Mark and Spencer
1. The first characteristic of revenue in the Annual Report (Marks and Spencer) is when the goods and services are delivered to the final client including all the risk and reward referred to the operation of the company and the client. The revenue occurs when the sale of good is with customers outside the group of companies of Mark and Spencer; a sale between companies of the same group is not considered in the revenues of the company.
2. The criteria to give the value to all the assets and liabilities of the financial statements of Mark and Spencer is at historical values, that is, the original value is not affected by inflation, depreciation or another accountable strategy to adjust the value. The strategy applies to the derivative instruments that the company owns (in its assets column) to protect the company against price variations in fabrics, commodities, and currencies. The Same situation applies to the short and long-term liabilities.
Historical value examples:
One example in the assets column is the "Investment Joint Ventures" with a value of 12.7 million pounds in 2014 and 12.2 million pounds in 2015, both values have historical values without adjustment for inflation or depreciation. A second example, in the liabilities column, is the "Derivative financial instruments" with a value of 51.5 million pounds in 2014 and 7.7 million pounds in 2015. Both the 2014 and 2015 values are not affected by inflation and amortization.
Fair value examples:
The "trade and other receivables" are introduced in the financial statements at fair value, but for the subsequent financial statements, the value assets are amortized, that is a nominal value less considered debts.
The investments in securities are considered in the financial statements at fair value; that is the market value of the investment. A value variation in the securities introduces a profit or loss to the financial results of the company.
3. The company Mark and Spencer use the principles of International Financial Reporting Standards (IFRS) for its annual report. There are sections of the annual report when there are considerations of Non-IFRS due to the market when the company operates. In that case, the company may use a Non-IFRS for a specific market, but later the regional results are summarized to the whole company using IFRS. The previous years from 2011 to 2014 the company used the same principles having continuity in the accounting criteria.
4. The loyalty scheme redemptions, gifts and refunds are sale strategies that the company Mark and Spencer use to promote sales and to have customer loyalty, but it may affect the revenues calculation due to the first assumption of the revenues due to the delivery of product and services. It this case, the company uses average delivery values of previous years according to an estimated value in gift cards and refunds. The concepts are recorded in the same period when the revenue is recorded. According to Amanda Mellor, Marks and Spencer signed an agreement with its registrar, Equiniti to safeguard the important relationship of the company with its customers. The returns policy of the company has a limit of 35 days after the purchase, giving to the company a calculated risk of the refunds that the company has to do in a fiscal year. The costs of the loyalty scheme and refunds affect the value of "Other comprehensive income expense for the year, net of tax" in the Income Statement of the company.
Marks and Spencer. «M&S Annual Report 2015.» 2015. Mark and Spencer. <http://annualreport.marksandspencer.com/M&S_AR2015_Full%20report.pdf>.