Showing papers on "Accounting period published in 2008"

Accounting for intangible investments

Abstract: The traditional categorisation of expenditures evident in many firms’ charts of accounts and financial statements does not identify and measure expenditures on intangible investment separately from tangible investment and operating expenditures. This contrasts with the accounting for tangible investment, which separately accounts for all expenditures as assets unless the future benefits are consumed in a single accounting period. Further, in searching for better ways to account for intangibles, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets. In this paper, we argue that identifying and separately reporting the expenditures on intangible investment is the logical first step in accounting for intangible investments. Learning about the firm’s categories of value driving (and sometimes potentially value destroying) expenditures has important implications for understanding aspects of the value chain, performance measurement, valuation, corporate governance and the external audit.

Factors That Influence Small and Medium Enterprises in Metro Manila to Choose between Accrual and Cash Accounting

Abstract: INTRODUCTION In this age of globalization, the harmonization of financial reporting requirements has become a necessity. The convergence of accounting standards worldwide helps ensure the increased level of confidence among investors and other users of financial information by high quality and globally adopted financial reporting structures. Based on the fundamental assumptions of accounting, principles are developed. These dictate how economic events are recorded and reported. Generally accepted accounting principles (GAAP) are designed to produce general-purpose financial statements of business enterprises, whether they are large or small. The users of general-purpose financial statements include shareholders, creditors, investors, employees, and public. Users of financial reports focus on earnings as well as on the financial condition of the enterprise. To measure an organization's performance and reflect its financial condition, two accounting methods are commonly used: accrual accounting and cash accounting. GAAP require the use of the accrual method of accounting. The accrual method recognizes revenues and expenses in the accounting period in which they are considered earned and incurred regardless of the inflow or outflow of cash. On the other hand, the cash accounting method recognizes revenue when cash is received and recognizes expenses when they are paid. However, there is a question of whether GAAP is applicable to small and medium enterprises (SMEs), and whether GAAP meet the needs of these companies, as well as the preparers and the users of their financial reports. Based on literature, there are two major criteria applied in classifying SMEs: asset size and number of employees (PSB ASEAN, 2005). In the Philippines, the SMEs sector are those companies engaged in different areas of business whether cooperative, partnership or corporation that can be categorized by asset size or by employment. Republic Act 9178 provides that the small enterprise ranges from 10 to 99 workers and capitalization of Php3,000,0001 to Php15,000,000; and the medium enterprise has workforce of 100 to 199 and capitalization over Php15,000,000 to Php100,000,000. This paper presents the important considerations of SMEs in Metro Manila in using an accounting method. Geographically, Metro Manila is the center of Luzon and the capital region of the Philippines. The Cordillera Mountains forms its boundary on the east, Laguna de Bay on the southeast, Central Luzon on the north and Southern Tagalog region on the south. Metro Manila is the general term for the metropolitan area that contains the cities of Manila, Caloocan, Las Pinas, Makati, Mandaluyong, Marikina, Paranaque, Muntinlupa, Pasay, Pasig, Malabon, Taguig, Valenzuela, and Quezon City. The municipalities of Metro Manila are Navotas, Malabon, Pateros and San Juan. This study examines whether SMEs in Metro Manila comply with or do not comply with GAAP. This study also aims to determine the factors that influence SMEs in Metro Manila to choose between the two accounting methods--accrual and cash. This paper reports the results from the observations, which identify the method that is more applicable to these entities. The relevance of developing a more comprehensive understanding is becoming more important, especially with the Exposure Draft of IFRS for SMEs, final standards of which are expected to be issued by the International Accounting Standards Board (IASB) in the second half of 2008. Most of the studies pertaining to accounting standards and practices applicable to SMEs have focused on developed countries (IFAC, 2006). No literature was found on the financial reporting of SMEs in the Philippines. Consequently, this research is pioneering and due to non-availability of previous data, this study is limited to SMEs located in Metro Manila. Surveys were conducted and data were gathered from ten external auditors handling SME clients throughout Metro Manila. …

Accounting for Intangible Investments

Abstract: The traditional categorisation of expenditures evident in many firms' Charts of Accounts and the financial statements does not identify and measure expenditures on intangible investment separately from tangible investment and operating expenditures This contrasts with the accounting for tangible investment, which separately accounts for all expenditures as assets unless the future benefits are consumed in a single accounting period Further, in searching for better ways to account for intangibles, to date, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets In this paper, we argue that identifying and separately reporting the expenditures on intangible investment is the logical first step in accounting for intangible investments Learning about the firm's categories of value driving (and sometimes potentially value destroying) expenditures has important implications for understanding aspects of the value chain, performance measurement, valuation, corporate governance, and the external audit

Analysis of green net national product and genuine saving in Portugal, 1991 - 2005

Abstract: The context of this paper is the measurement of welfare and weak sustainability, defined as non-declining utility, in dynamic economies, i.e., green, environmental or comprehensive accounting. We estimate the green net national product and genuine saving for Portugal 1991-2005, accounting for the disamenity of air pollution emissions, the depreciation of commercial forests - pine and eucalyptus -, the value of time (through technological progress), excluding the effect of business cycles and discussing the assumptions behind the usual terms included in the empirics of comprehensive accounting. For the accounting period considered we find that both GNNP and GS are positive, thereby indicating no sustainability problem in Portugal, although both GNNP and GS depict a trend towards unsustainability. Excluding technological progress there is a contradiction in the sustainability message: GS is negative after 2002, whereas GNNP is always positive, indicating that welfare increased.