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Essay / Research Paper Abstract
This 7 page paper analyses the British Airways accounts. The paper is written in three parts, the first part looks at BA accounting policies and identifies and discusses unusual accounting policies. The second part of the paper presents a financial analysis using vertical and horizontal ratio analysis. The third part of the paper considers whether or not the company is a good investment and whether the show should be purchased. The paper is written with reference to the 2006 and 2007 annual report. The bibliography cites 5 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEBA2007.rtf
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Unformatted sample text from the term paper:
in, as seen with the way goodwill is now accounted for on acquired assets. However, there are some practices which may be argued as unusual, or practices that may be
argued as skewing the results. The approach to capitalisation, revaluation and deprecation is interesting. The company state that they are using the historical const convention for the majority
of the accounts. This is reflected in the policy that the company has of not revaluing any tangible fixed assets, and then depreciating them on a straight line basis allowing
for their disposal value over the expected useful life of the asset. This includes land and property. While this may be argued as a fitting in with the historic
cost convention reflecting the real cost to the company. However, as this is an item that is seen on the balance sheet which reflects the value of the company it
is increasingly popular for companies to revalue assets, especially land and property. The trend with property and land has been for values to increase, revaluation have resulted in increased the
underlying asset value for many companies, BA are using the exception in IFRS 1 which allows for the company to carry forward property at the deemed cost after allowing for
the 31st March 1995 revaluations. This could result in an assessment of the company with a lower asset value that is actually the case. This reflects the arguments over historical
versus current value accounting. The issue here is that it appears to be practice against current trends. It is worth noting that the company does not deprecate the value of
land. Looking at capitalisation there is also an interesting approach to aircraft maintenance. SA common approach to the maintenance and running costs of equipment is for the costs to
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