1.

Introduction
As business students, we need general framework for thinking about the effects of risks and a
broad knowledge of Risk Management and Insurance. In addition we need to be aware of the
will require the knowledge and skills to interpret financial and other numerical and business data,
communicate the underlying issues with decision makers. From financial accounting we get the
desired knowledge. We can get knowledge about the format of various financial statements, the
elements of FSs, the criteria for the recognition, measurement and disclosure of those elements.
We can also know about IAS/IFRS or BAS/BFRS and the various provisions of them. But all
those are theoretically. We must know how to apply them practically. This report has been
prepared by giving importance on the practical application of BASs and BFRSs.

Objective of the report:

The main objective of the report is to know how the BASs and BFRSs are applied practically in
various organizations. Other objectives of the report-

Assimilate the principles and rules included in those BASs and BFRSs;
To acquire the capability of analyzing Financial Statements of various companies using
those BASs and BFRSs.
To turn our learning system from theoretical to practical

Methodology:
We have prepared this report using secondary data. Most of the provisions of BASs and BFRSs
are illustrated in our textbook. We have collected the annual report 2012-13 of Square
Pharmaceuticals Ltd from their website to analyze.

Limitations of the report:

Lack of experience:
As we do not have idea of the application BASs and BFRSs we have face some
difficulties to compete this report
Lack of enough information:
The information about the various assumptions, used methods provided in the
Financial Statements of the organizations annual report is not enough.

1
2. Theoretical Background
Financial Accounting is the process of identifying, measuring and communicating economic
information to others so that they can make decisions on the basis of that information and asses
the stewardship of the entitys management.

Financial Statements are the accountants summary of the performance of an entity over a
particular period and of its position at the end of that period. Financial Statements comprise-

The balance sheet (a statement of financial position)

The income statement (a statement of financial performance)
The statement of changes in equity (another statement of financial performance)
The statement of changes in financial position (usually in the form of a cash flow
statement)
Notes to the financial statements.

Accounting Framework
There are two types of Accounting Framework. That are-

Regulatory framework & Conceptual framework.

Regulatory framework comprises act or constitutes, national and local legislations. Fs should
comply with these following regulations-

The Companies Act,1994

The Bank Companies Act, 1991
BSEC laws
DSE/CSE regulations
Bangladesh Bank Directions

BFRS framework is the conceptual framework for the preparation and presentation of financial
statements. It consists of

The objective of financial statements

Underlying Assumptions
Qualitative characteristics of financial statements
The elements of financial statements
Recognition of the elements of financial statements
Measurements of the elements of financial statements
Concepts of capital and capital maintenance

2
Underlying Assumptions
There are four bases of accounting. Those ares-

i. Accrual Basis
ii. Going concern basis
iii. Cash basis
iv. Break-up basis

Under the accrual basis of accounting, transactions are recognized when they occur, not when the
related cash flows or outflows into or out of the entity.

Under the going concern basis financial statements are prepared on the assumption that an entity
will continue in operation for the foreseeable future, in that management has neither the intention
nor the need to liquidate the entity.

In the cash basis of accounting, only the cash impact of a transaction is recorded.

The accrual basis of accounting and going concern are referred to by BFRS Framework as
underlying assumptions.

The financial statements are prepared on a break-up basis when there is an intention or need to
sell of the assets. When the business is in financial difficulties and needs cash to pay off its its
creditors, they do so.

Qualitative characteristics of FSs

Qualitative characteristics of financial statement which are included in conceptual framework are
very important.

The four principal qualitative characteristics are understandability, relevance, reliability and
comparability.

The users must have some business, economic and accounting knowledge to understand the
statements. Complex, difficult contents should not be deducted according to the standard.

Information is relevant when they influence the economic decisions of users by helping them
evaluate past, present and future events or correcting or confirming their past evaluations.

The users can rely on the provided information. There should be no error and biasness. In
addition five things must be ensured to make them reliable-

Faithful presentation;
Economic substance;
Neutral;
Prudence
Completeness.

3
The information should present the underlined transactions faithfully, accurately and completely.

The economic substance or economic reality of the transactions should be presented by the
provided information.

Prudence does not allow the creation of hidden reserves or excessive provisions, understatements
of assets or overstatements of liabilities or expense.

