Searchmore came back to me with a couple of supplementary, and interesting, questions: Dear Duncan Thank you for the reply to my query. However I've discovered further issues with regard to this Crocodile valuation dilemma. We don't have an active market for the live crocodiles ( both consumable and bearer biological assets) and presumably paragraph 30 applies. The question is : 1 - What cost do we attribute to the consumable bearer biological assets and to the consumable biological assets? The main costs incurred is feeding , treatment costs and cleaning costs for the holding pens coupled with the direct labour. 2 -How should we best present the two classes of the biological assets in the balance sheet? Regards Searchmore My replies are: Dear Searchmore Question 1: IAS 41 paragraphs 30 – 33 show that the IASC people never thought about what might happen in Zimbabwe, did they? Their message in these paragraphs is quite clear: your problem is only an acceptable problem the first time you try to solve it, then it's plain sailing! “There is a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which market-determined prices or values are not available and for which alternative estimates of fair value are determined to be clearly unreliable. In such a case, that biological asset should be measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an enterprise should measure it at its fair value less estimated point-of-sale costs.” IAS 41:30 As a cost accountant, I have always taken the view that IAS 41 should adopt a cost based valuation basis anyway, but the IASC have decided otherwise. Paragraph 33 helps us here: “In determining cost, accumulated depreciation and accumulated impairment losses, an enterprise considers IAS 2, Inventories, IAS 16, Property, Plant and Equipment, and IAS 36, Impairment of Assets.” IAS 41:33 Take the view that you would for any other product that goes through a process, such as manufacturing furniture from wood or youghurt, cheese and butter from milk and so on and accumulate your costs from there. I would keep it as simple and realistic as possible. Question 2: IAS 41 is fairly clear here and I think that as long as you are able to accumulate the costs of the different classes of asset successfully then just take a look at the specimen balance sheet in Appendix A of IAS 41 for guidance. I hope you find these comments helpful. Best wishes DW

Margaret wrote again, I'm happy to say with this: Hello Duncan I have chosen Sommerfield and Sainsbury for my Report regarding the ASB's Statement of principles. What do you think? Do you think I should change them? Thank you here's my response Dear Margaret, The key point to bear in mind when choosing companies to analyse is whether you have full access to the information you need. Sainsbury data is freely available, I know; and I imagine the same is true of Somerfield, although I don't think I've ever studied them. You've chosen two companies in the same industry: is that within the brief you've been given, I can't remember. Not a bad idea but companies from different industries might give you something more interesting. On the other hand, the retail industry is fascinating from an accounting and logistics point of view, for example, as Tesco seems brilliant at logistics and that shines through in its Stock holdings ... Loads to think about! Hope this is useful. DW

This just came in, unsolicited! Dear Duncan, I'm trawling through Mike Bassett reviews and I come across yours. Thank you for firstly taking the time to write about the film and generally being so positive about it. As I write to you me and my writing partner are currently writing the TV series for the BBC so I guess you got your wish in the end. Thanks again. John R. Smith (Co writer MB:EM) Thought you'd all like to know! DW

Stage two: I wrote to the Statistics Service Dept of the UK Civil Service about the starting date of the RPI and they replied as follows: The Retail Prices Index began in 1947. Here is a link to the brief guide found on our website: http://www.statistics.gov.uk/downloads/theme_economy/rpiguides.pdf Here is a link to all the indices from 1947: http://www.statistics.gov.uk/downloads/theme_economy/RP02.pdf All this information is found on our website http://www.statistics.gov.uk/rpi Praise Mike Gibbs at the Stats Office! DW

I gave rather a flippant answer to a question that someone asked about the starting dates of indices such as the RPI, FTSE and so on; and having been rightly chastised for my flippancy, I then found out the following starting dates that relate to ALL FTSE indices currently in use: FTSE100: 31/12/83 FTSE All share: 10/4/62 FTSE250: 31/12/85 FTSE350: 31/12/85 Smallcap: 31/12/92 Fledgling: 30/12/94 FTSE AllShare ex Investment: 12/5/97 FTSE350 ex Investment: 12/5/97 FTSE IT: 31/12/97 FTSE All Share ex multinationals: 30/9/99 Thank you Eva Kamau at www.ftse.com DW

