Order 1060548: Research Report on Samsung Group assingment

Inventory

In according to IAS 2, inventoried should be stated at the lower of cost and net realisable value (Iasplus.com., 2017). Expenses like write-down to net realisable value should be recorded in the reasonable period of time when it occurred (Iasplus.com., 2017). However, Samsung recorded a low net realizable value in inventory (Samsung Electronics Co., Ltd, 2017), which mean it failed to present the recalled products to the financial statement and this will be an area that we have to critic at.

Profit

According to AASB, businesses are required to indicate the total revenue and expenses of the business in a particular financial year as in income statement (Aasb.gov.au., 2010). Samsung has prepared a comprehensive income statement in 2017’s annual report as per AASB’s requirement which is shown as below.

(Samsung Electronics Co., Ltd, 2017)

The figure showed that the profit was relatively high compare to other years, our research and analysis showed that Samsung was inflated by reducing their financial expenses. It is because financial expense was deducted on income statement for a particular period of time in order to obtain profit. Usually when short-term liability or long-term library increase, the finance expenses will also increase because of extra interest occurred on the additional debt. In this case, Samsung’s total liability increased from $61.19 billion in 2016 to 77.15 billion in 2017; however there was a decrease in finance expense from $9.4 billion in 2016 to $7.9 in 2017 (Samsung Electronics Co., Ltd, 2017). This situation showed that business inflated the figures in income statement. Therefore, this reflected that its financial statement is not trustable.

(Samsung Electronics Co., Ltd, 2017)

Reference

Aasb.gov.au. (2010). Financial Instruments: Recognition and Measurement. [online] Available at: http://www.aasb.gov.au/admin/file/content105/c9/AASB139_07-04_COMPjun10_07-10.pdf [Accessed 5 May 2018].

Iasplus.com. (2017). IAS 2 — Inventories. [online] Available at: https://www.iasplus.com/en/standards/ias/ias2 [Accessed 2 May 2018].

Samsung Electronics Co., Ltd, 2017, ‘SAMSUNG ELECTRONICS Co., Ltd. 2017 Business Report’, Samsung Electronics Co., Ltd., viewed 11 April 2018.