Accounting Policies : Majestic Wine Annual Report

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Accounting Policies: Majestic Wine Annual Report
The purpose of this paper is to deliver a brief overview of accounting policies as they pertain to subsidiaries of Majestic Wine. This topic became of interest as research revealed that it comes up across policies, that various accounting policies must be interrelated in order to account for subsidiaries. This means that from an accounting and auditing standpoint the existence of subsidiaries is an important issue.
Endenich, Hoffjan, Schlichting and Trapp (2016) found that international companies tend to have harmonious accounting policies when it comes to subsidiaries. There is a growing awareness about the need for a global accounting system, and this has had an effect of making
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The name of all the companies which, having more than half of the voting rights, either directly or indirectly through other companies in the group, have not been treated as subsidiaries in the consolidation due to lack of control; the effects of the acquisition or disappropriation of subsidiaries on the financial position at the date to which the financial statements refer, and the results achieved by such operations in the period covered by them, as well as the same amounts corresponding to the preceding period, must be included. Also, the individual financial statements of the parent company, and a description of the method used to account for investments in subsidiaries, must be included (Sedki, Smith & Strickland, 2014).
Another way subsidiaries are important is that they may indicate influence over investors, owners or officers in the company. According to Deloitte (n.d.): “A holding of 20% or more of the voting power (directly or through subsidiaries) will indicate significant influence unless it can be clearly demonstrated otherwise [IAS 28.6]” (para. 9). However, this is not an issue with Majestic Wine. Furthermore, “the existence of significant influence by an investor may become evident in the following ways: [IAS 28.7] representation on the board of directors or equivalent governing body of the investee, participation in the

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