tailieunhanh - Ebook Accounts demystified how to understand financial accounting and analysis (4th edition): Part 2

(BQ) Part 2 book "Accounts demystified how to understand financial accounting and analysis" has contents: Further features of company accounts; financial analysis – introduction, analysis of the enterprise; analysis of the funding structure; valuation of companies;.and other contents. | 7 CHAPTER Further features of company accounts ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Investments Associates and subsidiaries Accounting for associates Accounting for subsidiaries Funding Debt Equity Revaluation reserves Statement of recognised gains and losses Note of historical cost profits and losses Intangible fixed assets Leases Corporation tax Exchange gains and losses Fully diluted earnings per share Summary In our review of Wingate’s accounts we have covered the majority of the things you will see in the accounts of a small- to medium-sized company. However, most of the companies in which you might want to invest your spare cash, Tom, are rather larger than Wingate. These companies tend to have somewhat more complex accounts. In fact, at first glance, their accounts can be quite daunting. Don’t be intimidated! In the next couple of hours, we can get a good enough understanding of the main features that cause these complexities for you to be able to read such 121 ACCOUNTS DEMYSTIFIED accounts with considerable confidence. I do not propose to go into the accounting in detail, but merely to explain the principles of the relevant accounting rules. Investments One of the first things you will notice about many larger companies’ annual reports is that the main statements are described as ‘consolidated’. To understand this, we need to discuss investments and how we account for them. What are investments? Broadly speaking, an asset that is not used directly in the operation of a company’s business is classified as an investment. This definition would include, for example: ● Antique furniture or paintings held in the hope of a rise in value, rather than simply for use in the business. ● Shares in other companies bought as an alternative to putting some spare cash in the bank. ● Shares in other companies bought for strategic reasons, . they form part of the company’s long-term strategy. Such investments are known as trade investments. Many companies own .