Statutory Disclosure Analysis of Annual Report

Below Is the psychoanalysis of annual report of consumer product (Hub Seen) and instruction company (sunshine) in conformation to the financial reporting meter. FRR 107 argumentation of cash Flows Sunday is employ repoint method acting spell Hub Seen is using indirect method in presenting their property Flow Statements in the respective Annual Reports. Direct Method is preferable since this method renders the cash payment and receipts which be this Information are useful to the users of the financial statement In predicting future cash flow.Thus Sunday is using method that more relevance to the user while Hub Seen is using method that less relevance for the users. FRR 121 The Effects of Changes in Foreign deputise Rates Both Sunday and Hub Seen are exposed to the contradictory swap difference. For Sunday, it is arises from operation of its subsidiary that located step to the foreside Malaysia. While Hub Seen foreign bills difference Is mostly due to the purchases that denominated In other currencies from Its functional currency. tho Hub Seen did non engaged with any formal hedging activities since the transaction is at an welcome level where as, Sunday is applying natural hedging which is to reduce its risk in foreign currency by borrowing in the country they invested so that they can match he borrowing cost to the revenue earned. Therefore, the foreign exchange risk is reduced. So this tuition Is useful for the users since the Information Is pertinent to predict the future In safeguarding their Investment In the respective companies.FRR 118 taxation Both companies recognized its revenue according to the approved standard to the boundary that it is probable economic profits flow to the companies. Similar revenues that recognized by some(prenominal) companies are change of goods, dividend, interest and rental income. The deferent is that, Sunday suck up more source of income which is sales of repertories under development, land and prop erty Inventories sale of services, rights and enjoyment club subscription fees and time share revenue.It Is useful to the users of financial statement when they want to make decision in which industry to invest in or when they want to diversified their portfolios. FRR 119 Employee Benefits Both companies are compliance to the standard in disclosing the defined contribution plan and short term employee acquires to the users. But Sunday have a nonher employee benefit that Is share based payment that allows the employees to acquire share of Sunday at illuminate of directly imputable transaction cost.Sunday is volunteering in providing such benefit to the employees. So this kind of benefit may improve the motivation of the employees in discharging their duties exceed expectation. Thus, this motivation get out lead Sunday in higher performance which is this relevant information is useful to the users in predicting future performance of the company. FRR 124 Related Party Disclosures diagnose wariness personnel are considered related party to the company.Therefore, the companies need to dampen the total salary paid to them. Hub Seen only provided short term employee benefit and defined contribution plan to their key management personnel while Sunday also providing share based payment in admittance to the other two types of compensation. This shows that Sunday are more concern with the compensation paid to their key personnel since the key personnel are involving in decision making of the company which determine the company future performance.Therefore, by providing extra compensation compared to other company like Hub Seen, the key management personnel allow for be happy and motivated n discharging their duties diligently and with due care. FRR 124 Inventories Both companies stated their inventories at lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of co mpletion and the estimated costs necessary to make the sale. But Sunday is using weighted add up method while Hub Seen is using offset printing in first out method (FIFO) in determining their cost.For Hub Seen, using this method will show the highest profit compared to weighted average method (WA) and last in first UT method (LIFO) because of the nature of inflation. Even though higher describe gross profit is seem to be favorable to the investor, still this will resulted in higher tax to be paid by Hub Seen. perchance one of the reason Hub Seen adopted FIFO instead of other method is that, they are engaging in selling perishable item which is not suitable to use LIFO since the left inventories will be obsolescent and thus, invaluable.