Analysis of Financial Statements of Dhaka Bank Showing Application of BAS and BFRS

Table of Contents
Chapter 01 ................................................................................... 3
Introduction ................................................................................ 3
1.1 Origin of the Report: ..................................................................................................................... 4
1.2 Purpose of the Study: .................................................................................................................... 5
1.3 Objectives of the Report: .............................................................................................................. 6
1.4 Methodology: ................................................................................................................................ 7
1.5 Limitations of the Report: ............................................................................................................. 8
Chapter 02 ................................................................................... 9
Company profile ........................................................................ 9
2.1 Vision:.......................................................................................................................................... 10
2.2 Mission: ....................................................................................................................................... 10
2.3 Corporate Values: ....................................................................................................................... 11
2.4 Strategic Objectives: ................................................................................................................... 12
2.5 Ethical Principles: ........................................................................................................................ 12
2.6 Customer Charter:....................................................................................................................... 12
2.7 Shareholders information: ......................................................................................................... 13
2.8 Annual balance sheet overview: ................................................................................................. 14
Chapter 03 ................................................................................. 18
Financial Statements Analysis ................................................. 18
Income Statement: ........................................................................................................................... 19
Cash Flow Statement: ....................................................................................................................... 22
Balance Sheet:................................................................................................................................... 24
Chapter 04 ................................................................................. 28
BAS and BFRS Application: Analysis..................................... 28
4.1 BAS 1(Presentation of Financial Statement) ............................................................................... 29
4.1.1 BAS 1- Theoretical Overview:............................................................................................... 29
4.1.2 : DBLs Compliance with BAS 1............................................................................................. 33
4.2 BAS 2(Inventories) ....................................................................................................................... 34
4.2.1 BAS 2- Theoretical Overview:............................................................................................... 34
4.2.2 DBLs Compliance with BAS 2............................................................................................... 35
Page 1 of 90
4.3 BAS 7(Cash Flow Statement) ....................................................................................................... 36

4.3.1 BAS 7- Theoretical Overview: .............................................................................................. 36
4.3.2 DBLs Compliance with BAS 7 ............................................................................................... 40
4.4 BAS 10(Events after Balance Sheet Date) ................................................................................... 44
4.4.1 BAS 10- Theoretical Overview.............................................................................................. 44
4.4.2 DBLs Compliance with BAS 10 ............................................................................................ 45
4.5 BAS 16(Properties, Plant and Equipment) .................................................................................. 45
4.6 BAS 17(Lease) .............................................................................................................................. 51
4.7 BAS 18(Revenue) ......................................................................................................................... 54
4.7.2 : DBLs Compliance with BAS 18........................................................................................... 57
4.8 BAS 27(Consolidated and Separated Financial Statement) ........................................................ 57
4.8.2 : DBLs Compliance with BAS 27........................................................................................... 65
4.9 BAS 28(Investment in associates) ............................................................................................... 75
4.9.1 BAS 28- Theoretical Overview:............................................................................................. 75
4.9.2 DBLs Compliance with BAS 28............................................................................................ 77
4.10 BAS 37(Provisions, Contingent Liabilities and Contingent Asset) ............................................. 77
4.10.1 BAS 37- Theoretical Overview:........................................................................................... 77
4.10.2 DBLs Compliance with BAS 37.......................................................................................... 79
4.11 The Analytical Discussion on DBLs Financial Statement with Reference to BFRS ................... 80
Chapter 05 ................................................................................. 83
Brief Summary of BAS and BFRS Application ...................... 83
Chapter 06 ................................................................................. 86
Recommendation ...................................................................... 86
Conclusion: ................................................................................ 89
Bibliography: ............................................................................ 90
Page 2 of 90
Chapter 01
Introduction
Page 3 of 90
1.1 Origin of the Report:

This report has been prepared as a study on Financial Analysis of the Financial Statements of Dhaka
Bank Limited for the Year of 2014 on According with BAS and BFRS. as a part of the fulfillment of
course requirement. The report was prepared under the supervision of, Mohammad Salahuddin
Chowdhury, Assistant professor of Dept. of Finance, University of Dhaka. We are very much thankful
to him for assigning us with such type of practical work that has enhanced our knowledge and
experience.
Page 4 of 90
1.2 Purpose of the Study:

The purpose of the report is to apply our theoretical knowledge on the annual financial statement
analysis of Dhaka bank Ltd. Here we will analyze how the company prepare their financial, which
international standards they follow, whether there is any discrepancy or not, if so then which extent it
is. In the thorough analysis we will mainly focus on the difference between their criteria of preparing
financial statements and requirements of BAS and BFRS. This study will provide lots of calculations
to make the topic and all its goals implement clearly to the readers.
Page 5 of 90
1.3 Objectives of the Report:

The main objective of the study is to present the core accounting standards that all the existing
companies in Bangladesh must follow BAS and BFRS covers various monetary issues such as
conceptual and regulatory framework, cash flow statements, Intangible assets, Group accounts;
consolidated financial statements and so on.Again some other objectives will be fulfilled through this
study which is given below:
1. To explain the nature of financial reporting.
2. To explain and demonstrate the differences between Banks criteria and accounting standards
requirements.
3. To explain the purpose and principles underlying in various section of BAS and appropriate
BFRSs.
4. To help the readers understand by given real calculations with relevant formats.
5. To gather knowledge on such an issues that is essential to conform by all the entities.
Page 6 of 90
1.4 Methodology:
For smooth and accurate study everyone needs to follow some rules & regulations. The study
concerned information was collected from two sources:
Primary Sources:
Information was collected from primary sources in these ways:
1. By self-observation of some sites related to Financial reporting standards.
2. By talking face to face with some experienced people in this field.
3. By Scrutinizing the procedures and standards required by BAS and BFRS.
Secondary Sources:
Data were collected from secondary sources by the following ways:
1. Different trustworthy and reliable websites worked as our prime secondary sources of data.
2. The annual financial reports that we have collected from DSE also helped as secondary data to us.
Data analysis and interpretation:
Especially data have been analyzed based on the accounting standards provided by BAS and BFRS.
Again some statistical and chart graphs have been used for easy and better representation of data.
Page 7 of 90
1.5 Limitations of the Report:

On the way of our study, we have faced some challenges that have been termed as the limitations of
this study. These are followings:
Budgeted time limitation:
It was one of the main constraints that hindered to cover all aspects of the study.
Validity and Reliability:
Validity and reliability of the obtained information depends on the responses from the respondents.
Data Insufficiency:
Especially there was a little lack of information about financial reporting in the aspect of Bangladesh
in any of the journals or reports or websites available.
Inappropriateness and Scarcity of Evidence:
Actually, Inappropriateness and Scarcity of evidence lacked our practicalrepresentation of analysis.
In spite of many limitations, we have become successful in preparing the report with sufficient
adornment of flawlessness.
Page 8 of 90
Chapter 02
Company Profile
Page 9 of 90
2.1 Vision:
The vision is anything that is considered to be the long term plan implemented by any individual or
any corporate figure. We have come to the knowledge of the corporate vision of Dhaka Bank Limited
that is shown below:
In Dhaka Bank, they draw their inspiration from the distant stars. Their vision is to assure a standard
that makes every banking transaction a pleasurable experience. Their endeavour is to offer us supreme
service through accuracy, reliability, timely delivery, cutting edge technology and tailored solution for
business needs, global reach in trade and commerce and high on customers investments.
Their people, products and processes are aligned to meet the demand of their discerning customers.
Their goal is to achieve a distinct foresight. Their prime objective is to deliver a quality that
demonstrates a true reflection of their vision Excellence in Banking.
2.2 Mission:
The mission is anything that should be achieved from the point where at present in future. So, the
company mission is nothing but the goal that it wants to achieve in the long run.
Page 10 of 90
The mission of Dhaka Bank Limited is given below:

To be the premier financial Institution in the country providing high quality products and
services backed by latest technology and a team of highly motivated personnel to deliver
Excellence in Banking.
2.3 Corporate Values:

Corporate image is the source of value of intangibles considerably. So, creating value and obtaining
value in return is also important for any corporate body.
Dhaka Bank Limited wants to implement the following corporate values in its banking life:
Customer Focus
Integrity Quality
Page 11 of 90
Teamwork
Respect for the Individual
Responsible Citizenship
2.4 Strategic Objectives:

Their objectives are:
To conduct transparent and high quality business operation based on market
mechanism within the legal and social framework spelt in our mission and reflected
in their vision.
To provide them continually efficient, innovative and high quality products with
excellent delivery system.
To generate profit with qualitative business as a sustainable ever-growing
organization and enhance fair returns to their shareholders.
To promote employees wellbeing through attractive compensation package,
promoting staff through training, development and career planning.
To fulfil their responsibility to the government through paying entire range of taxes
and duties and abiding by the other rules.
To be cautious about environment and climate change.
2.5 Ethical Principles:

They operate their business based on some ethical Principles. These are:
Complying with countries laws and regulations.

Rejecting bribery and corruption.
Avoiding compromised gifts and entertainment.
Speaking up if they suspect any actual, planned or potential behaviour that may
breach any laws and regulations.
Complying with Anti Monetary Laundering guidelines and other prudent regulations
provided by our regulators.
Resolving Customer complaints quickly and fairly.
Maintaining confidentiality and fidelity of customer.
Treating colleagues with fairness and respect; work with highly motivated team spirit
and fellowship bondage.
2.6 Customer Charter:

They seek to build long-term, sustainable beneficial relationships with all their customers based on the
service commitments and their underlying values of mutual respect, the pursuit of excellence and
integrity in all their dealings.
Their primary concern is to understand and satisfy customers needs and expectations. They promise
to understand these needs which are both mutually beneficial and respect the values and principles in
all their actions.
They promise deal quickly, courteously and accurately with all correspondence between them.
Page 12 of 90
They believe in openness, integrity, transparency and accountability and provide high standard of
services to their valid customers. They create customer value, loyalty and equity, which create
customer delight over a lifetime patronage.
2.7 Shareholders information:

Dhaka bank has a strong shareholding position in the market compared to other competitors. The
volumes of shares are very healthy and productive that is owned by different types of shareholders. It
shows shareholdings are diversified as well.
Shareholders' Position
3%
20%
45%
32%
Sponsor
General Public
Financial Institutions
Other Investments
Fig 2.1 : Shareholding position of Dhaka Bank Ltd 2014
Shareholding position 2013

3%
17%
45%
35%
sponsors
General public
Financial Institution
Other Investors
Fig 2.2 : Shareholding position of Dhaka Bank Ltd of 2013
Page 13 of 90
2.8 Annual balance sheet overview:

In the following there is given a graphical overview of Dhaka Banks annual balance sheet of 2014
and 2013:
2.8.1 Asset mix: Total asset is formed through combination of different assets. Here we can see the
different segments such as loan and advances, investments, fixed assets and other forms asset mix. An
outlook of asset mix of 2014 and 2013 is given below:
Asset mix 2014
20%
Loan and advances
3%
Investments
Fixed assets
12%
65%
Other assets
Fig 2.3: Asset mix Dhaka Bank Ltd of 2014
Asset mix 2013

15%
2%
Loan and Advances

Investments
13%
Fixed Assets
70%
Other Assets
Fig 2.4: Asset mix of Dhaka Bank Ltd of 2013
2.8.2 Asset funding mix: Assets are purchased from an accumulated source of funds. The asset
funding of Dhaka Bank also comes from diversified sources. Here we see asset funding mix of Dhaka
bank comprises of Deposits, Shareholders Equity and other liabilities.
Page 14 of 90
Here are the two chart of asset funding mix of Dhaka Bank Ltd for the year 2014 and 2013:
Asset funding mix 2014

13%
8%
Deposits
Shareholder's Equity
Other liabilities
79%
Fig 2.5 : Asset funding mix of Dhaka Bank Ltd of 2014
Asset funding mix 2013

12%
8%
Deposits
Shareholder's Equity
Other liabilities
80%
Fig 2.6 : Asset funding mix of Dhaka Bank Ltd of 2013

2.8.3 Deposit mix: Deposit accounts are one of the essential sources of an organizations liquidity.
Dhaka Bank Ltd also has a mix of deposit schemes comprising of current deposit, Savings deposit,
fixed deposit and others.
The following graph shows different types of deposits for the year of 2014 and 2013:
Page 15 of 90
Deposit mix 2014

6%
9%
25%
Current Deposit
Savings Deposit
Fixed Deposit
Other Deposit
60%
Fig 2.7: Deposit mix of Dhaka Bank Ltd of 2014
Deposit mix 2013

9%
15%
8%
Current Deposit
Savings Deposit
Fixed Deposit
Other Deposit
68%
Fig 2.8: Deposit mix of Dhaka Bank Ltd of 2013

