Essays on Mubadala Financial Statement Assignment

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The paper 'Mubadala Financial Statement' is a wonderful example of a Finance and Accounting Assignment. The percentage is bad. The fair value of the investment properties is decreasing at a very high rate and this is a huge loss to the company. The investment assets have lost value by 89.08 percent and this is a very huge and material decrease in fair value. Recommendation Hedge the investment properties as Choi & Meek (2011) recommends. Impairment losses on property, plant, and equipment This is the loss in which the market value of the property, plant, and equipment falls below their carrying amounts, it is not recoverable (Schroeder et al. , 2011).

As such, the market value of the property, plant, and equipment is less than their book value. The impairment loss is the decrease in the cash flow generated by the assets. In essence, this is the amount by which the carrying amount of the property, plant, and equipment exceeds the recoverable amount. Calculation = {(585,361)– (652,958)}/ 652,958 = -67597 /652,958 = -0.1035 = -10.35% The percentage is good although it indicates that the impairment loss of the property, plant, and equipment decreased by a small percentage.

The percentage means that the property, plant, and equipment have an impairment loss decrease of 10.35 percent as compared to the previous financial period of 2011. This is a good indication and the company should continue to harness effectiveness in the management of the property, plant, and equipment to prevent the impairment loss. Recommendation Dispose of the property, plant, and equipment and purchase new ones. Impairment losses on equity-accounted investees This is the decrease in the market value of equity-accounted investees. It is the loss of market value of the equity-accounted investees.

Essentially, the impairment loss is the amount by which the carrying amount of the equity-accounted investees exceeds the recoverable amount. Calculation = {(0 – (471,984)} / 471,984 = -471,984/ 471,984 = -1 The percentage is bad. Equity accounted investees had no impairment loss the previous period; however, they had an impairment loss of 471,984 representing a one hundred percent impairment loss. Recommendation Repurchase the investees before the impairment loss is deteriorated much and reinvest in other equity accounted investees. Impairment losses on intangible assets This is the amount of loss or decrease in the market value of the intangible assets below their carrying amount.

It is the amount by which the carrying amount of the intangible assets surpasses their recoverable amount (Chambers, 2006). Calculation = {(194,209)– (29,207)}/ 29,207 = 165002/29,207 = 5.6494 times Or = 564.94% The ration is bad. The percentage indicates that the intangible assets impairment loss increased by 5.6 times or 564.94 percent. The intangible assets lost value at a very high rate; this is material and has considerable effects on the statement of the financial position of the company. Recommendation Provide for impairment loss and amortization of the intangible assets. Profit/ (loss) before net finance expense and taxes This is the amount of decrease or increase in net finance expense and taxes. Calculation = {236,053 - (3,903,647)}/ 3,903,647 = 4139700/3,903,647 = 1.0605 times or = 106.05% The ratio is very good, the profit or loss before the net finance expense and taxes increased considerably from loss of 3.9 million to a profit of 236,053.

This is a good indication of improved financial management. The ratio means that there was an increase of 106.05 percent from loss to profit.

References

Beatty, A & Weber, J (2006). Accounting discretion in fair value estimates: An examination of

Chambers, D (2006). Is goodwill impairment accounting under SFAS 142 an improvement over systematic amortization of goodwill. Available at SSRN 953649.

Choi, F. D., & Meek, G. K. (2011). International accounting.Pearson Higher Ed.

McNair, F. M., Olds, P. R., & Milam, E. E. (2013). Fundamental financial accounting concepts.McGraw-Hill Irwin.

Schroeder, R. G., Clark, M. W., &Cathey, J. M. (2011). Financial accounting theory and analysis: text and cases. John Wiley and Sons.

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