Balance Sheet

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					           Balance Sheet

“Old accountants never die;
they just lose their balance”

                          --Anonymous


   Assets, Liabilities & Shareholders’
                  Equity
       The Balance Sheet
Also called the statement of condition or
     statement of financial position

Financial Condition
Assets = Liabilities + Stockholders’ equity
Assets = What the firm owns
Liabilities = What the firm owes to outsiders
Stockholders’ equity = What the firm owes to
                         Internal owners
                 Assets
 Should provide probable future economic
 benefits
 Owned or controlled by the entity
 As a result of past transactions/events
 Cost/value should be determinable

Generally presented in order of liquidity
        A Few Definitions
Current Assets-Cash or other assets
 expected to be converted into cash
 within one year or one operating cycle,
 whichever is longer
Operating Cycle-Time required to
 purchase or manufacture inventory, sell
 the product, and collect the cash
         Current Assets-1
Cash and Cash Equivalents
   Valued at fair value- nominal amounts
Short-term Investments
 a.k.a-TRADING SECURITIES
 a.k.a-FINANCIAL ASSETS

 a.k.a-MARKETABLE SECURITIES

 Valued at fair value or amortized cost
               Current Assets-2
 RECEIVABLES
     Trade Receivables
          Accounts Receivable
          Notes Receivable
          Post dated cheques receivable
     Due From Related Parties
     Receivable from Employees
     Others
 Valued at amortized cost (net of interest) and
 reported at NET REALIZABLE VALUE
Net Realizable Value = Accounts Receivable
           - Allowance for Doubtful Accounts
A Word on the “Allowance…”
  Management must estimate the dollar
  amount of accounts receivable they expect
  to be uncollectible
  Affects balance sheet valuation AND bad
  debt expense on income statement
  Can be important in assessing earnings
  quality--changes should be analyzed
        Analysis of Receivables

                                     2004             2005        Growth
Net Sales                         484.217.501      533.179.059       10%
Accounts Receivable, total         40.766.849       53.580.885       31%
Allowance for doubtful accounts       294.505          550.191       87%
Allowance as a % of receivables             0,7%             1,0%
          Current Assets-3
Inventories
   Measured by FIFO or Weighted Average
   Valued at Lower of Cost or Net Recoverable
    Amount
Biological Assets (at fair value until the point
of harvest)
Assets Held for Sale
Other Current Assets
Deferred Tax Assets
       Long-term Assets-1
Trade Receivables
Other Receivables
Biological Assets
Long-term Financial Investments
   Valued at fair value or amortized cost or
    equity method of accounting
Deferred Tax Assets
          Long-term Assets-2
     Property, plant and equipment
1.   Option: Property, plant & equipment are valued
     at cost less accumulated depreciation and
     allowance for impairment
2.   Option: Property, plant & equipment are valued
     at revalued amount less accumulated
     depreciation and allowance for impairment
Book value = original cost/revalued amount
   - accumulated depreciation to date – impairment
   losses
       Long-term Assets-2
Intangible Assets
   Identifiability-
   Control-
   Future economic benefits-
   Reliable measurement of cost
recorded at cost initially and then carried
at cost less any accumulated amortization
and any accumulated impairment losses.
The life can be limited or indefinite
  Limited  amortize over the useful life
  Indefinite  NO AMORTIZATION
       Long-term Assets-3
GOODWILL
   Arise from business combinations
Investment Property
                     Liabilities
 obligations of an entity to make a future
    payment or to deliver goods or services to the
    third parties in the future in return for cash
    borrowed or service used or goods acquired
   Classified according to their due dates
     due within one year or the operating cycle are
      classified as current liabilities
     loans or credits that mature in more than one year
      are classified as long-term liabilities
            Liabilities-1
Current Portion of Long-term Debt
Financial Liabilities
 Bank Loans
 Bonds issued

 Finance Lease Liabilities
            Liabilities-2
Trade Payables
 Accounts Payable
 Notes Payable

Other Payables
 Due to Related Parties
 Payable to employees

 Taxes payable, etc…
              Liabilities-3
Accrued Liabilities
Unearned Revenues, a.k.a. Deferred
Income, Advances Received
Deferred Taxation
   Result of temporary differences in the
    recognition of revenue and expense for
    taxable income relative to reported
    financial income
         Deferred Taxation

