With Reference to the Measurement of Tangible Non-Current Assets, Critically Evaluate Whether Financial Statements Prepared Using Ifrs’s Provide Useful Information. Use Specific Examples from the Annual Reports of Ftse

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University of Hertfordshire | 6BUS1003 – Advanced Corporate Reporting | With reference to the measurement of tangible non-current assets, critically evaluate whether financial statements prepared using IFRS’s provide useful information. Use specific examples from the annual reports of FTSE 100 companies to illustrate your points. | | | 3rd December, 2012 |

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As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the
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With the product it produces and the machine itself being so unique it would be very difficult to reliably measure how long this will last. Even conveying this scenario to independent industry experts would not result in anything more than judgment and estimates due to its distinctiveness. This is one key problem area with IFRSs; it is principles based which means that rather than following a solid set of rules, accountants use their own judgment.
Furthermore, by adopting a historical cost approach the assets will be depreciated over that useful life which has been estimated. With the useful life of an asset being so subjective it is hard to apportion a useful figure to depreciation. By increasing the useful life of an asset you are effectively spreading the depreciation expense over a longer period of time resulting in lower depreciation expenses and vice versa. In fact, Zheng et al. (2012) go one step further and consider depreciation to be a strategy for managers to manipulate profits.
In addition to affecting profits by adjusting useful life and depreciation; key ratios will also be affected. The net profit margin can be influenced both ways to fit the purpose of business strategy. It could be increased to make it seem more profitable, or it can be influenced in a negative way to write off as much expenses as possible – if the year held disappointing results – in order to show next year more positively in comparison.
Return on non-current assets can

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