2.8.4 Revenue: An increase in economic benefit in the form of monetary inflows which results in
increase in equity. Interest is one of the important sources of revenue for an entity.
In the following chart revenue generated from interest and other sources of Dhaka Bank Ltd for the
year of 2014 and 2013 is given below:
Page 16 of 90
Revenue- Bank 2014
41%
Net interest income

Non Interest income
59%
Fig 2.9 : Revenue of Dhaka Bank Ltd 2014
Revenue- Bank 2013
48%
Net Interest Income
52%
Non Interest Income
Fig 2.10: Revenue of Dhaka Bank Ltd 2013

Dhaka Bank Limited has furnished its view in this way that can give us a clear overview of the
company understanding of its operation, investment, asset, finance, lease, PPE, liabilities and equities.
Whether, the management and internal bodies are strong enough to support the financial performance
is somewhat estimatable by the company overview shown above.
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Chapter 03
Financial Statements Analysis
Page 18 of 90
Income Statement:
An Income statement is statement that measures a company's financial performance over a specific
accounting period. Financial performance is assessed by giving a summary of how the business incurs
its revenues and expenses through both operating and non-operating activities. It also shows the net
profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. It is
also known as the "profit and loss statement" and statement of revenue and expense."
Particular
Dhaka Bank Limited

Profit and Loss Account
For the year ended 31 December 2014
2014
2013
(TAKA)
(TAKA)
Interest Income/profit on investments
13,705,387,970
15,131,141,289
Interest paid/paid on Deposits & Borrowings
(10,879,027,249)
(11,822,881,725)
Net interest Income
2,826,360,721
3,308,259,564
Investment Income
2,542,824,552
1,616,937,538
Commission, exchange and brokerage
1,127,036,781
1,093,341,022
Other operating income
360,878,331
376,977,712
4,030,739,664
3,087,256,272
6,857,100,385
6,395,515,836
Salary and Allowances
1,627,967,019
1,482,926,276
Rent, taxes, insurance, electricity, etc
406,184,756
354,748,442
Legal expenses
18,081,062
13,241,364
Postage, stamps, telecommunication, etc
42,600,696
43,219,136
Stationary, printing, advertisements, etc
198,019,076
134,486,079
Chief executives salary and fees
7,268,600
12,340,000
Directors fees
3,600,271
2,956,763
Auditors fees
805,000
690,000
Operating Income
Total operating income (a)
Operating expenses
Page 19 of 90
Depreciation and repairs of Banks assets
268,105,367
225,290,552
Other expenses
476,392,510
432,027,470
Total operating expense (b)
3,049,024,357
2,701,926,082
Profit before provision (c=(a-b))
3,808,076,028
3,693,589,754
Provision against loan and advances
543,128,511
57,050,512
Provision for diminution in value of 13,499,886

investments
584,582,559
Other provision
30,608,990
7,938,263
Total provision(d)
587,237,387
649,571,334
Profit before taxation (c-d)
3,220,838,641
3,044,018,420
Provision for taxation
1,191,845,133
1,117,341,489
Current tax
1,176,134,507
1,096,530,432
Deferred tax
15,710,626
20,811,057
Net profit after taxation
2,028,993,508
1,926,676,931
Retained surplus from previous year
1,191,170,022
413,443,614
Add: Retained earnings of current year
2,028,993,508
1,926,676,931
3,220,163,530
2,340,120,545
Statutory reserve
644,167,728
608,803,684
General reserve
20,394,675
126,703,225
Dividends
1,191,170,013
413,443,614
Profit available for distribution:
Appropriations:
Page 20 of 90
Retained earnings
Earnings per Share (EPS)
1,364,431,114
1,191,170,022
3,220,163,530
2,340,120,545
3.57
3.39
Explanation: Perspective of Dhaka Bank Limited:

The income statement measures the financial performance of the Dhaka Bank Limited over the period
of 2014 & 2013. We observed the total operating income, Net Profit after Taxation and Earning per
Share of Dhaka Bank Limited from the year from 2013 t0 2014 assessing the annual report of that
certain company. We have found some fluctuation in the total operating income and Net profit after
taxation & Earning per Share. The fluctuations are described hereby:
Income Statement
6,857
6,396
2,029 1,927
Total operating
Income
2014
2013
Net Profit after

Taxation
Figure 3.1: Income Statement Summary Comparison

In the year 2014, we get that total operating income is 6,857 million taka and Net profit after taxation
is 2,029 million taka. For 2013, we got that total operating income was 6,396 million taka and Net
profit after taxation was 1,927 million taka. In 2014 the total operating income is increased by 7.20%
from the previous year, the Net profit after taxation is increased by 5.29% from the previous year.
Earning Per Share

3.57%
3.39%
Earning Per Share
2014
2013
Figure 3.2: Earning Per Share Comparison

Page 21 of 90
In the year 2014, we get the earning per share is 3.57% and in the year 2013, earning per share was
3.39%. In 2014, Earning per Share is increased
Cash Flow Statement:

A cash flow statement, also known as statement of cash flows, is a financial statement that shows how
changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the
analysis down to operating, investing and financing activities. Essentially, the cash flow statement is
concerned with the flow of cash in and out of the business. The statement captures both the current
operating results and the accompanying changes in the balance sheet.
Particular
Dhaka Bank Limited

Cash Flow Statement
2014
2013
(TAKA)
(TAKA)
Interest/profit receipts
13,488,419,129
15,236,099,562
Interest/profit payments
(10,876,711,749)
(11,786,093,808)
Dividend receipts
80,295,480
44,734,627
Fee and commission receipts
826,966,780
825,951,074
Payments to employees
(1,627,967,019)
(1,482,926,276
Payments to suppliers
(259,505,834)
(205,025,405)
Income taxes paid
(1,391,744,053)
(849,771,031)
Receipts from other operating activities
417,683,333
434,936,600
Payments for other operating activities
(952,253,574)
(847,924,047)
(i)Operating profit before changes in current (294,817,507)

assets and liabilities
1,369,981,296
Cash flow from operating activities
Changes in operating assets and liabilities

Purchases/Sale of trading securities
(2,601,304,570
45,190,773
Loans and advances to customer
(3,535,635,805)
(9,455,598,896)
Other assets
(957,403,335)
(2,537,375,685)
Deposit from other banks
862,371,005
207,052,494
Page 22 of 90
Deposit from customers
8,010,022,917
8,346,961,629
Other liabilities account of customers
(36,798,429)
106,274,404
Other liabilities
(628,859,973)
1,374,866,882
(ii) Cash flow from/(used in) operating assets and 1,112,391,810

liabilities
(1,912,628,399)
Net cash flow from/ (used in) operating activities 817,574,303

(a)= (i+ii)
(542,647,103)
Proceeds from sale of securities
2,416,603,730
1,547,941,866
Sale/ (purchase) of securities
1,407,746,691
(119,124,347)
Purchase of property, Plant & equipment
(1,616,074,495)
(789,131,614)
Sale of property, Plant & equipment
29,481
1,414,700
Purchase or sale of Subsidiary
(249,999,940)
Net cash Flow from investing activities (b)
1,958,305,467
641,100,605
Borrowing from other banks
5,764,767,188
(2,046,960,017)
Dividends paid
(920,449,563)
Purchase/sale of subsidiary
60
Cash flow from/(used in) financing activities (c)
4,844,317,685
(2,046,960,017)
Net increase/ (Decrease) in cash and cash 7,620,197,395

equivalents (a+b+c)
(1,948,506,515)
Add: Effects of exchange rate changes on cash & 243,235,518

cash equivalents
222,830,286
Add: cash and cash equivalents at beginnings of 14,709,137,160

the year
16,434,813,389
Cash & Cash equivalents at end of the year (*)
22,572,570,073
14,709,137,160
1,395,090,440
1,608,867,780
Cash flow from financing activities
(*) Cash and Cash equivalents

Cash in hand
Page 23 of 90
Balance with Bangladesh bank & Sonali bank

Balance with
Institutions
other
Banks
&
14,505,763,632
Financial 6,219,697,351
10,291,760,145
2,464,187,135
Money at call & Short Notice
448,300,000
338,900,000
Prize Bond
3,718,650
5,422,100
Total
22,572,570,073
14,709,137,160

The cash flow statement of Dhaka Bank Limited shows the movements in cash and cash equivalents
over the period of 2014 & 2013. We observed the cash and cash equivalents at end of year of Dhaka
Bank Limited from the year from 2013 t0 2014 assessing the annual report of that certain company.
We have found some fluctuation in the cash and cash equivalents at end of year 2013 & 2014. The
fluctuations are described hereby:
Cash & Cash equivalents

(at the end of year)
22,573
14,709
Cash & Cash equivalents (at the
end of year)
2013
2014
Fig 3.3: Comparison of Cash and Cash Equivalents

In the year ended of 2014, we get cash and cash equivalent is 22,373 million and in the year ended of
2013, cash and cash equivalent is 14,709. In the year ended of 2014, cash and equivalent is increased
by 53.46%.
Balance Sheet:
The accounting balance sheet is one of the major financial statements used by accountants and
business owners. The balance sheet is also referred to as the statement of financial position. The
balance sheet presents a company's financial position at the end of a specified date. Some describe the
balance sheet as a "snapshot" of the company's financial position at a point (a moment or an instant)
in time. Because the balance sheet informs the reader of a company's financial position as of one
moment in time, it allows someone like a creditor to see what a company owns as well as what
it owes to other parties as of the date indicated in the heading. This is valuable information to the
banker who wants to determine whether or not a company qualifies for additional credit or loans.
Others who would be interested in the balance sheet include current investors, potential investors,
Page 24 of 90
company management, suppliers, some customers, competitors, government agencies, and labor
unions.
Dhaka Bank Limited
Balance Sheet
As at 31 December 2014
Particular
31.12.2014
(TAKA)
Property and Assets

Cash
15,900,854,072
Cash in Hand(including foreign currencies ) 1,395,090,440
Balance with Bangladesh Bank & its agent 14,505,763,632
banks (including foreign currencies)
31.12.2013
(TAKA)
11,900,627,925
1,609,002,280
10,291,760,145
Balance with Other Banks & Financial 6,685,901,914

Institutions
In Bangladesh
2,542,023,266
Outside Bangladesh
4,143,878,648
2,692,952,439
Money at Call & Short Notice
448,300,000
338,900,000
Investments
Government
others
19,698,855,161
18,358,963,884
1,339,891,277
18,756,939,948
16,009,301,980
2,747,637,968
1,927,287,468
765,664,971
Loans, advances, and lease/investments

103,131,519,274
Loans,
cash
credits,
overdrafts, 100,903,755,848
etc/investments
Bills purchased and discounted
2,227,763,426
99,595,883,469
97,382,030,272
Fixed assets including premises, furniture 3,957,799,257

and fixtures
2,518,488,968
Other Assets
9,367,352,413
8,810,436,943
Non-Banking Assets
23,166,033
23,166,033
Total Assets
158,747,543,561
144,408,630,421
2,213,853,197
Liabilities and Capital

Liabilities
Borrowings from Other Banks, Financial 9,414,685,059
Institutions and Agents
3,649,917,871
Deposits and other accounts

Current accounts and other accounts
Bills payable
Savings and Bank deposits
Term deposits
124,853,559,335
14,362,088,804
2,175,092,005
11,463,880,702
96,852,497,824
115,981,165,413
10,171,783,633
991,276,689
8,870,151,906
95,947,953,185
Non convertible Subordinate Bond
2,000,000,000
2,000,000,000
Page 25 of 90
Other Liabilities
9,733,785,542
10,890,638,241
Total liabilities
146,002,029,936
132,521,721,525
Capital & Shareholders Equity

Equity attributable to equity holders of the 12,745,513,625
parent company
Paid-up capital
5,685,129,640
Statutory reserve
4,825,543,616
Other reserve
870,409,255
Retained earnings
1,364,431,114
Total Equity
12,745,513,625
Total Liabilities & Shareholders' Equity
158,747,543,561
OFF Balance Sheet Items
CONTINGENT LIABILITIES:
Acceptance and Endorsements
Letter of Credits
Letter of Guarantee
Bills for Collection
Other Contingent Liabilities
Total:
11,886,908,896
5,414,409,190
4,181,375,888
1,099,953,796
1,191,170,022
11,886,908,896
144,408,630,421
13,756,065,906
13,042,203,273
13,085,748,553
5,783,061,204
3,008,744,945
48,675,823,881
12,304,828,570
11,023,698,214
13,891,546,477
5,717,930,781
2,530,870,689
45,468,874,731

