Financial Accounting at Tesco Plc
Tesco Plc complies with International Financial Reporting Standards (IFRS). Specifically, Tesco Plc’s £4,338 m goodwill and other intangible assets amount complies with IFRS no. 3, Business Combinations, which states that must identify and fair value the intangible assets amortization charges and costs. IFRS defines an intangible asset as lacking physical substance and are not financial instruments. Likewise, IFRS requires entities can identify the intangibles. To identified, the intangible asset can be bought or sold. Goodwill is one of Tesco’s IFRS- based intangible assets (Kieso, Weygandt, Warfield 2011).Inventories. Tesco Plc’s 2011 inventory is £ 3,162 m. Inventories are valued at lower of cost and fair value less selling costs. IFRS states that market price is equivalent to the inventories’ net realizable value. IFRS does not approve of U.S. GAAP’s use of the ceiling and floor factors in computing for market prices. IFRS agrees with U.S. GAAP in terms of recording the cost of the inventory. Tesco Plc’s inventories include the goods displayed in the company’s sales counters. The company’s inventories also include properties in the course of development. Tesco Plc complies with IFRS concepts (Kieso, Weygandt, Warfield 2011). Property, Plant, and equipment. The company’s £ 24,398 m property plant equipment amount complies with International Accounting Standards. IAS 16 mandates that the company recognizes the cost of the property, plant and equipment amount. The carrying value is the resulting from the depreciation expenses from the cost of the property, plant, and equipment accounts (Kieso, Weygandt, Warfield 2010). Intangibles. Tesco records its intangibles in compliance with IAS 38, Intangible Assets. The standard mandates all entities to record all intangible assets that include software, licenses, customer relationships, contracts, and brands at cost. The intangible cost is amortized over the straight-line basis during the intangible assets’ remaining useful life. In addition, management must record the research and development as expenses, not amortized over the remaining life of the asset involved. The standard requires that research costs should be expensed outright and development costs can be capitalized (intangible assets) if the asset will generate future economic benefits (Nikolai, Bazley, Jones 2009). The inventory value complies with IFRS’s implementation of IAS no. 2, measurement of inventory. The standard requires entities to record their inventories at lower of cost or net realizable value. Cost is equal to the purchase cost, cost of conversion, and other costs incurred in bringing the inventories to their present location (Esptein 2008). Some of the contents of the Audit Committee Chairman’s report are irrelevant. One irrelevant content is stating the group internal controls and risk management processes are embedded in their businesses. All businesses are required to implement internal controls to reduce or stop fraudulent and erroneous transactions.