The users can compare the performance between two years and between the same type
organizations.

Elements of financial statements:

The elements of financial statements are described below-

Assets: A resource controlled by an entity as a result of past events and from which future
economic benefits are expected to flow to the entity.

Liabilities: A present obligation of the entity arising from past events, the settlements o which is
expected to lead to the outflow from the entity of resources embodying economic resources.

Equity: The residual amount found by deducting all of the entitys liabilities from all of the
assets. It comprises paid up capital, share premium, retained earnings, general reserve and
revaluation reserve.

Income: It is an increase in economic benefits in the form of inflow, enhancements of assets or

decrease in liabilities.

Expenses: Expense is a decrease in economic benefits in the form of outflow, depletion of assets
or increase in liabilities.

Recognitions of elements in financial statements

Recognition means the process of incorporating an item in the balance sheet or income statement
that meets the definition and satisfies the following criteria for recognition:

i. It is probable that any future economic benefit associated with the item will flow to or
from the entity.

4
 ii. The item has a cost or value that can be measured with reliability. The use of reasonable
estimate is an essential part of the preparation of financial statements and does not
undermine their reliability.

Measurement in financial statements

BFRS uses several different measurements bases but the framework refers to just four. The four
measurement bases referred to in BFRS Framework are:

Historical cost: Assets are recorded at the amount of cash or cash equivalents paid or the fair
value of the consideration given to acquire them at the time of acquisition. Liabilities are
recorded at the amount of proceeds received in exchange for the obligation, or in some
circumstances, at the amounts of cash or cash equivalents expected to be paid to satisfy the
liability in the normal course of business

Current cost: Assets are carried at the amount of cash or cash equivalents that would have to paid
if the same or an equivalent asset was required currently.

Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be
required to settle the obligation currently.

Realizable (Settlement) value: Realizable value is the amount of cash or cash equivalents that
could currently be obtained by selling an asset.

Settlement value is the undiscounted amount of cash or cash equivalents expected to be paid to
satisfy the liabilities in the normal course of business.

Present value: A current estimate of the present discounted value of the future net cash flows in
the normal course of business.

Historical cost is the most commonly adopted measurement basis, but this is usually combined
with other bases.

Capital and capital maintenance

Under a financial concept of capital, such as invested money or invested purchasing power
capital is synonymous with the net assets or equity of the entity. This financial concept measures
capital as the equity in the balance sheet.

Under physical concept, capital is regarded as the productive capacity of the entity based on, for
example, units of output per day.

5
BAS 1 Presentation of financial statements

It requires that the components (Balance sheet, Income statement, Statements of changes in
equity, Cash flow statement, Notes) of financial statements should be clearly identified and
distinguished from other information presented.

Financial statements should present fairly the financial position, financial performance and cash
flows of an entity.

Financial statements are prepared on the going concern basis unless management either intends
to liquidate the entity or to cease trading or has no realistic alternative but to do so. In assessing
whether the entity is a going concern management must look at least twelve months.

If the going concern assumption is not followed, the management must disclose the basis which
has been used and the reason for doing so.

Financial statements other than the cash flow statement must be prepared on the accrual basis of
accounting.

To maintain consistency, the presentation and classification of items in the financial statements
should stay the same from one period to the next.

Each material class of items should be presented separately in the financial statements.
Immaterial amounts can be aggregated with same type of accounts.

Assets and liabilities can be offset against each other but immaterial gains, losses and related
expenses arising from same /similar transactions can be offset.

The profit or loss must be calculated after taking account of all income and expense in the
period.

Recommended formats are given but not mandatory

Financial statements should be prepared at least annually and within six months of the balance
sheet date.

It requires some information in prominent position which can be repeated on the basis of users
need; such as name, type of entity, balance sheet date, reporting currency and level of rounding.

BAS 1 suggest a format for the balance sheet and specified that certain items must be shown on
the face of the balance sheet. Other required information can be shown on notes. Both assets and
liabilities must be separately classified as current and non-current.

6
BAS 1 provides guidance on the layout of income statement. Between the two statements, the
income statement classifying expenses by function is more common in practice. Certain items
must be shown on the face of income statement and required information can be shown on notes.

It requires allocating net profit for the period between parent company equity holders and
minority interest which is shown on income statement.