The Balance Sheet of the Dhaka Bank Limited presents the actual financial position at the end of 31
December 2014 and 31 December 2013. We observed total assets and total liability & Shareholders
equity of Dhaka Bank Limited from the year of 2013 to 2014 on assessing the annual report of that
certain company. We have found some fluctuation in the total asset and total liability & Shareholders
equity. The fluctuations are described hereby:
Balance Sheet
158,748
144,409
146,002 132,522
2014
12,746
Total Assets
(million)
Total Liabilities
(million)
11,887
2013
Total Share
holders' Equity
(million)
Figure 3.4: Balance Sheet Comparison
Page 26 of 90
In the year 2014, we get that total asset is 158,748 million taka and total liability is 144,409 million
taka and total shareholders was 12,746 million taka. For 2013, we got that total asset was 144,409
million taka and liability was 132,522 million taka and Shareholders equity was 11,887 million taka.
In 2014 the total asset is increased by 9.93% from the previous year, the total liability is increased by
10.17% from the previous year and total share holders equity is also increased by 7.22% from the
previous year.
Page 27 of 90
Chapter 04
BAS and BFRS Application: Analysis
Page 28 of 90
Part A- BAS Application Analysis

4.1 BAS 1(Presentation of Financial Statement)
4.1.1 BAS 1- Theoretical Overview:
4.1.1.1 What information financial statements provide?
Financial statements provide information about Financial Position.
Financial Statements.
Cash flows.
Fiancial
Position
Financial
Statements
Provide
Information
Financial
about
Performan
ce
Cash
Flows
Figure 4.1: Information of Financial Statements

4.1.1.2 Objective
BAS 1(presentation of financial statements) prescribes the basis for the presentation for financial
statements, so as to ensure comparability with:
The entitys own financial statement of previous periods; and
The Financial statement of other companies.
BAS 1 must be applied to all general purpose financial statements prepared in accordance with BFRS.
BAS 1 is concerned with overall considerations about the minimum content of a set of financial
statements.
Whilst the terminology used was designed for profit-oriented businesses, it can be used with
modifications, for non-for-profit activities.
4.1.1.3 Purpose of Financial statements
The objective of general purpose financial statements is to provide information about Financial position
Page 29 of 90
Financial performance and cash flow

Management stewardship.
In order to achieve this, information is provided about the following aspects of the entitys results:
Assets
Liabilities
Equity
Income and expenses
Other changes in equity
Cash flows.
4.1.1.4 Components of financial Statements

The components of the financial statements are sketched in the bellow graph in accordance with BAS
1.
components of
Financial Statements
Balance sheet
Assets, Liabilities
and equity
Income statement
Statement of Changes
in equity
All changes in equity

Income and expense
other than those with

equity holders
Cash flow statement
Cash onflows and

outflows
Notes
Significant accounting
policies and other
explanatory notes
BAS 1 requires that they should be clearly identified and distinguished from other information
presented.
4.1.1.5 Overall Considerations
Considerations that should be complied with in the specific applications of the financial statements of
the general principles include
Fair presentation.
Going concern.
Accrual Basis.
Materiality.
Fair presentation:
Fair representation requires the faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and
expenses out in the framework. BAS 1 expands on this principle as follows:
Compliance with BFRS should be disclosed.
Page 30 of 90
Financial statements can only be described as complying with BFRS if they comply with
all the BFRS requirements.
Use of inappropriate accounting policies cannot be rectified either by disclosure or
explanatory material.
Going concern:
It is an underlying assumption in the accounting framework. It means that an entity is normally
viewed as continuing in operation for the foreseeable future. BAS 1 makes the following points It must look at least 12 months into the future from balance sheet date to see if the entity is a
going concern.
Uncertainties about the entitys ability to continue should be disclosed.
If this assumption is not followed then the Basis on which financial statements have been
prepared and reasons should be explained.
Accrual Basis of Accounting:
It is also an underlying assumption in the framework. According to it items are recognized as assets,
liabilities, equity, income and expenses when they satisfy the recognition criteria for those elements in
the framework. To comply with the recognition requirements they should be Recognized when they occur.
Recorded in the financial statements of the period to which they relate.
Profits and revenue must be matched against the expenditure incurred in earning it.
Consistency of preparation:
To maintain consistency, the presentation and classification of items in the financial statements should
stay the same from one period to next. Provided Significant change in nature and operations.
Review of financial statements which indicate more appropriate presentation.
Change in presentation requirements by BFRS.
Materiality and aggregation:
Amounts which are immaterial can be aggregated with amounts of a similar nature or function and
need not to be presented separately.
Materiality: Omissions or misstatement of items are material if they could individually or
collectively influence the economic decisions of users taken on the basis of the financial statements.
Materiality depends on the size and nature of the omission or misstatement judged in the surrounding
circumstances. The size or nature of the item, or a combination of both could be the determining
factor. Here An error too trivial to influence financial decision is immaterial.
Determination of an items materiality is Subjective exercise.
The assessment of an item as material or immaterial may affect its Treatment in financial
Statements.
Page 31 of 90
4.1.1.6 Structure and content

In addition to giving substantial guidance on the form and content of financial statements BAS 1 also
covers a number of general points Profit and loss must be calculated after taking account of all income and expenses in the
period.
Recommended formats should be followed.
Readers of financial statements should be able to distinguish between financial statements and
other information.
Financial statements should be presented at least annually.
Financial statements should be produced within six months of the balance sheet date.
4.1.1.7 Balance sheet
The following guidelines are given in BAS 1 about the presentation of balance sheet.
BAS 1 provides guidance on the layout of the balance sheet.

BAS 1 specifies that certain items must be shown on the face of the balance sheet.
Other information is required on the face of the balance sheet or in the notes.
Both assets and liabilities must be separately classified as current and non-current.
4.1.1.8 Income Statement

The following guidelines are given in BAS 1 about the presentation of income statement.
BAS 1 suggests two formats for the income statement
BAS 1 specifies that certain items must be shown on the face of the income statement
Other information is required on the face of the income statement or in the notes
Income statement formats:
BAS 1 suggests two possible formats for the income statement, the different between them being the
classification of expenses:
By function, or
By nature
These two formats are given visualized bellow to show the example of format of income statement
that is created by companies complied BAS 1
XYZ Ltd. Income Statement for the year ended [date]
Illustrating the classification of expenses by function
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Profit/loss from operation
CUm
X
(X)
X
X
(X)
(X)
X
Page 32 of 90
Finance cost
Investment income
Share of profit/(losses) of associates
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the period from continuing operations
Discontinuous operations
Profit/(loss) for the period from discontinued operations
Profit or loss for the period
Attributable to:
Equity holders of XYZ Ltd.
Minority interest
(X)
X
X/(X)
X
(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
XYZ Ltd. Income Statement for the year ended [date]

Illustrating the classification of expenses by nature
Continuing operations
Revenue
Changes in inventories of finished goods and work in progress
Work performance by the enterprise and capitalized
Raw materials and consumables used
Employee benefits expenses
Depreciation and amortization expense
Impairment of PPE
Other expenses
Profit /(loss) from operation
Finance cost
Investment income
Share of profit/(losses) of associates
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the period from continuing operations
Discontinuous operations
Profit/(loss) for the period from discontinued operations
Profit or loss for the period
Attributable to:
Equity holders of XYZ Ltd.
Minority interest
CUm
X
X
(X)
X
(X)
(X)
(X)
(X)
(X)
X
(X)
X
X/(X)
X
(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
4.1.2 : DBLs Compliance with BAS 1

BAS 1 related with the presentation of financial statements. The Dhaka Bank Limiteds financial
statements complied with the BAS 1. The proper reasoning behind this compliance is given bellow:
Page 33 of 90
DBLs purpose of creating financial statements matches with that of BAS 1 (show financial
posit financial performance and cash flow management stewardship)
According to BAS 1, DBL also prepare balance sheet to show financial position, income
statement to show financial performance, changes in equity statement to show all changes in
equity, cash flow statement to cash inflows and outflows and notes to show significant
accounting policies and explanationary notes.
To show a fair presentation DBL follows accrual basis of accounting and follow going
concern basis.
Dhaka bank limited maintain consistency in accounting as they are using accrual basis of
accounting and going concern basis from the beginning of their inception.
Their financial statements are comparable with relevant previous years as shown in the
annual report of 2014 where every element of financial statements is compared with previous
year 2013.
DBLs balance sheet has matched sample of BAS 1 and Its elements also matched with it.
DBLs income statement and cash flow statement are also presented as per BAS 1.
Income statement the DBL has followed the format of income statement where the expenses
are classified by their functions not by nature.
The presentation of equity statement and Cash flow statement of Dhaka Bank Limited also
matched with the given format of BAS 1.
4.2 BAS 2(Inventories)

BAS 2 discusses about the treatment of inventories. The objective of BAS 2 is to prescribe the
accounting treatment for inventories. In particular, it provides guidance on the determination of cost
and its subsequent recognition as an expense, including any write-down to net realisable value.
4.2.1.1 Definition:
According to BAS 2, inventories are the assets which are held for sale in the ordinary course of
business or in the process of production for such sale or in the form of materials or supplies to be
consumed in the production process or in the rendering of services. So, inventories can include goods
purchased and held for resale or finished goods or goods work in progress or raw materials awaiting
use etc.
4.2.1.2 Measurement:
According to BAS 2, in measuring inventories we should select the lower of cost and net realisable
value.
Here, the components of costs are presented in the following diagram:
Page 34 of 90
Cost
Purchase
Conversion
Other Costs
Purchase Price
Directly Related to
the Units of
Production
Abnormal
Amounts of
Production Costs
Duties and Taxes
Fixed and Variable

Production
Overheads
Storage Costs
Costs Directly
Attributable to
acquisition
Administrative
Overheads
Less Trade
Discount
Selling Costs
Fig 4.2: Components of Costs of Inventories

On the contrary, in the way of measuring inventories net realisable value indicates the estimated
selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sales.
4.2.1.3 Inventories: Perspective of Banking Industry
Financial services are the main area of the banking industry where inventory is not readily apparent.
In this subset, the accounts and monetary instruments are the inventory. While an account does not
exist until the client funds it, it is instantly created and transferred at the time of transaction. Another
area to consider is lending. When a client borrows money, those funds are the inventory. The money
is often drawn from the bank's capital from investment activities and transferred to the borrower when
he executes the proper documentation.
4.2.2 DBLs Compliance with BAS 2
The provisions furnished in the BAS 2 regarding inventories can be applied in all cases except the
following:
Work in progress under construction contracts;

Financial instruments;
Biological assets;
So, in this case Dhaka Bank Limited is fully unable to apply BAS 2. So, in case of inventories the
bank did not follow the provisions of BAS 2.
After analysing the related financial statements of Dhaka Bank Limited, we consider loans and
advances as the inventories of this company. The rationale behind this is that Dhaka Bank Limited
falls under the category of servicing industries.
Page 35 of 90
According to the annual report of Dhaka Bank Limited for the year 2014, we found total amount of
loans and advances is 103,131million Taka. In 2013, the total amount of loans and advances is
99,596million Taka. In fact, in 2014, total amount of loans and advances was increased by 4%.
4.3 BAS 7(Cash Flow Statement)

4.3.1.1 Objective of BAS 7
The objective of BAS 7 Cash flow statement is to provide historical information about changes in
cash and cash equivalent, classifying cash flows between operating, investing, and financing
activities. This will provide information to users of financial statements about the entitys ability to
generate cash and cash equivalents, as indicating the cash needs of the entity.
Cash: Cash comprises cash on hand and demand deposit.
Cash equivalent: Short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of change in value.
4.3.1.2 Scope of BAS 7
A cash flow statement should be presented as an integral part of an entitys financial
statements.
All types of entities are required by the standard to produce a cash flow statement.
4.3.1.3 Presentation of Cash flow Statement
BAS 7 requires cash flow statements to report cash flows during the period classified by:
I.
II.
III.
Operating activities
Investing activities
Financing activities
Operating
Activities
Investing
Activities
Financing
Activities
Cash flows
Figure 4.3: Types of Cash Flows

Page 36 of 90
i) Operating Activities:
Cash flows from operating activities are primarily derived from the principal revenue producing
activities of the entity. Most of the components of cash flows from operating activities will be those
items which determine the net profit or loss of the entity. The standard gives the following as
example of cash flows from operating activities.
Cash receipts from the sale of goods and the rendering of services.
Cash receipts from royalties, fees, commissions and other revenue.
Cash payments to suppliers for goods and services.
Cash payments to and on behalf of employees.
Cash flows from interest paid and income taxes paid are also dealt with here.
It is the key part of the cash flow statement because it shows whether, and to what extent,
companies can generate cash from their operations as other inflows may be non-recurring.
Cash generated from operations:
BAS 7 allows two possible layouts for cash generated from operations
The indirect method
The direct method
Figure 4.4 : Layouts for Cash Generated from Operations

