Friday, February 14, 2020

An Analysis of Contingent Liabilities and Assets Essay

An Analysis of Contingent Liabilities and Assets - Essay Example It will first examine the link between uncertain transactions and mainstream accounting, will review the rules pertaining to the recognition of contingent assets and liabilities and examine the similarities and differences with US accounting standards.Purpose of IAS 37 A provision is a charge against profits for the purpose of offsetting liability or loss (Hanif, 2005). From this definition, there are three possible reasons why these provisions would be made: 1. For liabilities and changes like provision for income tax. 2. For valuation adjustments for fixed assets like the provision for income tax. 3. For valuation adjustments for current assets like the provision for bad and uncertain debts (Hanif, 2005). Contingent liabilities and their position in financial accounting have a strong connection with recognition (Robinson, 2008). Recognition is the process of incorporating items that meet the definition of elements in financial statements (asset, liabilities, equity, income and expe nses) into the balance sheet or income statement (Robinson, 2008). The fundamental requirement for recognition is probability and measured reliability (Arboleda & Bessis, 2011). In other words, for a transaction to become an element in a financial statement, it must have a high chance of being carried out. It should also be measured reliably. Porter and Norton (2010) explain that recognition occurs when an economic event is recognised by words (e.g. cash, numbers, amount), can be measured by attribute (i.e. historical cost concept) and by unit (i.e. currency). Although some items are easy to recognise, such as cash and bank balances, other provisions are not so easy to recognise and can be carried into the financial statement. These provisions are liabilities of uncertain timing or amount (Alexander et al., 2007), i.e. they do not fit the orthodox criteria for recognition. A contingent liability is a present obligation that involves a possible outflow, which has no reliable estimate (Alexander et al., 2007). A contingent asset, on the other hand, is an asset whose economic benefit depends solely on future events outside the control of the company (Investopedia, 2012). IAS 37 is meant to ensure that the proper recognition criteria and measurements are applied to provisions made for contingent assets and liabilities (Ernst & Young, 2011). It encourages significant disclosure in financial statements in relation to nature, timing and amounts (Ernst & Young, 2011). The IAS makes a distinction between provisions and contingent liabilities. In other words, not all contingent liabilities need a corresponding provision to be created for them. Contingent liabilities are not recognised as liabilities because they are only possible and confirmation of payments occurs only after action is taken by an external entity. Second, they are present obligations that either do not meet recognition standards or no reliable estimation system exists for them. As such, it would be wron g and potentially fraudulent to recognise them. In the Deloitte textbook (2012), three examples are given to clarify the different types of liabilities in relation to contingent liabilities/assets. When goods are received and invoices are issued for them, they can be recognised as trade payables or debtors because there is no degree of uncertainty. They are assets. If goods are received

Saturday, February 1, 2020

Advertisements Essay Example | Topics and Well Written Essays - 750 words

Advertisements - Essay Example Competition always threatens to reduce the amount of sales recorded by each product.Because of this,manufactures of various products or providers of various services are forced to engage in regular advertisements These adverts are meant to capture the attention of consumers and provoke them to purchase a certain product or use it. Advertising involves the repetition of the name or image of a product with the aim of associating it with particular qualities with the brand in the minds of the consumers. The â€Å"holidays are coming† is a Coca Cola advertisement which features a train composed of red delivery trucks bearing the Coca Cola name are beautified with Christmas lights (Coca Cola video). The train drives along a snowy landscape and as it passes, it causes everything on its path to light up and people at the sides watch as delivery lorries pass by. This advert uses holiday campaigns and excitement as its advertising strategies. This advert made people to be aware that th e celebration season is back once again and this goes hand in hand with drinking. This motivates consumers to start treating themselves with Coca Cola drinks. It also reminds them to purchase or save money for buying coca-cola drinks for Christmas celebrations. The Coca Cola Company had stopped using the train advert in 2001. However, it was brought back in 2007 because many consumers called the company’s information center saying that they considered the advert as a mark of the beginning of Christmas. Another advert advertising Coca Cola was a billboard with a big bottle that had seemingly bubbled out a group of fun making and cheerful people. The background of the space containing the fun-making people is very bright. The slogan for this advert is â€Å"Live on the coke side of life† and uses excitement as its strategy (Coca-Cola-Art par 1). The â€Å"Live on the coke side of life† advert calls for people to live on the positive side of life (Coca-Cola-Art par 1). The advert makes people to think that drinking coca cola will make them to be happy. It helps them to reflect their optimist moments of their lives (Coca-Cola-Art par 2). The campaign invites consumers to live life full of color, create their own positive reality, listen to their hearts and be spontaneous. The use of people who are happy and making fun presents coca-cola not only as a drink that refreshes and makes one exited but also, it energizes them and gives them the strength to move with vigor. Another Coca-Cola advert is â€Å"Always Coca-Cola† previously featuring on TV. The main marketing strategy used in this advert is brand positioning. This adverts used good sounds and music, and a large mixture of pictures of people enjoying Coca Cola. Each picture in the advert had its own slogan. The welcoming picture was a cute lady smiling at the audience and its slogan was â€Å"have a Coca Cola†. The second is that of two men feeling so refreshed and its slogan was â€Å"it sends thirst flying† and the third slogan was â€Å"thirst asks nothing more†. The fourth slogan was â€Å"delicious and refreshing† followed by â€Å"so refreshing so welcome, everywhere† and the final is â€Å"what I want is Coke† and its picture featured a cure lady reaching out for a bottle of coke. All throughout the advert, there was a nice Coca Cola song that repetitively used the words â€Å"always Coca Cola.† The use of sounds and music helps to achieve effective marketing in that it makes people feel good to be associated with the product being advertised. The mixture good music and pictures creates in the consumers an emotional ambience that draws them to the marketing campaign and makes them feel good to have the product. The slogans â€Å"it sends thirst flying† and â€Å"thirst asks nothing more† makes consumers to perceive Coca Cola as the best solution to thirst and this will always prompt them to g et themselves of a bottle or can of Coca Cola whenever they are thirsty. In this way, the position of the brand in the soft