BAS 1 also provides guidance on the layout of changes in equity. Revaluation surpluses and
dividend declared on the balance sheet date will be shown here.

BAS 1 specifies certain items which must be disclosed by way of note-

Basis on which FSs were prepared

Specific accounting policies
Judgments made by management in applying the accounting policies
Key measurement assumptions made about the future
The disclosure of ordinary dividends proposed or declared after the period end and not
recognized in the accounting period.

BAS 2 Inventories

Inventories are assets includes goods held for sale(FG),gods in production process(WIP) and
materials waiting to be put in production(Raw materials) .

BAS 2 does not apply to-work in progress under construction contracts, financial instruments
and biological assets.

Inventories should be measured at lower of cost and net realizable value.

Cost comprises the cost of purchase, conversion, bringing the inventories to their present
condition and location.

Net realizable value is the estimated selling price in the ordinary course of business less the
estimated cost of completion and the estimated costs necessary to make the sale.

BAS 7 Cash flow statements

The cash flow statement shows movements in cash and cash equivalents and all entities are
required to prepare a cash flow statement.

7
Cash comprises cash on hand and demand deposits. Cash equivalents include short term highly
liquid investments which are subject to an insignificant risk of change in value.

BAS 7 requires cash flow statements to report cash flows during the period classified by
operating activities, investing activities and financing activities.

It allows two possible layouts for cash generated from operations-direct & indirect method.

Cash flows from operating activities are primarily derived from the principal revenue-producing
activities of the entity.

Cash flows from investing activities are those related to the acquisition or disposal of any non-
current assets, or trade investments together with returns received in cash from investments.

Financing activities include

Cash preceeds from issuing shares, debentures, loans, notes, mortgages and other short or
long term borrowings;
Cash repayments of amount borrowed
Repayment of capital of amounts borrowed under finance leases
Dividends paid to shareholders

BAS 7 specifies components of cash and cash equivalents.

It does not record non-cash transactions. Significant non-cash transactions should be disclosed.

BAS 16 Property, plant and equipment

PPE are tangible assets held for use in production or supply of goods and services or for
administrative purposes and which are expected to be used during more than one year.

Items of PPE should be recognized where it is probable that future economic benefit will flow to
the entity and their cost can be measured reliably

Repairs and maintenance expenditure should not be capitalized but replacement expenditure
should be capitalized.

PPE should be measured at cost at recognition which includes purchase price, directly
attributable costs and estimate of dismantling and site restoration costs. Cost is measured in cash
or fair value.

After initial recognition an item of PPE may be carried under the cost model or the revaluation
model.

8
Revaluation should be made frequently to ensure that carrying amount is not materially different
from updated fair value.

All assets in a single class must be treated in the same way.

BAS 16 provides examples of PPE of separate classes.

Revaluation gains are taken directly to equity as part of the revaluation surplus and revavaluation
looses are recognized as an expense unless they relate to an earlier revaluation surplus.

Each significant part of PPE item must be depreciated separately.

Depreciation charge is recognized in profit and loss. None is recognized directly in the
revaluation reserve. However, BAS 16 permits a transfer between reserves.

Residual value and useful lives must be reviewed annually. Any change must be treated as a
change in accounting estimates.

There are a number of different methods of depreciation:

Straight line
Declining balance
Sum of the units

Useful lives, depreciation rates, gross accumulated depreciation and net amount at strat and end
of period must be disclosed.

BAS 16 requires the provisions of BAS 36 must be applied.

BAS 17 Leases

Lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series
of payments the rights to use an asset for an agreed period of time.

BAS 17 recognizes two types of leases-

Finance leases;
Operating leases.

The leases are classified at inception.

BAS 17 requires that, when an asset changes hands under a finance lease, the accounting
treatment should reflect the substance of the transactions.

9
BAS 17 requires that the land and building elements of a single lease are considered separately
for classification.

BAS 17 provides examples of the key risks and rewards incidental to ownership of an asset. Risk
includes possibility of losses arising from idle capacity, technological obsolescence and fall in
value. Rewards mean potential gains arising from profitable use or future sale of the asset.

The leased assets are depreciated and treated as any other non-current assets.

Lease payments reduce the liability and cover any accrued interest.