In case Trefor Jones reads this: I replied to your email, Trefor, but it came back as undeliverable. Here's what I said. Well, Trefor, I've played around with two of Excel's functions and have to ask: are you sure you've given me the right coefficients? I did what you did and derived a fifth equation: simple and satisfies the MINVERSE and MMULT requirements. I get answers: a = 16 b = 4 c = 0 d = 16 e = 16 But these values do not satisfy the equations: instead of the RHS values you gave for equations 1 - 4, these answers give me 16 20 16 -4 I then tried the SOLVER routine and ended up with similar values: a = 15.90 b = 3.79 c = 0.16 d = 16 e = 16.15 16.16 21.2 16.4 -3.76 I'll happily work on this a bit more, Trefor: just confirm your data and we'll see if we can make any more progress. Best wishes DW

Very nice drive to Sarajevo since I last logged on and I'll be here for a couple of weeks. Greg wrote and asked Hello Greg, Hi, I'm a Master's student from a University in the UK. I'm currently doing my Financial Reporting coursework regarding the UK retail market. I'm in the midst of finding the risk free rate (Rf) and the Rm for computing the cost of capital rate for computing my NPV. So can you be so kind to give me some hints of how and where can I find these rates from especially for Marks & Spencer Plc and J Sainsbury? Thanks in advance. Greg Here's my reply: I’m not sure I’ll be able to help you that much as you have moved into a specialist area and since I don’t work much in and around finance, I can only do my best. Start with something like this http://www.rail-reg.gov.uk/docs/77/costcap.htm it gives you the standard view of the risk free rate being the rate on index-linked UK Government bonds … this page concerns the cost of capital for railtrack and it should be of use to you as it then goes on to talk about debt premia and the cost of equity. Here’s a similar page from Oftel http://www.oftel.gov.uk/publications/1995_98/fair_trading/ftmobile/annex.htm which gives a few more, although it’s not as comprehensive as the previous page. That page links to http://www.oftel.gov.uk/publications/1995_98/fair_trading/ftmobile/contents.htm which MIGHT be of additional help. Here’s a pdf file that I’ve seen a few times, http://www.postcomm.gov.uk/documents/competition/OXERA_letter.pdf, and that you might find useful: aimed at the postal service this time. Another pdf file from the competition commission http://www.competition-commission.org.uk/fulltext/306a3.4.pdf that relates to BAA and gives the usual blurb on cost of capital and beta. It’s part of a very large document that you might get your hands on if you play around with the URL or go to the commission’s site and do a search there. Yet another pdf, this time on the London Underground http://www.london.gov.uk/approot/news/ind_soc_report/Appendix_VII_financial_modelling.pdf at least you are getting real live examples! A lot of sensitivity analysis here, too, by the look of it. Try this pdf, too, http://www.caa.co.uk/erg/ergdocs/costofcapital.pdf, although my web link fell apart at this point! Anyway, I hope this is of some use and I’m sorry I couldn’t get directly at M&S and Sainsbury for you but I think these links will get you at least part of the way. Let me know if I can help further and tell me how you get on with your study: I will be interested. Best wishes DW

Felix wrote to ask if his idea of using a Lorenz Curve for use in calculating bonuses was feasible. I set up spreadsheet file for felix in which I demonstrated both a Lorenz Curve type approach and an approach using regression analysis. If you would like a copy of the spreadsheet, just write to me at duncan@duncanwil.co.uk, making sure it's clear what you want and I'll send it. DW

Early on Friday I flew down to Zagreb en route to Banja Luka in Bosnia where I am working on a short contract on cost accounting systems development. I've already taken lots of snaps with my digital camera and will keep you fully informed! I replied to Margaret again, this time she asked a question on how to analyse an annual report and accounts document to see if it meets the needs of its users. This is what I replied: Let me start you off with a task that you should find helpful. Go to my web site and look in the financial accounting section and you will find that I write about this topic on various pages. Take a look at the pages called concepts and conventions. I not only talk about general concepts and conventions but specifically about the ASB’s views of who the users of accounting are … as a matter of interest I think the ASB’s list of users is too short and my own list is much better! I hope this at least starts you off Maggie! Then you can take the annual reports and sit them alongside my pages and the ASB’s Statement of Principles and go through them one by one. Which companies did you choose? Why did you choose them? Could you have chosen better companies that would help you with this task? DW