) x 20 = 2,000
S = (20,000 - b0,000) x b0 = 3b,000
20,000x 20 = 24,000
(c) Sncc wc rc c0ns0ldIng P gr0up, Sp0sIcqusI0n pr0IIs sh0uld bc
shrcd bcIwccn P nd n0nc0nIr0llng nIcrcsI n rI0 80 nd 20
.c. P = 3b, 000 x 80 = 28, 800
S= 3b, 000 x 20 = 7, 200
4. Thc ncgIvc g00dwll 0I Sn RmusI bc shrcd bcIwccn Ihc gr0up nd
n0nc0nIr0llng nIcrcsI n rI0 80 nd 20.
40b
ThI s: T0 0r0up = 80 x 30,000 = 24,000
N0nc0nIr0llng nIcrcsI = 20 x 30,000 = b, 000
Usng Ihs drccI mcIh0d c0uld bc lcss c0mplcIcd Ihn Ihc IrsI ndrccI mcIh0d.
0r0up NC!
P n S (0rccI) 80 20
P n R (0rccI) 20
P n R (!ndrccI) 80 X b0 48 ___
T0Il b8 32
C0ns0ldI0n schcdulc
Subsdry N'000 Prc P0sI N0n c0nIr0llng
cqusI0n cqusI0n nIcrcsI
R = b8 N'000 N'000 N'000
0rdnry shrcs 300 204.0 9b.0
Pr0II & l0ss 20 40.8 40.8 38.4
S = 80
0rdnry shrcs b00 480.0 20.0
Pr0II & l0ss 300 9b.0 44.0 b0.0
820.8
C0sI 0I nvcsImcnI(SIcp !!!) (808.8) (37.2)
NcgIvc g00dwll 2.0
Add P's rcscrvc b00.0
C0ns0ldIcd pr0II 79b.8 _____
N0nc0nIr. nIcrcsI
() C0sI 0I nvcsImcnI N0nc0nIr0llng
0r0up !nIcrcsI
'000 '000 '000
P n S 0rccI 570.0 --
P n R 0rccI 90.0
P n R !ndrccI ( 80:20) 8b.0 48.8 37.2
T0Il
Rcc0nclc Ihc c0sI 0I nvcsImcnI n Ihc N0Ic wIh Ihc drII blncc
ShccI Igurcs '000
P c0sI 0I nvcsImcnI bb0
R C0sI 0I nvcsImcnI 8b
T0Il 84b
P C0sI 0I nvcsImcnI n S 570
P C0sI 0I nvcsImcnI n R 90
SC0sI 0I nvcsImcnI n R 8b (84b)
lncc
407
C0ns0ldIcd lncc ShccI s I 3 0cccmbcr 2008
'000
NcI AsscIs
0rdnry shrc cpIl ,500.0
Pr0II nd L0ss cc0unI 79b.8
2,29b.8
N0n c0nIr0llng nIcrcsI 2,77.2
() SIcps !\ nd \ rc c0mm0n I0 b0Ih mcIh0ds.
() Thc drccI mcIh0d ppcrs I0 bc cscr I0r c0ns0ldIng mxcd gr0ups
nd IhI s Ihc mcIh0d usully d0pIcd n s0lvng cxmnI0n qucsI0ns.
Thc prcnI c0mpny wll Ikc up Is shrc 0I rghIs n Is subsdry c0mpny.
Thc numbcr 0I shrcs wll chngc buI Ihc pcrccnIgc hcld by Ihc prcnI
c0mpny n rclI0n I0 Ihc I0Il wll n0I chngc.
Thc rghIs ssuc mghI bc mdc I prcmum. Ths shrc prcmum s rcgrdcd
s prccqusI0n Ir0m Ihc prcnI's p0nI 0I vcw sncc Ihc vluc hs cxsIcd
bcI0rc Ihc dIc 0I Ihc rghIs.
Thc IrcImcnI cc0rdcd I0 Ihc ssuc 0I b0nus shrcs by subsdry dcpcnds
0n whcIhcr I s mdc Ir0m prccqusI0n pr0IIs 0r p0sIcqusI0n rcscrvcs.
()
whcrc Ihc ncccssry d|usImcnIs hvc n0I bccn mdc n Ihc b00ks, Ihc
ncccssry d|usImcnIs sh0uld bc s I0ll0ws:
0cbI Ihc subsdry's rcscrvcs nd
CrcdI Ihc subsdry's shrc cpIl wIh Ihc m0unI 0I scrp
ssuc
Thc g00dwll nd c0ns0ldI0n rcscrvcs wll bc Ihc smc bcI0rc nd
IIcr Ihc b0nus shrcs wcrc mdc Ir0m prccqusI0n rcscrvcs.
(b)
whcrc Ihc b0nus s pd Ir0m cpIl rcscrvcs, n0 d|usImcnI s nccdcd
I0r gr0up cc0unI purp0sc. H0wcvcr, I Ihc b0nus s pd 0uI 0I rcvcnuc
rcscrvcs, gr0up dsIrbuIblc rcscrvcs wll bc IIccIcd. Thc p0sI
cqusI0n rcscrvcs w0uld rcducc by Ihc m0unI 0I b0nus ssuc whlc
Ihc 0rdnry shrc cpIl wll ncrcsc by c0rrcsp0ndng m0unI.
Thc chpIcr IrcIcd ndcpIh Ihc mcchncs 0I c0ns0ldIng blncc shccIs n
busncss c0mbnI0ns, hghlghIng Icms IhI sh0uld n0I ppcr n Ihc
408
C0ns0ldIcd lncc ShccI nd cxplnng Ihc d|usImcnIs rcqurcd I0
clmnIc Ihcm.
. P Plc cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I S Plc. H0w w0uld Ihc rcIncd
pr0IIs 0I Ihc subsdry bc IrcIcd n Ihc c0ns0ldIcd blncc shccI mmcdIcly
IIcr Ihc cqusI0n!
() 80 0I Ihc pr0II w0uld bc c0ns0ldIcd.
() 20 0I Ihc pr0II w0uld bc crcdIcd I0 mn0rIy nIcrcsI.
() 80 0I Ihc pr0II w0uld bc crcdIcd I0 c0sI 0I c0nIr0l.
(v) 80 0I prccqusI0n pr0II w0uld bc crcdIcd I0 c0sI 0I c0nIr0l
20 0I I0Il pr0IIs I0 mn0rIy nIcrcsI nd 80 p0sI cqusI0n pr0IIs I0 c0ns0ldIcd
pr0IIs.
A. !\ 0nly
. ! nd !!
C. !! nd !!!
0. ! nd !!!
E. !, !! nd !!!
0udu Plc 0wns 80 0I Ihc ssucd 0rdnry shrcs nd b 0I Ihc ssucd prcIcrcncc
shrcs 0I 0sun LId whcn Ihc rcIncd pr0II 0I 0sun LId wcrc N800,000. Thc blncc
shccI (cxIrcI) 0I Ihc Iw0 c0mpncs I 3 0cccmbcr 2007 sh0wcd Ihc I0ll0wng
0udu PLc 0sun LId
N'000 N'000
0rdnry shrcs 0I N cch 0,000 5,000
0 PrcIcrcncc shrcs 0I N cch 2,000 2,000
AccumulIcd pr0II 3,000 2,400
2. whI s Ihc shrch0ldcrs' Iund IhI w0uld ppcr n Ihc c0ns0ldIcd blncc
shccI 0I 0udu Plc I 3 0cccmbcr 2007!
A. N24,400,000
. N20,b00,000
C. N5,400,000
0. N5,000,000
E. N4,280,000.
3. ClculIc Ihc n0nc0nIr0llng nIcrcsI I0 bc ncludcd n Ihc c0ns0ldIcd blncc
shccI 0I 0udu Plc I 3 0cccmbcr 2007.
A. N,800,000
. N880,000
C. Nb80,000
0. N3,b0,000
E. N4,880,000.
409
M0 Plc 0wns Ihc cnIrc 0rdnry shrc cpIl 0I Uhuru Plc. Thc I0ll0wng
nI0rmI0n s cxIrcIcd Ir0m Ihc ndvdul blncc shccIs 0I Ihc Iw0 c0mpncs
s I 3 0cccmbcr, 2008.
M0 Plc Uhuru Plc
N
CurrcnI sscIs b,000,000 5,250,000
CurrcnI lblIcs 3,750,000 ,500,000
Thc dcbI0rs 0I M0 Plc ncludc N750,000 rcccvblc Ir0m Uhuru Plc, whlc Ihc
crcdI0rs 0I Uhuru Plc ncludc N525,000 pyblc I0 M0 Plc.
Thc dIIcrcncc s cc0unIcd by csh n IrnsI.
4. whI s Ihc vluc 0I Ihc currcnI sscIs n Ihc c0ns0ldIcd blncc shccI 0I M0
Plc!
A. N0,500,000
. N0,725,000
C. N,250,000
0. N,475,000
E. N2,225,000.
5. ClculIc Ihc ncI currcnI sscIs I0 bc ncludcd n c0ns0ldIcd blncc shccI 0I
M0 Plc.
A. N5,475,000
. N5,700,000
C. N5,775,000
0. Nb,000,000
E. Nb,750,000.
0knlw0n Plc cqurcd 85 0I Ihc sx mll0n N 0rdnry shrcs 0I T0lu Plc 0n 30
1unc 2008 I0r N7.2 mll0n. T0lu Plc pd dvdcnd 0I 0 Ir0m pr0II 0I N3
mll0n I0r Ihc ycr cndcd 30 ScpIcmbcr 2008.
b. ClculIc Ihc cIIccIvc c0sI 0I nvcsImcnI n T0lu Plc.
7. Sh0w Ihc |0urnl cnIrcs I0r Ihc dvdcnd rcccvcd by 0knlw0n Plc n Ihc
ndvdul cc0unI 0I 0knlw0n. N0 nrrI0n s rcqurcd.
8. A subsdry's Ixcd sscIs wcrc rcvlucd I surplus 0n Ihc dIc I ws cqurcd
by Ihc prcnI c0mpny. whI wll bc Ihc cIIccI 0I Ihs surplus 0n prccqusI0n
pr0IIs nd p0sIcqusI0n pr0IIs 0I Ihc subsdry!
9. P 0wns b0 0I S nd 25 0I R. S 0wns 35 0I R. R s subsdry 0I ............
0. T cqurcd 80 N cquIy shrc 0I R 0n 1nury, 2004 whcn Ihc rcIncd pr0IIs
0I R m0unIcd I0 Nb0 mll0n, nd cqurcd 75 N cquIy shrcs. T 0n 30
1nury, 2005 whcn Ihc rcIncd pr0II 0I T m0unIcd I0 N35 mll0n. whcn dd R
bcc0mc mcmbcr 0I gr0up!
40
4
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc pr0ccdurcs nv0lvcd n Ihc c0ns0ldI0n 0I Ihc pr0II nd l0ss cc0unI
0I prcnI c0mpny nd Is subsdrcs.
0cm0sIrIc h0w I0 clmnIc nIcrc0mpny slcs nd unrclzcd pr0IIs 0n
c0ns0ldI0n.
Prcprc c0ns0ldIcd pr0II nd l0ss cc0unI ncludng Ih0sc 0I subsdrcs
cqurcd durng Ihc ycr.
Ad|usI I0r Ihc cIIccI 0I nIcrc0mpny dvdcnds nd nIcrcsI 0n l0n n Ihc
c0ns0ldIcd pr0II nd l0ss cc0unI.
Kn0w h0w I0 cc0unI I0r n0nc0nIr0llng nIcrcsI.
A c0ns0ldIcd pr0II nd l0ss cc0unI s prcprcd by ddng I0gcIhcr Ihc rcsulIs
0I Irdng n Ihc ycr 0I Ihc prcnI c0mpny nd Is subsdrcs IIcr mkng
d|usImcnIs IhI rc ncccssry I0 cxcludc nIcrc0mpny Icms.
Thc lw cxcmpIs Ihc prcnI c0mpny Ir0m prcscnIng Is 0wn pr0II nd l0ss
cc0unI I0gcIhcr wIh Ihc gr0up pr0II nd l0ss cc0unI pr0vdcd Ihc
c0ns0ldIcd pr0II nd l0ss cc0unI c0nIns n0Ic sIIng h0w much 0I Ihc
c0ns0ldIcd pr0II s dclI wIh n Ihc cc0unIs 0I Ihc prcnI c0mpny.
!n gcncrl, Ihc I0rmI 0I Ihc c0ns0ldIcd pr0II nd l0ss cc0unI s Ihc smc
s Ihc ndvdul c0mpny cc0unIs.
Thc c0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr s dvdcd nI0 Ihc I0ll0wng
prIs.
() Turn0vcr lcss c0sI 0I slcs 0I c0mpncs n Ihc gr0up IIcr cxcludng
nIcrc0mpny slcs nd purchscs.
() Thc 0pcrIng cxpcnscs 0I Ihc c0mpncs n Ihc gr0up. Unrclzcd pr0II
0n gr0up slcs sIll hcld n sI0ck nd Ixcd sscIs sh0uld bc clmnIcd.
() Pr0II (0r l0ss) 0n 0rdnry cIvIcs bcI0rc Ix I0r Ihc ycr by c0mpncs
n Ihc gr0up.
