Financial Accounting for Companies

BSB6400

Individual Assignment 1

Name: Maryam Alkhoor

Student ID: 201000526

Required A:

1- Income Statement:

Joelle Beauty SalonIncome Statement

For the year ended December 31, 2012BD BD

Services revenue 20,500

ExpensesSalary expense (5,800

)Rent expense (3,360

)Utilities expense (550)Interest expense (350)Advertising expense (300)

(10,360)Net income 10,140

2- Statement of Financial Position:

Joelle Beauty SalonStatement of Financial Position

As at December 31, 2012BD BD

AssetsNon-current assetsEquipments 4,000Furniture 4,500Stationary 80

8,580

Current assetsCash 22,000Trade receivable 90Inventory 450Supplies 850

23,390Total assets 31,970

LiabilitiesNon-current liabilitiesLoan 4,000Current liabilitiesTrade payable 230

4,230EquityCapital 27,740Total liabilities and equity 31,970

3- Statement of Change in Owner Equity:

Joelle Beauty SalonStatement of Change in Owner’s EquityFor the year ended December 31, 2012

BDTotal equity as of January 1, 2012 18,000Net income 10,140Withdrawals (400)Total equity as of December 31, 2012 27,740

Required B:

Introduction about the company

Naseej is a Bahraini joint stock company (closed) incorporated in the Kingdom of Bahrain on 5 August 2009. It considers as the first fully-integrated real estate and infrastructure development company in the Middle East. The company’s core activity is to undertake the design, construction, development, sale and purchase of real estate projects, plus providing mortgage facilitation and banking and financial services. The company is pursuing property development and investment opportunities that have more demand, like: affordable housing, light industrial, serviced apartments, workforce and student accommodation. Naseej involves around 100 employees in Bahrain, capitalised at US$ 286 million, and currently owns around 19 well-known shareholders in the middle east, such as Ithmaar Development Company, Gulf Finance House, Faisal Islamic Bank of Egypt, Eskan Bank, and much more. In the next years, Naseej will spread-over 11 middle east countries. Currently, Net profit is higher than forecasted, as it has just constructed 10 housing projects. Naseej is working to build over 4,000 affordable housing units over the next three years. In future, Naseej is planning to develop affordable housing projects by incorporating the LEED global green building standard, through using natural resources from renewable sources in building, which are last longer, requires less cost and maintenance than normal building materials. (2012)

IFRS Number Explanation7

(Financial Instruments: Disclosures): This IFRS standard requires 2 main things; disclosure of information about the significance of financial instruments for an entity’s financial position and performance, plus disclosure about the nature and extent of risks arising from financial instruments. First, to know whether the company adopts the disclosure of financial instruments or not this can be evidenced from the balance sheet and income statement information. In the balance sheet and income statement of the company there is categorized financial information. For example, in balance sheet, financial assets and liabilities categorized; there are many types of assets, like: cash, cash equivalents, and equipments, and assets arranged orderly as first non-current then current assets, and this the same for liabilities. Also, assets arranged first then liabilities, and each asset, liability, and equity unit has specific statement with more explanation and details in the notes section, like: equipment and property unit has definition, analysis, and statement includes each type of equipments with details1. Also, in the income statement, types of expenses and revenues were arranged properly, and there is net income (profit), everything is categorized. Moreover, there is reclassification for each class of assets and liabilities, measured from fair value, loans and receivables, total carrying amount, to amortized cost2. Furthermore, in the balance sheet there is a held-to-maturity investment, as Naseej acquires a land at Shakhura to develop housing project with 57 villas over a period of 3 years 3. Also, investment property is not measured at fair value, so it has total investment income which represents the fair value. Second, disclosures of risks arising from financial instruments require: quantitative disclosures for each class of risks, and qualitative disclosure for each risk and how each risk managed. For example, Naseej has credit, market, and liquidity risks, and each risk has clear definition, analysis of how Naseej dealt-with and measured the risk and specific statements with details for each 4.

1 See appendix 12 See appendix 23 See appendix 34 See appendix 4

Liquidity risk means that the company cannot satisfy its debts when it does not have lots of liquidity and cash, so to avoid its debts, Naseej placed a rate of assets with short-term placements with banks to improve liquidity, so we can see in the first months the company has debts and trade payables, but in the last months there is nothing (zero) which means Naseej satisfied its debts5. The market risks consist of Currency& profit-rate-risk. In currency risk there were no fluctuations in assets and liabilities’ value as all amounts in BD currency6. In profit-rate-risk, if there are changes in market-rate-risk so there will be changes in fair values, so Naseej managed this risk by profit-rate-risk placement with banks, because the market prices change continuously7. Therefore, the company is complying with IFRS 7 to a large extent, and all of those disclosures will help financial users, suppliers, shareholders, and public to take a decision whether to invest in Naseej or not8. (2012)

Required C: Appendix

Appendix 1

Appendix 2

5 See appendix 56 See appendix 67 See appendix 78 See appendix 8

Appendix 3

Appendix 4

Appendix 5

Appendix 6

Appendix 7

Appendix 8

Required D:

Bibliography2012. Company Profile. naseej properties. [Online] 2012. http://www.naseejproperties.com/company-profile.

2012. IFRS 7 — Financial Instruments: Disclosures. IASPlus. [Online] 2012. http://www.iasplus.com/en/standards/standard47.