Solution to Question 1-

I have used the annual report 2017-18 for the analysis of Kinetic Engineering Limited
Link - http://kineticindia.com/investors//AnnualReports/AnnualReport2017_18.pdf

Fundamental Concepts
Property Rights: Property plant & equipment (Note-3) and Other intangible assets (Note-3) are recognized in the
books of accounts.
Business Entity: The shareholder’s funds are presented separately in the balance sheet, signifying ownership-
management separation.
Going Concern: Even though the company has accumulated losses and defaulted in payments the management
believes in future profitable operations.
Monetary Expression in Accounts: The financial statements of the company and all its subsidiaries and associates
are presented in INR.
Matching Concept: Recognition of Inventory for goods not consumed in the report.
Realization Concept: Revenues are recognized after transfer of ownership.
Consistency between Accounting Periods: As per Note-2, the accounting policies adopted are consistent with the
previous year (16-17). (Page 56)
Diversity among Independent Entities: Specific recognition criteria for different business lines are specified in the
accounting policy.
Conservatism: Provisions where it is probable that an outflow of resources embodying economic benefit will be
required to settle the obligation.
Materiality: All amounts are expressed in Lakhs, ignoring smaller values.
Timelines in Financial Reporting: The financial statements of the company are presented annually.
Internal Control: The director’s report states that the internal Auditor of the company conducts periodical internal
reviews.

Solution to Question 2-

As per annual report of Kinetic Engineering Limited for 2017-18, below mentioned stakeholders have been
identified

Stakeholder Useful Information How it is useful

Shareholders (Financial Institutions) Dividends; Share Price; Earnings per
share; Year on year performance
comparison
Shareholding distribution; Balance
Board of Directors sheet; P & L statement; Cash Flow
statement
Senior Management Director’s Report; Balance sheet;
P&L statement; Cash Flow
statement
Capital Adequacy Ratio (BASEL III
disclosures)
Regulators (SEBI)
Income Tax Department Profit & Loss Statement
Customers Balance sheet
To gauge the return on their
investment; investment potential
To measure the performance of the
company and take decisions on
future goals of the company
To take informed decisions and
predict its implications; Year on year
performance comparison
To check compliance and protect
depositor’s money
To assess corporate taxes and other
duties
To ensure that their deposits are safe

Employees Changes in employment benefits; To calculate bonus and assess job

Salary; Profits safety