CHAPTER II

METHODOLOGY

This research relates the assessment of the application of IAS16 (Property, Plant and

Equipment) in a Hotel and Restaurant entity. This is an accounting research which focuses on

investigating the contemporary controversy of entities that are required to follow the accounting

standards. Researchers are to conduct a study in the current standing of the compliance of

published parameters in the field for the purpose of uniformity among businesses. The problems

are identified and solutions are furnished for a client or group of clients. Research methodology

used by the researchers is in accordance with the nature and scope of investigation and that

prompt the researchers to describe procedure adopted and research technique used to validate

the observation and conclusions made from such facts.

Accounting research is a research into the effect of economic events on the process of

summarizing, analyzing, verifying, and reporting standardized financial information, and on the

effects of reported information on economic events. In order to be effective and efficient, the

study must adopt a practical approach that will ease the treatment of information and

presentation of the analysis. The researchers made reliability in the degree to which an

assessment tool produces stable and consistent results.

Research Design

Analytical Research Design is used in collecting and analyzing measures in the study. The

design enabled researchers to identify the samples of subjects and expose the status and outcome

of the investigation. Quantitative data is gathered and qualitative data is transcribed verbatim to

facilitate data analysis. Procedures must be in place to ensure the accuracy of this process.

Patterns and relationships in the data are identified and the research question is answered

through the synthesis of numerical and/or narrative data. The researchers will know the effect of
not following the standards. The data gathered will enable them to effectively present solution to

the problem. An analytical research paper is composed entirely of fact-based evidence. Analytical

research is an attempt to establish why something is a certain way or how it came to be that

way.

Sampling Design and Technique

The study uses non-profitability sampling where the sample is subjectively chosen by the

researches in the study they are interested in studying. It is picked in a process that does not

give all the entities in the population equal chance of being selected. The method allows the

researchers to select the best entity for the study.

The Subject

The subject of the study is in the hospitality industry. As defined by the Council on Hotel,

Restaurant and Institutional Education, businesses under this industry includes the hotel and

motel, or lodging, trade. It also includes food services, recreation services, and tourism. The

hospitality industry provides accommodations, meals, and personal services for both the traveling

public and permanent residents. The researchers decided to discuss about a specific entity that

is engage in Hotel and Restaurant in their research.

Research Instrument

The researchers devised necessary questions after investigating the financial statements of

the entity and record them in a sheet of paper.

Sources of data

In a research of this nature, attempts are made at disclosing the sources of the researchers’

information. These sources are principally the primary and secondary sources from which data

are recovered. The disclosure of the sources is below:

1.0 Primary Source of Data

The data needed for the study are gathered through oral interviews with the management and

from the original documents of the firm being studied. The researchers secured the entity’s

financial statements which are given by the management with the assurance of full confidentiality

of the business’ name. The income statement for the year ended December 31, 2015, Balance

Sheet as of December 31, 2015 and notes to financial statement provided the data needed in

order to have a full grasp of the firm’s current state that facilitated the study. The researchers

also used the standard that deals with the property, plant and equipment (PPE) under

International Accounting Standard (IAS) 16 published by International Accounting Standards

Board (IASB) for the inspection of compliance of the entity.

2.0 Secondary Source of Data

The secondary data were gathered through reading of Accounting books and interpretations

of IAS 16. The other sources were journals and online articles regarding PPE, its depreciation

and importance of proper treatment of such assets.

Data Gathering Procedure and Method

The researchers begin with an observation of the current situation of the businesses and

develop an idea for a case to study. The initial research helped them to pick the best entity for

the study since they will be looking at the disclosures. Researchers went to the location of the

hotel they’ve chosen as the subject and talked with the management about the matter. The entity

gave a copy of their financial statements to the researchers. After examining the financial reports,

the researcher asked questions regarding the information embedded there. The income

statement, balance sheet and notes to financial statements were investigated and necessary data

were extracted, tabulated and processed by the researchers. The evidence has been brought

forth and tests are performed and the gathered data were organized and analyzed.