The lessee has to allocate the finance charge between accounting periods using one of the
methods-

The actuarial method

The sum of digits method

Operating lease rentals are charged to the income statement on straight line basis over the lease.

BAS 18 Revenue

Revenue is income arising in the normal course of an entitys activities.

Revenue should be recognized when it is probable that future economic benefit will flow to the
entity and when these benefits can be measured reliably.

BAS 18 provides guidance on the recognition of revenue arising in the following transactions

Sale of goods;
Rendering of services;
The use by others of entity assets yielding interest, royalty and dividends.

In case of sale of goods revenue should be recognized when-

Significant risk and rewards of ownership has been transferred;

The seller has no control over the goods;
The revenue can be measured reliably.

Revenue from rendering services should be recognized when-

The costs and the stage of completion of the transaction at the balance sheet date can be
measured reliably

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Interest is recognized on a time proportion basis that takes into account the effective yield on the
asset

Royalties are recognized on an accrual basis in accordance with the substance of the relevant
agreement.

Dividends are recognized when the shareholders right to receive payment is established.

The accounting policies adopted for the recognition of revenue, methods used to determine the
stage of completion must be disclosed.

BAS 36 Impairment of assets

Whenever an assets recoverable amount falls to an amount less than its carrying amount, it is
said to be impaired.

BAS 36 applies to PPE, intangible assets and some financial assets.

Impairment loss should be written off against profit immediately.

External and internal information should be reviewed for the evidence of impairment.

If impairment loss subsequently reverses, it should be treated as revaluation gain.

Revised carrying amount should be depreciated over remaining useful life.

BAS 38 Intangible assets

Intangible asset means an identifiable non monetary asset that does not has physical substance.

BAS 8 excludes goodwill arising in a business combination, financial assets as defined in BAS
39, mineral rights, related exploration and development expenditure incurred.

An intangible should be recognized if it is probable that future economic benefit will flow to the
entity and the cost can be measured reliably.

To be recognized an intangible asset must be identifiable and controlled by an entity.

An intangible asset is identifiable if it meets at least one of the two following criteria-

It is separable;
It arises from contractual or other legal rights.

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Subsequent costs cannot be capitalized in case of intangible assets. That costs should b shown on
profit and loss.

At recognition an intangible asset should be recognized at cost.An intangible asset acquired as

part of a business combination is capitalized at fair value.

Separately acquired identifiable intangible asset should be capitalized at cost including purchase
price, directly attributable costs excluding cost of introduction of a new product, cost of
conducting business in a new location, administration and other general overhead costs.

The useful life of an intangible asset may be finite or indefinite. An intangible asset with a finite
useful life should be amortized over its expected useful life and the amortization should be
started when the asset is available for use.

BAS 27 Consolidated and separate financial statements

All parents must present consolidated financial statements.Consolidated statements must include
the parent and all the entities under its control.

The investment in the subsidiary is carried at cost in the parents balance sheet, cost being the
fair value of the consideration given as computed under BFRS 3.

BAS 27 makes specific reference to consolidation procedures necessary-

Eliminating the carrying amount of the parents investment against its share of the equity
in its subsidiaries, with goodwill being the resultant figure;
Eliminating intra group balances, transactions, profits and losses in full;
Calculating the minority interest and presenting it as a separate figure in the balance sheet
and income statement.

BAS 28 Investment in associates

An associate is an entity over which the investor has significant influence.

A holding of 20% or more of the voting power in an investee is presumed to provide the investor
with significant influence.

Associates must be accounted for in the consolidated financial statements using the equity
method.The investment in the associate is carried at cost in the investors balance sheet.

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3. FSs of Square Pharmaceuticals
Ltd
We have selected Square pharmaceuticals Ltd to analyze its Financial Statements according to
BAS and BFRS. It was established in 1954 as a partnership and incorporated as a Private
Company in 1964.It has been involved in Manufacturing and Marketing of
Pharmaceutical,Finished Products, Basic Chemicals, AgroVet Products Pesticide Products, Small
Volume Parental Opthalmic Products and Insulin Products.

The amount of authorized capital of the company is 5000 million and the paid up capital is
3707.68 million.