The direct method is preferred by BAS 7 but not required. In practical terms the indirect method is
likely to be easier and less time consuming to prepare and is more likely to be examined.
Indirect Method:
Using the indirect method, cash generated from operations is calculated by performing
reconciliation between:
Profit before tax as reported in the income statement, and
Cash generated from operations.
This reconciliation is produced as follows:
Reconciliation of profit/loss before tax to cash generated from operations for the year ended 31
December 20X7
Page 37 of 90
Profit / (loss) before tax

Finance Cost
Investment income
Depreciation charge
Amortization charge
Loss/ (profit) on disposal of non-current assets
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in in accruals
Increase/(decrease) in provisions
Cash generated from operations
CU
X
X
(X)
X
X
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
X/(X)
X
Direct Method:
Using direct method cash generated from operations would be analysed as follows and shows as a
note to the cash flow statement:
Gross operating cash flows for the year ended 31 December 20X7
Cash receipts from customers

Cash paid to suppliers and employees
CU
X
(X)
X
ii) Investing Activities:

The cash flows classified under this heading show the extent of new investment in assets which will
generate further income and cash flows. The standard gives the following examples of cash flows
arising from investing activities.
Cash payment to acquire property , plant and equipment, intangibles and other non-current
assets, including those relating to capitalised development costs and self-constructed
property, plant and equipment
Cash receipts from sales of property, plant and equipment, intangibles and other noncurrent assets
Cash payment to acquire equity or debt of other entities.
Interest received
Dividend received
iii) Financing Activities:
This section of cash flow statement shows the share of cash which the entitys capital providers have
claimed during the period. This is an indicator of likely future interest and dividend payments. The
standard gives the following examples cash flows which might arise under this heading.
Page 38 of 90
Cash proceeds from issuing shares

Cash payments to owners to acquire or redeem the entitys shares
Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short and
long-term borrowings
Repayments of capital of amounts borrowed under finance leases
Dividend paid
Example of Cash Flow Statement:
A proforma according to standard is given bellow:
CU000
CU000
Cash flows from operating activities

Interest paid
Income taxes paid
2730
(270)
(900)
Net cash from operating activities
1,560
Cash flows from investing activities

Purchase of property, plant, and equipment
(900)
Proceeds from sale of property, plant, and equipment
20
Interest received
200
Dividend received
200
Net used in investing activities
(480)
Cash flows from financing activities

Proceeds from issue of share capital
250
Proceeds from issue of long-term borrowings
250
Dividend paid
Net cash used in financing activities
(1,290)
(790)
Net increase in cash and cash equivalents
290
Cash and cash equivalents at the beginning of the period
120
Cash and cash equivalents at the end of the period
410
Page 39 of 90
4.3.1.4 Disclosures:
BAS 7 requires certain additional disclosures to accompany the cash flow statement.
Components of cash and cash equivalent: the following disclosures are required:
The components of cash and cash equivalents.
A reconciliation showing the amounts in the cash flow statement reconcile with the
equivalent items reported in the balance sheet.
The accounting policy used in deciding the item included tin cash and cash equivalents (BAS
1)
Other disclosures:
All entities should disclose, together with a commentary by management, any other information
likely to be of importance, for example:
Restriction on the use of or access to any part of cash equivalents.
The amount of undrawn borrowing facilities which are available.
Cash flows which increased operating capacity compared to cash flows which merely
maintained operating capacity.
Significant non-cash transactions:
Many investing and financing activities do not have direct impact on current cash flows although
they do affect the capital and asset structure of an entity. Significant non-cash transactions should
be disclosed.
Examples include:
The acquisition of assets either by assuming directly related liabilities or by means of a
finance lease
The acquisition of an entity by means of an issue of equity shares

Dhaka Bank Limited has been complied with the BAS 7. The following consolidated statement of cash
flows and separate cash flow statement are the mark of this compliance. Besides the mentionable
points of DBLs cash flow statement is discussed below :
Separate Cash Flow Statement:
Dhaka Bank Limited

Cash Flow Statement
Particular
2014
(TAKA)
2013
(TAKA)

Page 40 of 90
Dividend receipts
Income taxes paid
13,488,419,129
(10,876,711,749)
80,295,480
826,966,780
(1,627,967,019)
(259,505,834)
(1,391,744,053)
417,683,333
(952,253,574)
15,236,099,562
(11,786,093,808)
44,734,627
825,951,074
(1,482,926,276
(205,025,405)
(849,771,031)
434,936,600
(847,924,047)
(i)Operating profit before changes in current

(294,817,507)
1,369,981,296
(2,601,304,570
(3,535,635,805)
(957,403,335)
862,371,005
8,010,022,917
(36,798,429)
(628,859,973)
1,112,391,810
45,190,773
(9,455,598,896)
(2,537,375,685)
207,052,494
8,346,961,629
106,274,404
1,374,866,882
(1,912,628,399)
817,574,303
(542,647,103)

Purchase or sale of Subsidiary
Cash flow from financing activities
Dividends paid
Cash flow from/(used in) financing activities
(c)
2,416,603,730
1,407,746,691
(1,616,074,495)
29,481
(249,999,940)
1,958,305,467
1,547,941,866
(119,124,347)
(789,131,614)
1,414,700
641,100,605
5,764,767,188
(920,449,563)
60
4,844,317,685
(2,046,960,017)
(2,046,960,017)
Net increase/ (Decrease) in cash and cash

equivalents (a+b+c)
Add: Effects of exchange rate changes on
cash & cash equivalents
Add: cash and cash equivalents at beginnings
of the year
Cash & Cash equivalents at end of the year (*)
7,620,197,395
(1,948,506,515)
243,235,518
222,830,286
14,709,137,160
16,434,813,389
22,572,570,073
14,709,137,160
1,395,090,440
14,505,763,632
1,608,867,780
10,291,760,145

Other assets
Other liabilities
(ii) Cash flow from/(used in) operating assets
and liabilities
Net cash flow from/ (used in) operating
activities (a)= (i+ii)

Cash in hand
Balance with Bangladesh bank &Sonali bank
Page 41 of 90
Balance with other Banks & Financial

Institutions
Prize Bond
Total
6,219,697,351
2,464,187,135
448,300,000
3,718,650
22,572,570,073
338,900,000
5,422,100
14,709,137,160
Consolidated Cash Flow Statement:
Dhaka Bank Limited and its Subsidiary

Consolidated Cash Flow Statement
Particular
Dividend receipts
Income taxes paid
(i)Operating profit before changes in
current assets and liabilities
Other assets
Other liabilities
(ii) Cash flow from/(used in) operating
Net cash flow from/ (used in) operating
activities (a)= (i+ii)
Dividends paid
2014
(TAKA)
2013
(TAKA)
13,750,834,735
(11,114,332,831)
80,295,480
930,579,591
(1,627,967,019)
(259,505,834)
(1,391,744,053)
690,233,887
(1,014,613,426)
15,284,179,850
(11,786,093,808)
44,734,627
941,723,974
(1,482,926,276)
(205,025,405)
(849,771,031)
(159,715,914)
(908,130,399)
43,780,529
878,975,618
(2,601,304,570)
(3,254,621,253)
(975,269,050)
862,371,005
8,010,022,917
(36,798,429)
(764,253,845)
1,240,146,775
45,190,773
(9,581,607,960)
(2,197,407,042)
207,052,493
8,346,961,629
106,274,404
1,789,093,022
(1,284,442,681)
1,283,927,304
(405,467,063)
1,938,405,838
1,407,746,691
(1,616,815,345)
29,481
1,729,366,665
5,764,767,188
(920,449,563)
1,547,941,866
(119,124,347)
(789,991,302)
1,414,700
640,240,917
(2,046,960,017)
Page 42 of 90
Cash flow from/(used in) financing
activities (c)
60
4,844,317,685
(2,046,960,017)
Net increase/ (Decrease) in cash and cash

equivalents (a+b+c)
Add: Effects of exchange rate changes on
cash & cash equivalents
Add: cash and cash equivalents at
beginnings of the year
Cash & Cash equivalents at end of the
year (*)
7,857,611,654
(1,812,186,163)
243,235,518
222,830,286
14,938,036,964
16,527,392,841
23,038,884,136
14,938,036,964
1,395,199,940
14,505,763,632
1,609,002,280
10,291,760,145
6,685,901,914
2,692,952,439
448,300 ,000
3,718,650
23,038,884,136
338,900,000
5,422,100
14,938,036,964

Cash in hand
Balance with Bangladesh bank &Sonali
bank
Balance with other Banks & Financial
Institutions
Prize Bond
Total
4.3.2.1 Analysis on the compliance of Separate Cash Flow Statement

The analysis on the compliance of BAS 7 by the DBLs separate cash flow statement is point out
bellow:
The company has used the proforma of BAS 7 for showing Cash flow Statement.
Dhaka Bank Limited has used the direct method to calculate cash generated from operation
which is explained in note 41 and 42 as follows:
Receipt from other operating activities

Exchange earnings
Total
2014
TK.
56,834483
360,848,850
417,683,333
2013
TK.
44,559,662
390,376,938
434,936,600
Payment for other operating activities

Rent, Taxes, Insurance, Lighting etc.
Chief executives salary & allowances
Directors fees & Meeting expenses
Repair of banks assets
2014
TK.
406,184,756
7,268,600
3,600,271
91,341,161
2013
TK.
354,748,442
12,340,000
2,956,763
69,169,506
Page 43 of 90
Other expenses
476,392,510 439,456,997
984,787,298 878,671,708
(32,533,724) (30,747,661)
952,253,574 847,924,047
Dhaka Bank Foundation

Total
4.3.2.2 Analysis on the compliance of Consolidated Cash Flow Statement

The analysis on the compliance of BAS 7 by the DBLs consolidated cash flow statement is point out
bellow:
The company has used the proforma of BAS 7 for showing Cash flow Statement.
Dhaka Bank Limited has used the direct method to calculate cash generated from operation
which is explained in note 41(a) and 42(a) as follows:
Receipt from other operating activities
Consolidated Receipts from other operating activities

Dhaka Bank Limited
Dhaka Bank Securities Limited
Dhaka Bank Investment Limited
Total
2014
TK.
952,253,574
62,358,127
1,725
1,014,613,426
2013
TK.
847,924,047
60,206,352
908,130,399
Consolidated Payment for other operating activities

Dhaka Bank Limited
Dhaka Bank Securities Limited
Dhaka Bank Investment Limited
Total
2014
TK.
417,683,333
259,899,462
2,651,092
690,233,887
2013
TK.
434,936,600
(594,652,514)
(159,715,914)
4.4 BAS 10(Events after Balance Sheet Date)
4.4.1 BAS 10- Theoretical Overview

4.4.1.1 Purpose of BAS 10:
Financial statements are prepared to the balance sheet date. The preparation of financial statements
will normally continue for a period after this date. During this time lag, events may occur which
provide additional information that is relevant to the preparation of the financial statements. The
objective of BAS 10 events after the Balance Sheet date is to prescribe when financial statements
should be adjusted for these events and any disclosures that may be required.
Page 44 of 90
4.4.1.2 Events after balance sheet date:

These are those events, favourable and unfavourable, that occur between the balance sheet date and
the date when the financial statements are authorized for issue.
These are two different classes of events after the balance sheet date:
Adjusting events; and

Non-adjusting events
Adjusting events:
Those that provide evidence of conditions that existed at the balance sheet date.
Examples include:
Bankruptcy of a customer, requiring adjustment to the amount receivable

Proceeds or other evidence concerning the net realizable value of inventories
Non-adjusting events:
These are the indicative of conditions that arose after the balance sheet date.
Examples include:
Plans to discontinue operations announced after the year end

Major purchase of assets.
Dividends:
Dividends should be treated as follows:
They cannot be shown as a liability as there is no obligation at the balance sheet date.
The amount of dividends payable must be disclosed in the notes to the financial statements.

