Chapter 1 - Question 1-2

For your firm, identify three Assets, three Liabilities and three items of Equity.  Describe what each item means to you (you may find some footnotes in your firm’s financial statements may help you to make more sense of these items). Put on your blog your answer to this question and comment on the answers to this question of at least three other people. Include links to your blog and also to your comments in other people’s blogs


Three Assets

1. Inventories  34.7£m
2. Property, plant and equipment  508.0 £m
3.  Pension scheme surplus 38.2 £m

 (Costs as at 31 December 2013)

What each item means to me
Inventories - items (assets) being held for short term.
Property, plant and equipment - assets being held long term.
Pension scheme surplus - Funds left over after pension allocation and can now be put back into assets.

Further Notes:
In the yearly financial report 2013 page 121 Inventories is explained in more detail, for example : Inventories are stated at the lower of cost and net releasable value,  Cost is determined using the first in, first out (FIFO) method etc

In the yearly financial report 2013 page 120 the Property, plant and equipment is listed in more detail.

 In the yearly financial report 2013 page 124, Pension notes in more detail how this is calculated. "The calculations of the recognized assets and liabilities from such plans are based upon statistical and actuarial calculations"


Three Liabilities

1. Income tax payable 12.7 £m                 
2.  Borrowings  32.7 £m                            
3.  Provisions  2.9 £m                                  

  (Costs as at 31 December 2013)

What each item means to me
 Income tax payable  -    Money that will be owed in tax.              
 Borrowings   -    Money owed.                    
 Provisions  -  money they have allowed for for a future venture, in this case a construction obligation.


 Further Notes:
  In the yearly financial report 2013 page 122, Income tax: notes in more detail the Current and deferred income tax - The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group’s subsidiaries operate and generate taxable income. Also page 129.

 In the yearly financial report 2013 page 122, Borrowing: notes in more detail
"Borrowings are classified as non-current liabilities where the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date."

In the yearly financial report 2013 page 124, Provisions: "Provisions; Provisions for vacant properties, restructuring costs and legal claims are recognized when the group has a present legal or constructive obligation as a result of past events and it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated."

Three items of Equity

1. Share capital  51.8£m
2.  Share premium  99.2 £m
3. Capital redemption reserve  150.9 £m

  (Costs as at 31 December 2013)

 What each item means to me
Share capital - the proportion of ownership in company (worth).
 Share premium - the normal amount a share goes for.
Capital redemption reserve - account firm must have by UK law, where a company buys or redeems its own stock out of distributable profits (profit that can be distributed to stockholders as dividends if the directors decide to do so.

 Further Notes:
In the yearly financial report 2013 page 116, Consolidated statement of changes in equity table.