       Machinery     IFRS    Tax Legis
Cost               50.000     50.000
Life                      10         5
Rate                    10%        20%
EBD                50.000     50.000
          IFRS     EBD         Depr       EBT        tax
year 1           50.000       5.000     45.000     9.000
year 2           50.000       5.000     45.000     9.000
year 3           50.000       5.000     45.000     9.000
year 4           50.000       5.000     45.000     9.000
year 5           50.000       5.000     45.000     9.000
year 6           50.000       5.000     45.000     9.000
year 7           50.000       5.000     45.000     9.000
year 8           50.000       5.000     45.000     9.000
year 9           50.000       5.000     45.000     9.000
year 10          50.000       5.000     45.000     9.000
Total                        50.000               90.000


                       Tax Leg.         EBD        Depr      EBT       tax
                 year 1               50.000     10.000    40.000    8.000
                 year 2               50.000     10.000    40.000    8.000
                 year 3               50.000     10.000    40.000    8.000
                 year 4               50.000     10.000    40.000    8.000
                 year 5               50.000     10.000    40.000    8.000
                 year 6               50.000        -      50.000   10.000
                 year 7               50.000        -      50.000   10.000
                 year 8               50.000        -      50.000   10.000
                 year 9               50.000        -      50.000   10.000
                 year 10              50.000        -      50.000   10.000
                 Total                           50.000             90.000
Provisions and Contingent
        Liabilities
a potential liability arising from a past
transaction and that depends on a future
event
   could be disclosed in the body of the balance
    sheet with the liabilities
   could be disclosed within notes to financial
    statements
certainty of the amount and the payment date
determines where they will be disclosed
 Is the amount of
                                                     Recognize liability
 the
                              YES                     on the balance
 liability known?                                          sheet


                 NO
                                                    YES


Can the amount of            YES              Is the liability likely to
Liability be reasonably                       occur? (Probable)
Estimated?


                                    NO
               NO

                      Disclose in the notes
                         To the financial
                           Statements
                    (CONTINGENT LIABILITY)
            Provisions
Post Retirement Benefits
Restructuring Provisions
Environmental Liabilities
Product Warranties,
Others such as litigations,
On November 24, 2003 , 26 passengers on Paris Airlines Flight No. 901 were injured
upon landing when the plane skidded off the runway. Personal injury suits for
damages totaling $5.000.000 were filed on January 11, 2004 against the airline by the
18 injured passengers. The airline carries no insurance. Legal counsel has studied
each case and advised Paris that it can reasonably expect to pay 60% of the damages
claimed. The financial statements for the year ended 31 December 2003 were issued
February 27, 2004 .


Agazzi Corporation, a dishwasher machine manufacturer, is the defendant in a patent
infringement lawsuit. The attorney of the company claims that, if the suit goes against
Agazzi, the loss may be as much as $4.000.000; however, the attorney believes the
loss of this suit to be only possible.

Animaniacs company entered into a contract on 21 January 2008 which will probably
result in a significant loss to the company. The financial statements as of 31
December 2007, that were issued to public on 1 February 2008 do not reflect any
provision for the probable loss.
    Shareholders’ Equity
Share Capital
Additional paid-in Capital
Treasury Stocks (contra equity)
Revaluation Fund
Retained Earnings
  Comprehensive Income
Non-owner changes to equity and
includes
 NetIncome for the year
 Other comprehensive income
   Adjustments to fair value for available-for-sale
    securities
   Foreign currency translation adjustment

   Gains/losses on cash flow hedge derivatives

   Gains/losses on investment hedge instruments

   Adjustments related to under funding a defined
    benefit pension plan
  Statement of Shareholders’ Equity


Provides details of changes in Equity
Stock
Other comprehensive income
Retained earnings
Includes beginning and ending balances
in accounts
                                              Company A          Company B
Current Assets                                 343.485.717        439.980.188
Property Plant and Equipment                   826.801.982      1.026.117.794
Other Long-term Assets                         124.702.064        189.943.503
                 Total Assets                1.294.989.763      1.656.041.485

Current Liabilities                            302.800.391        189.489.327
Long-term Liabilities                          257.035.615        328.989.213
Shareholders' Equity                           735.153.757      1.137.562.945
Total Liabilities and Shareholders' Equity   1.294.989.763      1.656.041.485

                                                 Company A Company B
    Current Assets                                     27%       27%
    Property Plant and Equipment                       64%       62%
    Other Long-term Assets                             10%       11%
                     Total Assets                     100%      100%

    Current Liabilities                                   23%        11%
    Long-term Liabilities                                 20%        20%
    Shareholders' Equity                                  57%        69%
    Total Liabilities and Shareholders' Equity           100%       100%

				
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posted:8/22/2011
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