No material events had occurred after Balance Sheet date, which could affect the values reported in
the financial statements.
4.5 BAS 16(Properties, Plant and Equipment)

4.5.1.1Brief Introduction to Property, Plant and Equipment (PPE):
Property, plant and equipment are tangible resources that are used in the operations of the
business and are not intended for sale to customers. They are also called property, plant and
equipment or fixed assets (see Weygandt, Kieso & Kimmel: 421). The major characteristics of
property, plant and equipment are:
(i)
(ii)
They are acquired for use in operations and not for resale ;
They are long-term in nature and usually subject to depreciation; and
Page 45 of 90
(iii)
They possess physical substance (see Kieso, Weygandt & Warfield; 470).
International Accounting Standards (IAS) 16 on property, plant and equipment (revised 1998)
deals with the accounting treatment of property, plant and equipment. IAS 16 (revised 1998) sets
out overall consideration for the presentation of property, plant and equipment in the Financial
Statements. The recognition, measurement and disclosure related to the property, plant and
equipment are dealt with by IAS 16. This paper is an attempt to draw a brief outline of IAS 16, which
is mandatory in Bangladesh for Listed Public Limited Companies (PLCs) and also to try to show the
empirical extent of financial reporting by listed PLCs in Bangladesh in compliance with IAS 16.The
focus is not on the quality of the reporting of the companies but rather on what the reporting levels
are in general.
4.5.1.2 Objective and Scope of BAS 16:
The objective of BAS 16 is to prescribe the accounting treatment of property, plant and equipment
so that the users of the Financial Statements can discern information about an entitys investment in
its property, plant and equipment and the changes in such investment. The principal issues in
accounting of property, plant and equipment are the recognition of the assets, the determination of
their carrying amounts and the depreciation charges and impairment losses to be recognized in
relation to them (para-1). Applicability of BAS 16 (revised 1998) can be enumerated as follows:
BAS 16 does not apply to:
o Property, plant and equipment classified as held for sale and which is discontinued
for operations (para-3),
o Biological assets related to agricultural activity (para-3),
o The recognition and measurement of exploration and evaluation assets (para-3), and
o Mineral rights and mineral reserve such as oil, natural gas and similar nonregenerative resources (para-3).
BAS 16 applies to property, plant and equipment used to develop or maintain the assets
related to biological assets of agricultural activity and also related to mineral rights and
mineral reserves.
BAS 16 is applicable for other accounting treatment including depreciation of leased
property, plant and equipment which is recognized by BAS 17 (para-4).
BAS 16 applies to an entity that is being constructed or developed for future use as
investment property but does not yet satisfies the definition of investment property in BAS
40 (para-5).
An entity using the cost model for investment property in accordance with BAS 40 shall use
the cost model in accordance with BAS 16.
4.5.1.3 Recognition of Property, Plant and Equipment:
If the following two criteria satisfy, the property, plant and equipment will be recognized:
It is probable that future economic benefit will flow to the entity.
The items cost can be measured reliably.
Page 46 of 90
Subsequent Costs:
1. Repairs and maintenance expenditure should be recognized in profit or loss as incurred
2. Replacement parts should be capitalized provided the original cost of the items they.
4.5.1.4 Measurement at Recognition:
An item of PPE qualifying for recognition is initially measured at cost.
Cost: This is the amount of cash or cash equivalents paid or the fair value of other consideration
given to acquire an asset.
Fair Value: This is the amount for which an asset could be exchanged between knowledgeable,
willing parties in an arms length transactions.
4.5.1.5 Elements of PPE:
PPE should be measured at cost at acquisition.
Cash
Here,
or,
Cost
Fair value if PPE are exchanged
Purchase price.
Directly attributable costs
Estimate of dismantling and site restoration costs.
Measurement after Recognition
IAS 16 permits two accounting models:
Cost Model: The asset is carried at cost less accumulated depreciation and impairment loss.
Revaluation Model: The asset is carried at a revalued amount, being its fair value at the date of
revaluation less subsequent depreciation and impairment, provided that fair value can be measured
reliably.
Accounting for Revaluation:
Increase in Value:
The basic rule is that increases in value on a revaluation are credited directly to equity. The effect of
this is that they:
They dont appear in the income statement.
They dont appear in the c=statement of changes in equity.
Page 47 of 90
The exception is that where such an increase reverses an earlier revaluation decrease on the same
asset that was recognized in profit or loss, then the surplus should be recognized in profit or loss, but
only to the extent of the previous decrease, In practice, the surplus is treated so that the overall effect
is the same as if the original downward revaluation recognized in profit or loss had not been occurred.
Accounting for Increases in Value:

Asset Value (balance sheet) ----------- Dr.
Accumulated Depreciation ------------ Dr.
Revaluation Reserve -----------Cr.
Decrease in Value:
The basic rule is that decreases in value on a revaluation are recognized as an expense and charged to
the income statement.
The exception is where such a decrease reverses an earlier revaluation increase on the same asset that
was recognized directly in equity and is held in the revaluation reserve, then the deficit should be
recognized directly in equity but only to the extent of the previous increase.
Accounting for Decrease in Value:
Revaluation Reserve ------------ Dr.
Income Statement -------------- Dr.
Asset Value (balance sheet)----------- Cr.
Depreciation of Revalued Asset:

Where an asset has been revalued, the depreciation charge is based on the revalued amount less
residual amount, from the date of revaluation. The assets residual value should also be re-estimated
on revaluation.
Residual value: residual value is the estimated amount that an entity would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal if the asset were already of the
age in the condition expected at the end of its useful life.
Entry to Record Transfer:
Revaluation Reserve --------------- Dr.
Retained Earnings --------- -------Cr.
Page 48 of 90
Depreciation:
This is the systematic allocation of the depreciable amount of an asset over its useful life.
Depreciation Method:
Straight Line Method: Equal distribution of the asset over time.
Diminishing or Reducing Basis: Charging more depreciation in the early years of an assets
life than in the later years.
Sum of the Units: Here, the charge is calculated by reference to the output each year as a
proportion of the total expected output over the assets useful life.
Property, plant & equipment are recognized if it is probable that future economic benefits
associated with the assets will flow to the Bank and the cost of the assets can be reliably measured.
I) All fixed assets are stated at cost less accumulated depreciation as per 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 nonrefundable taxes.
II) The Bank recognizes in the carrying amount of an item of property, plant and equipment the cost
of replacing part of such an item when that cost is incurred if it is probable that the future economic
benefits embodied with the item will flow to the company and the cost of the item can be measured
reliably. Expenditure incurred after the assets have been put into operation, such as repairs and
maintenance, is normally charged off as revenue expenditure in the period in which it is incurred.
iii) Depreciation is charged on straight-line method at the following rates on cost of assets from the
month of their purchase as per revised policy with effect from the year 2012.
IV) Name of the Assets
Rate of Depreciation
Land
Nil
Building
2.50% p.a.
Furniture & Fixtures
10.00% p.a.
Office Appliances & Equipment
20.00% p.a.
Computer and Software
20.00% p.a.
Vehicles
20.00% p.a.
Asset Revaluation Reserve:

Dhaka Bank Limited re-valued the entire class of Land during the year 2011 by an independent
valuation firm according to Paragraph 36 of BAS-16 as per approval of the Board of Directors of the
Bank. As per BRPD Circular No.10 dated 24 November, 2002, the amount of asset revaluation
Page 49 of 90
reserve after revaluation of banks asset will be eligible up to 50% for the treatment of the
supplementary capital (Tier-II). [For detail please see Note-18.2].
Other Assets:
Other assets include all balance sheet accounts not covered specifically in other areas of the
supervisory activity and such accounts may be quite insignificant in the overall financial condition of
the Bank.
Receivables:
Receivables are recognized when there is a contractual right to receive cash or another financial
asset from another entity.
Non-Banking Assets:
Non-banking assets are acquired on account of the failure of a debtor to repay the loan in time after
receiving the decree from the Court regarding the right & title of mortgaged property during the
year 2010. The value of the properties has been incorporated in the books of accounts on the basis
of third party valuation report.
Impairment of Assets:
The policy for all assets or cash-generating units for the purpose of assessing such assets for
impairment is as follows:
The Bank assesses at the end of each reporting period or more frequently if events or changes in
circumstances indicate that the carrying value of an asset may be impaired, whether there is any
indication that an asset may be impaired. If any such indication exists, or when an annual
impairment testing for an asset is required, the bank makes an estimate of the assets recoverable
amount. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its
recoverable amount by debiting to profit and loss account. Fixed assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may be
impaired.
So, on the basis of the financial statement that we have got from the annual report of Dhaka bank
Limited for the year of 2014, says that the following issues comply if we sum up again the whole pros
and cons of the part of property, plant and equipment:
Property, Plant and Equipment
Complied
Figure 4.5 : Compliance of PPE with DBLs Financial Statements
Page 50 of 90
4.6 BAS 17(Lease)

4.6.1.1 Lease:
An agreement where the lessor conveys to the lessee for a payment or a series of payments for the
right to use an asset for an agreed period of time.
In a leasing transaction, there is a contract between the lessor and the lessee for the hire of an asset.
The lessor is owner and supplier of the asset.

The lessee is user of the asset.
Substance over form:

It is a principle of accounting that the commercial substance of a transaction should be reflected in
financial statements rather than legal form. This is a consequence of BFRS framework requirement to
represent transaction faithfully.
There are many types of leasing agreements. By entering into certain sorts of lease, a company is, in
effect, gaining the use of a non-current asset whilst incurring a long-term liability. Where the
commercial substance of the transaction is the purchase of a non-current asset, this should be reflected
in the accounting treatment despite the legal form of the rental agreement.
4.6.1.2 Types of Lease:
BAS 17 recognizes two types of lease:
Financial leases, in which the risks and rewards of ownership are transferred from the lessor
to the lessee, and
Operating leases: all other leases.
Inception is when the provisions are agreed: commencement is when the lessee can use the leased
asset.
4.6.1.3 Classification of Lease:
Financial lease: A lease that transfers substantially all the risks and rewards incidental to ownership
of an asset. Title may or may not eventually be transferred.
Operating lease: A lease other than a finance lease.
Identifying Finance Leases:
BAS 17 also provides examples of situations that would normally lead to a lease being classified as a
finance lease:
At the end of the lease term the ownership of the asset will be transferred to the lessee.
At the end of the lease term lessee has the option to purchase the asset at a reasonable certain
price.
Lease term covers the major part of the economic life of the asset.
Page 51 of 90
At the inception of the lease the present value of the minimum lease payments amounts to at
least substantially all of the fair value of the leased asset.
The leased assets are of special nature that only the lessee can use them without major
modifications.
Minimum lease payments:

Payments over the lease term that the lessee is or can be required to make, excluding contingent rent,
costs for services and taxes to be paid by and reimbursed to the lessor.
Fair Value:
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arms length transaction.
4.6.1.4 Accounting for finance leases:
Setting up balance sheet accounts:
According to BAS 17, when an asset changes hands under a finance lease, the accounting treatment
should be:
Asset account ----------------- Dr.
Payables: Finance lease liabilities ------------- Cr.
Depreciating the asset:

Depreciation expense ------------------ Dr.
Accumulated depreciation ---------------- Cr.
Making the payment:
Payables: Finance lease liabilities -------------- Dr.
Cash -------------------------------- Cr.
Finance charge:
Income statement: Finance cost --------------- Dr.
Payables: Finance lease liabilities ------------- Cr.
Instalment in advance:
Interest accrues over time and is included in the payment at the end of each period of borrowing,
where instalments are paid in advance.
Page 52 of 90
The first instalment repays capital only as no time has yet elapsed for interest to accrue.
At the end of the accounting period the year-end liability will include capital and interest that
has accrued to date but which has not been paid.
Instalment in arrear:
Interest accrues over time and is included in the payment at the beginning of each period of borrowing
where instalment is paid in arrears.
4.6.1.5 Operating leases:
Accounting for operating leases:
Operating lease does not really pose an accounting problem at the legal situation are the same, i.e. The
lessee does not own the leased asset either legally or in substance. The lessee is simply renting the
asset and the rental expense is charged to the income statement.
Leasing:
Leases are classified as Finance Lease whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as Operating Leases.
A) The Bank as Lessor:
Amounts due from leases under finance lease are recorded in the assets side of the Balance Sheet at
the amount of the banks net investment in the leases. Finance lease rental income is allocated to
accounting periods so as to reflect a constant periodic rate of return on the banks net investment
outstanding in respect of the leases. No depreciation has been charged for such lease in the account.
B) The Bank as Lessee:
Assets held under finance leases are recognized as assets of Bank at fair value at the date of
acquisition or if lower, at the present value of the minimum lease payments. The corresponding
liability to the lessor is included in the Balance sheet as a Finance Lessee obligation. Lease payments
are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly
against income. Assets held under Finance Leases are depreciated over their expected useful lives on
the same basis as owned assets.
Lease
Complied
Figure 4.6 : Compliance of DBLs Financial Statements with BAS 17
Page 53 of 90
4.7 BAS 18(Revenue)

4.7.1.1 Objective and scope of BAS 18
BAS 18 prescribes the accounting treatment of revenue recognition in common types of transaction.
It states that in general terms revenue should be recognized:
When it is probable that future economic benefits will flow to the entity and
These benefits can be measured reliably.
BAS 18 applies to:
Sale of goods (manufactured items and items purchased for resale).
The rendering of services (which typically involves the performance by the entity of a
contractually agreed task over an agreed period of time)
The use by others of entity assets yielding interest, royalties and dividends
The standard specifically excludes various types of revenue arising from leases, insurance contracts,
changes in value of financial instruments or other current assets, natural increases in agricultural
assets and mineral ore extraction.
4.7.1.2 Revenue
Revenue income is defined in BFRS Framework as 'increases in economic benefits in the form of
inflows or enhancements of assets or decreases of liabilities that result in increases in equity.' Revenue
is simply income arising in the ordinary course of an entity's activities and it may be called different
names such as:
Sales
Turnover
Interest
Dividends
Royalties
Sales
Royalties
Turnover
Revenue
Dividents
Interest
Figure 4.7 : Types of Revenue