42
(v) TxI0n 0n 0rdnry cIvIcs I0r Ihc ycr by c0mpncs n Ihc gr0up.
(v) N0nc0nIr0llng nIcrcsI, whcrc Ihc prcnI c0mpny dd n0I cqurc 00
cquIy nIcrcsI n Ihc subsdry.
(v) ExIr0rdnry Icms, 0nly Ihc gr0up shrc lcss Ihc rclIcd Ix sh0uld
bc c0ns0ldIcd.
(v) Appr0prI0n 0I pr0IIs: Ths ncludcs dvdcnds 0I Ihc prcnI c0mpny
0nly nd IrnsIcr I0 rcscrvcs.
(v) RcIncd pr0II br0ughI I0rwrd: 0nly Ihc p0sIcqusI0n pr0IIs 0I Ihc
subsdry sh0uld bc c0ns0ldIcd wIh Ihc pr0II 0I Ihc prcnI c0mpny.
(x) RcIncd pr0II crrcd I0rwrd: Ths s Ihc ddI0n 0I Ihc rcIncd pr0II
I0r Ihc ycr nd Ihc rcIncd pr0IIs br0ughI I0rwrd.
C0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 3 0cccmbcr, 2007
Turn0vcr x
C0sI 0I slcs (x)
0r0ss pr0II x
0sIrbuI0n c0sI x
AdmnsIrI0n c0sIs /nd ny mprmcnI l0ss x (x)
Pr0II Ir0m mn busncss x
0Ihcr 0pcrIng nc0mc x
0Ihcr nIcrcsI rcccvblc nd smlr nc0mc x
!nIcrcsI pyblc nd smlr chrgcs (x)
Pr0II 0n 0rdnry cIvIcs bcI0rc Ix x
TxI0n (x)
Pr0II 0n 0rdnry cIvIcs IIcr Ix x
N0nc0nIr0llng nIcrcsI (x)
Pr0II bcI0rc cxIr 0rdnry Icms IIrbuIblc I0 gr0up mcmbcrs x
ExIr 0rdnry pr0II / (l0ss) x
Pr0II/(L0ss) I0r Ihc ycr x
Appr0prI0ns: (x)
RcIncd pr0II I0r Ihc ycr x
RcIncd pr0IIs br0ughI I0rwrd x
RcIncd pr0IIs crrcd I0rwrd x
() 0I Ihc gr0up pr0II I0r Ihc Inncl ycr, x hs bccn dclI wIh n Ihc
cc0unIs 0I Ihc prcnI c0mpny.
() Pr0II 0n 0rdnry cIvIcs bcI0rc IxI0n s sIIcd IIcr chrgng Ihc
I0ll0wng:
0cprccI0n 0n Ixcd sscIs x
AudI0rs' rcmuncrI0n nd Iccs x
0rccI0rs' cm0lumcnI (s) x
43
() Thc Igurcs I0r cxIr0rdnry Icms nd Ix Ihcrc0n rc mdc up 0I ll
Ihc prcnI c0mpny's cxIr0rdnry Icms nd Ihc gr0up shrc 0I Ihc
subsdrcs cxIr0rdnry m0unIs.
(v) M0vcmcnI 0n Rcscrvcs
Thc 0r0up Thc PrcnI C0mpny
RcIncd pr0II b/I x x
RcIncd pr0II I0r Ihc ycr x x
RcIncd pr0II c/I x x
AI Ihs p0nI, I s mp0rInI I0 llusIrIc wIh cxmplcs 0I Ihc d|usImcnIs
IhI my c0mc up n Ihc prcprI0n 0I c0ns0ldIcd pr0II nd l0ss cc0unI.
Thc drII pr0II nd l0ss cc0unIs 0I 10c Plc nd Abc Plc I0r Ihc ycr cndcd 3
0cccmbcr 2008, wcrc s I0ll0ws:
10c Plc Abc PLc
'000 '000
Slcs rcvcnuc 2,000 8,000
C0sI 0I slcs (5,000) (3,000)
0r0ss pr0II 7,000 5,000
0pcrIng cxpcnscs (2,250) (,450)
Pr0II bcI0rc Ix 4,750 3,550
TxI0n (,000) (800)
Pr0II IIcr Ix 3,750 2,750
RcIncd Pr0II b/I 7,000 3,750
RcIncd pr0II c/I 0,750 b,500
10c Plc cqurcd Ihc cnIrc 0rdnry shrc cpIl 0I Abc Plc whcn Abc Plc
ws nc0rp0rIcd.
Prcprc Ihc c0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 3
0cccmbcr 2008.
Sncc 10c Plc cqurcd 00 0rdnry shrcs n Abc Plc nd Ihcrc rc n0
0Ihcr nIcrc0mpny IrnscI0ns, Ihc c0ns0ldIcd pr0II nd l0ss cc0unI
s rrvcd I by ddng smlr Icms n Ihc pr0II nd l0ss cc0unI 0I Ihc
prcnI c0mpny nd IhI 0I Ihc subsdrcs.
'000
Turn0vcr 20,000
C0sI 0I slcs ( 8,000)
0r0ss pr0II 2,000
44
0pcrIng cxpcnscs (3,700)
Pr0II bcI0rc Ix 8,300
TxI0n (,800)
Pr0II IIcr Ix b,500
RcIncd pr0II b/I 0,750
RcIncd pr0II c/I
0r0up 10c Plc
RcIncd pr0II 1n 2008 0,750 7,000
RcIncd pr0II I0r Ihc ycr b,500 3,750
RcIncd pr0II c/I
Thc cnIrc pr0II br0ughI I0rwrd 0I Abc Plc s p0sIcqusI0n pr0II, sncc I
bccmc subsdry Ir0m Ihc dIc 0I Is nc0rp0rI0n.
!nvcsImcnI nc0mc rcccvblc by Ihc prcnI c0mpny w0uld bc cnccllcd
gnsI dvdcnd pyblc by Ihc subsdry.
Thc IcIs rc Ihc smc s n llusIrI0n (8.) b0vc, cxccpI IhI b0Ih
c0mpncs pr0p0scd dvdcnds.
'000 '000
Pr0II IIcr Ix (s n 8.) 3,750 2,750
Pr0p0scd dvdcnds (,200) (,000)
RcIncd pr0II I0r Ihc ycr 2,550 ,750
RcIncd pr0II b/I 7,000 3,750
RcIncd pr0II c/I 9,550 5,500
10urnl cnIry
0r. !nv. !nc0mc Rcccvblc cc0unI (00 x 000): ,000
Cr. Pr0II nd l0ss cc0unI 0I 10c ,000
45
'000 '000 '000
Turn0vcr 2,000 8,000 20,000
C0sI 0I slcs (5,000) (3,000) (8,000)
0r0ss pr0II 7,000 5,000 2,000
0pcrIng cxpcnscs (2,250) (,450) (3,700)
Pr0II bcI0rc Ix 4,750 3,550 8,300
TxI0n (,000) (800) (,800)
Pr0II IIcr Ix 3,750 2,750 b,500
Ad|usImcnI I0r nIcrc0mpny dvdcnds ,000 (,000)
Pr0II IIrbuIblc I0 gr0up mcmbcrs 4,750 ,750 b,500
Pr0p0scd dvdcnd (,200) (,200)
RcIncd pr0II I0r Ihc ycr 5,950 ,750 8,700
RcIncd pr0II b/I 7,000 3,750 0,750
RcIncd pr0II c/I 2,950 5,500 9,450
() Thc c0ns0ldIcd pr0II nd l0ss cc0unI s prcprcd by cxIrcIng Ihc
Igurcs n Ihc c0ns0ldI0n c0lumn.
(b) Thc pr0p0scd dvdcnd 0I Ihc subsdry (Abc Plc) ws crcdIcd I0 10c
Plc cc0unI s rcccvblc. !I s n nIrgr0up IrnscI0n.
(c) Thc c0ns0ldIcd pr0p0scd dvdcnd s IhI 0I Ihc prcnI c0mpny
0nly.
!I s ncccssry I0 c0nsdcr sIuI0n whcrc Ihc prcnI c0mpny d0cs n0I 0wn
Ihc cnIrc 0rdnry shrc cpIl n Ihc subsdry nd Ihc pr0IIs 0I Ihc
subsdry br0ughI I0rwrd I Ihc bcgnnng 0I Ihc pcr0d s n0I cnIrcly p0sI
cqusI0n.
!n Ihs csc, Ihc n0nc0nIr0llng nIcrcsI s dcducIcd Ir0m pr0II IIcr Ix I0
rrvc I Ihc pr0IIs IIrbuIblc I0 gr0up mcmbcrs nd 0nly Ihc p0sIcqusI0n
rcIncd pr0II 0I Ihc subsdry br0ughI I0rwrd wll bc c0ns0ldIcd.
Thc I0ll0wng llusIrI0n wll cxpln I bcIIcr.
'000 '000
Turn0vcr 50,000 4,500
C0sI 0I slcs 20,000 5,000
0r0ss pr0II 30,000 9,500
Admn cxpcnscs (8,000) (,200)
22,000 8,300
4b
!nc0mc Ir0m shrcs n gr0up c0mpny 3,b00 0
Pr0II bcI0rc IxI0n 25,b00 8,300
Tx 0n pr0IIs (3,400) (b00)
Pr0II IIcr Ix 22,200 7,700
0vdcnd (8,000) (4,500)
RcIncd pr0II I0r Ihc ycr 4,200 3,200
RcIncd pr0II b/I 8,000 ,000
RcIncd pr0II c/I
T0lu Plc cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I !Ic Plc whcn Ihc rcscrvc
0I !Ic Plc ws b00,000. Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd pr0II
nd L0ss Acc0unI 0I T0lu gr0up I0r Ihc ycr cndcd 3 0cccmbcr 2007.
: Rcc0nclc Ihc nIcr gr0up dvdcnd '000
0vdcnd rcccvblc by T0lu Plc s pcr drII 3,b00
Sh0uld grcc wIh 4,500,000 x 80 3,b00
Turn0vcr 50,000 4,500 b4,500
C0sI 0I slcs (20,000) (5,000) (25,000)
0r0ss pr0II 30,000 9,500 39,500
AdmnsIrI0n cxpcnscs (8,000) (,200) (9,200)
Pr0II bcI0rc Ix 22,000 8,300 30,300
TxI0n (3,400) (b00) (4,000)
Pr0II IIcr Ix 8,b00 7,700 2b,300
N0nc0nIr. nIcrcsI 20 (,540) (,540)
!nIcrc0mpny dvdcnd 3,b00 (3,b00)
0r0up pr0II I0r Ihc ycr 22,200 2,5b0 24,7b0
Pr0p0scd dvdcnd (8,000) _____ (8,000)
RcIncd pr0II I0r Ihc ycr 4,200 2,5b0 b,7b0
RcIncd pr0II b/I 8,000 320 8,320
RcIncd pr0II c/I
Thc rcIncd pr0II br0ughI I0rwrd I0r c0ns0ldI0n I0r !Ic Plc s
rrvcd I s I0ll0ws:
Pr0II br0ughI I0rwrd s pcr drII ,000
PrccqusI0n pr0II (0n dIc 0I cqusI0n) ( b00)
P0sI cqusI0n 400
Apply 80 I0 I 320
47
Turn0vcr b4,500
C0sI 0I slcs (25,000)
0r0ss pr0II 39,500
AdmnsIrI0n cxpcnscs (9,200)
Pr0II bcI0rc Ix 30,300
TxI0n (4,000)
Pr0II IIcr Ix 2b,300
N0nc0nIr0llng nIcrcsI (,540)
0r0up pr0II I0r Ihc ycr 24,7b0
Pr0p0scd dvdcnds (8,000)
RcIncd pr0II I0r Ihc ycr b,7b0
RcIncd pr0II b/I 8,320
RcIncd pr0II c/I
() M0vcmcnI 0n rcscrvcs
RcIncd pr0II br0ughI br0ughI I0rwrd //2007 8,320 8,000
RcIncd pr0II I0r Ihc ycr b,7b0 4,200
RcIncd pr0II c/I 3/2/2007
() 0I Ihc gr0ups' pr0II I0r Ihc ycr, 22,200,000, hs bccn dclI wIh n
Ihc cc0unIs 0I T0lu Plc.
!nIr gr0up slcs sh0uld bc clmnIcd Ir0m Iurn0vcr nd c0sI 0I slcs bccusc
Ihc c0ns0ldIcd pr0II nd l0ss cc0unI Igurc I0r Iurn0vcr nd c0sI 0I slcs
sh0uld rcprcscnI 0nly slcs I0, nd purchscs Ir0m, c0mpncs 0uIsdc Ihc
gr0up.
Thc unrclzcd pr0II n g00ds n0I ycI s0ld sh0uld ls0 bc cxcludcd.
Thc pr0ccdurcs rc s I0ll0ws.
() 0cducI Ihc nIcrc0mpny slcs I scllng prcc Ir0m b0Ih slcs nd
c0sI 0I slcs
(b) ClculIc Ihc unrclzcd pr0II n such g00ds n0I ycI s0ld (s cxplncd
undcr c0ns0ldIcd blncc shccI).
