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An overview of courts (jamaica) limited's identification and significant accounting policies as of march 31, 2002. The company's basis of preparation, use of estimates, foreign currency translation, financial instruments, fixed assets, hire purchase receivables, inventories, cash and cash equivalents, revenue recognition and deferred profit, deferred taxation, and employee benefit costs. It also includes information on leases and comparative information.
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Identification and Principal Activities Courts (Jamaica) Limited (the company) is a public company incorporated and resident in Jamaica. It is a subsidiary of Courts Furnishers (Overseas) Limited which is incorporated in England and which holds 79.9% of the company's issued stock units. The ultimate holding company is Courts PLC which is also incorporated in England. The principal activities of the company consist of the retailing and the hire purchase financing of furniture and appliances. These financial statements are presented in Jamaican dollars Basis of preparation The financial statements have been prepared in accordance with and comply with Jamaican Accounting Standards and have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets. Use of estimates The preparation of financial statements in conformity with Jamaican generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Foreign currency translation Transactions during the year are converted into Jamaican dollars at the appropriate rates of exchange ruling on transaction dates. Assets and liabilities denominated in foreign currencies are translated into Jamaican dollars at the appropriate rates of exchange ruling on the balance sheet date. Gains or losses arising from fluctuations in exchange rates are reflected in the profit and loss account
Financial instruments Financial instruments carried on the balance sheet include cash and short term deposits, bank overdraft, receivables, payables, loans and group balances. The particular recognition methods adopted are disclosed in the policy statements associated with each item. The fair values of the financial instruments are discussed in Note 21. Fixed assets All fixed assets are initially recorded at cost. Freehold land and buildings are subsequently shown at market valuations by external independent valuers, less subsequent depreciation of buildings. Increases in carrying amounts arising on revaluation are credited to the revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged against the capital reserve; all other decreases are charged to the profit and loss account. Depreciation is calculated mainly on the straight line basis at such rates as will write off the carrying value of the assets over the period of their expected useful lives. The expected useful lives are as follows: Buildings 100 years Computer equipment 5 years Office equipment, furniture, fixtures and fittings 10 years Motor vehicles 10 years Gains and losses on disposal of fixed assets are determined by reference to their carrying amount and are taken into account in determining operating profit. Hire purchase receivables Hire purchase receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. Inventories Inventories are stated at the lower of cost and net realisable value, cost being determined on a weighted average basis. Net realisable value is the estimate of the selling price in the ordinary course of business, less sellingexpenses. Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand and deposits held at call with banks, net of bank and short term loans. Revenue recognition and deferred profit Sales to customers are recognised upon delivery of goods and customer acceptance. Profit on hire purchase sales is