Materielle anlægsaktiver

Anja Madsen & Jonas Thielsen

Student thesis: Diploma thesis


This project is our final assignment on the HD(R) study. This assignment will as its general topic cover the area of “Tangible fixed assets”. Within this topic we will cover the accountant part of tangible fixed assets, based on the Danish “Annual Reporting Standards” (ÅRL) and the IFRS. We have chosen to focus on this area, as it is an area in which analysis is logic and obvious. Furthermore it often represents a sustainable item in the financial statements. The problem we have chosen to analyse is, whether the legislation, in the area of tangible fixed assets, gives the required amount of information in conjunction to the “true and fair view” of the financial statement. Based on this we will explore what challenges the management and the accountant can be estimated to face in the inclusion and measurement of fixed assets, and how it can be made easier. We will in relation to this look at how fixed assets are treated in ÅRL and IFRS, and what differences there are between the legislations on this area. We will furthermore discuss how the inclusion and measurement of fixed assets is done in practice, as well as whether or not the legislation is adequate in an extent which both the management and the accountant can satisfactorily estimate the value of the tangible fixed assets. We have in this assignment made a case company named AJ A/S. By reviewing this chosen case firm, we want to take a closer look on the options and choices that the management has when it comes to inclusion and measurement of fixed assets. In this regard we will evaluate which methods give a true and fair view of the company. Through this assignment we have produced a theoretical review of the legislative requirements there are to the treatment of tangible fixed assets regarding the accountant part. To elucidate the legislative requirements and their content we will establish a series of examples, which contributes in giving the assignment a clearer expression. We have in the assignment noted that the definition of a tangible fixed asset is virtually the same in both ÅRL and IFRS. In addition we have noted that tangible fixed assets is measured at cost price at the first inclusion and from then included at cost price with deduction for the accumulated depreciation. To give the most true and fair financial statement depreciations must be divided as each asset by itself, and preferably in as many parts as possible. We would clearly assess that every asset as a minimum should be divided to every asset which has a cost price. The chosen depreciation method should preferably reflect the actual value deterioration each asset has. If the asset is valued to have a lesser value than the book value due to for instance quick degradation, there should be made depreciation on each asset. If the assets accountant value changes due to this value deterioration, there should be adjusted for depreciations, residual value, useful lifetime etc.. The financial statement must give accounting user information regarding cost price, methods of depreciation and the expected lifetime. This should give accounting user a possibility to compare and evaluate the treatment of the tangible fixed assets. When reviewing the case company AJ A/S, the treatment of fixed assets in practice is reviewed. It appears from the various estimates of useful lifetime and depreciation method, that it may have a great impact on the financial statement. This places great requirements to the company management in relation to inclusion and measurement of the tangible fixed assets. The management has to use their knowledge regarding the company in order to make objective estimates of the assets. This is crucial in order to make a true and fair view of the financial status in interest of the accounting users, however these estimates must be considered very subjective. When making the statement of the basis for depreciation it can be concluded that, an increased degree of detail of each asset, gives a more correct treatment of the asset in relation to both the useful lifetime and the depreciation method. In addition division of each asset gives more comprehensible and reliable information in the financial statement. When reviewing both the theoretical and practical treatment of tangible fixed assets we can ascertain that there is a great amount of estimates which solely to the company and its management. This gives the management the opportunity to change the timing in the placement of depreciations. This displacement of the depreciations could create some problems for the accounting user; the user could have problems to view the actual depreciation of the asset. This opportunity, therefore, does not contribute in a true and fair view of the expenses each year, why it is important that both accountant and management complies their responsibility and their obligations.

EducationsGraduate Diploma in Financial and Management Accounting, (Diploma Programme) Final Thesis
Publication date2011
Number of pages97