Ths m0unI sh0uld bc dcducIcd Ir0m pr0II nd l0ss cc0unI nd Ihc sI0ck n
Ihc blncc shccI.
Rulcs I0r rcm0vng unrclzcd pr0II
48
() !I Ihc slcs wcrc mdc by Ihc prcnI c0mpny, Ihcrc w0uld bc n0
d|usImcnI I0 n0nc0nIr0llng nIcrcsI.
(b) !I Ihc unrclzcd pr0II 0rgnlly r0sc n Ihc subsdry (IhI s, Ihc
slc s Ir0m Ihc subsdry I0 Ihc prcnI c0mpny) Ihc n0nc0nIr0llng
nIcrcsI sh0uld bc d|usIcd I0r Is shrc n Ihc unrclzcd pr0IIs.
(c) N0IwIhsIndng Ihs scc0nd rulc, ll Ihc unrclzcd pr0II sh0uld bc
clmnIcd Ir0m c0sI 0I slcs I0 dcIcrmnc Ihc c0rrccI m0unI 0I gr0ss
pr0II crncd by Ihc gr0up s I Ihcy rc Irdng s snglc cnIIy.
Thc drII Irdng nd pr0II nd l0ss cc0unI 0I Pp LId nd Zusc LId I0r Ihc
ycr cndcd 3 0cccmbcr, 2007.
'000 '000
Slcs 50,000 20,000
C0sI 0I slcs (8,000) (8,000)
0r0ss pr0II 32,000 2,000
0pcrIng cxpcnscs (0,000) (3,000)
Pr0II bcI0rc Ix 22,000 9,000
TxI0n b,000 ,500
Pr0II IIcr Ix b,000 7,500
AddI0nl nI0rmI0n
() Pp cqurcs 80 0I Ihc ssucd 0rdnry shrc cpIl 0I Suzc whcn
Ihc rcscrvc 0I Suzc ws 9, 500,000.
(b) !n Ihc ycr cndcd 3 0cccmbcr, 2007, Pp s0ld I0 Suzc g00ds c0sIng
3, 040,000 I0r 3, 800,000.
(c) AI Ihc cnd 0I Ihc ycr, Suzc s0ld b0 0I Ihcsc g00ds.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd pr0II nd l0ss cc0unI 0I Pp
LId, nd Is subsdry I0r Ihc ycr cndcd 3 0cccmbcr 2007.
ClculIc Ihc unrclzcd pr0IIs 0n nIrgr0up Irdng, sIll n sI0ck.
'000
Slcs rcvcnuc 0n nIrgr0up slcs 3,800
C0sI 0I g00ds s0ld (3,040)
T0Il unrclzcd pr0II 7b0
Pr0p0rI0n n0I ycI s0ld 00 b0= 40
Unrclzcd pr0II 7b0,000 x 40
Prcprc Ihc c0ns0ldI0n schcdulc nd IrcI Ihc I0ll0wng
() ElmnIc nIcrc0mpny slcs I scllng prcc Ir0m slcs nd
c0sI 0I slcs.
49
() Add 304,400 I0 c0sI 0I slcs, (nd dcducI Ir0m Ihc sI0ck vluc
n Ihc blncc shccI).
C0ns0ldI0n Schcdulc
Pp LId Suzc LId Ad|usImcnI C0ns0ldI0n
'000 '000 '000 '000
Slcs 50,000 20,000 (3,800) bb,200
C0sI 0I slcs (8,000) (8,000) 3,800 (22,200)
Unrclzcd pr0II (304) (304)
0r0ss pr0II 3,b9b 2,000 43,b9b
0pcrIng cxpcnscs (0,000) (3,000) (3,000)
Pr0II bcI0rc Ix 2,b9b 9,000 30,b9b
TxI0n (b,000) (,500) (7,500)
Pr0II IIcr Ix 5,b9b 7,500 23,9b
N0nc0nIr. nIcrcsI x 20 (,500) ______ (,500)
Pr0II I0 gr0up mcmbcrs
Assumc IhI n Ihc lsI llusIrI0n, Ihc g00ds wcrc s0ld by Suzc I0 Pp, Ihc
unrclzcd pr0II w0uld sIll bc clmnIcd n I0Il s dcm0nsIrIcd b0vc.
H0wcvcr, Ihc n0nc0nIr0llng nIcrcsI w0uld hvc bccn ,439,200 (IhI s,
,500,000 - b0,800).
() !I Ihc Ixcd sscIs rc IrnsIcrrcd I vluc 0Ihcr Ihn Ihc ncI b00k
vluc, Ihc pr0II 0r l0ss rsng 0n Ihc IrnsIcr s clmnIcd.
(b) Thc dcprccI0n chrgc bscd 0n Ihc c0sI 0I Ihc sscI I0 Ihc gr0up wll
bc uscd I0 rcducc Ihc m0unI 0I pr0II 0r l0ss I0 bc clmnIcd.
0n 1nury, 2008, Prkcr LId s0ld plnI I0 Sr0 LId I0r b5,000. Thc sscI
whch 0rgnlly c0sI 32,000 hd ncI b00k vluc 0I 99,000 0n Ihc dIc
0I IrnsIcr. 0Ih c0mpncs dcprccIc plnI I 20 0n c0sI pcr nnum nd
Prkcr 0wns b0 0I Sr0. Sh0w Ihc d|usImcnIs ncccssry I 3 0cccmbcr,
2008, Ihc ycrcnd 0I Ihc gr0up.
Unrclzcd pr0II 0n slc 0I plnI 33,000
Enhnccd dcprccI0n 33,000 x 20 ( b,b00)
C0ns0ldIcd pr0II nd l0ss cc0unI
Thc d0ublc cnIry s '000 '000
0r. Pr0II 0n slc 0I plnI 33,000
Cr. 0cprccI0n cc0unI b,b00
Cr. PlnI cc0unI 2b,400
420
An0Ihcr wy I0 clculIc Ihc cnhnccd dcprccI0n s:
20 x b5,000 (TrnsIcr vluc) 33,000
20 x 32,000 (c0sI) 2b,400
Enhnccd dcprccI0n
Thc n0nc0nIr0llng nIcrcsI wll bc d|usIcd I0r Is shrc 0I Ihc rcducI0n n
dcprccI0n, bccusc Ihs ws rcc0rdcd n Ihc subsdry's b00ks.
Thc d0ublc cnIry s '000 '000
0r. N0nc0nIr0llng nIcrcsI
(Pr0II nd L0ss cc0unI) (40 x b,b00) 2,b40
Cr. N0nc0nIr0llng nIcrcsI
(blncc shccI) 2,b40
Thc IcIs rc s n llusIrI0n b0vc cxccpI IhI Sr0 IrnsIcrrcd Ihc sscIs I0
Prkcr. whI d|usImcnIs rc rcqurcd n Ihc c0ns0ldIcd cc0unIs!
Thc d|usImcnIs rc s bcI0rc.
ThI s I0 clmnIc unrclzcd pr0II 0I 33,000 nd
rcducc Ihc dcprccI0n chrgc by b,b00
H0wcvcr, Ihc n0nc0nIr0llng nIcrcsI w0uld bc d|usIcd by 3,200 (40 x
33,000) sncc Ihc unrclzcd pr0II s n Ihc b00ks 0I Sr0.
Thc d0ublc cnIry s:
0r. N0nc0nIr0llng !nIcrcsI (blncc shccI) 3,200
Cr. N0nc0nIr0llng !nIcrcsI (nc0mc sIIcmcnI) 3,200
!I Ihc prcnI c0mpny 0wns l0n sI0ck n Ihc subsdry, I wll rcccvc nIcrcsI
Ir0m such subsdry. ThcrcI0rc, prI 0I Ihc I0Il nIcrcsI pd 0r pyblc by
Ihc subsdry wll bc IrcIcd s nvcsImcnI nc0mc n Ihc prcnI c0mpny's
b00k.
0n c0ns0ldI0n, b0Ih cnIrcs sh0uld bc clmnIcd. 0nly Ihc nIcrcsI pyblc
0r rcccvblc Ir0m prIcs 0uIsdc Ihc gr0up sh0uld bc c0ns0ldIcd.
Thc n0nc0nIr0llng nIcrcsI n Ihc pr0II nd l0ss cc0unI wll bc clculIcd n
Iw0 prIs, vz:
() shrc 0I Ihc n0nc0nIr0llng nIcrcsI n Ihc prcIcrcncc dvdcnd, plus.
42
(b) shrc 0I Ihc n0nc0nIr0llng nIcrcsI n Ihc pr0IIs IIrbuIblc I0 0rdnry
shrch0ldcrs.
Rcmcmbcr IhI Ihc ssuc 0I prcnI c0mpny r0sc s rcsulI 0I Ihc m|0rIy 0I
Ihc 0rdnry shrcs cqurcd n Ihc subsdry. ThcrcI0rc, Ihc rclI0nshp
bcIwccn Ihc prcnI c0mpny nd Ihc n0nc0nIr0llng nIcrcsI s n Ihc pr0II
IIrbuIblc I0 0rdnry shrch0ldcrs. Thc pr0II IIrbuIblc I0 0rdnry
shrch0ldcrs s 0bIncd by dcducIng Ihc prcIcrcncc dvdcnd Ir0m Ihc pr0II
IIcr Ix.
Ppcr LId cqurcd 75 0I Ihc 0rdnry shrc cpIl nd 45 0I Ihc prcIcrcncc
shrc cpIl 0I S0s0 LId mny ycrs g0.
ExIrcI Ir0m Ihc drII pr0II nd l0ss cc0unI 0I S0s0 LId I0r Ihc ycr cndcd 3
0cccmbcr, 2007.
Pr0II IIcr Ix 250,000
0vdcnd pyblc
PrcIcrcncc 5,000
0rdnry 90,000
05,000 (05,000)
RcIncd pr0II
T0Il NC !
Pr0II IIcr Ix (S0s0 LId) 250,000
Lcss prcIcrcncc dvdcnd 5,000 (55) 8,250
Avlblc I0 0rdnry shrch0ldcrs 235,000 (25) 58,750
b7,000
Thc pr0II 0I Ihc subsdry Ir0m Ihc bcgnnng 0I Ihc cc0unIng pcr0d I0 Ihc
dIc 0I cqusI0n s prccqusI0n pr0II. Ths pr0II wll bc cxcludcd Ir0m
c0ns0ldI0n.
Thcrc rc Iw0 mcIh0ds I0r cc0unIng I0r cqusI0n durng Ihc ycr, I0 cnsurc
IhI 0nly p0sIcqusI0n pr0IIs rc c0ns0ldIcd.
Thc Iw0 mcIh0ds rc:
() Thc prI ycr mcIh0d
(b) Thc wh0lc ycr mcIh0d.
F0r Ihc purp0sc 0I c0ns0ldI0n, Iurn0vcr s ssumcd I0 ccruc cvcnly durng
Ihc ycr.
422
Thc subsdry's pr0II I0 bc c0ns0ldIcd s Ihc p0sI cqusI0n pr0IIs 0nly.
Thc Iurn0vcr, c0sI 0I slcs nd 0Ihcr cxpcnscs wll bc dvdcd bcIwccn Ihc
prccqusI0n nd p0sIcqusI0n pcr0ds nd 0nly Ih0sc 0I p0sIcqusI0n
pcr0ds wll bc c0ns0ldIcd.
Undcr Ihs mcIh0d, Ihc I0Il pr0IIs I0r Ihc ycr s ncludcd n Ihc c0ns0ldI0n
Igurcs. H0wcvcr, IIcr Ihc n0nc0nIr0llng nIcrcsI Igurc hd bccn 0bIncd,
dcducI0n wll bc mdc I0r prccqusI0n pcr0d. Smlrly, Ihc shrc 0I
prccqusI0n dvdcnds wll bc cxcludcd Ir0m c0ns0ldI0n.
Rcmcmbcr IhI Ihc prccqusI0n dvdcnd s IrcIcd s rcIurn I0 Ihc prcnI
c0mpny s prI 0I Ihc c0sI 0I nvcsImcnI n Ihc subsdry.
Thc drII Pr0II nd L0ss Acc0unIs 0I Hmmcr LId nd Nl LId I0r Ihc ycr
cndcd 30 ScpIcmbcr, 2008, rc s I0ll0ws.
Turn0vcr 5,720 2,400
C0sI 0I slcs (3,200) (,200)
0r0ss pr0II 2,520 ,200
0pcrIng cxpcnscs (,440) ( 8b)
Pr0II bcI0rc Ix ,080 384
Tx ( 540) ( 92)
Pr0II IIcr Ix 540 92
0vdcnds dcclrcd ( 220) ( 45)
RcIncd pr0II I0r Ihc ycr 320 47
Hmmcr cqurcd 75 0I Ihc 0rdnry shrc cpIl 0I Nl 0n Mrch, 2008.
Assumc IhI pr0IIs ccrucd cvcnly durng Ihc ycr. Prcprc Ihc c0ns0ldIcd
pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 30 ScpIcmbcr, 2008, usng
() PrI ycr mcIh0d
() wh0lc ycr mcIh0d
() PrI ycr mcIh0d
Thc p0sI cqusI0n pcr0d s Ir0m Mrch 2008 - 30
ScpIcmbcr 2008 = 7 m0nIhs.
