Assignment one Steps 7-11Step 7I read through the material like a breeze. I was ready to get this assignment piece rolling. To kick it off I looked at my 2017 inventory. I searched the word ‘Inventory’ and had 9 results. The first showed me the operating profit and loss notes relating to the consolidated financial statements. Inventory was under special items along with acquisition costs, reorganisation and restructuring, assets impairments, property disposals and refinancing costs. The value shown was £1106.

I continued onto the 2nd result. This showed the cost of transferring property, plant and equipment from/to inventory. The 2017 total value was £300. The next lot of results mentioned that a proportion of inventories wouldn’t be realised until 12 months down the track. Cost of sales also included inventories valued at £35.9m. Also, that inventory provisions increased by £36000. I felt I didn’t grasp all the knowledge I needed so I search ‘Inventories’. This tine I had 10 results.

The first few inventories assisted with was mentioned above. It also included the total value of inventories broken down. £836 went to raw material and consumables. £619 was works in progress and £11282 were finished goods and goods for resale, giving a total of £12737. This total value was shown again in the consolidated statement of financial position.

The 7th result I received was showing the cash flow statement which has the increase/decrease in inventories value which was an increased value of £1404. The 600 group inventories are valued at the lower of cost and net realisable value after making allowance for obsolete and slow-moving items. Raw materials were purchase cost on a first in, first out (FIFO) basis, finished goods and works in progress cost of direct materials are also on FIFO. Labour and a proportion of manufacturing overheads based on normal operating capacity. I moved onto 2016 after that and found it to be written very similar.

Special items were slightly different from 2015 as it was acquisition costs reorganisation and restructuring, inventory and property write downs, property disposals and abortive transaction costs. The value give was £3520. Another value was different as inventory provisions was increased by £46000 in 2016.

The value given for 2016 inventories in the consolidated statement of financial position was £11274 and the cash flow value was a decrease of £106. The rest was once again written the same. This was good as it helped solidify my knowledge of my company’s inventories. I still had 2015 to look at though.

2015 was different as it showed an inventory write down value in the notes section showing the value of £268. I assumed this was going to mean something further into the financial statements. The special items were the same as 2016 but the value given was £1362. Inventory provisions was increased by £424000 in 2015.In the notes section under acquisitions inventories had a value of £610. I’m not quite sure what this was meaning. Was it that this value was bought or obtained by another company?

Next, I looked at the statement of financial position and received the inventories value of £11036. The cash flows in inventories was once again an increase of £1051. Reading the textbook made reading the 100% easier. No questions really popped out at me except for the one shown above. I think these numbers are quite large in value because my company being an engineering group with

manufacturing and distributing machine tools as well as industrial laser systems, would require lots of inventory. My company has quite a lot of raw material to build more tools and would have quite a few works in progress as these things do take time, but also, they had lots of finished goods ready for distribution and purchase.

My company hasn’t changed its inventory practises. I think they found a system that has worked best and stuck to it over these years. Everything was very similar in how it was written in all 3 financial statements. I think my company uses perpetual inventory system as it seems continuous and detailed. Also, the financial statement showed links between inventories and the cost of sales. Throughout the financial statement it clearly states it uses the FIFO method of inventory. I believe an ussie that my company faces are that a proportion of inventory isn’t recorded until the following year. I think recording where things are in the period will help the 600 group with their inventory.

I have had a few experiences with inventory. While working at Target a few years ago I had done a few stock counts. This is because Target uses periodic inventory system. I physically counted and marked each item of clothing that needed to be included in inventory. In my current job I also so stocktake. I work at a tavern so when it comes to stock I must measure alcohol levels and count number of cakes. This all the staff do as the managers are they’re ones to complete the rest.

Step 8

With this step I not only followed the tutorials shown to us but I also played around with MYOB, knowing this is the best way that I learn. I created my own cards, transactions and inventory. I simulated a fake business called ChloeHarris. I felt that this was the best way that I was going to learn MYOB.

