Detailed guidance

FINANCIAL ACCOUNTING
Table of Contents
Question 1:    3
Question 2:    5
Question 3:    7
References    9
Appendices    10
Consolidated Income Statements of Nestle Group for 2016    10
Consolidated Balance Sheet (Extracts) of Nestle Group for 2016    11
Consolidated Cash Flow Statements of Nestle Group for 2016    12
Question 1:
What accounting policies does the company apply and what is the structure of the financial statements? How do these compare and/or contrast with IAS 1 Presentation of Financial Statements? Specifically, comment on tangible and intangible assets
An insight into the financial statement for the year 2016 of Nestle group of the company may reveal the fact that the financial statements of the company have been prepared in compliance with International Financial Reporting Standard (IFRS) issued by International Accounting Standard Board (IASB) and Swiss Law. The annual report of the group reveals that the financial statements are prepared on a historical cost basis and in compliance with the accrual basis of an accounting convention. All significant transactions, joint business agreement and transactions with associates and related parties are compiled as at 31st December accounting year-end.
The audited financial statements of the group may also show that the structure of the financial statement of the group of the company comprises of a) consolidated balance sheet, b) consolidated income statement, c) consolidated statement of comprehensive income, d) consolidated cash flow statement and e) consolidated statement of changes in equity. Along with these 5 key components of a financial statement, the notes to the accounts are also construed to be a key part of the financial statement of the company which involves notes to the various line items as appearing in the financial statement including the accounting policies as adopted by the firm (IAS 1 — Presentation of Financial Statements, 2020).
In this context, it may be stated that the consolidated financial statement of the company is prepared in accordance with IAS 1 (International Accounting Standard 1: Presentation of Financial Statements). As per IAS 1, the components of financial statement are the balance sheet, income statement, cash flow statement, statement of changes in equity and statement of comprehensive income which may be presented in the financial statement sets of the company discussed herein. In addition, the notes and summary of significant accounting policies also form part of the financial statement which is evident in the case of Nestle as well. IAS 1 also states that the going concern concept is an important consideration in the conceptual framework of the financial statement preparation process. Also, the accrual basis of accounting is a recognised mode of accounting which is being followed in case of Nestle as well. A brief perusal into the annual report of 2016 for the firm establishes that the company’s financial statements show comparative information of previous year (or years) which is also in line with the requirement of IAS 1 (Consolidated Financial...