17.

1 Tha naad Ior addiIionaI inIormaIion

A giear ueal o uiscussion las raken lace in iecenr yeais aLour rle uesiiaLiliry o nor
simly inreiiering iesulrs in reims o ioirs only. One vay o uoing rlis is in reims o
rle value auueu Ly rle Lusiness irsel ro rle iesouices acquiieu Ly ir in riansoiming rlem
inro rle inal iouucr. 1le iouucrion o sucl 'value auueu sraremenrs` vas
iecommenueu in rle Ccrjcrate Bejcrt 19S.
Sucl value auueu can Le raken ro ieiesenr in moneraiy reims rle ner ourur o an
enreiiise. 1lis is rle uieience Lerveen rle roral value o irs ourur anu rle value o rle
inurs o mareiials anu seivices oLraineu iom orlei enreiiises. 1le value auueu is seen
ro Le uue ro rle comLineu eoirs o cairal, managemenr anu emloyees, anu rle
sraremenr slovs lov rle value auueu las Leen uisriiLureu ro eacl o rlese acrois.
17
VaIua addad sIaIamanIs
hjecllves
After you have studied this chapter, you should:

be aware of the benefits of presenting statements of value added

17.Z ExampIa
As an examle, rle ioir anu loss accounr o Giovrl Lru slovn Lelov is rlen iesrareu
in value auueu reims:
roWIh LId
rcfit anJ Icss Acccunt fcr tle year enJeJ 31 Decehber 19X1
I I
1uinovei 65,000
Cosr o sales` 439,000
Gioss ioir 326,000
DisriiLurion cosrs` 93,000
Auminisriarive exenses` 10S,000 201,000
125,000
Inreiesr ayaLle 2,000
Pioir on oiuinaiy acriviries Leoie raxarion 123,000
1ax on ioir on oiuinaiy acriviries 44,000
Pioir oi rle yeai on oiuinaiy acriviries arei raxarion 9,000
UnuisriiLureu ioirs iom lasr yeai 55,000
134,000
1iansei ro geneial ieseive 15,000
Piooseu oiuinaiy uiviuenu 60,000 5,000
UnuisriiLureu ioirs caiiieu ro nexr yeai 59,000
Ncte: Cosrs` incluue: I
Wages, ensions anu orlei emloyee Leneirs 220,000
Deieciarion 4,000
All orlei cosrs veie Louglr in iom oursiue 346,000
(I439,000 + I93,000 + I10S,000) I640,000
roWIh LId
Statehent cf Value AJJeJ fcr tle year enJeJ 31 Decehber 19X1
I I
1uinovei 65,000
Bouglr in mareiials anu seivices 346,000
Value auueu 419,000
AjjlieJ tle fcllcuing uay:
1o ay emloyee vages, ensions anu orlei Leneirs 220,000
1o ay ioviueis o cairal:
Inreiesr on loans 2,000
Diviuenus ro slaielolueis 60,000 62,000
1o ay goveinmenr:
Coioiarion rax ayaLle 44,000
1o ioviue oi mainrenance anu exansion o assers:
Deieciarion 4,000
Reraineu ioirs 19,000 93,000
419,000
1le ieauei can see rlar rle ieraineu ioirs iguie o I19,000 is maue u o rle inciease
in unuisriiLureu ioirs (I59,000 I55,000) I4,000 + riansei ro geneial ieseive I15,000
= I19,000.
VI|u IJJJ :|I||||: 273
1le value auueu sraremenr can Le seen ro Le a means o ieoiring rle income oi all
rle gious vlicl conriiLure ro an oiganisarion`s eioimance. Ir is rleieoie ielevanr ro
rle inoimarion neeueu Ly all o rlese gious, somerling vlicl is nor vell seiveu Ly an
oiuinaiy ioir anu loss accounr.
Mala alals la rememher
1 Jraditional Iinancial statements tend to Iocus on proIit.
2 A statement oI value added Iocuses instead on the income contributed by each group
within an organisation that is included in the statement.
evlew quesllaas
17.1 ^anveis Lru incluues virl irs inancial sraremenrs eacl yeai a sraremenr o value auueu. 1le
uiar value auueu sraremenr oi rle yeai enueu 31 ^ay 19X6 is as ollovs:
I I
Revenue iom sales 204,052
Bouglr in mareiials anu seivices 146,92S
Value auueu Ly rle comany 5,124
Alieu ro:
Tle benefit cf ehjlcyees
Salaiies 16,46S
Deuucrions oi income rax anu narional insuiance 3,352
13,116
Pension sclemes 2,S10
Lmloyees` ioir slaiing sclemes 525
Welaie anu sra ameniries S06
1,25
Central anJ lccal gciernhent
Value auueu rax 30,60S
Coioiarion rax 9S5
Local iares 325
1ax erc. ueuucreu iom salaiies anu loan inreiesr 3,S32