Samuel S Chowdhury is now playing the role as the chairman of the company and Tapan
Chowdhury as the Managing Director. There are 5868 employees engaged in the company.

It has now two subsidiary companies. That are-

Square Cephalosporins ltd

Square Formulations Ltd

In addition to subsidiary company it has four associate companies. The names of those
companies are as follows-

Square Textile Ltd.

Square Knit fabrics ltd.
Square Hospitals Ltd.
Square Fashions Ltd.

Consolidation:

Square Cephalosphorins Ltd:

SPL holds 950000 shares of Tk 100 each out of total issued capital of 955000 shares. As SCL is
not listed, its market price cannot be determined. However NAV as on 31 march 2013 stand at Tk
1890.85 per share. SPL has also deposited Tk 40 core as share money deposit which has not yet
been capitalized.

Square Formulations Ltd:

SPL holds 995000 shares of Tk 100 each out of 999000 issued shares which is not listed. SPL
has also deposited Tk 3760000000 as share money.

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Subsidiaries entities are controlled by Square Pharmaceuticals Ltd. (SPL). Control exists when
SPL has the power to govern the financial and operating policies of the entity.

14
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16
17
18
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 March 2013

1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATERIAL INFORMATION

Legal Form of the Company:

Reporting Company

Square Pharmaceuticals Ltd. was incorporated on November 10, 1964 under the Companies Act
1913 and it was converted into a Public Limited Company in 1991 and offered its share to the
public with the approval of the Bangladesh Securities and Exchange Commission in the month
of December, 1994. The shares of the company are listed in the Dhaka Stock Exchange Ltd. and
Chittagong Stock Exchange Ltd.

Subsidiary companies:

Square Cephalosporins Ltd: Square Cephalosorins Ltd was incorporated n August 29, 2005
under Companies Act 1994 as a private limited company.

Square Formulations Ltd:

The company was incorporated on November 21, 2011 under Companies Act 1994 as a private
limited company.

Nature of Business Activities:

Reporting Company:

The company owns and operates modern pharmaceuticals factories and produces and sells
pharmaceuticals drugs and medicines. The company has a separate division to operate a modern
Basic Chemical Factory and produces and sells Basic Chemical Products. The company has an
AgroVet Division producing and sells AgroVet products. The company has also a Pesticide
Division producing and sells Pesticide Products.

Subsidiary Companies:

Square Cephalosporins Ltd:

The company owns modern pharmaceuticals factory and produces and sells Pharmaceuticals
Drugs and Medicines.

Square Biotechs Ltd:

The company has voluntary winding up by its members on August 30, 2012.

Square Multi-fabrics Ltd

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The company has voluntarily winding up by its members on October 20, 2012.

Square Formulations Ltd

The company will produce and sell pharmaceuticals drugs and medicines

Percentage of Holding Share on Subsidiaries Company:

Subsidiary Company Holding of Share Percentage of Holding

Square Cephalosporins Ltd. 950,000 99.48%

Square Formulations Ltd. 995,000 95.50%

Application of Bangladesh Accounting Standards (BAS):

The following BASs are applicable for the financial statements for the year under review:
BAS 1 Presentation of financial statements
BAS 2 Inventories
BAS 7 Cash flow statements
BAS 8 Accounting policies, changes in accounting
BAS 10 Events after balance sheet date
BAS 12 Income taxes
BAS 16 Property, plant and equipment
BAS 17 Leases
BAS 18 Revenue
BAS 19 Employee benefits
BAS 21 The effects of changes in foreign exchange rates
BAS 23 Borrowing costs
BAS 25 Related party disclosure
BAS 26 Accounting for investments
BAS 27 Consolidated and separate financial statements
BAS 28 Accounting for investment in associates
BAS 32 Presentation of financial instruments
BAS 33 Earning per share
BAS 37 Provisions, contingent liabilities and contingent assets
BAS 38 Intangible assets
BAS 39 Financial instruments: Recognition and measurement
BFRS 7 Financial instruments: Disclosure
BFRS 8 Operating segment
BFRS 12 Interest in other equity

20
21
Debtors include Tk. 144,155,959 due from export sales of which Tk. 107,827,863 has since been
realized.

There was no amount due by the directors (including Managing Directors), Managing agent of
the company and any of them severally or jointly with any other person

There was also no other amount due by associate undertakings.

