Bachelor of Business Administration in Business Management
Sri Lanka Institute of Information Technology
Narrative revelations ( including accounting policies ) : their relevancy and impact on the fiscal information of the Thalawakelle tea estates PLC
Narrative revelations provide insight information of an organisation to the current and possible investors that fiscal statements would non intricately discourse. Fiscal statements ab initio include the Income Statement, Balance Sheet, Cash flow Statement and Statement of Changes in Equity where as the narrative revelations will inform of the schemes and methods used in developing the fiscal statements for a certain period.
These revelations have gain more acknowledgment with the demand of complete and accurate accounting information as basic qualities of accounting information holding major influences on economic determinations of groups such as persons, households, rivals, creditors, investors and other groups involves with the concern mostly called as ‘stakeholders ‘ of the company.
Thalawakelle Tea Estate Plc is a taking tea industry in Sri Lanka and placed at the top for their monetary value amongst the other regional tea fabrication companies. Year 2008 was a recorded twelvemonth for tea monetary values. Company had earned a net net income after revenue enhancement of Rs. 108.0 million from a turnover of Rs. 2.2 billion in twelvemonth 2008. As the cost of sale constituent increased due to the pay hiking and the fertiliser monetary values estates profitableness declined by 9.5 % during the twelvemonth specially in the low adult tea estates. In existent footings tea production was 6.9 million during the twelvemonth which was a addition of 0.65 million Kg. The entire capital outgo in the twelvemonth was Rs. 349.3 million. The cumulative investings since denationalization have reached up to Rs. 2,591 million. In the twelvemonth company invested Rs. 27.4 million in hydro power undertakings. Dividend per portion for the twelvemonth was Rs. 1.25 ( Thalawakelle Tea Estate PLC – 2008 ) .
The primary vehicle that forces companies to reexamine how they interact with their clients, and possible stockholders and the nature of published corporate information about public presentation is the one-year study. In the study, concluding histories provide merely a drumhead about the company ‘s public presentations and revelations include more elaborate and important information ‘s about the company so the stakeholders can acquire a clear thought about Thalawakelle Tea Estate Plc.
Gross of the gross revenues of goods is recognized to the extent that it is likely that the economic benefits will flux to the company and the gross and associated cost incurred or to be incurred can be faithfully measured. Company has chief three grosss. Those are tea, gum elastic and other. Compare to 2007 merely gum elastic has decline the entire gross, tea and other grosss are increased. As per the note Revenue is measured at the just value of the money received or receivable which is the cyberspace of trade price reductions and gross revenues revenue enhancements. Whether received or non involvement relevant for the twelvemonth is recognized as Interest income. Rental income, other income and royalties documented on an accrual footing but royalties footing in conformity with the substance of the relevant understanding. Dividends recognized on hard currency footing. In twelvemonth 2008 sum gross had increased in greater sum. The note will depict individually the classs of gross and the policy used by the company in acknowledging gross. Having disclosed such information any individual would be able to mensurate the income figure more accurately and it complies with the criterion as good. ( Thalawakelle Tea Estate PLC – 2008 ) .
Harmonizing to the investings in Thalawakelle tea estate there are short-run and long-run investings policies. In short-run exchequer measures and other involvement bearing securities held for resale to profit in the short-run market motions accounted for at cost. Company invests in HNB securities Limited, Mercantile Investment Limited and People ‘s Renting Company Limited. The sum of the short-run investings in twelvemonth 2008 is Rs. 18,900,000. In the long term company holds 3,519,000 ordinary portions of TTEL Hydro power company ( Pvt ) Ltd. And 306,000 ordinary portions of TTEL Somerset Hydro power company ( Pvt ) Ltd. The entire investings are Rs. 65,790,000 and investings are stated at cost. When disclosed about investings, it ‘s easy for any party to acquire a important thought about the company ( Thalawakelle Tea Estate PLC – 2008 ) .