Page 54 of 90
Revenue According to BAS 18 as follows:

The gross inflow of economic benefits during the period arising in the course of the ordinary activities
of an entity when those flows result in increases in equity, other than increases relating to
contributions from equity participants.
4.7.1.3 Measurement of Revenue:
When a transaction takes place, the amount of revenue is usually decided by the agreement of the
buyer and the seller. The revenue, however, should be measured at the fair value of the consideration
received or receivable.
4.7.1.3. 1 Sales of goods:
Revenue should only be recognized when all of the following conditions are satisfied.
The entity has transferred the significant risks and rewards of ownership of the goods to the
buyer.
The seller no longer has management involvement or effective control over the goods.
The amount of revenue can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow to the entity.
The costs incurred in respect of the transaction can be measured reliably.
4.7.1.3.2 Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, the
associated revenue should be recognized by reference to the stage of completion of the transaction at
the balance sheet date.
The outcome of a transaction can be estimated reliably when all of the following conditions are
satisfied:
The amount of revenue can be measured reliably
It is probable that the economic benefits associated with the transaction will flow to the entity
The stage of completion of the transaction at the balance sheet date can be measured reliably
The costs incurred for the transaction and the costs to complete the transaction can be
measured reliably
The recognition criteria above are similar to those for the sale of goods. One of the key differences is
the need to be able to determine the stage of completion of the transaction. This is of particular
relevance when the completion of a contract for services straddles more than one accounting period.
The following methods of assessing the stage of completion are referred to in BAS 18:
Surveys of work performed
Page 55 of 90
Services performed to date as a percentage of total services to be performed

The proportion that costs incurred to date bear to the estimated total costs of the transaction.
Progress payments and advances received from customers often do not reflect the services performed.
As a result it is normally inappropriate to recognize revenue based on payments received.
If the overall outcome of a services transaction cannot be estimated reliably, then revenue is only
recognized to the extent of those costs incurred that are recoverable from the client.
4.7.1.3.3 Investment income
When others use the enterprise's assets yielding interest, royalties and dividends, the revenue should
be recognized when:
a) It is probable that the economic benefits associated with the transaction will flow to the
enterprise and
b) The amount of the revenue can be measured reliably.
The revenue is recognized on the following bases:
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 shareholder's right to receive payment is established. This
is usually when the dividends are declared.
4.7.1.4 Disclosure of BAS 18
The following items should be disclosed:
The accounting policies adopted for the recognition of revenue, including the methods used to
determine the stage of completion of transactions involving the rendering of services
The amount of each significant category of revenue recognized during the period including
revenue arising from:
The sale of goods
The rendering of services
Interest
Royalties
Dividends
The amount of revenue arising from exchanges of goods or services included in each
significant category of revenue.
Any contingent gains or losses, such as those relating to warranty costs, claims or penalties should be
treated according to BAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Page 56 of 90

Dhaka Bank Limited has been complied with the BAS 18. BAS 18 related with the recognition of
revenue. The proper reasoning behind this compliance is given bellow:
a) Interest Income/Profit Received: According to BAS 18 the interest/profit receivable on

unclassified loans and advances/investments is recognized quarterly on accrual basis.
Interest/profit on classified advances is accounted for on a cash receipt basis. Interest on
Credit Card outstanding is calculated on daily product but charged on monthly basis. Interest
charged on Credit Card up to 28 December 2014. Monthly bill of Credit Card issued on 28th
day of each month.
b) Investment Income: According to BAS 18 Interest income on investments is recognized on

accrual basis.
c) Fees and Commission Income: Fees and commission income arises on services provided by
the Bank and recognized on a cash receipt basis. Commission charged to customers on letter
of credit and letter of guarantee are credited to income at the time effecting the transactions.
d) Dividend Income: According to BAS 18 dividend income from shares is recognized at the
time when it is realized.
e) Interest /Profit paid and other expenses: The interest/profit paid on deposits, borrowings
and other expenses are recognized on accrual basis.
4.8 BAS 27(Consolidated and Separated Financial Statement)

)
BAS 27 is to be applied in the preparation of the consolidated financial statements (CFS) of the group.
It is also to be applied in accounting for subsidiaries in the parent company's individual financial
statements. This can be seen in the definitions below:
4.8.1 .1 Definitions:
A group: A parent and all its subsidiaries.
Consolidated financial statements: The financial statements of a group presented as those of a single
economic entity.
Minority interest: That portion of the profit or loss and net assets of a subsidiary attributable to the
equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.
Parent: An entity that has one or more subsidiaries.
Subsidiary: An entity, including an unincorporated entity such as a partnership, which is controlled
by another entity (known as the parent).
Page 57 of 90
4.8.1.2 Control
The factors identified by BAS 27 which would indicate that one entity controls another are very
similar to those identified by BFRS 3. However, BAS 27 also requires an assessment of whether any
potential voting rights that are currently exercisable or convertible contribute to control. Potential
voting rights are considered not currently exercisable or convertible when they cannot be exercised or
converted until:
A future date or
The occurrence of a future event.
For example, an entity may own share warrants or debt or equity instruments that are convertible into
ordinary shares that if exercised or converted would give the entity additional voting power. In
making this assessment the entity should examine all the facts and circumstances that affect the
potential voting rights (e.g. terms of exercise, contractual arrangements). However, the intention of
management and the financial ability to exercise or convert should not have an effect on the
assessment.
4.8.1.3 Presentation of Consolidated Financial Statement (CFS):
With one exception, a parent must present CFS.
A parent need not prepare CFS if:
Either it is a wholly-owned subsidiary or the owners of the minority interest have all been
informed of the proposal that CFS are not prepared and none have and
Its securities are neither publicly traded nor in the process of being issued to the public; and
CFSs are prepared by the immediate or ultimate parent company.
4.8.1.4 Scope of Consolidated Financial Statement
The CFS must include the parent and all the companies under its actual control.
Exclusion from the CFS is not permitted on the grounds that a subsidiary's business is
dissimilar from those of the other companies in the group.
There is only one circumstance in which an entity falling within the definition of a subsidiary
is not consolidated in the normal way. This is when a new subsidiary is acquired but the 'held
for sale' criteria of BFRS 5 are met.
4.8.1.5 Consolidation procedures
BAS 27 makes specific reference to those consolidation procedures necessary to present the group as
a single economic entity. The steps of consolidation procedure are:
Eliminating the carrying amount of the parent's 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, within total equity but separately from the parent
shareholders' equity
In the income statement.
Page 58 of 90
There are additional requirements that:

Where the parent and subsidiary have different reporting dates, that difference must be not
more than three months (remember that, because it has control, the parent can dictate a
reporting date to the subsidiary) and adjustments must be made for major transactions
between the two dates. An example of such an adjustment would be if the subsidiary with
cash appearing in its balance sheet at the earlier date lent it to the parent so that the same cash
was in the parent's
Uniform accounting policies must be applied to all companies in preparing the CFS. If they
are not adopted in the subsidiaries' own financial statements, then adjustments must be made
as part of the consolidation. It might be the case that certain group companies take advantage
of the alternative accounting treatments allowed in some areas by BFRSs, but these must be
made uniform on consolidation.
4.8.1.6 Parent's separate financial statements:
The investment in a subsidiary is carried at cost in the parent's balance sheet; cost being the fair value
of the consideration given as computed under BFRS 3.
The knock-on effect is that the only income included in the parent's income statement are the
distributions received of profits earned after the date of acquisition; distributions out of earlier
profits are accounted for as return of the investment made and are deducted from cost.
4.8.1.7 Disclosures in Consolidated Financial Statements:
Disclosure must be made of:
The nature of the relationship between parent and subsidiary when the parent does not own,
directly or indirectly, more than half of the voting power in the subsidiary
Reasons why a parent does not have control over an investee, even though it holds more than
half of the voting power in it
A subsidiary's reporting date if different from that of the parent, together with the reason for
using a different date
The nature of any restrictions on a subsidiary's ability to transfer funds to the parent
4.8.1.8 The effect of consolidation
Group accounts consolidate the results and net assets of group members to present the group to the
parents shareholders as a single economic entity. This reflects the economic substance and contrasts
with the legal form, where each company is a separate legal person.
Parent
Controls (>50%)
Group-single entity
Subsidiary
Figure 4.8: Group Structure
Page 59 of 90
The effect of consolidation can be illustrated by comparing buying an unincorporated business from
its existing proprietor with buying a controlling interest in a company from its existing shareholders.
4.8.1.9 Format of Consolidation Financial Statements:
According to BAS 27, Format of consolidation Financial Statements is given below:
Consolidated Balance Sheet
AS at 31 march 20X6
Particular
CU
CU
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Assets
Non-current asset
Property, plant and equipment
Intangibles asset
Investments to others
Current assets
Inventories
Trade and Other receivable
Investments
Total assets
Equity and Liabilities
Capital and Reserve
Ordinary share capital
Share premium account
Revaluation reserve
Retain earnings
Non-controlling Interest
Total Equity
Non-current Liabilities
Borrowing
Finance lease liabilities
Current Liabilities
Trade and other receivable
Taxation
Provision
Borrowings
Page 60 of 90
Total equity and liabilities
XXX
XXX
XXX
XXX
Consolidated Income Statement

For the year ended 1 March 20x6
Particular
Revenue
Cost of sale
Gross profit
Distribution cost
Finance cost
Investment income
Profit/loss before tax
Tax
Profit before taxation
CU
XXX
(XXX)
XXX
XXX
(XXX)
(XXX)
XXX/(XXX)
(XXX)
XXX
XXX/(XXX)
(XXX)
XXX
Profit attributable to:

Share holders of equity holder
Minority interest
XXX
XXX
XXX
Consolidated changes in equity

Particular
Paid up
Capital
Noncontrollin
g
Interest
Statutor
y
Reserve
General
Reserve
Asset revaluation
reserve
Investment revaluation
reserve
Retained
earnings
Total
Balance as at 1
January 2013
Restated balances
Surplus/deficit on
account of
revaluation of
property
X
-
X
-
X
-
X
-
X
-
X
-
Surplus/deficit on
account of
revaluation of
investments
Currency transaction
difference
Page 61 of 90
Net gains and loss

not recognized in the
income statement
Share capital of
subsidiary company
(X)
(X)
(X)
(X)
Adjustment with
retained earnings
Net profit for the
year
Transfer to reserve
Dividend:
Stock Dividend
Cash Dividend
Stock dividend paid

by subsidiary
company
X
Change in reserve
Non-controlling
interest
Balance as at 31
December 2013
4.8.1.10 Format of Separated Financial Statements:

According to BAS 27, Format of separated Financial Statements is given below:
Balance Sheet
As at 31 march 20X6
Particular
CU
CU
Page 62 of 90
Assets
Non-current asset
Property, plant and equipment
Intangibles asset
Investments to others
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Capital and Reserve

Ordinary share capital
Share premium account
Revaluation reserve
Retain earnings
Total Equity
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Non-current Liabilities
Borrowing
XXX
XXX
XXX
XXX
XXX
XXX
Current Liabilities
Trade and other receivable
Taxation
Provision
Borrowings
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Total equity and liabilities
XXX
XXX
Current assets
Inventories
Trade and Other receivable
Investments
Total assets
Equity and Liabilities
Page 63 of 90
Income Statement
Particular
CU
Revenue
Cost of sale
Gross profit
Distribution cost
Finance cost
Investment income
Profit/loss before tax
Tax
Profit before taxation
XXX
(XXX)
XXX
XXX
(XXX)
(XXX)
XXX/(XXX)
(XXX)
XXX
XXX/(XXX)
(XXX)
XXX
Change in equity statement

Particular
Balance as at 1 January 2013 changes in

accounting policy
Paid up
Capital
Statutory
Reserve
General
Reserve
Asset
Revaluation
Reserve
Investment
Revaluation
Reserve
Retained
Earnings
Total
Restated balance
Surplus/deficit on account of revaluation

of property
Surplus/deficit on account of revaluation

of investments
Currency transaction difference
Net gains and loss not recognized in the

income statement
X
-
(X)
-
(X)
-
(X)
Net profit for the year

Transfer to reserve Dividend:
Stock Dividend
Cash Dividend
Change in reserve
Balance as at 31 December 2013
Page 64 of 90

Dhaka Bank Limited has been complied with the BAS 27. The following consolidated and separated
financial statements are compliance with 27. Besides the mentionable points of DBLs Financial
statements are discussed below:
Consolidated financial statements of Dhaka Bank Limited:

Consolidated Balance Sheet
Particular
31.12.2014
(TAKA)
31.12.2013
(TAKA)
3(a)
3.1(a)
3.2(a)
15,900,963,572
1,395,199,940
14,505,763,632
11,900,762,425
1,609,002,280
10,291,760,145
Balance with Other Banks & Financial

Institutions
In Bangladesh
Outside Bangladesh
4(a)
6,685,901,914
4.1(a)
4.2(a)
2,542,023,266
4,143,878,648
1,927,287,468
765,664,971
5(a)
448,300,000
338,900,000
Investments
Government
others
6(a)
6.1(a)
6.2(a)
21,660,965,339
18,358,963,884
3,302,001,455
20,240,852,234
16,009,301,980
4,231,550,254
Loans, advances, and lease/investments

Loans, cash credits, overdrafts,
etc/investments
7(a)
7.1(a)
103,604,211,956
101,376,448,530
100,199,590,703
97,985,737,506
8(a)
2,227,763,426
2,213,853,197
Fixed assets including premises, furniture

and fixtures
9(a)
3,972,617,496
2,538,497,507
Other Assets
10(a)
7,479,196,391
7,077,369,984
Non-Banking Assets
11(a)
23,166,033
23,166,033
159,775,322,700
145,012,091,325
Property and Assets

Cash
Cash in Hand(including foreign currencies )
Balance with Bangladesh Bank & its agent
banks (including foreign currencies)
Notes
Total Assets
2,692,952,439

Liabilities
Borrowings from Other Banks, Financial
Institutions and Agents
12(a)
9,414,685,059
3,649,917,871
13
124,853,559,335
115,981,165,413
Page 65 of 90

Bills payable
Term deposits
14,362,088,804
2,175,092,005
11,463,880,702
96,852,497,824
10,171,783,633
991,276,689
8,870,151,906
95,947,953,185
14
2,000,000,000
2,000,000,000
Other Liabilities
15(a)
10,534,004,356
11,336,192,195
Total liabilities
Equity attributable to equity holders of the
parent company
Paid-up capital
Statutory reserve
Other reserve
Retained earnings
Non-controlling interest
Total Equity
146,802,248,750
16
17
18
19(a)
16(a)
Total Liabilities & Shareholders' Equity

Letter of Credits
Letter of Guarantee
132,967,275,479
12,973,044,957
12,044,793,878
5,685,129,640
4,825,543,616
870,409,255
1,591,962,445
28,994
12,973,073,950
5,414,409,190
4,181,375,888
1,099,953,796
1,349,055,004
21,968
12,044,815,846
159,775,322,700
145,012,091,325
13,756,065,906
13,042,203,273
13,085,748,553
5,783,061,204
3,008,744,945
12,304,828,570
11,023,698,214
13,891,546,477
5,717,930,781
2,530,870,689
48,675,823,881
45,468,874,731
21
Total:

Consolidated Profit and Loss Account
Particular
Operating Income
Interest paid/paid on Deposits & Borrowings
Net interest Income
Investment Income
Operating expenses
Legal expenses
Notes
22(a)
23(a)
24(a)
25(a)
26(a)
27(a)
28(a)
29(a)
2014
(TAKA)
2013
(TAKA)
13,735,943,604
(10,872,137,267)
2,863,806,337
2,802,724,014
1,229,119,977
362,407,946
4,394,251,937
7,258,058,274
15,179,221,577
(11,822,881,725)
3,356,339,852
1,695,510,179
1,207,466,062
400,612,175
3,303,588,416
6,659,928,268
1,658,519,240
420,901,350
18,453,410
1,513,862,196
368,265,377
13,370,989
Page 66 of 90

Directors fees
Auditors fees
Depreciation and repairs of Banks assets
Other expenses
Provision for diminution in value of
investments
Other provision
Total provision(d)
30(a)
31(a)
32(a)
33(a)
34(a)
35(a)
36(a)
37(a)
38

Current tax
Deferred tax
Net Profit after tax attributable to:
Equity holders of DBL
Non-controlling interest

Add: Net profit after tax (attributable to
equity holders of DBL)
Appropriations:
Statutory reserve
General reserve
Dividends
Retained earnings
Consolidated Earnings per Share (CEPS)
40(a)
43,139,888
199,016,679
7,268,600
4,451,376
977,500
283,775,653
481,099,128
3,117,602,824
43,817,242
135,594,530
12,340,000
3,459,752
805,000
239,310,592
435,445,254
2,766,270,932
4,140,455,450
543,128,511
13,499,886
3,893,657,336
57,050,512
584,582,559
238,787,580
795,415,977
3,345,039,473
103,838,636
745,471,707
3,148,185,629
1,246,392,649
1,231,650,519
14,742,131
2,098,646,823
1,166,690,451
1,146,415,949
20,274,502
1,981,495,178
2,098,639,857
6,966
2,098,646,823
1,981,489,696
5,482
1,981,495,178
1,349,055,004
2,098,639,857
516,515,831
1,981,489,696
3,447,694,861
2,498,005,527
644,167,728
20,394,675
1,191,170,013
1,591,962,445
3,447,694,861
608,803,684
126,703,225
413,443,614
1,349,055,004
2,498,005,527
3.69
3.49
Page 67 of 90

Consolidated statement of Changes in Equity
Particular
Paid up
Capital
Noncontrolling
Interest
Statutory
Reserve
General Reserve
Asset revaluation
reserve
Investment
revaluation reserve
Retained
earnings
Total
Balance as at
1 January
2013
4,667,594,130
16,486
3,572,572,2
04
346,546,164
648,455,000
34,611,362
516,515,831
9,786,311,177
Restated
balances
Surplus/defici
t on account
of revaluation
of property
4,667,594,130
-
16,486
-
3,572,572,2
04
-
346,546,164
-
648,455,000
-
34,611,362
-
516,515,831
-
9,786,311,177
-
2,77,009,491
2,77,009,491
Surplus/defici
t on account
of revaluation
of investments
Currency
transaction
difference
Net gains and
loss not
recognized in
the income
statement
311,620,853
Adjustment
with retained
earnings
1,981,495,178
1,981,495,178
Net profit for

the year
Transfer to
reserve
Dividend:
7,46,815,060
(413,443,641)
608,803,68
4
(735,506,909)
(5,482)
648,455,000
311,620,853
1,349,055,004
Share capital
of subsidiary
company
Stock
Dividend
Cash
Dividend
(333,371,446)
126,703,225
5,482
-
Stock
dividend paid
by subsidiary
company
Change in
reserve
Noncontrolling
interest
Balance as at
31 December
2013
5,414,409,190
21,968
4,181,375,8
88
139,877,943
12,044,815,846
Page 68 of 90

Consolidated statement of Changes in Equity
Particular
Paid up
Capital
Non-controlling
Interest
Statutory Reserve
General
Reserve
Asset revaluation
reserve
Balance as at
1 January
2014
5,414,409,19
0
21,968
4,181,375,888
139,877,943
648,455,000
Investment
revaluation
reserve
311,620,853
Restated
balances
Surplus/defic
it on account
of
revaluation
of property
5,414,409,19
0-
21,968
-
4,181,375,888-
139,877,943
-
648,455,000
-
311,620,853
-
Surplus/defic
it on account
of
revaluation
of
investments
Retained
earnings
Total
1,349,055,0
04
12,044,815,846
1,349,055,0
04
-
12,044,815,846-
(249,939,216)
(249,939,216)
-
Currency
transaction
difference
Net gains
and loss not
recognized
in the
income
statement
61,681,637
60
60
2,098,646,8
23
2,098,646,823
270,720,450
Share capital
of subsidiary
company
Adjustment
with retained
earnings
Net profit for
the year
Transfer to
reserve
Dividend:
Stock
Dividend
Cash
Dividend
644,167,728
6,966
20,394,675
-
(920,449,563)
(270,720,45
0)
(920,449,56
3)
(644,562,40
3)
Stock
dividend
paid by
subsidiary
company
(6,966)
Change in
reserve
Noncontrolling
interest
Balance as at
31
December
2014
5,685,129,64
0
28,994
4,825,543,616
160,272,618
648,455,000
61,681,637
1,591,962,4
55
12,973,073,950
Page 69 of 90
Separated financial statements of Dhaka Bank Limited:

Dhaka Bank Limited
Balance Sheet
Particular
Notes
31.12.2014
(TAKA)
31.12.2013
(TAKA)
Property and Assets

Cash
Cash in Hand(including foreign
currencies )
Balance with Bangladesh Bank & its
agent banks (including foreign
currencies)
3
3.1
15,900,854,072
1,395,090,440
11,900,627,925
1,609,002,280
3.2
14,505,763,632
10,291,760,145
Balance with Other Banks & Financial

Institutions
In Bangladesh
Outside Bangladesh
6,685,901,914
4.1
4.2
2,542,023,266
4,143,878,648
1,927,287,468
765,664,971
448,300,000
338,900,000
Investments
Government
others
6
6.1
6.2
19,698,855,161
18,358,963,884
1,339,891,277
18,756,939,948
16,009,301,980
2,747,637,968
Loans, advances, and

lease/investments
Loans, cash credits, overdrafts,
etc/investments
103,131,519,274
99,595,883,469
7.1
100,903,755,848
97,382,030,272
2,227,763,426
2,213,853,197
Fixed assets including premises,

furniture and fixtures
3,957,799,257
2,518,488,968
Other Assets
10
9,367,352,413
8,810,436,943
Non-Banking Assets
11
23,166,033
23,166,033
Total Assets
2,692,952,439
158,747,543,561 144,408,630,421
Liabilities
Borrowings from Other Banks,
Financial Institutions and Agents
12
9,414,685,059
3,649,917,871
13
124,853,559,335
115,981,165,413
Page 70 of 90

Bills payable
Term deposits
14,362,088,804
2,175,092,005
11,463,880,702
96,852,497,824
10,171,783,633
991,276,689
8,870,151,906
95,947,953,185
14
2,000,000,000
2,000,000,000
Other Liabilities
15
9,733,785,542
10,890,638,241
Total liabilities
Equity attributable to equity holders of
the parent company
Paid-up capital
Statutory reserve
Other reserve
Retained earnings
146,002,029,936
132,521,721,525
12,745,513,625
11,886,908,896
5,685,129,640
4,825,543,616
870,409,255
1,364,431,114
5,414,409,190
4,181,375,888
1,099,953,796
1,191,170,022
Total Equity
12,745,513,625
11,886,908,896
Total Liabilities & Shareholders'

Equity
158,747,543,561 144,408,630,421


Letter of Credits
Letter of Guarantee
Total:
16
17
18
19
21
13,756,065,906
13,042,203,273
13,085,748,553
5,783,061,204
3,008,744,945
12,304,828,570
11,023,698,214
13,891,546,477
5,717,930,781
2,530,870,689
48,675,823,881
45,468,874,731
Dhaka Bank Limited

Profit and Loss Account
Particular
Notes
2014
(TAKA)
Operating Income
22
13,705,387,970
Interest paid/paid on Deposits &
23
(10,879,027,249)
Borrowings
Net interest Income
2,826,360,721
Investment Income
24
2,542,824,552
25
1,127,036,781
26
360,878,331
2013
(TAKA)
15,131,141,289
(11,822,881,725)
3,308,259,564
1,616,937,538
1,093,341,022
376,977,712
Page 71 of 90
4,030,739,664
6,857,100,385
3,087,256,272
6,395,515,836
27
28
29
30
31
32
33
34
35
1,627,967,019
406,184,756
42,600,696
198,019,076
7,268,600
3,600,271
805,000
268,105,367
1,482,926,276
354,748,442
13,241,364
43,219,136
134,486,079
12,340,000
2,956,763
690,000
225,290,552
36
476,392,510
3,049,024,357
432,027,470
2,701,926,082
3,808,076,028
3,693,589,754
543,128,511
13,499,886
57,050,512
584,582,559
30,608,990
587,237,387
3,220,838,641
7,938,263
649,571,334
3,044,018,420
1,191,845,133
1,176,134,507
15,710,626
2,028,993,508
1,117,341,489
1,096,530,432
20,811,057
1,926,676,931
1,191,170,022
2,028,993,508
3,220,163,530
413,443,614
1,926,676,931
2,340,120,545
644,167,728
20,394,675
1,191,170,013
1,364,431,114
3,220,163,530
608,803,684
126,703,225
413,443,614
1,191,170,022
2,340,120,545
3.57
3.39

Operating expenses
Legal expenses
Directors fees
Auditors fees
Depreciation and repairs of Banks
assets
Other expenses
Provision for diminution in value of
investments
Other provision
Total provision(d)
37
38