22
Employees advances of Tk. 17,963,029 includes advance to officers Tk. 16,935,253.

No amount was due by the Directors (including Managing Director) and Managing Agents
of the company and any of them severally or jointly with any other person except as
stated in (a) above.

No amount was due by the associate undertakings.

Short term loan is receivable from the above subsidiaries/associate undertakings and bearing
interest @ 1% above the rate of interest charged by the commercial bank and considered
good.

23
24
The distribution schedule showing the number of shareholders and their share
holdings in percentage has been disclosed below:

25
Standard Chartered Bank:

An amount of Tk. 96,975,232 has been disbursed during the year 2012-2013 and it is secured on
fixed and floating assets of the company. The interest rate of loan will remain floating. The
remaining balance stands at Tk. 71,061,669 as on 31-03-2013.

HSBC Ltd.:

An amount of Tk. 258,639,147 has been disbursed during the year 2012-2013 for import of
machinaries and it is secured on specific imported machinery. The interest rate of loan will
remain floating. The remaining balance stands at Tk. 241,420,118 as on 31-03-2013.

DEG Germany:

The loan of Tk. 1,029,000,000 (USD 15,000,000 @ BDT 68.60) was disbursed for capital expenditure
purposes and capacity expansion in normal course of business. The interest rate of loan is 06
months LIBOR+2.70% and the loan is repayable in 08 (eight) equal half-yearly installment of USD
1,875,000 starting from August, 2010. The remaining balance stands at Tk. 293,062,500 which is
shown under Note 16 (d).

26
(f) Minimum Lease Payments- Tk. 939,371

Prime Bank Ltd.:

An amount of Tk. 54,000,000 was recognized as Minimum Lease Payments under lease of
Vehicle. The lease is repayable in 48 (forty eight) equal monthly installment of Tk. 1,381,000
starting from July 2010 and the remaining balance stands at Tk. 939,371 as on 31-03-2013.

27
The loans of Janata Bank Ltd. are secured by registered mortgage and other loans are
secured against pledge and hypothecation of stocks and book debts.

28
29
30
34. APPROPRIATION DURING THE YEAR:
In accordance with BAS-1 "Presentation of Financial Statements", the appropriations for the year
have been reflected in the "Statement of Changes in Equity".

Balance of Net Profit though carried forward in the Statement of Financial Position will be
applied for payment of this year's cash dividend proposed by the Board of Directors @ Tk. 2.50
per share and will be recognized as liability in the accounts as and when approved by the
Shareholders in the Annual General Meeting. The total amount of Proposed Cash Dividend for
the year 2012-2013 is calculated at Tk. 926,921,660.

The Board of Directors also proposed Bonus Shares (Stock Dividend) @30% per share and total
amount of proposed Bonus Share (Stock Dividend) for the year is calculated at Tk. 1,112,305,990

35. PARTICULARS OF DISPOSAL OF PROPERTY, PLANT AND

EQUIPMENT DURING THE YEAR:

Particulars ofCost Acc. Depn UptoWDV as on 31-Sales Price Profit

Assets 31-03-12 03-12

Motor Vehicle 37,641,450 24,666,939 12,974,511 15,702,996 2,728,485

Motor Cycle 18,026,106 13,744,436 4,281,670 9,117,955 4,836,285

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Equipments 347,008,948 246,882,757 100,126,191 100,188,767 62,576
Total 402,676,504 285,294,132 117,382,372 125,009,718 7,627,346

40. DIVIDEND PAID TO THE SHAREHOLDERS:

During the year under review total cash dividend for 2011-2012 amounting to Tk.
662,086,900 has been paid to the Shareholders and also bonus shares amounting to Tk.
1,059,339,040 for the year 2011-2012 have been accounted for. Dividend were paid in local
currency to the local custodian bank of the shareholders as such no dividend was remitted in
foreign currency.

41. CLAIM NOT ACKNOWLEDGED AS DEBT:

There was no claim against the company not acknowledged as debt as on 31-03-2013.

42. UN-AVAILED CREDIT FACILITIES:

There was no credit facility available to the company under any contract but not availed of
as on 31-03-2013 other than bank credit facility and trade credit available in the ordinary
course of business.