Trade receivables made up with Produce debitors, Progresss and Prepayments and other debitors. The sum of which is in twelvemonth 2008 is Rs. 84,636,978. Compare to 2007 merely other debitors has increased. Allowances for bad and dubious receivables which are estimated to recognize cyberspace of allowances are stated at the trade receivables. Other receivables and dues from related parties are recognized at cost this is without the proviso for bad and dubious debts. ( Thalawakelle Tea Estate PLC – 2008 ) .
All immoveable assets in these estates under finance rentals have been taken into the books of the company retroactive to 22 June 1992, in footings of the opinion of the UITF of the Institute of Charted Accountants of Sri Lanka. The board has decided at its meeting on 8th March 1995 that these assets would be taken at their book value as they appear in the books of the Sri Lanka States Plantation Corporation ( SLSPC ) on the twenty-four hours instantly predating the day of the month of formation of the company to suite the footings of the UITF. These assets are taken into the 22nd June 1992 Balance Sheet. The amortisation of these assets has being implemented in equal sums over different periods as follows: Mature plantations/improvement to land ; 30 old ages, Buildings ; 25 old ages and Machinery ; 15 old ages. Property, works and equipment are recorded at cost less accrued depreciation and all points of those ab initio recorded at cost. Leasehold belongings comprising of land usage rights obtained on a long-run footing is started as entering its carrying values harmonizing to the No. 19 of Sri Lanka Accounting Standard. Depreciation is calculated on the cost or rating of all belongings. The sum of the Property, works & A ; equipment immoveable estate assets on finance rental is Rs. 156,854,897. It ‘s a lessening of Rs. 10,983,766 when comparison to 2007. ( Thalawakelle Tea Estate PLC – 2008 ) .
The cost of the new workss and replanting at the clip of reaping the harvest are categorized as the Immature/Mature plantations. General charges are applied for the labors based on the labour yearss spend on new planting and replanting. The staying part of the general charges is expensed in the accounting clip period in which it is incurred. In the twelvemonth 2008, immature plantations are Rs. 413,396,431 and mature plantations are Rs. 923,483,804. When comparison to 2007 both immature and mature plantations are increased. These are investings in mature and immature since the formations of the company ( Thalawakelle Tea Estate PLC – 2008 ) .
Retiring benefit duties are defined as a step used to place the liability of on plus that occurs during the life of the plus ( Vitez Osmond – 2009 ) . Company gives tip on retiring and as per SLAS 16 retirement benefit costs it measures the tip based on the present value of its benefits which is a alone part program for every two old ages utilizing Projected Unit Credit ( PUC ) . This is besides as portion of the retirement of Payment of Gratuity Act No. 12 of 1983 and besides the Indian Repatriate Act No. 34 of 1978 to eligible employees. As the note continues company ‘s Actual ratings are carried out by the Messers Actuarial and Management advisers ( Pvt ) Limited.
The actuarial rating is carried out one time in every two old ages and few cardinal premises are used by the company. Rate of involvement is 10 % and the rate of salary addition 11 % from workers ( every two old ages ) and from staff 7.5 % . Actual additions and losingss consider as income or disbursals. This point is grouped in balance sheet under none current liabilities and deferred income. ( Thalawakelle Tea Estate PLC – 2008 ) .
There are three stock lists in Thalawakelle tea estates. Those are turning harvest – baby’s rooms, Harvested harvest and Input stocks, consumables & A ; spares. In the twelvemonth 2008 stock lists show that harvested harvests which is 291,474,025 is higher than turning harvest baby’s rooms and input stocks, consumables and spares. At the terminal of the twelvemonth the entire stock lists show the entire sum as Rs. 359,947,539. In valuing the stock lists other than produced stocks are valued at the lower cost of cost and realizable value ; this is after leting for disused and slow traveling points. After leting for the estimated cost of completion/conversion to convey to a salable status, Net realizable value is the monetary value at which stock lists can be sold in the ordinary class of concern after leting for the cost of completion. ( Thalawakelle Tea Estate PLC – 2008 ) .
