Impairments bite deep as goodwill in six businesses written off
Following a sudden and prolonged period of reduced vehicle utilisation and declines in the residual values of used vehicles, UK vehicle rental company Northgate recognises £181 million impairments of goodwill, intangibles and vehicle fleet, leading to a pre-tax loss for the year.
Treasury share reserve and retained earnings reduced to reflect fall in share price
UK vehicle rental company Northgate transfers £5.5 million out of its “own shares” reserve to in respect of a “market value adjustment”, reducing retained earnings by 11%.
Paper mill provision reduces current profit by 32.5%
Swedish paper company Holmen recognises a SEK356 million provision, reducing pre-tax profit by 32.5%, in respect of curtailing activities at one paper mill and closure of another.
Incentive scheme outside scope of IFRS 2
Swedish paper company Holmen discloses an incentive scheme that allows staff to buy call options at market value, but recognises no cost as it considers the scheme outside the scope of IFRS 2 "Share-based payment".
Treasury shares reserve not adjusted for share cancellation
UK retailer Sports Direct International does not adjust its £201 million treasury shares reserve to reflect subsequent cancellation of nearly half of the shares purchased and thus does not show a true and fair view of either the amount of treasury shares retained or of distributable reserves
Gain on available-for-sale assets contributes 34.8% of profit
UK retailer Sports Direct International recognises a £41.4 million gain on disposal, that represents more than a third of profit before tax.
Restatement reveals previous error in accounting for treasury shares
UK investment trust Murray Income Trust restates its prior year balance sheet to correct an error in treating treasury shares as if they had been cancelled.
Post-retirement benefit deficit and deduction of treasury shares from equity result in net assets reducing by 13%
Under IFRS, French healthcare company Sanofi-Aventis recognises a post-retirement benefit deficit of €3.5 billion and deducts from equity €3.3 billion of treasury shares which combine to reduce net assets by 13%.
Learning curve emerges on treasury share accounting UK domestic products manufacturer McBride admits a mistake in its treatment of treasury shares, whilst UK mortgage lender Paragon, which has also purchased its own shares for reissue, exemplifies the required treatment.