43. CONTINGENT LIABILITY:

Contingent liability of the company was Tk. 1,618,640,764 as on 31-03-2013 for opening
letter of credit by the banks in favor of foreign suppliers for raw materials, packing materials
and plant & machineries.

44. EVENTS AFTER THE REPORTING PERIOD:

There is no significant event other than normal activities between the financial year closing
date and Financial Statement signing date.

45. RELATED PARTY TRANSACTIONS:

The company did not do any related transactions with its sister concern other than its
subsidiaries/associates undertaking viz Square Textiles Ltd., Square Fashions Ltd., Square Knit
Fabrics Ltd., Square Hospitals Ltd., Square InformatiX Ltd., Square Multi Fabrics Ltd., Square
Cephalosporins Ltd., Square Formulations Ltd. and Square Biotechs Ltd. during the year
reporting.

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33
34
SQUARE PHARMACEUTICALS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Year Ended 31 March 2013

Share Share Genera Tax Gain onRetained Non
Capital Premiu l Holiday Marketable Earnings Controlling
Taka m Taka Reserv Reserve Securities Taka Interest Total
At 31 March 2012 2,648,347, 2,035,465, 105,878, 449,870,4
e Taka Taka 420,437,4
(Unrealized) 13,460,021 7,339,774
Taka Taka
19,127,359
600
Total Comprehensive Income- 000
- 200
- 49
- 68 ,134
(107,174,0 4,127,788, 1,484,129 ,625
4,022,098,
(2012-2013)
Non Controlling- - - 41)
- 116
- (100,000) 204
(100,000)
Interest (Net)
Adjustment for
Square
DivestmentMulti
of Fabrics- - - (43,638,7 268,797
(64,912,63 (1,045,485) (109,328,0
Cash
Ltd. Dividend (2011- - - - -47 - (662,086,9
5) - (662,086,9
70)
2012) Dividend (2011-1,059,339, -
Stock - - 00)
(1,059,339, - -00)
2012)
At 31 March 2013 040 3,707,68 2,035,46 105,878 406,231, 313,532,2040)
15,801,47 7,678,418 22,377,94
6,640 5,000 ,200 702 24 0,675 2,859

SQUARE PHARMACEUTICALS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Year Ended 31 March 2012

Share Share General Tax HolidayGain on MarketableRetained Non Controlling
Capital Premium Reserve Reserve Securities (Unrealized)Earnings Interest Taka
Taka Taka Taka Taka Taka Taka Total Taka
At 31 March 2011 1,961,739,000 2,035,465,000 105,878,200 1,532,954,925 294,179,676 10,033,495,983 5,849,133 15,969,561,917

Total Comprehensive Income (2011-- - - - 126,257,792 3,618,570,975 1,490,641 3,746,319,408

2012)
Transfer to Tax Holiday Reserve- - - (1,083,084,476 - 1,083,084,476 - -
)
Cash Dividend (2010-2011) - - - - - (588,521,700) - (588,521,700)

Stock Dividend (2010-2011) 686,608,600 - - - (686,608,600) - -

At 31 March 2012 2,648,347,60 2,035,465,00 105,878,20 449,870,449 420,437,468 13,460,021,1 7,339,774 19,127,359,62
0 0 0 34 5

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4. Analysis:
Presentation of financial statement
The components (Balance sheet, Income statement, Statements of changes in equity, Cash flow
statement, Notes) of financial statements have been clearly identified and distinguished from
other information presented in this report of Square Pharmaceuticals Ltd.

These FSs fairly presented financial position, financial performance and changes in cash flows.
We can call it a fair presentation because compliance with BFRS was disclosed in the notes.

The elements of financial statements were measured on "Historical Cost" convention in a going
concern concept and on accrual basis.

The previous years' figures were presented according to the same accounting principles.
Compared to the previous year, there were no significant changes in the accounting and
valuation principles affecting the financial position and performance of the company.

There were no material misstatements in their report.

Square aggregated all of their income and expenses over the period to calculate profit and loss
which were shown by notes 26 to 29.

Square pharmaceuticals Ltd prepare their FSs annually.

Information about entity name, type of entity, balance sheet date, reporting currency and level of
rounding were present.

