NTR Puts Order Into Plessey's Far-Flung Empire

Article Abstract:

Producing consolidated accounts is a difficult task for a large multinational corporation like the Plessey Co. PLC. Forms numbering to one hundred have many cross- checks and when produced manually were virtually impossible to produce error-free. Plessey has attempted computerization in other areas without much success. Plessey commissioned external consultants to recommend hardware, software, communications and other facilities that would suit their needs. They recommended Hewlett- Packard HP3000 series 44 minicomputer centrally, with a network of HP125 microcomputers in the subsidiaries. For software, they recommended MMs/PPL General Ledger and Financial Reporting System package on the minicomputer. For success, it was determined a team approach be taken with support from the top. The system was successfully installed in April 1982. A diagram of the network is included. An interim reporting system was set up until all systems were installed and applications software was written. All 140 management reporting units worldwide submit monthly reports and projections. A list of six applications were planned of which all were complete by 1983. The 1983 accounts for Plessey Co. were produced a year before they were required. New Technology Reporting (NTR) via the HP125 is the only acceptable method for transmitting financial data. Information is accurate, up-to-date and, presented in proper format. Shareholders have benifitted by an earlier report. Accountants enjoy their work more.

International business enterprises, Multinational corporations

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Accounting for acquisitions and mergers

Article Abstract:

Statement of Standard Accounting Practice 23 required that the cost of an acquisition be the fair value of the purchase consideration given when business combinations used acquisition accounting. However, the statement does not cover the accounting for of acquisitions affected by share-for-share exchanges between companies that are unquoted. Such share valuations are imprecise and subjective, and if such share valuations are unsatisfactory, a direct valuation of the targeted firm's assets may be used. The valuation should analyze price/earnings ratios and dividend yields, adjusted for voting rights and transferability. Other possibilities for valuation include a cash alternative to a share-for-share offer or the issuance of a new class of shares to pay for the acquisition.

United Kingdom, Corporations

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Opinions 16 and 17: a winning combination

Article Abstract:

Two AICPA Accounting Principles Board (APB) opinions have helped to harmonize the accounting treatment of mergers and acquisitions in the US. Opinion 16, Business Combinations, concludes that only two methods are acceptable for reporting business combinations, pooling of interests, and purchase methods of accounting. Opinion 17, Intangible Assets, requires the cost of intangible assets such as goodwill to be amortized to operating expense, generally under the straight line method. The opinions and their underlying guidance have helped to create a reasonably fair playing field in mergers and acquisitions in the US. Similar opinions for UK accountants would help rationalize the accounting treatment of mergers and acquisitions in the UK.

Standards, American Institute of Certified Public Accountants

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