Prcprc Ihc c0ns0ldI0n schcdulc I0r pr0II nd l0ss cc0unI
423
Hmmcr LId Nl LId C0ns0ldI0n
7
/
'000 '000 '000
Turn0vcr 5,720 ,400 7,20
C0sI 0I slcs (3,200) (700) (3,900)
0r0ss pr0II 2,520 700 3,220
0pcrIng cxpcnscs (,440) (47b) (,9b)
Pr0II bcI0rc Ix ,080 224 ,304
TxI0n (540) (2) (b52)
Pr0II IIcr Ix 540 2 b52
N0nc0nIr0llng nIcrcsI (25 0I 2,000) (28) (28)
!nIcrc0mpny dvdcnd sIcp () 49 (49) _____
Pr0II vlblc I0 gr0up mcmbcrs 589 35 b24
0vdcnds dcclrcd (320) (__) (320)
RcIncd pr0II I0r Ihc ycr
!nIcrc0mpny dvdcnd '000
0vdcnd dcclrcd by Nl LId 2
AIIrbuIblc I0 gr0up 75 x 2,000 84
Lcss prccqusI0n 5/2 x 84,000 35
P0sI cqusI0n
() wh0lc ycr mcIh0d
Hmmcr LId Nl LId C0ns0ldI0n
'000 '000 '000
Turn0vcr 5,720 2,400 8,00
C0sI 0I slcs (3,200) (,200) (4,400)
0r0ss pr0II 2,520 ,200 3,720
0pcrIng cxpcnscs (,440) (8b) (2,25b)
Pr0II bcI0rc Ix ,080 384 ,4b4
TxI0n (540) (92) (732)
Pr0II IIcr Ix 540 92 732
NC ! 92,000 x 25 (48) (48)
PrccqusI0n pr0II I0r Ihc ycr (sIcp !!) (b0) (b0)
!nIcrc0mpny dvdcnd 49 (49)
Pr0II vlblc I0 gr0up mcmbcrs 589 35 b24
0vdcnds dcclrcd (320) () (320)
RcIncd pr0II I0r Ihc ycr 2b9 35 304
5 x 75 x 92,000 = b0,000
2
424
() Undcr Ihc Iw0 mcIh0ds, Ihc gr0up's Igurcs dIIcr unIl Ihc
prccqusI0n pr0II I0r Ihc ycr s dcducIcd Ir0m Ihc pr0II IIcr Ix.
(b) Thc c0ns0ldIcd pr0II nd l0ss cc0unI wll bc 0bIncd by cxIrcIng
Ihc Igurcs n Ihc c0ns0ldI0n c0lumn 0I Ihc schcdulcs.
(c) Thc bss I0r c0ns0ldI0n sh0uld bc sIIcd. F0r cxmplc,
() whcn Ihc prIycr mcIh0d s uscd, Ihc bss I0r
c0ns0ldI0n wll bc sIIcd s I0ll0ws, Ihc rcsulIs 0I Ihc
subsdry cqurcd durng Ihc ycr hs bccn br0ughI n Ir0m Is
cIIccIvc dIc 0I cqusI0n.
() whcn Ihc wh0lcycr mcIh0d s uscd, Ihc bss I0r c0ns0ldI0n
wll bc sIIcd s I0ll0ws, Ihc rcsulIs 0I Ihc subsdry cqurcd
durng Ihc ycr rc ncludcd I0r Iull cc0unIng pcr0d 0I 2
m0nIhs nd Ihc pr0p0rI0n 0I Ihc rcsulIs rsng pr0r I0
cqusI0n rc dcducIcd Ir0m Ihc gr0up pr0II IIcr Ix.
Thc g00dwll 0n cqusI0n sh0uld n0I bc m0rIzcd buI ny mprmcnI l0ss
sh0uld bc cc0unIcd I0r n Ihc pr0II nd l0ss cc0unI n Ihc pcr0d n whch Ihc
mprmcnI 0ccurrcd.
Thc cumulIvc m0unI 0I mprmcnI l0ss I Ihc bcgnnng 0I Ihc cc0unIng
pcr0d s dcducIcd Ir0m Ihc subsdry's p0sIcqusI0n rcscrvcs br0ughI
I0rwrd.
Thc mprmcnI l0ss rcc0gnzcd durng Ihc currcnI cc0unIng pcr0d s IrcIcd
s 0pcrIng cxpcnscs.
Thc drII Pr0II nd L0ss Acc0unI I0r Ihc ycr cndcd 30 1unc, 2008, 0I gr0up
rc s I0ll0ws.
Hcnry LId S0uz LId
'000 '000
Turn0vcr 58,400 58,5b0
C0sI 0I slcs (327,045) (3b,892)
0r0ss pr0II 9,355 2,bb8
0pcrIng c0sI (5,92) (5,85b)
!nc0mc Ir0m shrcs n S0uz 3,740 ______
NcI pr0II bcI0rc Ix 43,83 5,82
Tx (b7,485) (7,b2)
NcI pr0II IIcr Ix 75,b98 8,200
0vdcnd pr0p0scd 48,000 4,b75
RcIncd pr0II I0r Ihc ycr 27,b98 3,525
RcIncd pr0II I 1uly 2003 88,47 b,983
RcIncd pr0II c/I
425
AddI0nl nI0rmI0n:
() Hcnry LId b0ughI 80 0I Ihc 0rdnry shrcs 0I S0uz LId, Ihrcc ycrs
g0 whcn IhI c0mpny's 0I rcscrvcs m0unIcd I0 2,292,000.
000dwll 0I 2,000,000 r0sc 0n Ihc cqusI0n
(b) T0Il 0I mprmcnI l0ss 0I 7,200,000 hd bccn wrIIcn 0II g00dwll
sncc cqusI0n 0I S0uz 0I whch 2,400,000 s rcc0gnzcd durng
Ihc currcnI ycr.
Prcprc Ihc c0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 30 1unc,
2008.
Rcc0nclc Ihc nIr gr0up dvdcnds
'000 '000
Hcnry rcccvcd 3,740 Sh0uld grcc wIh 80 x 4,b75 3,740
N0 d|usImcnI s rcqurcd
Hcnry LId S0uz LId Ad|usImcnI C0ns0ldIcd
'000 '000 '000 '000
Turn0vcr 58,400 58,5b0 57b,9b0
C0sI 0I slcs (327,045) (3b,892) (3b3,937)
0r0ss pr0II 9,355 2,bb8 23,023
0pcrIng c0sI (5,92) (2,85b) (2,400) (b0,b8)
Pr0II bcI0rc Ix 39,443 5,82 (2,400) 52,855
TxI0n (b7,485) (7,b2) (75,097)
Pr0II IIcr Ix 7,958 8,200 (2,400) 77,758
N0nc0nIr0llng nIcrcsI (20) ______ (,b40) (,b40)
Pr0II vlblc I0
gr0up mcmbcrs 7,958 b,500 7b,8
ClculIc Ihc rcscrvcs 0I 0r0up br0ughI I0rwrd
'000 '000
Hcnry LId 88,47
S0uz (b,982 - 2,292) x 80 3,752
9,899
Lcss: !mprmcnI l0ss (n0Ic ) 4,800
87,099
Prcprc Ihc c0ns0ldIcd pr0II nd l0ss cc0unI.
42b
Turn0vcr 57b,9b0
C0sI 0I slcs (3b3,937)
0r0ss pr0II 23,023
0pcrIng c0sI (b0,b8)
NcI pr0II bcI0rc Ix 52,855
TxI0n (75,097)
Pr0II IIcr Ix 77,758
N0nc0nIr0llng nIcrcsI (,b40)
NcI pr0II IIcr Ix IIrbuIblc I0 gr0up mcmbcrs 7b,8
0vdcnd pr0p0scd 48,000
RcIncd pr0II I0r Ihc ycr 28,8
RcIncd pr0II br0ughI I0rwrd (87,099)
RcIncd pr0II crrcd I0rwrd
M0vcmcnI 0n Rcscrvcs
'000
AI 1uly 2007 87,099
RcIncd pr0II I0r Ihc ycr 28,8
AI 30 1unc 2008
'000
() T0Il mprmcnI l0ss wrIIcn 0II 7,200
Chrgcd I0 pr0II n currcnI ycr 2,400
Ad|usIcd 0n rcscrvc br0ughI I0rwrd 4,800
(b) Thc m0unI 0I Ihc gr0up pr0II I0r Ihc ycr dclI wIh n Ihc cc0unI 0I
Hcnry LId cn bc 0bIncd s I0ll0ws
'000
Hcnry's ncI pr0II bcI0rc Ix 39,443
!nIcrc0mpny dvdcnd rcccvblc( 4b75 x 80) 3,740
!mprmcnI l0ss (currcnI ycr) (2,400)
40,783
TxI0n ( b7,485)
Pr0II dclI wIh n Hcnry's cc0unI 73,298
Thc pr0p0rI0n 0I Ihc gr0up's shrc 0I Ihc subsdry's cxIr0rdnry Icm,
sh0uld bc ggrcgIcd wIh IhI 0I Ihc prcnI c0mpny I0r c0ns0ldI0n. Thc
cxIr0rdnry l0ss 0r pr0II s ncludcd IIcr Ihc pr0II n 0rdnry cIvIcs
IIrbuIblc I0 gr0up mcmbcrs, lcss Ihc rclIcd Ix.
427
Thc prncplcs I0r dcrvng Ihc pr0II nd l0ss 0I vcrIcl gr0up cn bc
undcrsI00d s I0ll0ws:
() Thc p0sIcqusI0n pr0IIs 0I Ihc subsubsdry wll IrsI bc
c0ns0ldIcd wIh Ihc subsdry.
(b) Thc ggrcgIc 0I Ihc p0sIcqusI0n pr0IIs 0I Ihc subsdry nd
subsubsdry wll Ihcn bc c0ns0ldIcd wIh Ihc prcnI c0mpny's
rcsulI.
(c) All 0Ihcr Icms wll bc d|usIcd s cxplncd bcI0rc, IhI s, s n whcrc
Ihc prcnI hs 0nly 0nc subsdry.
Thc I0ll0wng nI0rmI0n s gvcn 0n P0rI LId, Sc LId nd Tc LId I0r Ihc ycr
cndcd 3 0cccmbcr 2007:
P0rI LId Sc LId Tc LId
'000 '000 '000
0pcrIng pr0II ,995 ,030 775
!nvcsImcnI nc0mc 35 20 _____
Pr0II bcI0rc Ix 2,030 ,050 775
TxI0n (750) (500) (250)
Pr0II IIcr Ix ,280 550 525
0vdcnd pd:
0rdnry (00) (50) (25)
PrcIcrcncc (50) (25) (25)
,30 475 475
RcIncd pr0II //2007 2,400 800 b50
RcIncd pr0II 3/2/2007
() P0rI LId cqurcd b0 0I Ihc 0rdnry shrc cpIl 0I Sc LId 0n 3
0cccmbcr, 2003 whcn Ihc pr0II nd l0ss cc0unI blncc 0I Sc LId
ws 300,000.
(b) Sc LId cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I Tc LId n 200b,
whcn Ihc pr0II nd l0ss cc0unI blncc 0I Tc LId ws 350,000.
Y0u rc rcqurcd I0 prcprc Ihc c0ns0ldIcd pr0II nd l0ss cc0unI 0I P0rI LId
nd Is subsdrcs I0r Ihc ycr cndcd 3 0cccmbcr 2007.
428
P0rI LId
b0
Sc LId
80
Tc LId
Rcc0nclc Ihc nIrgr0up dvdcnds
!nvcsImcnI nc0mc I0 P0rI 35
!nvcsImcnI nc0mc I0 Sc 20
55
0vdcnd rcccvcd by P0rI I0r Sc b0 x 50 30
0vdcnd rcccvcd by Sc I0r Tc 80 x 25 20 50
!nvcsImcnI nc0mc I0 bc c0ns0ldIcd
ClculIc Ihc p0sIcqusI0n pr0II br0ughI I0rwrd
Sc LId Tc LId
lncc b/I 800 b50
lncc I cqusI0n 300 350
P0sIcqusI0n 500 300
Add 80 0I Tc P0sIcqusI0n 240
ThcrcI0rc, I0 bc c0ns0ldIcd s
'000
b0 x 740,000 = 444
Add rcscrvc 0I P0rI Plc 2,400
C0ns0ldIcd rcscrvcs
Prcprc Ihc c0ns0ldI0n schcdulc
P0rI LId Sc LId Tc LId C0ns0ldI0n NC !