Square classified both assets and liabilities as current and non-current. The income statement
classified expenses by function which is guided by BAS 1.

Net profit allocated between equity holders and minority interests were shown in consolidated
statement of comprehensive income. Notes for non controlling interest 12.3

Inventories:

Raw materials, packing materials, work in process, spare and accessories and goods in transit
were recorded as inventories as per BAS 2.

Inventories are stated at the lower of cost or NRV in compliance with the requirements of Para
21 & 25 of BAS 2.

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Cash flow statement

Cash flow statement of Square Pharmaceuticals Ltd is prepared in accordance with BAS-7
under direct method and as outlined in the Securities and Exchange Rule 1987.

Cash flow statements to report cash flows of Square Pharmaceutical Ltd during the period are
classified by operating activities, investing activities and financing activities.

Components of cash and cash equivalents are shown in the cash flow statement of square
Pharmaceutical Ltd. It does not record non-cash transactions.

Property, plant and equipment

At Square Pharmaceuticals Ltd all property, plant and equipment is initially accounted for at cost
and depreciated over their expected useful life in accordance with BAS-16. The cost of
acquisition of an asset comprises its purchase price and any directly attributable cost of bringing
the asset to its working condition for its intended use inclusive of inward freight, duties and non-
refundable taxes.

In respect of major projects involving construction, related pre-operational form part of the
value of the asset capitalized. Expenses capitalized also include applicable borrowing cost.

On retirement or otherwise disposal of fixed assets, the cost and accumulated depreciation are
eliminated and any gain or loss on such disposal is reflected in the income statement which
is determined with reference to the net book value of the assets and the net sales proceeds.

Repair and maintenance expense have been recorded in income statement.

The cost model has been used to measure the PPE after initial recognition.

Each significant part of PPE has been depreciated separately. Declining balance method has been
used to depreciate the assets which are one of the suggested methods of BAS16.

Depreciation charge has been recognized in profit and loss.

Leases:
The leased assets have been depreciated and treated as any other non-current assets.

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Operating lease rentals have been charged to the income statement on straight line basis over the
lease as per BAS 17.

Lease deposit amount was 1,381,000.

Interests on lease have been recorded under financial expense in the income statement for
finance lease .

Revenue

At Square Pharmaceuticals Ltd-

In compliance with the requirements of BAS-18 revenue is recognized for local sales of
Pharmaceuticals Drugs and Medicines, AgroVet Products and Pesticide Products at the time of
delivery from depot and Exports of Pharmaceuticals Drugs and Medicines at the time of
delivery from Factory Godown. Local sales of Basic Chemical Products are recognized at the
time of delivery from Factory Godown i.e when the significant risk and rewards of ownership is
transferred to the buyer, there is no continuing management involvement with the goods and the
amount of revenue can be measured reliably.

Dividend income is recognized when the right to received payment is established.

Interest income is recognized when accrued on a time proportion basis.

Consolidated and separate financial statements:

In compliance with BAS 27 Squire Pharmaceuticals Limited has presented consolidated financial
statements including its own and subsidiarys statements.

The investments of Square Pharmaceuticals Ltd on the shares of Square Cephalosporins Ltd,
Square Biotechs Ltd, Square Formations Ltd and Square fabrics Ltd has been recorded at cost in
the Squire Pharmaceuticals Ltds balance sheet as per the requirement of BAS 27.

The investments of Square Pharmaceuticals Ltd on its subsidiaries have been eliminated against
their net assets.

Intra group balances, transactions, profits and losses have been eliminated.

Minority interest has been calculated separately and shown separately in the balance sheet and
income statement.

According to BAS 28, invesmetment on associates has been recorded cost.

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5. Conclusion

From this report we have come to know about different things regarding Financial Accounting
and Reporting System prevailing in Bangladesh. With the help of this report we have been able
to know different things about the Square Pharmaceuticals Limited. We have analyzed the
Financial Statements of Square Pharmaceuticals Limited and with the help of this we have been
able to find out the different accounting policies followed by Square Limited. We have also
analyzed the accounting framework prevailing in Bangladesh and followed by Square Limited.
Finally, we have compared this information with our theoretical studies.

6. Bibliography

1) Financial Accounting Study Manual

2) Annual Report of Square Pharmaceuticals Limited

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