I found that at the end of the quiz it didn’t want to properly show me the results. So, I had to redo the test to present it this way as proof this activity was completed.

Step 9

The story that I was aiming to show wasn’t what ended up being shown. I couldn’t create a second file like I wanted to for this step. I think I made a mistake when creating my free trial as to which one I used. So I had to use the file that I used to create all the training entries. So my starting figures weren’t where I needed them to be. I tried fixing this as much as possible.

The story I wanted was that 600 group rented out a new bulding to work on a project in Essex. So I included a rent for the building that they would use. They paid in advanced one bill. Then they wanted to install lights and get tools and equipment. So they spent some money a fair bit of money there. I had that they bought raw material to start building on their new laser system. While they were working on this they had a hiccup and need some more money. They got a bank loan and firstly paid a salary that they were owing. So then the developing started happening. Once they completed their project they sold it, along with their equipment they no longer needed. This meant that they no longer needed to rent this place but received money back as they paid extra when paying rent.

I think that this might be something that they would do for smaller projects for bigger productions. I don’t think that my story or what I was aiming to say came across clearly as this was the first time for me to use MYOB and it was something that I was struggling with.

Step 10I began by looking at my 2015 financial statement. I searched the word ‘depreciation’ and received 12 results. The first showed me Depreciation value in the cash flow statement of £450. The next result to me depreciation was calculated to write off the cost of property, plant and equipment. I also received the depreciation and amortisation value which totalled £495.

Depreciation was even broken down into four categories. Exchange difference, acquisitions during period, charge for period and disposals during period. Tangible fixed assets also had a depreciation section. This included disposals, transfers from group companies and change for period. The total shown was £84.

The only thing that resembled policy was the section discussing the IFRS 14 regulatory deferral accounts. So, I searched what this was. The IFRS is the International Financial Reporting Standards. I felt silly for not picking up on the acronym as I have heard this before in classes.

Amortisation and depreciation were always spoken of closely together. On the cash flow where it shows depreciation, Amortisation was just above. This showed a value of £133.

I noticed that share based payments and amortisation of intangible assets were separately identified in the financial statement. I was under the impression they weren’t separate. I tried to use trusty google to help me out but found nothing of use.

Next, I looked at the 2016 annual statement. I searched depreciation first again. In the cash flow statement I was given the value £548. Tangible fixed assets also had a depreciation value of £135. There was still something I didn’t understand about depreciation. How could It be an asset. I thought it would be a form off loss, because the value of something is going down. I continued reading and found that the 600 group once again used same regulation. I felt I was becoming a pro at picking things out of the annual report.

Amortisation was again a small value in the cash flow. Only £122 this time. This time I was also given an annual rate which was 20%. I also found something else different, in the addition share option costs, amortisation of intangible assets and amortisation of loan note costs which are non-cash costs to the 600 group were included into the special items section.

Looking at the 2017 annual report I found that the currency had depreciated from one of the companies so, I think lots had changed. In the cash flow statement depreciation sat at £452. The IFRA 14 regulatory deferral accounts was still used so nothing changed there. Everything else had stayed the same. Due to it being so similar I am under the impression that the same people who wrote the 2017 report had also written the 2016 and the 2015 as well.

2017 is like 2016 as they both have special items section same. In the cash flow statement amortisation dropped to £58. My firm hasn’t changed its depreciation method. I think this is because they have found something that works for them and they may not be read to change it. The method that my company uses is straight-line. I believe that depreciation expense has been on the decline over the years. I think a bit more time and it won’t be as much of a significant issue.

Step 11PEER FEEDBACK SHEET: Assignment Steps 7-10

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Step 7Inventory

Step 8MYOB set upMYOB trainingMYOB quizStep 9Business transactionsAll Journals reportFinancials and discussion

Step 10Depreciation

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