'000 '000 '000 '000 '000
0pcrIng pr0II ,995 ,030 775 3,800
!nvcsImcnI nc0mc 5 _____ ____ 5
Pr0II bcI0rc Ix 2,000 ,030 775 3,805
TxI0n (750) (500) (250) (,500)
Pr0II IIcr Ix ,250 530 525 2,305

429
PrcI. dvdcnd 0I subsdrcs:
Sc LId (25) 25
Tc LId ____ (25) 25
Avlblc I0 0rdnry shrcs 505 500
N0nc0nIr0llng nIcrcsI Tc 20 (00) 00
P0sIcqusI0n pr0II 0I Tc 400
TrnsIcr I0 Sc 400 (400)
Avlblc I0 0rdnry shrcs 905
N0nc0nIr. nIcrcsI 40 (3b2) 3b2
T0Il mn0rIy nIcrcsI ______ ____ (52)
'000 '000
0pcrIng pr0II 3,800
!nvcsImcnI nc0mc 5
Pr0II bcI0rc Ix 3,805
TxI0n (,500)
Pr0II IIcr Ix 2,305
N0nc0nI. nIcrcsI ( 52)
,793
0rdnry dvdcnd 00
PrcIcrcncc dvdcnd 50 ( 50)
RcIncd pr0II I0r Ihc ycr ,b43
RcIncd pr0II b/I 2,844
RcIncd pr0II c/I
Thc rcIncd pr0II c/I cn bc rcc0nclcd wIh Ihc rcIncd pr0II n Ihc drII
pr0II nd l0ss cc0unI s I0ll0ws:
'000
P0sIcqusI0n pr0II 0I
Sc LId n Tc LId (,25 - 350) x 80 b20
Add Sc LIdrcscrvc ,275
P0sIcqusI0n 0I P0rI LId n Sc LId (,895 - 300) x b0 957
Add P0rI rcscrvcs 3,530
Thc prncplc I0r c0ns0ldI0n 0I pr0II nd l0ss cc0unI s Ihc smc I0r
c0ns0ldIcd blncc shccI. ThI s, Ihc rcsulIs 0I ll Ihc gr0up c0mpncs
430
sh0uld bc prcscnIcd n 0nc pr0II nd l0ss cc0unI. M0sI 0I Ihc Igurcs rc
smplc ggrcgI0ns 0I Ihc rcsulIs 0I Ihc prcnI nd Ihc subsdrcs, h0wcvcr,
nIcrc0mpny IrnscI0ns sh0uld bc clmnIcd.
F0r nsIncc:
() !nIcrc0mpny slcs nd purchscs nd Ihc unrclzcd pr0II 0n such
Icms sh0uld bc clmnIcd.
() !nIcrc0mpny nvcsImcnI nc0mc sh0uld bc clmnIcd.
Thc n0nc0nIr0llng nIcrcsI s sh0wn s 0nc Igurc dcducI0n Ir0m pr0II IIcr
Ix. Thc c0ns0ldIcd dvdcnd s I0r Ihc prcnI c0mpny 0nly.
Thc c0ns0ldIcd rcIncd pr0II br0ughI I0rwrd s mdc up 0I Ihc gr0up shrc
0I Ihc p0sIcqusI0n rcIncd pr0II 0I Ihc subsdrcs nd Ihc prcnI's
rcscrvcs.
!I s mp0rInI I0 clmnIc ny mprmcnI l0ss 0n sscI Ir0m Ihc c0ns0ldIcd
pr0II nd l0ss cc0unI.
. 0urng Ihc ycr cndcd 3 Mrch 2008, Chuks Plc, wh0 0wncd 90 0I Ihc shrc
cpIl 0I 11 Plc, s0ld g00ds I0 11 Plc I slcs prcc 0I Nbb mll0n. Ths rcprcscnIcd
mrkup 0I 0 0n c0sI. AI Ihc ycrcnd, 30 0I Ihc sI0cks wcrc n0I ycI s0ld by 11
Plc. whcn prcprng Ihc c0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr, Ihc
cc0unInI Ilcd I0 d|usI I0r nIcr c0mpny pr0II n Ihc cndng sI0ck. Thc mpcI
0I Ihc 0mss0n 0n c0ns0ldIcd sIIcmcnIs ws I0
A. 0vcrsIIc Ihc ncI pr0II by Nb.b mll0n nd undcrsIIc Ihc cl0sng sI0ck
by N.98 mll0n.
. undcrsIIc b0Ih Ihc ncI pr0II nd cl0sng sI0ck by N.98 mll0n.
C. 0vcrsIIc Ihc ncI pr0II by Nb mll0n nd undcrsIIc Ihc sI0ck by N.8
mll0n.
0. 0vcrsIIc b0Ih Ihc ncI pr0II nd Ihc sI0ck by N.8 mll0n.
E. undcrsIIc b0Ih Ihc ncI pr0II nd sI0ck by N.b2 mll0n.
2. 1udc Plc 0wns 75 0I K0l Plc 0rdnry shrcs. 0urng Ihc ycr cndcd 3 0cccmbcr
2007, K0l Plc s0ld g00ds I0 1udc I prcc 0I N5 mll0n. Thc g00ds hd c0sI K0l
N3.5 mll0n. 1udc s0ld ll Ihcsc g00ds I0r N7 mll0n.
Thc I0ll0wng nI0rmI0n pcrIns I0 1udc nd K0l I0r 2007.
1udc K0l
N'm N'm
Slcs 20 4
C0sI 0I Slcs 0 7
0 7
whI m0unI sh0uld 1udc rcp0rI s Ihc c0sI 0I slcs n Is c0ns0ldIcd pr0II nd
l0ss cc0unI!
A. N7 mll0n
. N3.5 mll0n
C. N2.0 mll0n
0. N.75 mll0n
E. N0.25 mll0n.
43
3. ApI Plc 0wns 0nly 80 0I Ihc ssucd shrcs 0I 0ng LId. ExIrcIs Ir0m Ihc pr0II
nd l0ss cc0unI 0I 0ng LId I0r Ihc ycr cndcd 3 Mrch, 2008, sh0wcd Ihc
I0ll0wng:
N'000
Pr0II IIcr Ix 3b0,000
0vdcnds:
PrcIcrcncc (80,000)
0rdnry (b0,000)
RcIncd pr0II
whI s Ihc n0nc0nIr0llng nIcrcsI IhI wll bc sh0wn n Ihc c0ns0ldIcd pr0II
nd l0ss cc0unI 0I ApI Plc I0r Ihc ycr cndcd 3 Mrch, 2008!
A. N38 mll0n
. N04 mll0n
C. N72 mll0n
0. N58 mll0n
E. N24 mll0n.
4. ng Plc cqurcd b0 0I Ihc 0rdnry shrc cpIl 0I nkcr Plc, whcn Ihc rcscrvc
0I nkcr Plc ws N2 mll0n l0ss. AI 3 0cccmbcr, 2007, Ihc rcscrvcs 0I ng Plc
nd nkcr Plc wcrc N8 mll0n nd Nb mll0n rcspccIvcly..
whI wcrc Ihc c0ns0ldIcd rcscrvcs 0I ng Plc I 3 0cccmbcr 2007!
A. N4b mll0n
. N34.8 mll0n
C. N22 mll0n
0. N20.4 mll0n
E. N3.2 mll0n.
5. 0n 0cI0bcr, 2008, 0bby Plc cqurcd 80 0I Ihc 0rdnry shrc cpIl 0I C0kcr
Plc. Thc Ir vlucs 0I C0kcr's sscIs wcrc cqul I0 Ihcr b00k vlucs wIh Ihc
cxccpI0n 0I Is plnI, whch hd Ir vluc 0I N b mll0n n cxccss 0I Is b00k
vluc I Ihc dIc 0I cqusI0n. Thc rcmnng uscIul lIc 0I ll C0kcr's plnI I Ihc
dIc 0I cqusI0n ws I0ur ycrs. 0cprccI0n 0I Ihc plnI s 0n sIrghIlnc
bss. Thc ycr cnd 0I 0bby nd C0kcr ws 30 1unc 2008.
whI dcprccI0n sh0uld bc chrgcd I0 Ihc c0ns0ldIcd pr0II nd l0ss cc0unI
n rcspccI 0I Ihc plnI I0r Ihc ycr cndcd 30 1unc, 2008!
A. Nb.0 mll0n
. N20 mll0n
C. N4.0 mll0n
0. N3.2 mll0n
E. N3.2 mll0n.
b. !n vcrIcl gr0up sIuI0n Ihc p0sIcqusI0n pr0IIs 0I Ihc subsubsdry wll
IrsI bc c0ns0ldIcd wIh IhI 0I Ihc...........................
7. !nIr gr0up slcs sh0uld bc clmnIcd Ir0m................ nd......................
8. whcn subsdry s cqurcd durng Ihc ycr, Ihc prI ycr 0r wh0lc ycr mcIh0ds
rc uscd I0r c0ns0ldI0n 0I Ihc subsdry's pr0II nd l0ss cc0unI. AI whI p0nI
wll Ihc Iw0 mcIh0ds gvc Ihc smc rcsulIs!
9. Unrclscd pr0II n g00ds n0I ycI s0ld n nIrgr0up Irdng sh0uld bc.............
432
0. whI rc Ihc mcIh0ds 0I dclng wIh currcnI ycr's dvdcnd 0I prcnI c0mpny
nd Is subsdry n Ihc c0ns0ldIcd pr0II nd l0ss cc0unI! Thc subsdry hs
bccn 0wncd mny ycrs g0!
433
AIIcr sIudyng Ihs chpIcr, rcdcrs sh0uld bc blc I0:
Expln Ihc bsc prncplcs nd phl0s0phy 0I cc0unIng I0r ss0cIcd c0mpny
nd |0nI vcnIurcs.
0sIngush m0ng cquIy mcIh0d 0I cc0unIng, pr0p0rI0nl c0ns0ldI0n nd
Ihc purchsc mcIh0d.
Apply Ihc cquIy nd pr0p0rI0nIc c0ns0ldI0n mcIh0ds 0I cc0unIng.
Prcprc Inncl sIIcmcnIs whcrc ss0cIcd c0mpncs nd |0nI vcnIurcs rc
ncludcd.
Kn0w h0w I0 prcprc Ihc cc0unIs 0I |0nI vcnIurcrs.
Acc0unIng I0r nvcsImcnIs n ss0cIcs s g0vcrncd by Ihc pr0vs0ns 0I CAMA
2004 nd Ihc rcqrcmcnIs 0I SAS 28.
Thc AcI dcscrbcs n ss0cIc s rclIcd c0mpny.
Schcdulc 2, prI \, prgrph b8 0I Ihc AcI dcscrbcs rclIcd c0mpny s ny
b0dy c0rp0rIc n whch Ihc nvcsI0r (c0mpny) h0lds, 0n l0ng Icrm bss,
Ihc cquIy v0Ing rghIs I0r Ihc purp0sc 0I sccurng c0nIrbuI0n I0 Ihc
nvcsI0r's 0wn cIvIcs by cxcrcsc 0I ny c0nIr0l 0r nIlucncc rsng Ir0m I.
Thc AcI IurIhcr sIIcs IhI n rclIcd c0mpny, Ihc nvcsI0r s dccmcd I0:
() h0ld qulIyng cpIl nIcrcsI n Ihc b0dy c0rp0rIc.
() cxcrcsc mIcrl nIlucncc n mIIcr rclIng I0 dvdcnds, c0mmcrcl
nd Inncl p0lcy 0I Ihc b0dy c0rp0rIc.
() h0ld 20 0r m0rc 0I ll Ihc rclcvnI shrcs hcld n IhI b0dy c0rp0rIc
(v) h0ld Ihc nIcrcsI 0n l0ng Icrm bss.
SAS 28 dcIncs n ss0cIc s n cnIIy, ncludng unnc0rp0rIcd cnIIcs
such s prIncrshp, 0vcr whch Ihc nvcsI0r hs sgnIcnI nIlucncc nd IhI
s ncIhcr subsdry n0r n nIcrcsI n |0nI vcnIurc.
434
SgnIcnI nIlucncc s Ihc p0wcr I0 prIcpIc n Ihc Inncl nd 0pcrIng
p0lccs 0I Ihc nvcsIcc buI n0I c0nIr0l 0r |0nI c0nIr0l 0vcr Ih0sc p0lccs. A
h0ldng 0I 20 0r m0rc 0I Ihc v0Ing p0wcr s prcsumcd I0 m0unI I0 sgnIcnI
nIlucncc. A v0Ing 0I lcss Ihn 20 wll n0I gvc sgnIcnI nIlucncc, unlcss I
cn bc clcrly dcm0nsIrIcd IhI such n nIlucncc cxsIs.
SgnIcnI nIlucncc s usully cvdcnccd n 0nc 0r m0rc 0I Ihc I0ll0wng wys.
() RcprcscnII0ns 0n Ihc b0rd 0I drccI0rs 0r cquvlcnI g0vcrnng b0dy
0I Ihc nvcsIcc.
(b) PrIcpI0n n p0lcy mkng pr0ccsscs, ncludng dvdcnd dccs0ns.
(c) MIcrl IrnscI0ns bcIwccn Ihc nvcsI0r nd Ihc nvcsIcc.
(d) !nIcrchngc 0I mngcrl pcrs0nncl
(c) Pr0vs0n 0I csscnIl Icchncl nI0rmI0n
whcIhcr 0r n0I sgnIcnI nIlucncc cxsIs ls0 dcpcnds 0n Ihc dsIrbuI0n
0I shrch0ldngs. F0r nsIncc whcrc Ihc dsIrbuI0n s hghly dspcrscd,
h0ldng 0I lcss Ihn 20 my gvc sgnIcnI nIlucncc whcrcs m|0rIy
h0ldng by 0nc nvcsI0r my prcvcnI Ihc 0Ihcr Ir0m cxcrcsng sgnIcnI
nIlucncc cvcn I I h0lds m0rc Ihn 20 cquIy.