When stock lists conveying into its present location and status for the costs incurred are as follows ; ( Thalawakelle Tea Estate PLC – 2008 ) .
Input Material – At mean cost.
Turning Crop – Nurseries ; At the cost of direct stuffs, direct labor and an appropriate proportion of straight attributable operating expenses, less proviso for over adult workss.
Produce Stocks – Valued at estimated selling monetary values or since realized monetary values.
Spares & A ; Consumables and Packing Materials ; at existent cost.
Net incomes per portion calculate based on the net income after revenue enhancement and divide by the leaden figure of ordinary portions. Company has issued 23,750,001 ordinary portions. Company net income after revenue enhancement is increased in twelvemonth 2008, so the net incomes per portion increased from 44 cents. ; ( Thalawakelle Tea Estate PLC – 2008 ) .
Leases have been executed for all estates for a period of 53 old ages. And besides these rentals are retroactive to 22 June 1992 which is the day of the month of the formation of the company. In footings of the opinion obtained from the Urgent Issue Task Force ( UITF ) of the Institute of Charted Accountants of Sri Lanka, all these lands have been taken into the books of the company on the day of the month of the formation of the company which is 22 June 1992. Subsequently on 8th March 1995 the board has decided that bare land would be revalued at the value established for this intent by the rating specializer MR D.R Wickreamasinghe merely prior to the formation of the company. Leasehold right to bare land comprising of land usage rights obtained on a long-run footing is re-classified as leasehold belongings and stated at the recorded carrying values as at the effectual day of the month of Sri Lanka Accounting Standard No. 19 – Leases, in line with revised Opinion of the Urgent Issues Task Force of the Institute of Chartered Accountants of Sri Lanka. Such lands which have been re classified and their value amongst are amortized over the staying chartered term or utile life of the rental belongings, whichever is shorter. ( Thalawakelle Tea Estate PLC – 2008 ) .
The leasehold right to land is disclosed under non-current assets under leasehold belongings.
The revised UITF opinion does non allow farther reappraisal of leasehold belongings.
The leasehold belongings is being amortised by equal sums over a 53-year period and the unexpired period of the rental as at the Balance Sheet day of the month is 36 old ages. Reappraisal sum is arrived at after seting for assets handed over to Tea Smallholdings Development Authority. ( Thalawakelle Tea Estate PLC – 2008 ) .
There are three chief constituents of the income revenue enhancement disbursal. Those are current income revenue enhancement charges, deferred revenue enhancement charge and reversal of proviso. In twelvemonth 2007 entire revenue enhancement disbursal was 14,237,278 but in the twelvemonth 2008 it decrease up to 1,795,095 because of the reversal of proviso. In 2004/05 the income revenue enhancement was provided based on Inland Revenue Act No. 38 of 2000. The proviso for income and revenue enhancement based on the elements of income and outgo as reported in concluding statements. Using the liability method deferred income revenue enhancement is provided besides deferred income revenue enhancement assets and liabilities are measured at the revenue enhancement rates that are expected to use to the twelvemonth ( Thalawakelle Tea Estate PLC – 2008 ) .
When sing the analysis done based on the fiscal studies for the old ages of 2007 and 2008 Thalawakelle Tea Estates Plc Company, it is apparent that the company has a high quality fiscal coverage docket which is going more and more advanced in showing revelations. Narrative revelations are of import for the possible investors and other stakeholders. Profit/loss history and Balance sheet shows merely a sum-up of the Thalawakelle Tea Estate ‘s fiscal public presentations. Notes and other revelations are to the full described in item so to acquire a important thought about company ‘s fiscal place and public presentation revelations are needed. Thalawakelle Tea Estate Plc is a listed company so accounts must be in to the full equal and transparent. Harmonizing to the Sri Lanka Accounting Standards company must include company ‘s all disclosers in their one-year study.