Financial Report on Crimson PLC Essay Example | Topics and Well Written Essays - 1000 words

Financial Report on Crimson PLC - Essay Example The cash flow statement is omitted from the financial statements due to the lack of classification data. The Income Statement does not present comparative information because of the lack of prior period data. Crimson Plc did not prepare a balance sheet or accumulate its accounting records in a general ledger due to the turbulence of the period. The opening balances for the 22 Balance Sheet accounts were compiled from a pro forma Balance Sheet drawn up as of the last day of the financial year 31 December 2005. It is possible that amendments to the Balance Sheet may be called for if and when new information emerges. The 22 financial transactions presented in the Balance Sheet and Income Statement were processed using double entry accounting but without a general ledger system. The following accounting principles have been applied consistently during the period with respect to items that are considered material in relation to Crimson’s financial statements. The financial statements have been prepared under the going concern concept. The going concern concept has been defined as follows: "the enterprise will continue in operational existence for the foreseeable future. This means in particular that the income statement and balance sheet assume no intention or necessity to liquidate or curtail significantly the scale of the operation." The financial statements are presented on a fair value basis for financial assets and liabilities falling within the scope of IAS 39, except those for which a reliable measure of fair value is not available. For those assets not falling within the scope of IAS 39, the principal of historical cost is adopted on initial recognition. Adopting IAS 18 clause revenues are recognised when earned and expenses when incurred. Expenses are recognized in the Income statement on the basis of a direct association between the costs incurred and the earnings of specific items of income(matching).However, here the application of the matching concept does not allow