Question

Select a company and go to Yahoo! Finance and look it up. The financial statements are easily available there. Identify what types of property, plant and equipment the company has and what they do with it (and most importantly, how that affects the financial statements).

Answer 1

I have taken the financial statements of maruti suzuki for the year 17-18. whic is one of the largest car manufacturing companies.

The breakup given in the property, plant and equipment heading are as below:

A) Free hold land

B) Leasehold land

C) Building

D) Plant and machinery

E) electronic data processing equipment

F) furniture, fixtures and office appliances and

G) vehicles

H) capital work in progress.

As it is well known that car manufacturing involves very massive assembly line , a variety of huge machinery will be used at the each level of assembly.

Coming to affects on financial statements, property, plant and equipment will affect in the form of depreciation, profit or loss on sale of property, plant and equipment, impairment, additions and deletions in the assets and in cases when IND AS is applicable fair valuation as on the balance sheet date and also property, plant and equipment affects in calculation of deferred tax, effects in creating the provision for income tax. If the asset base of the company is strong, brings good opinion in the minds of prospective investors which effects the share valuation and also indirectly contributes in the calculation of earnings per share and diluted eps and in calculation of many ratios.