Report on Numeracy

## TASK 1

#### Reflective log

From the above self analysis it can be analysed that I know numeracy regarding to the interest rate and interest mount calculation. I aware with mainly two types of interest calculation methods which are such as simple interest as well as compound interest rate. There are different formulas for both the calculation and helps to determine that how much some of money will be generated by the investor after making investment for particular period of time. I can easily derive time, principle amount as well as interest rate for annual, semi-annual and quarterly basis. Hence, it can be said that I have good command on the simple and compound interest rate calculation.

Moreover, it can be said that I am able to analyse future value of any kind of investment with the help of net present value. From this I clearly understand that when future value of potential investment will be positive then should put money in that. On the other hand side, when value of NPV comes negative then there is no chance to make investment in that. Further, criteria about which I am not that much aware and needs more practice which is such as linear equation. I can make the scatter graph but unable to derive linear equation which lead to influence proper decisions as well as analysis. According to the frequency distribution I am able to make the table of frequency distribution easily and in an appropriate manner. There is a problem related to respective thing that for make the histogram and interpret it I need more practice.

On the other side in terms of probability distribution I am not aware about it as well as unable to calculate probability of any occurrence which may happen in the future. I can understand about probability after analysing and researching on that but not able to compute any kind of calculated if calculator provided then as well. In regarding to this, I cannot do calculation of exchange rate if they give training they it may be possible but not sure.

#### Two examples of real life

I have applied my ability of interest rate calculation in the real life when I made an investment in an avenue. The person at where I make investment, he provides me less money in comparison to real interest amount. Further, I show to him proper calculation about that and take all the calculated and proper money along with principle amount.

Another example relies with the future value calculation using net present value tool. When my father going to purchase a new equipment in their business then they have two mutually exclusive equipments. Further, by using NPV method I derive future value of both the equipments and by comparing he choose one equipment which has higher future value of its initial cost.

### SECTION 1

#### QUESTION 1

**A. One power law**

In the numeracy criteria, there are different kinds of laws and regulations are to be use by the analyser. Among them one power law is describes that a particular number having multiplications up to which how many levels. There are mainly three types of powers on any number such as zero, negative as well as positive. In the one power only one digit is there for a number.

**B. One root law**

Apart from the above mentioned law of one power there are another law used in the
numeracy is such as law of one root which is identified as square root as well. The
value of square root is fractional value or index in the actual manner. Further it
denotes by symbol which is such as“**√**”.

**C. Simplification of one power law**

The power law simplify by three ways which are such as zero, positive and negative which is along with example described below:

Zero = 6^0 = 1. Value of digit comes always one when there is zero power.

Positive = 6^2 = 36. Value of positive power is multiplications of same digit.

Negative = 6^-2 = 0.028. When there is negative power then value of digit reduce from original.

**D. Simplification of one root law**

Law of one root is to be simplified with the help of below given example:

**√**16 = 4. Value of income digit is power of the outcome digit where
power remains same of the respective digit.

### QUESTION 2

#### A. Simple interest amount

Principle amount |
£17500 |

Interest rate per annum |
8% |

Time |
3 years |

Simple interest |
P*R*T / 100 = 17500 * 8 * 3 / 100 = £4200 |

In the present case when A invest amount worth of £17500 for 3 year on the rate of 8% then return in terms of simple interest will be worth of £4200. Further, total amount after three years will become £17500+£4200 = £21700.

#### B. Compound interest yearly

C = P [(1+r)n – 1]

= 17500 [(1+0.08)3 – 1]

= 17500 * 0.2597

= £4544.75

Total amount after 3 years will be worth of £17500 + £4544.75 = £22044.75.

#### C. Compound interest semi-annually

C = P [(1+r/2) 2*n – 1]

= 17500 [(1+0.08 / 2) 2*3 – 1]

= 17500 * 0.2653

= £4642.75

Total amount after 3 years will be worth of £17500 + £4642.75 = £22142.75.

