It is required for a company to disclose its financial figures accordingly to some specific regulation and adhering with them restrict. International Accounting Standards (IAS) which has been designed specifically by International Accounting Standard Board (IASB) is some of the essentials which have been taken into account to record and disclose the data in an appropriate manner. There is a case is given in which Herb Husskies which is intending to merge with Holdings. Mr. Smith is required to have the consolidated financial statement.
It is mentioned in the case study, that the Holding Inc has a total proportion of 80% of debt and 20% of owner’s equity or capital; therefore, it is required to put the capital and equity by us on the right places as well. We have to adhere with the IAS-32 while recording the equity and capital of the company at the right place from which Smith can get an idea. Apart from that, Intangible assets like Goodwill should be recorded appropriately and it could be found in IAS-39. Income statement of the company should have been made according to the regulations of IAS-1, while inventories should be record according to the IAS-2.
The supporting facts of our assumptions are that our company would also associate with Holdings in order to give a fair idea of disclosure with the company. The current relation of manager with the holdings is not as effective as it could be and there is a need to enhance the relationship of the holdings with the upper management as well. The upper management of Herb Husskies has to enhance the level of relationship among the managers of Holdings and should communicate every lacking and drawback of their consolidated financial statement in order to help them to reach on a certain decision. Debt to equity ratio should be kept to a lower level, while assets should be classified on a higher level.
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