Thc cc0unIng mcIh0d prcscrbcd by SAS 28 s Ihc cquIy mcIh0d.
Undcr Ihc cquIy mcIh0d
() Thc nvcsImcnI n Ihc ss0cIc s nIlly crrcd n Ihc blncc shccI
I Ihc hsI0rcl c0sI. ThcrcIIcr, I s sIIcd I Ihc nvcsI0r's shrc 0I Ihc
ncI sscIs 0I Ihc ss0cIc.
(b) Thc nvcsI0r's shrc 0I Ihc ss0cIc pr0IIs s rcc0gnzcd n Ihc pr0II
nd l0ss cc0unI.
9.3.
()
Thc gr0up's nIcrcsI n Ihc ss0cIc s Ihc ggrcgIc 0I Ihc
() gr0up's shrc 0I Ihc ss0cIc g00dwll, plus
() prcmum rsng 0n cqusI0n 0I nIcrcsI n Ihc ss0cIc
pr0II/l0ss, plus
() Ihc gr0ups shrc 0I Ihc ncI sscIs 0I Ihc ss0cIc, lcss
(v) ny dsc0unI rsng Ir0m cqusI0n 0I nIcrcsI.
Thc nvcsImcnI n Ihc ss0cIc s dscl0scd scprIcly s n0n
currcnI sscI.
(b)
() Thc nvcsI0r rcc0gnzcs Is shrc 0I ss0cIcd c0mpny's
pr0II bcI0rc Ix.
() Thc nvcsI0r dscl0scs scprIcly Is shrc 0I ss0cIcd
c0mpny's Ix.
435
() Thc nvcsI0r rcc0gnzcs Is shrc 0I cxIr0rdnry Icms
nd rcIncd pr0II.
(v) Thcrc s lmI I0 Ihc m0unI 0I Ihc l0sscs IhI Ihc nvcsI0r
wll rcc0gnzc. 0ncc Ihc ss0cIc's ncI sscIs hvc bccn
rcduccd I0 zcr0 vluc, n0 IurIhcr l0sscs wll bc
rcc0gnzcd.
9.3.2
0nly Ihc gr0up shrc 0I Ihc unrclzcd pr0II sh0uld bc cc0unIcd I0r.
Thc Inncl sIIcmcnIs uscd I0 cc0unI I0r Ihc ss0cIc sh0uld bc
drwn up I0 Ihc nvcsI0r's blncc shccI dIc. Thc nvcsI0r my n0I bc
blc I0 cIIccI chngc n Ihc ycrcnd 0I Ihc ss0cIc bccusc I d0cs
n0I cxcrcsc c0nIr0l 0vcr I. ThcrcI0rc, whcrc Ihc cc0unIng dIcs dIIcr,
Ihc m0sI rcccnI cc0unIs w0uld hvc I0 bc uscd, wIh dscl0surcs 0I
sgnIcnI IrnscI0ns sncc IhI dIc.
Thc cc0unIng p0lccs 0I Ihc ss0cIc sh0uld bc hrm0nzcd wIh IhI
0I Ihc nvcsI0r. !I I s n0I p0ssblc, Ihc IcIs sh0uld bc dscl0scd.
Thc nvcsI0r sh0uld dscl0sc:
() Is shrc 0I Ihc c0nIngcnccs nd cpIl c0mmImcnIs 0I n
ss0cIc I0r whch I s ls0 c0nIngcnIly lblc, nd
(b) Ih0sc c0nIngcnccs IhI rsc bccusc Ihc nvcsI0r s scprIcly
lblc I0r ll Ihc lblIcs 0I Ihc ss0cIcs.
Sncc n ss0cIc s n0I c0ns0ldIcd, Ihcsc nIcrc0mpny IrnscI0ns wll
n0I bc cnccllcd 0uI.
()
hc l0n sh0uld bc dscl0scd scprIcly n Ihc blncc shccI s
nvcsImcnI n Ihc ss0cIc. L0ns I0 nd Ir0m Ihc ss0cIcd c0mpny
sh0uld n0I bc ncIIcd 0II.
(b)
Thc rcccvblc nd pyblcs sh0uld n0I bc ncIIcd 0II. RIhcr Ihcy sh0uld
bc ncludcd undcr rcspccIvc currcnI sscI 0r lblIcs. Such rcccvblcs
nd pyblcs sh0uld bc dscl0scd scprIcly, I mIcrl.
() A lsI nd dcscrpI0n 0I sgnIcnI ss0cIcs sh0wng
() Ihc pr0p0rI0n 0I Ihc 0wncrshp nIcrcsI, 0r
() Ihc pr0p0rI0n 0I Ihc v0Ing nIcrcsI.
(b) Thc mcIh0d uscd I0 cc0unI I0r nvcsImcnI n cch ss0cIc.
43b
TI Plc cqurcd 25 0I Ihc 0rdnry shrc cpIl 0I l0 Plc Ihrcc ycrs g0
I0r ,440, 000. AI IhI dIc, Ihc shrc cpIl nd rcscrvcs 0I l0 Plc
m0unIcd I0 5,84,000. 0n 3 0cccmbcr 2008, l0 Plc cpIl nd rcscrvcs
m0unIcd I0 8,b40,000. Thc ncI Ingblc sscIs n l0 Plc rc sIIcd I Ihcr
Ir vlucs.
Sh0w I whI m0unI Ihc nvcsImcnI n l0 Plc wll bc sh0wn n Ihc
c0ns0ldIcd blncc shccI 0I TI Plc s 0n 3 0cccmbcr 2008.
C0ns0ldIcd lncc shccI (cxIrcIs) 0I TI Plc s 0n 3 0cccmbcr, 2008
Fxcd sscIs xx
!nvcsImcnI n TI Plc (n0Ic ) 2,304,000
!nvcsImcnI n Ihc ncI sscIs 0I Ihc ss0cIc
(25 x 8,b40,000) 2,b0,000
000dwll (n0Ic 2) 44,000
2,304,000
C0sI ,440,000
Lcss: Shrc 0I Ihc ncI sscIs I cqusI0n
( 5,84,000 x 25) ,29b,000
000dwll 44,000
C0sI 0I nvcsImcnI ,440,000
Shrc 0I p0sIcqusI0n pr0II
25 x (8,b40,000 - 5,84,000) 8b4,000
2,304,000
Thc gr0up pr0IIs wll bc ncrcscd by Ihc gr0up shrc 0I Ihc p0sIcqusI0n
pr0IIs 0I Ihc ss0cIc.
0n 3/2/2008, Abu Plc cqurcd 40 0I Ihc 2,000,000 0rdnry shrc cpIl
0I N cch 0I rllcII Plc I0r ,700,000 whcn Ihc rcscrvcs 0I Ihc c0mpny
sI00d I ,200,000. 0n Ihc smc dIc, Abu Plc cqurcd b0 0I Ihc 0rdnry
shrc cpIl 0I 0n Plc whcn Ihc rcscrvcs 0I 0n Plc ws 2,000,000.
437
Thc pr0II nd l0ss cc0unI 0I Ihc Ihrcc c0mpncs I0r Ihc ycr cndcd 3
0cccmbcr 2008 wcrc s I0ll0ws:
Abu Plc 0n Plc rllcI Plc
'000 '000 '000
Pr0II bcI0rc Ix 0,400 5,400 4,000
C0mpny nc0mc Ix (4,200) (,400) (,400)
Pr0II IIcr Ix b,200 4,000 2,b00
ExIr0rdnry l0ss IIcr Ix (,b00)
Pr0p0scd dvdcnd (2,000) (800) (200)
RcIncd pr0II I0r Ihc ycr 4,200 3,200 800
RcIncd pr0II b/I 3,000 2,400 2,000
RcIncd pr0II c/I
Prcprc Ihc Pr0II nd L0ss Acc0unI 0I Abu Plc nd Is subsdry ncludng Ihc
gr0up shrc 0I ss0cIcd c0mpny.
Abu 0r0up c0ns0ldIcd pr0II nd l0ss cc0unI I0r Ihc ycr cndcd 3/2/08
'000 '000
Turn0vcr xx
0r0up pr0II bcI0rc Ix (P + S) 5,800
0r0up shrc 0I ss0cIc pr0II 4,000 x 40 ,b00
Pr0II bcI0rc Ix 7,400
TxI0n: 0r0up (P + S) 5,b00
Ass0cIc ( ,400 + 40) 5b0 (b,b0)
Pr0II IIcr Ix ,240
N0nc0nIr0llng nIcrcsI ( 4,000 + 40) (,b00)
NcI pr0II I0r Ihc pcr0d 9,b40
ExIr0rdnry l0ss ( ,b00 x 40) (b40)
NcI pr0II I0r Ihc pcr0d 9,000
0vdcnd pr0p0scd (2,000)
RcIncd pr0II I0r Ihc ycr 7,000
RcIncd pr0II b/I (w2) 3,5b0
RcIncd pr0II c/d
'000
RcIncd pr0II b/I 3, 5b0
RcIncd pr0II I0r Ihc ycr 7,000
RcIncd pr0II c/I
438
0r0up Ass0cIc
'000 '000 '000
r0ughI I0rwrd (w2) 3, 240 320 3,5b0
RcIncd I0r Ihc ycr (w3) b, b80 320 7,000
9,920 b40
() 000dwll n Ass0cIc '000
C0sI 0I shrcs cqurcd ,700
Shrc 0I ncI sscIs 40 (2,000 + ,200) ,280
000dwll
(b)
'000
0r0up 3,000 + b0 ( 2,400 - 2,000) 3,240
Ass0cIc 40 ( 2,000 - ,200) 320
(c)
RcIncd pr0II 4,200 + b0 ( 3,200) b,20
Fr0m rllcII b0 x 800 480
Fr0m 0n 40 x 200 80
Ass0cIc 800 x 40
() Thc ss0cIc pr0II bcI0rc Ix s n0I ggrcgIcd wIh Ihc gr0up pr0II. !I
s dscl0scd scprIcly. Thc ss0cIc Ix s ls0 dscl0scd scprIcly
Ir0m Ihc gr0up Ix.
(b) ExIr0rdnry Icms (l0sscs n Ihs csc) rc sh0wn bcl0w pr0II IIcr
Ix nd mn0rIy nIcrcsI. Thc shrc 0I ss0cIcs gns 0r l0sscs sh0uld
bc dscl0scd scprIcly.
Th0ugh n0I c0mpuls0ry, I hclps I0 ppr0ch Ihs qucsI0n by prcprng w0rkng
schcdulc IrsI.
Abu Plc 0n Plc C0ns0ldIcd rllcII
'000 '000 '000 '000
Pr0II bcI0rc Ix 0,400 5,400 5,800 4,000
Ass0cIcd pr0II 40 _______ _______ ,b00 ,b00
Pr0II bcI0rc Ix 0,400 5,400 7,400
TxI0n (4,200) (,400) (5,b00)
Ass0cIc Ix _______ _______ (5b0) (5b0)
Pr0II IIcr Ix b,200 4,000 ,240 ,040
439
N0nc0nIr. nIcrcsI (,b00) (,b00)
ExIr0rdnry l0ss _____ ______ (b40) (b40)
Pr0II I0r Ihc pcr0d b,200 2,400 9,000 400
!nIcrc0mpny dvdcnd:
0r0up b0 480 (480)
Ass0cIc 40 80 (80)
Pr0p0scd dvdcnd (2,000) __ _ (2,000) __
RcIncd pr0II I0r Ihc ycr 4,7b0 ,920 7,000 320
RcIncd pr0II b/I 3,000 240 3,5b0 320
RcIncd pr0II c/I 7,7b0 2,b0 0,5b0 b40
Thc rcIncd pr0II b/I I0r Abu Plc s 3,000,000
9.b.
A |0nI vcnIurc s c0nIrcIul rrngcmcnI whcrcby Iw0 0r m0rc prIcs
undcrIkc n cc0n0mc cIvIy whch s sub|ccI I0 c0nIrcIully grccd
bss 0I shrng c0nIr0l.
10nI c0nIr0l rscs bccusc n0nc 0I Ihc prIcs cn c0nIr0l Ihc cIvIy
l0nc buI ll Ihc prIcs I0gcIhcr cn d0 s0.
9.b.2
Thc c0nIrcI whch csIblshcs Ihc |0nI vcnIurc usully dcls wIh Ihc
I0ll0wng:
() Thc cIvIy nd durI0n 0I Ihc vcnIurc
(b) Thc pp0nImcnI 0I 0rd 0I 0rccI0rs nd Ihc v0Ing rghIs 0I
Ihc vcnIurcrs
(c) CpIl c0nIrbuI0ns by Ihc vcnIurcrs,nd
(d) Thc shrng by Ihc vcnIurcrs 0I Ihc 0uIpuI, nc0mc, cxpcnscs 0r
rcsulIs 0I Ihc |0nI vcnIurc.
SAS 29 dcnIIcs Ihrcc bsc Iypcs 0I |0nI vcnIurc:
() 10nIly c0nIr0llcd 0pcrI0ns
(b) 10nIly c0nIr0llcd sscIs
(c) 10nIly c0nIr0llcd cnIIcs.
9.7.