#### D. Compound interest quarterly

C = P [(1+r/4) 4*n – 1]

= 17500 [(1+0.08 / 4) 4*3 – 1]

= 17500 * 0.2682

= £4693.5

Total amount after 3 years will be worth of £17500 + £4693.5 = £22193.5.

### QUESTION 3

#### A. Amount which she should invest

Total value |
£250000 |

Time |
10 years |

Rate of interest |
3% p.a. |

Principle amount needs to invest |
C = P [(1+r)n] 250000 = P (1+0.03)10 = £186025.75 |

#### B. Computation of interest rate

Principle |
£4500 |

Time |
10 years |

Balance |
£7686.65 |

Interest rate |
C = P [(1+r)n] 7686.65 = 4500 (1+r)10 = 5.5% |

In 2015, recoverable amount is higher than carrying figure so there is no journal entry has been made.

#### C. Explaining the reasons for impairment

In 2014, carrying amount is $200000, whereas recoverable amount implies for $110000. Hence, carrying amount is higher than recoverable cost which shows the loss of $90000. Carrying cost – recoverable amount $200000 – $110000 = $90000

#### D. Presenting the amount of plant and equipment in balance sheet

In balance sheet, revaluate amount of plant and equipment is recorded by business entity after doing final reversal.

### QUESTION 3

#### Interpreting the technical requirements and importance of international accounting standards

International Accounting standards have high level of importance which ensures high level transparency and standardization in the financial statements. Hence, final accounts which are prepared according to IFRS are highly reliable in nature and thereby helps stakeholders in making decisions (Florou, Kosi and Pope, 2017). However, technical knowledge is highly required among the individuals or accounting personnel to deal with the aspects of International Accounting Standards such as IAS 12 and 26 etc. In this, accounting personnel must have ability to recognize deferred tax assets and liabilities. Moreover, assets, revenue received in advance, other liabilities, unrecognized items; consolidated financial statements are the main bases of taxation (Warren, 2016). By taking into consideration all such bases accounting personnel can assess or determine the tax liability. In addition to this, in IAS 12 contains rules regarding the measurement of deferred tax. Along with this, tax rate are also varied from one year to another. In this, accounting personnel is required to update with changing rules and policies. Through this, finance manager and accounting personnel would become able to determine suitable tax liability. In addition to this, IAS 26 serves information about retirement plans which can be distinguished into two types such as defined benefit and contribution plan. Hence, it clearly presents information about the recording, measurement and disclosure of information regarding the retirement benefit plans. Hence, for effective presentation accounting personnel must have knowledge regarding the rules and regulations which are related to it (Bond, Govendir and Wells, 2016). Thus, by considering all such aspects it can be said that technical and conceptual knowledge is highly required for dealing with the standards more effectively and efficiently. Moreover, reporting and measurement aspect of pension plan is highly differing from one standard to another (McPhail, Macdonald and Ferguson, 2016). For instance: UK GAAP has different rules in relation to treatment on pension benefits in against to IAS. Hence, conceptual understanding and knowledge is highly required for dealing with the amount of retirement benefits and deferred tax amount. There are several key issues which are associated with financial reporting enumerated below:

- Reporting needs and requirements are mentioned in the regulations which business entity requires following for ensuring transparency in the final accounts. However, sometimes is not possible for the business organization to comply with all the rules to the large extent.
- Further, some government authorities have framed and introduced legislation which entail that companies are not obliged to prepare financial statements according to accounting standards. Moreover, sometimes treasurer directives also enforce accounting standard which company has to follow for the preparation of financial statements.

### References

- Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136.Accounting & Finance.
- Florou, A., Kosi, U. and Pope, P.F., 2017. Are international accounting standards more credit relevant than domestic standards?.Accounting and Business Research.47(1). pp.1-29.
- McPhail, K., Macdonald, K. and Ferguson, J., 2016. Should the international accounting standards board have responsibility for human rights?.Accounting, Auditing & Accountability Journal.29(4). pp.594-616.
- Warren, C. M., 2016. The impact of International Accounting Standards Board (IASB)/International Financial Reporting Standard 16 (IFRS 16).Property Management.34(3).