Hammersmith Tools Essay

1379 Words6 Pages
Hammersmith Tools Limited The underlying accounting policies have been applied in the preparation of the financial statements of Hammersmith Tools Ltd. Statement of Accounting Policies For the Year ending 31 December 2011 1. Purpose The purpose of the following statement of Accounting policies is to act as a guide to non-accounting employees on basic accounting procedures that are employed in the company while determining the overall profits of the company. 2. Basis of Preparation The financial statements are prepared in accordance with the applicable law and under the convention of Historical cost. The preparation is governed by the Generally Accepted Accounting Principles (GAAP) rules and the regulations from the Association of Chartered Certified Accountants and Chartered Institute of Management Accountants (CIMA) 3. Basis of Consolidation The following financial statements are those of the company and its subsidiaries up to the end of the 2011 financial year. Results of subsidiaries disposed or acquired in the course of the year are included in the income statement up to the disposal date or from the acquisition date. Joint ventures are the undertakings that the company has a long term interest and shares its control jointly with another entity (Kones 2009, 45). Business associates are the undertakings that Hammersmith Tools has the ability to exercise a significant influence because the company has a controlling interest in the capital structure of the other company. Figures of the joint ventures and associates are those taken from the last audited financial statements at the balance sheet date (Barry 2004. 67). The investment in these companies is taken as a fixed asset in the company’s financial statements. 4. The reporting Entity Hammersmith Tools Limited is incorporated as a wholesale distributor of hardware equipment to high quality,

More about Hammersmith Tools Essay

Open Document