A |0nIly c0nIr0llcd 0pcrI0n s 0nc whch nv0lvcs Ihc usc 0I Ihc sscIs
nd 0Ihcr rcs0urccs 0I Ihc vcnIurcrs rIhcr Ihn Ihc csIblshmcnI 0I n
cnIIy whch s scprIc Ir0m Ihc vcnIurcrs Ihcmsclvcs. Ech vcnIurcr
uscs Is 0wn sscIs nd ncurs Is 0wn cxpcnscs nd lblIcs. Pr0IIs
rc shrcd m0ng Ihc vcnIurcrs n cc0rdncc wIh Ihc c0nIrcIul
grccmcnI.
440
An uIh0r wrIcs b00k, Iypcs nd pr00I rcds Ihc mnuscrpIs nd
n0Ihcr pcrs0n pr0vdcs Ihc cpIl I0r publshng I. Thc uIh0r nd
Ihc 0Ihcr pcrs0n bcr Ihcr 0wn cxpcnscs nd Ikc n grccd shrc 0I
Ihc slcs rcvcnuc Ir0m Ihc pr0ducI.
9.7.2
A |0nIly c0nIr0llcd sscI s |0nI vcnIurc n whch Ihc vcnIurcrs c0nIr0l
|0nIly n sscI c0nIrbuIng I0 0r cqurcd I0r Ihc purp0sc 0I Ihc |0nI
vcnIurc.
A vcnIurcr rcc0gnzcs n Is scprIc Inncl sIIcmcnIs nd
c0nscqucnIly n Is c0ns0ldIcd Inncl sIIcmcnIs Is shrc 0I pr0II
Ir0m Ihc sscI nd Is shrc 0I ny cxpcnscs ncurrcd by Ihc |0nI vcnIurc
nd ny cxpcnsc whch I hs ncurrcd n rcspccI 0I Ihc nIcrcsI n Ihc
|0nI vcnIurc.
A bnk nd n csIIc vlucr buy n csIIc nd lcI 0uI Ihc
csIIc. Thc bnk pr0vdcs Ihc c0sI 0I purchsc, rcIurbshmcnI nd
mnIcnncc whlc Ihc csIIc vlucr ssgns vluc I0 Ihc csIIc nd
c0llccIs rcnI 0n I. Thc bnk nd Ihc csIIc vlucr cch Ikc n grccd
shrc 0I Ihc rcnIl nc0mc Ir0m Ihc csIIc.
9.7.3
A |0nIly c0nIr0llcd cnIIy s |0nI vcnIurc whch nv0lvcs Ihc
csIblshmcnI 0I c0mpny, prIncrshp 0r 0Ihcr cnIIy n whch cch
vcnIurcr hs n nIcrcsI. Thc grccmcnI bcIwccn Ihc vcnIurcrs pr0vdcs
I0r Ihcr c0nIr0l 0vcr Ihc cnIIy.
A, nd C cnIcr nI0 |0nI vcnIurc I0 mnuIcIurc pr0ducI I0r slc
nd scI up c0mpny I0r Ihs purp0sc. A 0wns 58, 34 nd C 28 0I
Ihc cquIy shrc cpIl 0I Ihc c0mpny nd rc Is 0nly drccI0rs. Thcy
my cnIcr nI0 c0nIrcIul grccmcnI I0 |0nIly c0nIr0l Ihc c0mpny
nd shrc pr0IIs cc0rdng I0 Ihcr shrch0ldngs.
10nI vcnIurcs rc rcp0rIcd n cIhcr
() Thc Inncl sIIcmcnIs 0I Ihc |0nI vcnIurc, 0r
(b) Thc ndvdul Inncl sIIcmcnIs 0I cch ndvdul vcnIurcr, 0r
(c) Thc c0ns0ldIcd Inncl sIIcmcnIs 0I cch ndvdul vcnIurcr, whch
pplcs 0nly I0 |0nIly c0nIr0llcd cnIIcs.
!n Is scprIc Inncl sIIcmcnIs, cch ndvdul vcnIurcr rcc0gnzcs:
() Thc sscIs IhI I c0nIr0ls nd Ihc lblIcs whch I ncurs.
44
(b) Thc cxpcnscs IhI I ncurs nd Is shrc 0I Ihc slcs rcvcnuc IhI I
crns Ir0m Ihc slc 0I g00ds 0r scrvccs by Ihc |0nI vcnIurcr.
Ths IrnscI0n wll uI0mIclly bc ncludcd n Ihc vcnIurcr's c0ns0ldIcd
Inncl sIIcmcnIs nd n0 prIculr c0ns0ldI0n d|usImcnI wll bc
rcqurcd.
!n Ihc Inncl sIIcmcnIs 0I Ihc |0nI vcnIurc cch vcnIurcr wll rcc0rd
IrnscI0ns 0n bchlI 0I Ihc |0nI vcnIurc n hs 0wn rcc0rds, l0ngsdc Is
0Ihcr busncss dclngs.
A vcnIurcr sh0uld rcc0gnzc n Is scprIc Inncl sIIcmcnIs nd
c0nscqucnIly n Is c0ns0ldIcd Inncl sIIcmcnIs Ihc I0ll0wng:
() !Is shrc 0I Ihc |0nIly c0nIr0llcd sscIs, clssIcd cc0rdng I0 Ihc nIurc
0I Ihc sscIs,
(b) Any lblIy IhI I hs ncurrcd.
(c) !Is shrc 0I ny lblIcs ncurrcd |0nIly wIh 0Ihcr vcnIurcrs n rclI0n
I0 Ihc |0nI vcnIurc,
(d) Any nc0mc Ir0m Ihc slc 0r usc 0I Is shrc 0I Ihc 0uIpuI 0I Ihc |0nI
vcnIurc I0gcIhcr wIh Is shrc 0I ny cxpcnscs ncurrcd by Ihc |0nI
vcnIurc, nd
(c) Any cxpcnscs whch I hs ncurrcd n rcspccI 0I Ihc |0nI vcnIurc.
!n Ihc cc0unIs 0I Ihc |0nI vcnIurc, cch vcnIurcr my scI up Is 0wn cc0unI
rcc0rds I0r nc0mc nd cxpcnscs drccIly ncurrcd s prI 0I Ihc vcnIurc (Ihcrc
wll bc blncc 0n Ihs cc0unI IhI rcprcscnIs Ihc m0unI rcccvblc Ir0m
0r pyblc I0 Ihc vcnIurc.
A mcm0rndum pr0II nd l0ss cc0unI I0r Ihc pcr0d wll bc prcprcd
pcr0dclly n 0rdcr I0 clculIc Ihc shrc 0I pr0IIs duc I0 nd Ir0m Ihc
ndvdul vcnIurcr.
() !n Is c0ns0ldIcd Inncl sIIcmcnIs, vcnIurcr sh0uld rcp0rI Is
nIcrcsI n |0nIly c0nIr0llcd cnIIy, usng pr0p0rI0nIc c0ns0ldI0n.
Thc vcnIurcr ncludcs n Is c0ns0ldIcd Inncl sIIcmcnIs Is shrc
0I cch 0I Ihc sscIs, lblIcs, nc0mc nd cxpcnscs 0I Ihc |0nIly
c0nIr0llcd cnIcrprsc cIhcr c0mbncd 0n lncbylnc bss wIh smlr
Icms n Ihc vcnIurcr's Inncl sIIcmcnIs 0r rcp0rIcd s scprIc lnc
Icms.
(b) An lIcrnIvc IrcImcnI s IhI n Is c0ns0ldIcd Inncl sIIcmcnIs
vcnIurcr sh0uld rcp0rI Is nIcrcsI n |0nIly c0nIr0llcd cnIIy usng
Ihc cquIy mcIh0d.
442
SAS 29 ll0ws 0Ihcr cc0unIng mcIh0ds undcr Ihc I0ll0wng crcumsInccs:
() An nIcrcsI cqurcd nd hcld cxclusvcly wIh vcw I0 Is subscqucnI
dsp0sl n Ihc ncxI Iwclvc m0nIhs. Such nIcrcsI sh0uld bc clssIcd
s hcld I0r Irdng.
(b) whcn |0nIly c0nIr0llcd cnIIy bcc0mcs subsdry 0I Ihc vcnIurcr,
Ihc vcnIurcr sh0uld cc0unI I0r Is nIcrcsI n cc0rdncc wIh SAS 27,
(c) whcn |0nIly c0nIr0llcd cnIIy bcc0mcs n ss0cIc 0I Ihc vcnIurcr,
Ihc vcnIurcr shll cc0unI I0r Is nIcrcsI n cc0rdncc wIh SAS 28.
() A vcnIurcr sh0uld dsc0nInuc Ihc usc 0I pr0p0rI0nl c0ns0ldI0n
mcIh0d whcn I ccscs I0 hvc |0nI c0nIr0l 0vcr |0nIly c0nIr0llcd
cnIIy.
(b) A vcnIurcr sh0uld dsc0nInuc usng Ihc cquIy mcIh0d whcn I ccscs
I0 hvc c0nIr0l 0vcr 0r sgnIcnI nIlucncc n Ihc |0nIly c0nIr0llcd cnIIy.
whcn vcnIurcr buys n sscI Ir0m 0r sclls sscI I0 |0nI vcnIurc, unrclzcd
pr0IIs wll rsc. whcn vcnIurcr sclls sscIs I0 Ihc |0nI vcnIurc nd s rcIncd
by Ihc |0nI vcnIurc, Ihc vcnIurcr sh0uld rcc0gnzc 0nly Ihc p0rI0n 0I Ihc gns
whch s IIrbuIblc I0 0Ihcr vcnIurcrs.
Thc vcnIurcr sh0uld rcc0gnzc Ihc Iull m0unI 0I ny l0ss whcn Ihc slc pr0vdcs
cvdcncc 0I rcducI0n n Ihc ncI rclzblc vluc 0I Ihc currcnI sscI 0r
pcrmncnI mprmcnI n Ihc vluc 0I Ixcd sscIs.
whcn vcnIurcr purchscs n sscIs Ir0m |0nI vcnIurc, Ihc vcnIurcr sh0uld
n0I rcc0gnzc Is shrc 0I Ihc pr0IIs unIl I rcsclls Ihc sscI I0 n ndcpcndcnI
prIy.
L0sscs 0n such purchscs sh0uld bc rcc0gnzcd mmcdIcly I Ihcy rcprcscnI
rcducI0n n Ihc ncI rclzblc vluc 0I currcnI sscIs 0r n mprmcnI n
Ihc vluc 0I Ixcd sscIs.
A vcnIurcr sh0uld dscl0sc Ihc I0ll0wng
() A lsIng nd dcscrpI0n 0I nIcrcsI n sgnIcnI |0nI vcnIurcs nd Ihc
pr0p0rI0n 0I 0wncrshp nIcrcsI hcld n |0nIly c0nIr0llcd cnIIcs.
(b) !Is ggrcgIc c0mmImcnIs n Ihc vcnIurc n rclI0n I0 Is nIcrcsI n
Ihc |0nI vcnIurc nd Is shrc 0I c0mmImcnIs IhI hvc bccn ncurrcd
|0nIly wIh 0Ihcr vcnIurcrs.
(c) !Is shrc 0I Ihc cpIl c0mmImcnIs 0I Ihc |0nI vcnIurc.
443
(d) Any c0nIngcnccs nd cpIl c0mmImcnIs ss0cIcd wIh hs nIcrcsI
n Ihc |0nI vcnIurc.
A nd undcrIkc |0nI vcnIurc whcrcby Ihcy wll |0nIly c0nIr0l Ihc
c0nsIrucI0n nd 0pcrI0n 0I ppclnc. Thc vcnIurcrs grcc I0 shrc c0sI nd
nc0mc cqully.
Thc I0ll0wng IrnscI0ns hvc bccn rcc0rdcd by Ihc Iw0 cnIcrprscs I Ihc
cnd 0I Ihc IrsI ycr 0I 0pcrI0n:
A
'm 'm
C0nsIrucI0n 0I ppclnc 3b0 420
0pcrI0nl c0sI ncurrcd 90 b0
Rcvcnuc rcccvcd (20) (84)
330 39b
H0w d0 Ihcsc IrnscI0ns ppcr n Ihc Inncl sIIcmcnIs 0I A!
() Pr0II nd L0ss cc0unI (cxIrcIs)
'm
Rcvcnuc (20 + 84) x 02
C0sIs (90 + b0) x (75)
Pr0II 27
() lncc shccI (cxIrcIs)
'm
Fxcd sscIs (3b0 + 420) x 390
Pr0II 27
CurrcnI lblIcs (1\ wIh ) 33
NcI nvcsImcnI n 0pcrI0n 330
'm 'm
Shrc 0I rcvcnuc 02 Shrc 0I c0nsIrucI0n c0sI 390
C0nsIrucI0n c0sI 3b0 Shrc 0I 0pcrI0n c0sI 75
0pcrI0n c0sI 90 Rcvcnuc 20
lncc c/d 33 ____
585 585
Am0unI IIrbuIblc I0 cch vcnIurcr s
(330 + 39b)
2 = 3b3
444
s nd 10ldc cnIcrcd nI0 |0nI vcnIurc wIh Ihc purp0sc 0I buyng s0mc
h0usng csIIcs nd rcscllng Ihcm. A |0nI bnk cc0unI ws n0I 0pcncd. Ech
prIy mdc purchscs scprIcly, subscqucnIly scllng Ihc h0uscs nd pyng
ncdcnIl cxpcnscs Ihr0ugh hs 0wn scprIc busncss. !I ws grccd IhI
pr0II nd l0ss sh0uld bc shrcd, s 3 nd 10ldc 2 nd IhI cch prIy
sh0uld rcndcr I0 Ihc 0Ihcr ycrly sIIcmcnI 0I hs IrnscI0ns nd cxpcnscs.
