| Autor: Sylwia Silska-Gembka | 313 |
Strony: 313-327
pełen tekst
THE ROLE OF THE NOTES ON THE ACCOUNTS IN FIRMS REALIZING LONG TERM CONTRACTS
Summary
Adopted in the year 2002, Polish accounting law allowed the “Percentage of Completion” method (PCM) an the Completed Contract Method (CCM) for accounting in long term contracts. In order to implement PCM either the “cost to cost” method or an alternative using measurement of progress to completion, in relation to work carried out is recommended. Choosing this valuation method influences the financial position presented in the financial statement. This choice effects the lack of comparability of the financial statement. Subjectivity allowed in the rules could mislead the users of financial statement. Even relatively expert users of financial statement may not understand the disparate results generated from different construction accounting methods such as PCM and CCM. The accounting law allows many free choices that enable companies in the same line of business to use different methods to calculate PCM. In this situation reporting the basic disclosures in the additional information is essential. The main purpose of this article is emphasizing the role of the additional information in firms realizing long term contract and examining the level of reporting the basic required disclosures concerning the valuation method for long-term contracts in the additional information.
pełen tekstTHE ROLE OF THE NOTES ON THE ACCOUNTS IN FIRMS REALIZING LONG TERM CONTRACTS
Summary
Adopted in the year 2002, Polish accounting law allowed the “Percentage of Completion” method (PCM) an the Completed Contract Method (CCM) for accounting in long term contracts. In order to implement PCM either the “cost to cost” method or an alternative using measurement of progress to completion, in relation to work carried out is recommended. Choosing this valuation method influences the financial position presented in the financial statement. This choice effects the lack of comparability of the financial statement. Subjectivity allowed in the rules could mislead the users of financial statement. Even relatively expert users of financial statement may not understand the disparate results generated from different construction accounting methods such as PCM and CCM. The accounting law allows many free choices that enable companies in the same line of business to use different methods to calculate PCM. In this situation reporting the basic disclosures in the additional information is essential. The main purpose of this article is emphasizing the role of the additional information in firms realizing long term contract and examining the level of reporting the basic required disclosures concerning the valuation method for long-term contracts in the additional information.