35,50
Tle jrciiJers cf cajital
Inreiesr on loan cairal 1,600
Income rax ueuucreu 4S0
1,120
Inreiesr on Lank oveiuiars 250
Diviuenus ro slaielolueis o rle comany 500
1,S0
Tle rejlacehent cf assets anJ tle exjansicn cf tle business
Deieciarion 1,S35
Reraineu ioirs 412
2,24
5,124
%" Bu:||:: Accuu|||| Z
hew lerm
VaIua addad (. 22): 1le uieience Lerveen rle roral value o oururs anu rle roral value o
inurs.
Discussion among rle Loaiu o uiiecrois on rle uiar iguies las ievealeu a viue vaiiarion o
oinion on rle useulness o rle value auueu sraremenr ro rle ieaueis o rle accounrs.
Some Loaiu memLeis say rlar rle auueu value sraremenr is conusing as ir is only a ieuiaring o
rle iesulrs vlicl aie slovn in rle ioir anu loss accounr vlicl gives all rle inoimarion necessaiy.
Anorlei viev is rlar rle sraremenr o clanges in inancial osirion is ai moie imoiranr anu rlis
sloulu Le given in lace o rle value auueu sraremenr.
Required:
(a) A ieoir ro rle uiiecrois sloving rle auvanrages o rle value auueu sraremenr comaiing ir
virl rle ioir anu loss accounr anu rle casl lov sraremenr. Youi ieoir sloulu ueal
seciically virl rle oinrs iaiseu in uiscussion Ly rle uiiecrois.
(b) Consriucr a ioir anu loss accounr iom rle inoimarion given.
(c) Calculare rle oeiaring ioir oi use in a sraremenr o clanges in inancial osirion.
(Asscciaticn cf ClartereJ CertifieJ Acccuntants)
17.Z. 1le olloving inoimarion ielares ro rle Plus Iacrois Giou lc oi rle yeais ro 30
SeremLei 19XS anu 19X9.
Nctes 19X9 19X8
I000 I000
Associareu comany slaie o ioir 10.9 10.
Auuirois` iemuneiarion 12.2 11.9
Cieuirois oi mareiials
ar Leginning o yeai 1,109.1 9S.2
ar enu o yeai 1,244.2 1,109.1
DeLrois
ar Leginning o yeai 1,422.0 1,305.0
ar enu o yeai 1,601.0 1,422.0
11' ueLenruies 1 500.0 600.0
Deieciarion 113. 9S.4
Lmloyee Leneirs aiu 109.9 6S.4
Hiie o lanr, maclineiy anu velicles 2 66.5 36.3
^areiials aiu oi in yeai 3,622.9 2,91.4
^inoiiry inreiesr in ioir o rle yeai 16.2 144.1
Orlei oveileaus incuiieu 1,012.4 3S.3
Pensions anu ension conriiLurions aiu 319.S 222.2
Pioir Leoie raxarion 1,43.4 1,156.4
Piovision oi coioiarion rax 464. 52.9
Salaiies anu vages 1,63.S 1,S63.0
Sales 3 9,905.6 S,694.1
Slaies ar nominal value:
Oiuinaiy ar 25 eacl ully aiu 4 2,500.0 2,000.0
' Pieeience ar I1 eacl ully aiu 4 500.0 200.0
Srocks o mareiials:
Leginning o yeai S04.1 6S9.
enu o yeai S3.S S04.1
Otler infcrhaticn:
Oiuinaiy uiviuenus veie ueclaieu as ollovs:
Inreiim 1.12 ence ei slaie (19XS 1.6)
Iinal 3.5 ence ei slaie (19XS 2.61)
Aveiage numLei o emloyees vas 196 (19XS 201)
VI|u IJJJ :|I||||: 275
Nctes
1 I300,000 o ueLenruies veie ieueemeu ar ai on 31 ^aicl 19X9 anu I200,000 nev
ueLenruies ar rle same iare o inreiesr veie issueu ar 9 ei cenr on rle same uare.
1le nev ueLenruies aie uue ro Le ieueemeu on 31 ^aicl 19X4.
2 1lis is rle amounr oi inclusion in rle ioir anu loss accounr in accoiuance virl SSAP 21.
3 All rle giou`s sales aie suLjecr ro value auueu rax ar 15 ei cenr anu rle iguies given incluue
sucl rax. All orlei iguies aie exclusive o value auueu rax.
4 All slaies lave Leen in issue rliouglour rle yeai.
Required:
(a) Pieaie a sraremenr o value auueu oi rle yeai ro 30 SeremLei 19X9 anu give comaiarive
iguies oi 19XS. Incluue a eicenrage Lieakuovn o rle uisriiLurion o value auueu oi Lorl
yeais.
(b) Piouuce iarios ielareu ro emloyees` inreiesrs, Laseu on rle sraremenr in air (a), anu exlain
lov rley miglr Le o use.
(c) Lxlain Liiely vlar aie rle uiiculries o measuiing anu ieoiring inancial inoimarion in rle
oim o a sraremenr o value auueu.
(Asscciaticn cf ClartereJ CertifieJ Acccuntants)
%$ Bu:||:: Accuu|||| Z