 |
| Details |
Case Code: CLFIN012
|
| Case Length: 4 pages |
| Period: - |
| Pub Date: 2020 |
| Teaching Note:Available |
| Subject : Finance |
| Price:Rs.100 |
| Organization :Aleykhya Manufacturing Limited |
| Industry : Business & Consumer Services |
| Countries : India |
|
|
|
|
Valuing of Fixed Assets – The Consistency Concept |
|
|
|
|
|
|
Alekhya, a young entrepreneur who had successfully run a cotton bags manufacturing unit for five years, decided to expand the business by making an additional investment in the plant and machinery of the company. She approached the bank which had given her a loan to start the business for an additional loan and submitted the necessary documents. However, the bank rejected the loan request stating that the valuation of the plant and machinery looked inconsistent.
The present case study provides scope for a discussion on the concept of consistency in the accounting process and how it facilitates the decision-making process by ensuring the reliability of accounting information.
|
| Buy Now |
| To download this case click on the button below, and select the case from the list of available cases: |
OR
 |
|
|
| |
Issues: |
 |
- The consistency concept in accounting.
|
|
- The importance of consistency in the decision making process.
|
|
- How the consistency concept ensures reliability of accounting information.
|
|
| Introduction |
| On April 1, 2013, Alekhya, a budding entrepreneur, started a manufacturing unit called ‘Alekhya Manufacturing Limited’ (AML) to make environmental friendly cotton carry bags. These bags were sold under the brand ‘Go Green’. With the ban on single use plastic bags being implemented in several cities across India there was a huge demand for environment friendly shopping bags. There were not many companies making such bags. So Alekhya’s venture picked up quickly and her business operations were highly successful (Refer to Exhibit-I for Trends in Revenue and Profit Margins of AML). At the end of the fifth year i.e. on March 31, 2018, she wanted to upgrade the existing plant and machinery and so applied for a bank loan and submitted the necessary documents... |
Keywords |
|
Accounting, Accounting principles, Accounting Concepts, Consistency Concept,Depreciation, Going concern concept, Profit and loss account, balance sheet
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
$16) per copy.
|
|
|
|