Any h0usc uns0ld I Ihc cnd 0I cch pcr0d, wcrc I0 bc Ikcn 0vcr by Ihc prIy
buyng Ihcm I Ihcr 0rgnl c0sI plus 0. 0urng Ihc ycr cndcd 30 1unc,
2008, Ihc I0ll0wng IrnscI0ns I00k plcc.
2007
1uly b s b0ughI Ihrcc h0uscs I0r 2 mll0n nd pd
mnIcnncc c0sI 0I 500, 000.
ScpI. 8 10ldc s0ld Iw0 0I Ihcsc h0uscs I0r mll0n.
0cI. 20 s s0ld 0nc 0I Ihc h0uscs I0r b mll0n.
0cc. 22 10ldc b0ughI I0ur h0uscs I0r 2 mll0n nd ncurrcd
mnIcnncc c0sI 0I mll0n.
2008
Mrch 20 s s0ld Iw0 0I Ihc h0uscs I0r 8.5mll0n nd pd
nsurncc nd dvcrIsng bll 0I 300, 000.
1unc 30 s's Irvclng nd cnIcrInmcnI cxpcnscs wcrc
200,000 I0r Ihc ycr whlc 10ldc hd pd 20,000
I0r smlr cxpcnscs.
Prcprc Ihc mcm0rndum nc0mc sIIcmcnI 0I Ihc |0nI vcnIurc I0r Ihc ycr
cndcd 30 1unc 2008 nd Ihc cnIrcs IhI wll bc mdc n cch vcnIurcr's
Inncl sIIcmcnIs. ScIIlcmcnI ws cIIccIcd bcIwccn Ihc prIcs 0n 0 1uly
2008.
Mcm0rndum nc0mc sIIcmcnI I0r Ihc ycr cndcd 30 1unc 2008
'000 '000
Purchscs s 2,000 Slcs s 4,500
10ldc 2,000 10ldc ,000
Expcnscs s ,000 H0usc Ikcn 0vcr
10ldc ,20 10ldc b,b00
Shrc 0I pr0II s 3,588
10ldc 2,392 ______
32,00 32,00
445
10nI \cnIurc wIh 10ldc
2007 '000 2007 '000
1uly b Purchscs 2,000 0cI 20 Slcs b,000
1uly b MnIcnncc c0sI 500
2008 2008
Mrch 20 !nsurncc & AdvcrI 300 Mrch 20 Slcs 8,500
1uly 30 Trvcllng 200 1uly 0 nk 2,088
1unc 30 Shrc 0I pr0II 3,588 _______
b,588 b,588
10nI vcnIurc wIh s
2007 '000 2007 '000
0cc 22 Purchscs 2,000 ScpI 8 Slcs ,000
0cc 22 !ncdcnIl cxpcnscs ,000 1unc 30 H0uscs Ikcn 0vcr b,b00
1unc 30 Trvcllng 20
1unc 30 Shrc 0I pr0II 2,392
1uly 9 - nk s 2,088 _______
Thc Inl cc0unIs 0I Pul Plc nd Sls Plc b0Ih rc gvcn bcl0w
lncc shccIs I 3 0cccmbcr 2008
Pul Sls
0r0up 0r0up
'000 '000
Fxcd sscIs 3,200 b0,000
C0sI 0I nvcsImcnI 0,800
NcI currcnI sscIs b,000 b,000
0rdnry shrc cpIl Iully pd 2,000 b,000
Rcscrvcs 8,000 5,000
L0ns ______ 45,000
Pul 0r0up Sls 0r0up
'000 '000
Slcs 24,000 20,000
0pcrIng cxpcnscs (2,000) (3,400)
0pcrIng pr0II 3,000 b,b00
Fnncc c0sI (4,800)
Pr0II bcI0rc Ix 3,000 ,800
44b
TxI0n (,b20) (9b0)
Pr0II IIcr Ix ,380 840
0vdcnds pd (400) (b0)
RcIncd pr0II I0r Ihc ycr
() Pul Plc nd 1mcs Plc 0wn 50 0I Ihc cquIy n Sls Plc. Thcy grcc I0
mngc Sls |0nIly wIh cqul rcprcscnII0n nd v0Ics 0n Ihc 0rd
0I drccI0rs.
(b) !nvcsImcnI n Sls hs bccn sIIcd I Ihc c0sI.
(c) Thc nvcsImcnI ws mdc 0n 1nury 2007 whcn Ihc Sls' pr0II ws
I 2mll0n.
(d) Pul Plc hs n0I ncludcd Is shrc 0I nvcsImcnI n slcs n Ihc b0vc
cc0unIs.
Y0u rc rcqurcd I0 prcprc Ihc Inncl sIIcmcnIs 0I Ihc Pul gr0up I0 cc0unI
I0r Sls Plc s |0nIly c0nIr0llcd cnIIy usng Ihc I0ll0wng mcIh0ds.
() Pr0p0rI0nl c0ns0ldI0n 0n lncbylnc bss.
(b) TrcImcnI 0n scprIc lnc bss.
(c) Thc cquIy mcIh0d.
10nIly c0nIr0llcd cnIIcs
()
Pul Sls
0r0up 0r0up Sls 50 0r0up
'000 '000 '000 '000
Fxcd sscIs 3,200 b0,000 30,000 43,200
000dwll n Sls w ,800
!nvcsImcnI n Sls 0,800 cnccllcd
NcI currcnI sscIs b,000 b,000 3,000 9,000
54,000
0rdnry shrc 0I 2,000 cnccllcd 2,000
Rcscrvcs w2 9,500
L0n 45,000 22,500 22,500
54,000
Pr0II nd L0ss cc0unI I0r Ihc ycr cndcd 3 0cccmbcr 2008
Pul Sls Sls (50) 0r0up
'000 '000 '000 '000
Slcs 24,000 20,000 b0,000 84,000
0pcrIng cxpcnscs (2,000) (3,400) (5b,700) (77,700)
0pcrIng pr0II b,300
447
!nc0mc Ir0m slcs:
0rdnry shrcs 80 cnccllcd
!nIcrcsI pyblc (4,800) (2,400) (2,400)
Pr0II bcI0rc Ix 3,900
TxI0n (,b20) (9b0) (480) (2,00)
Pr0II IIcr Ix ,800
0vdcnds pd (400)
RcIncd pr0II I0r Ihc ycr
(b) Pr0p0rI0nl c0ns0ldI0n
Pul 0r0up lncc shccI I 3 0cccmbcr 2008
'000
Fxcd sscIs 3,200
Shrc 0I 10nI vcnIurc sscIs 30,000
000dwll ,800
NcI currcnI sscIs b,000
Shrc 0I 1\ ncI currcnI sscIs 3,000
T0Il sscI lcss currcnI lblIcs
0rdnry shrcs 0I 2,000
Rcscrvcs 9,500
Shrcs 0I 1\ L0n 22,500
(c) EquIy McIh0d
Pul 0r0up c0ns0ldIcd lncc shccI I 3 0cccmbcr 2008
'000
Fxcd sscIs 3,200
!nvcsImcnI n Sls Plc (w3) 2,300
NcI currcnI sscIs b,000
0rdnry shrcs 0I cch 2,000
Rcscrvcs 9,500
'000 '000
Slcs 24,000
0pcrIng cxpcnscs (2,000)
0pcrIng pr0II 3,000
Fnncc c0sI (0r0up)
Pr0II bcI0rc Ix 3,000
Shrcs 0I 1\ pr0II bcI0rc Ix (n0Ic ) 900
3,900
448
Tx 0r0up ,b20
Shrc 0I 1\ Ix 480 (2,00)
N0Ic : Shrc 0I 10nI vcnIurc pr0II '000
0r0up shrc 0I pr0II bcI0rc Ix ,800 x 50 900
N0Ic 2: Shrc 0I 1\ ncI sscIs '000
0r0up shrc 0I ncI sscIs 50 x 2,000 0,500
000dwll ,800
000 '000
()
C0sI 0I nvcsImcnI 0,800
EquIy cqurcd
0rdnry shrcs b,000
PrccqusI0n rcscrvc 2,000
8,000 x 50 (9,000)
000dwll
'000 '000
(b)
Rcscrvcs 0I Pul 8,000
Rcscrvcs 0I Sls 5,000
PrccqusI0n (2,000)
3,000 x 50 ,500
'000 '000
(c)
0r0up shrc 0I ncI sscIs 50 2,000 x 50 0,500
000dwll ,800
2,300
Thc chpIcr dclI wIh Ihc bsc prncplcs nd cc0unIng I0r ss0cIcd
c0mpncs nd |0nI vcnIurcs. Thc dsIncI0n bcIwccn cquIy mcIh0d 0I
cc0unIng nd pr0p0rI0nl c0ns0ldI0n nd Ihcr pplcI0ns wcrc dscusscd
n dcIl.
449
. Thc cquIy mcIh0d 0I cc0unIng I0r n nvcsImcnI n Ihc 0rdnry shrc
cpIl 0I n0Ihcr c0mpny sh0uld bc uscd whcn Ihc
A. purchsc c0nsdcrI0n s 0I sgnIcnI m0unI.
. nvcsImcnI cnsurcs s0urcc 0I supply 0I rw mIcrls.
C. nvcsImcnI cnblcs Ihc nvcsI0r I0 prIcpIc n Ihc Inncl nd
0pcrIng p0lccs 0I Ihc nvcsIcc.
0. nvcsImcnI grnIs Ihc nvcsI0r Ihc p0wcr I0 g0vcrn Ihc p0lccs 0I
Ihc nvcsIcc.
E. nvcsImcnIs s 0bIncd by n cxchngc 0I shrcs I0r shrcs.
2. whcn c0mpny uscs Ihc cquIy mcIh0d I0 cc0unI I0r Is nvcsImcnIs n
n0Ihcr c0mpny, Ihc csh dvdcnds rcccvcd Ir0m Ihc nvcsIcc sh0uld
bc rcc0rdcd s:
A. dvdcnd nc0mc.
. dcducI0n Ir0m Ihc nvcsI0r's shrc 0I Ihc nvcsIcc's pr0IIs.
C. n ddI0n I0 Ihc nvcsI0r's shrc 0I Ihc nvcsIcc's pr0IIs.
0. dcducI0n Ir0m Ihc prcnI c0mpny's dvdcnd
E. dcducI0n Ir0m Ihc nvcsImcnI cc0unI.
Pul Plc cqurcd 50 mll0n 0rdnry shrcs 0I Luwc Plc I0r N 00 mll0n,
whcn Ihc rcIncd pr0IIs 0I Luwc wcrc N b0 mll0n. Luwc's pr0II I0r Ihc
ycr cndcd 3 Mrch 2005 bcI0rc pr0p0sng dvdcnd 0I N 8mll0n ws
N 23 mll0n.
3. !nvcsImcnI n Luwc Plc w0uld bc rcc0gnzcd 0n Ihc dIc 0I cqusI0n I
A. N b0m
. N 00m
C. N 90m
0. N 50m
E. N 40m
4. Thc crryng m0unI 0I nvcsImcnI n Luwc Plc I 3 Mrch, 2005 s
A. N 35.2m
. N 08.8m
C. N b0m
0. N 9b.8m
E. N 2b7m
5. whcn n nvcsI0r uscs Ihc cquIy mcIh0d I0r nvcsImcnI n 0rdnry shrcs
Ihc nvcsImcnI cc0unI wll ncrcsc whcn Ihc nvcsI0r rcc0gnzcs
A. csh dvdcnd rcccvcd Ir0m Ihc nvcsIcc.
. dsc0unI cqurcd n Ihc nvcsIcc.
C. surplus 0n rcvluI0n 0I Ihc nvcsIcc's sscIs I Ihc dIc 0I
cqusI0n.
0. pr0p0rI0nIc nIcrcsI n Ihc rcIncd crnngs 0I Ihc nvcsIcc.
E. pcr0dc mprmcnI l0sscs 0I Ihc nvcsIcc's sscIs.
450
b. whI s Ihc cnIIy 0vcr whch Ihc nvcsI0r hs sgnIcnI nIlucncc nd
IhI s ncIhcr subsdry n0r n nIcrcsI n |0nI vcnIurc cllcd!
7. whI cc0unIng ppr0ch s prcscrbcd by SAS 28 I0r ss0cIcs!
8. A c0nIrcIul grccmcnI whcrcby Iw0 0r m0rc prIcs undcrIkc n cc0n0mc
cIvIy whch rcsulIs n shrng 0I Ihc 0uIc0mc s ________________
9. 10nI vcnIurcs rc cc0unIcd I0r usng __________ , whcrcs ss0cIcs
rc cc0unIcd I0r usng.
0. SIIc 0nc Iypc 0I |0nI vcnIurc.