Accounting Hw Wiley Marks and Spencer
The financial statements of Marks and Spencer plc (M&S) are available at the books companion website or can be accessed at
Instructions
Refer to M&Ss financial statements and the accompanying notes to answer the following questions.
(a) Using the notes to the consolidated financial statements, determine M&Ss revenue recognition policies.
(b) Give two examples of where historical cost information is reported in M&Ss financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes.
(c) How can we determine that the accounting principles used by M&S are prepared on a basis consistent with those of last year?
(d) What is M&Ss accounting policy related to refunds and loyalty schemes? Why does M&S include the accounting for refunds and loyalty schemes in its critical accounting estimates and judgments?
SOLUTION
According to Note 1—Accounting Policies, “Revenue comprises sales of goods to customers outside the Group less an appropriate deduction for actual and expected returns, discounts and loyalty scheme voucher costs, and is stated net of Value Added Tax and other sales taxes. Sales of furniture and online sales are recorded on delivery to the customer.”
Most of the information presented in M&Ss financial statements is reported on an historical cost basis. Examples are: Property, Plant, and Equipment, Intangible Assets, Investment Properties, and Inventories (subject to net realizable value). Regarding the use of