Current tax
Deferred tax
Profit available for distribution:
Add: Retained earnings of current year
Appropriations:
Statutory reserve
General reserve
Dividends
Retained earnings
Earnings per Share (EPS)
40
18,081,062
Page 72 of 90
Dhaka Bank Limited

Statement of Changes in Equity
Particular
Balance as at 1
January 2013
changes in
accounting policy
Paid up Capital
4,667,594,130
Statutory
Reserve
3,572,572,204
General
Reserve
Asset
Revaluation
Reserve
346,546,164
Investment
Revaluation Reserve
648,455,000
34,611,362
Retained Earnings
413,443,614
Total
9,683,222,474
Restated balance
4,667,594,130
3,572,572,204
346,546,164
648,455,000
34,611,362
413,443,614
9,683,222,474
Surplus/deficit on
account of
revaluation of
property
277,009,491
277,009,491
3,11,620,853
1,926,676,931
1,926,676,931
746,815,050
-
(333,371,446)
-
(413,443,614)
-
608,803,684
126,703,225
(735,506,909)
Surplus/deficit on
account of
revaluation of
investments
Currency
transaction
difference
Net gains and loss
not recognized in
the income
statement
Net profit for the
year
Transfer to
reserve Dividend:
Stock Dividend
Cash Dividend
Change in reserve
Balance as at 31
December 2013
5,414,409,190
4,181,375,888
139,877,943
648,455,000
311,620,853
1,191,170,022
11,886,908,896
Dhaka Bank Limited

Statement of Changes in Equity
Particular
Balance as at
1 January
2014 changes
in accounting
policy
Restated
balance
Surplus/deficit
on account of
revaluation of
property
Paid up
Capital
Statutory
Reserve
5,414,409,190
4,181,375,888
5,414,409,190
4,181,375,888
General
Reserve
Asset
Revaluation
Reserve
648,455,000
Investment
Revaluation
Reserve
311,620,853
Retained
Earnings
Total
1,191,170,022
11,886,908,896
139,877,943
648,455,000
311,620,853
1,191,170,022
11,886,908,896
(249,939,216)
(249,939,216)
139,877,943
Surplus/deficit
Page 73 of 90
on account of
revaluation of
investments
Currency
transaction
difference
Net gains and
loss not
recognized in
the income
statement
Net profit for
the year
Transfer to
reserve
Dividend:
61,681,637
2,028,993,508
2,028,993,508
270,720,450
-
(270,720,450)
(920,449,563)
(920,449,563)
644,167,728
20,394,675
(664,562,403)
5,685,129,640
4,825,543,616
1,364,431,114
12,745,513,625
Stock
Dividend
Cash
Dividend
Change in
reserve
Balance as at
31 December
2014
160,272,618
648,455,000
61,681,637
4.8.2.1 Analysis on the compliance of consolidated financial statements

The analysis on the compliance of BAS 27 by the DBLs consolidated financial statement is point out
bellow:
The consolidated financial has been prepared according to BAS 27.
Dhaka Bank Limited has used the single entity method to prepare the consolidated financial
statement
Property, plant & equipment are recognized if it is probable that future economic
benefits associated with the assets will flow to the Bank and the cost of the assets can
be reliably measured.
Provisions are recognized when the company has a present obligation which will
result in an outflow of resources.
4.8.2.2 Analysis on the compliance of separated financial statements
The analysis on the compliance of BAS 27 by the separated financial statement is point out bellow:
The consolidated financial has been prepared according to BAS 27.
Dhaka Bank Limited has used the historical cost convention to prepare the separated
financial statement
Page 74 of 90
Property, plant & equipment are recognized if it is probable that future economic
benefits associated with the assets will flow to the Bank and the cost of the assets can
be reliably measured.
Provisions are recognized when the company has a present obligation which will
result in an outflow of resources.
4.9 BAS 28(Investment in associates)

4.9.1.1 Definition of Associate:
Associate is an entity, including an unincorporated entity such as a partnership, over which the
investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Here, significant influence means the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies.
Significant influence can be determined by the holding of voting rights (usually attached to shares) in
the entity. BAS 28 states that:
If an investor holds 20% or more of the voting right of the investee (directly or indirectly) it is
presumed that the investor has significant influence; therefore associate status will be
presumed unless it can be demonstrated otherwise.
If an investor holds less than 20% of the voting right of the investee (directly or indirectly) it
is presumed that the investor does not have significant influence; therefore there is no
associate status unless demonstrated otherwise.
BAS 28 also states that significant influence can be shown by one or more of the following:
Representation on the board of directors

Participation in policy making decisions
Material transactions between the investor and investee
Interchange of managerial personnel
Provision of essential technical information
4.9.1.2 Relationship with the group

An associate is not part of the group as a group comprises the parent and its subsidiaries only.
Though it is possible that the groups investment in associate can be held by a subsidiary company, it
can be thought for simplicity that the groups investment in associate can be held by the parent only.
So, the relationship between the group and the subsidiary is given bellow:
Page 75 of 90
Parent
Companty
Group
Subsidiary
Company
Associate
Company
Figure 4.9: Associates Relationship with Group
4.9.1.3 Treatment in investing companys own accounts
The treatments in the investing companys financial statements are as follows:
The balance sheet of the investing company shows the investment in the associate in noncurrent asset investments, usually at cost.
The investing companys income statement shows dividend income received and receivable
form the associate as income from associates.
Balance Sheet of Investing Company
CU
Non-current Assets:
Investment in associates
XXXX
Income statement of Investing Company
Dividend income from associate
CU
XXX
4.9.1.4 Treatment in consolidated financial statements: accounting principles

The investment in the associate should be accounted for in the consolidated financial statements
using the equity method of accounting. The methods reflect the substance of the relationship
between the entities rather than their legal form. The groups share of the associates profits, assets
and liabilities are included in the consolidated financial statements rather than the cost of the
investment and dividend income received.
4.9.1.5 Equity method: consolidated balance sheet
In consolidated balance sheet, The investment in associate is shown as a single line under
non-current assets described as Investment in Associates
Page 76 of 90
It is initially recognised at cost and is subsequently adjusted in each period for changes in the
parents share of the net assets.
In group reserve parents share of the associates post-acquisition reserves are included.
The assets and liabilities of the associate are not included on a line by line basis.
4.9.1.6 Equity method: consolidated income statement
The groups share of associates profit after tax is recognised as a single line entry in the
consolidated income statement as a single entry line.
This is disclosed immediately before the group profit before tax as Share of profit of
associates.
If the associate is acquired mid-year its result should be time-proportioned.
Investment in associate is not applicable in case of Dhaka Bank Limited, because this parent
company has no associate rather it has two subsidiary. The reasons for non-compliance are DBL has no associate company
So, they have not shown any amount named Investment in Associate in their consolidated
balance sheet
So, groups share of associates profit after tax is not recognised as a single line entry in the
consolidated income statement as a single entry line
So, any dividend from associate has not shown in separate income statement of Dhaka Bank
Limited.
4.10 BAS 37(Provisions, Contingent Liabilities and Contingent

Asset)
4.10.1.1 Objective of BAS 27
BAS 37 aims to ensure that:
Appropriate recognition criteria and measurement bases are applied to provisions,
contingent assets and contingent liabilities; and
Sufficient information is disclosed in the notes to the financial statements to enable users to
understand their nature, timing and amount.
4.10.1.2 Provisions: definition and recognition:
A provision is a liability of uncertain timing or amount.
A liability is a present obligation of the entity arising from past events, the settlement of which is
expected to result in an outflow from the entity of resources embodying economic benefits.
Page 77 of 90
4.10.1.3 Recognition of Provision:

BAS 37 states that a provision should be recognized when:
An entity has a present obligation (legal or constructive) as a result of a past event
It is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation; and
A reliable estimate can be made of the amount of the obligation.
4.10.1.4 Contingent Liability:
Definition: A contingent liability is either:
A possible obligation that arises from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the entity, or
A present obligation that arises from past events but is not recognized because:
It is not probable that an outflow of resources embodying economic benefits

will be required to settle the obligation; or
The amount of the obligation cannot be measured with sufficient reliability.
Treatment of contingent liabilities:

Contingent liabilities should not be recognized in the financial statements, but may require disclosure.
Because contingent liabilities are inherently uncertain, they should be assessed continually to identify
whether the criteria for recognizing a provision have been met. If this occurs, a provision should be
recognized in the period in which the criteria are met. This would represent a change of accounting
estimate regarding the likely outcome of an uncertain situation.
Disclosure of contingent liabilities:
Unless the possibility of any outflow in settlement is remote, the following disclosures should be
made for each class of contingent liability at the balance sheet date:
A brief description of its nature; and
Where practicable:
An estimate of the financial effect (measured in the same way as a provision)
An indication of the uncertainties; and
The possibility of any reimbursement.
No specific guidance is provided in BAS 37 on the meaning of remote. In line with prudence,
'remotes should be interpreted as meaning extremely unlikely. This means that the probability of an
event occurring should be so small that it can be ignored.
4.10.1.5 Contingent Assets:
Definition: A contingent asset is a possible asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the entity.
Page 78 of 90
Treatment of contingent assets: A contingent asset must not be recognized. Only when the realization
of the related economic benefits is virtually certain, it should recognition take place because, at that
point, the asset is no longer contingent.
This is an application of the prudence concept.
Contingent assets should be assessed continually to identify whether the uncertainty has been
removed. If events confirm the existence of an asset, it should be recognized provided that it can be
measured reliably
Disclosure of contingent assets: Where an inflow of economic benefits is probable, i.e. more likely
than not, the contingent asset must be disclosed. The following information is required:
A brief description of the nature of the contingent asset
An estimate of the financial effect
As for contingent liabilities, these disclosures may be avoided on the grounds that it is impractical to
provide the information or would be seriously prejudicial to the entity.
Dhaka Bank Limited has been complied with the BAS 37 to recognize and measure provision and
contingent liabilities. Besides, Dhaka Bank Limited follow the Bangladesh Bank rules to recognize
and measure provision and contingent liabilities.
Analysis on compliance of Provision:
According to BAS 37 Dhaka Bank Limited the provision has present obligation
resulting of past event. Such as provision for taxation, Provision against loans and
advances, Provision for diminution in value of investments
Provision for Loans and Advances is made on the basis of year end review by the
Management and of instructions contained in Bangladesh Bank BRPD Circular No.
14 dated 23.09.2012, BRPD Circular No. 19 dated 27.12.2012, BRPD Circular No.
05 dated 29.05.2013 and BRPD Circular No. 16 dated 18.11.2014.
Analysis on compliance of contingent liabilities:

According to BAS 37 Dhaka Bank Limited Contingent liabilities have not been recognized
Contingent in the financial statements, but it has been disclosed in financial statements under
off balance sheet items:

Notes
21

Letter of Credits
Letter of Guarantee
Taka
31.12.2014
13,756,065,906
13,042,203,273
13,085,748,553
5,783,061,204
3,008,744,945
Taka
31.12.2013
12,304,828,570
11,023,698,214
13,891,546,477
5,717,930,781
2,530,870,689
Total:
48,675,823,881
45,468,874,731
Page 79 of 90
As per Bangladesh Bank Guidelines Off-balance sheet items have been disclosed under
contingent liabilities & other commitments. Dhaka Bank Limited has maintained provision @
1% against off-balance sheet exposures (L/C, Guarantee and Acceptances & Endorsements)
as per BRPD Circular #14, dated September 23, 2012.
Analysis on compliance of contingent assets:

Dhaka Bank Limited has no contingent assets.
So, they have not shown any amount named contingent assets in their financial state.
Part B- BFRS Application Analysis

4.11 The Analytical Discussion on DBLs Financial Statement with
Reference to BFRS
In this part the compliances of Dhaka Bank Limited with the concerned BFRS (Bangladesh Financial
Reporting standards) have been discussed with the brief explanation with regard to the aspects of the
financial statements of Dhaka Bank Limited for the year of 2014.
i) Investment in shares and securities:
BFRS: As per requirements of BAS 39 investment in shares and securities generally falls either under
at fair value through profit and loss account or under available for sale where any change in the
fair value (as measured in accordance with BFRS 13) at the year end is taken to profit and loss
account or revaluation reserve respectively.
Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares
and unquoted shares are revalued at the year end at market price and as per book value of last audited
balance sheet respectively. Provision should be made for any loss arising from diminution in value of
investment; otherwise investments are recognized at cost.
ii) Revaluation gains/losses on Government securities:
BFRS: As per requirement of BAS 39 where securities will fall under the category of Held for
Trading (HFT), any change in the fair value of held for trading assets is recognized through profit and
loss account. Securities designated as Held to Maturity (HTM) are measured at amortized cost method
and interest income is recognized through the profit and loss account.
Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any
gains on revaluation of securities which have not matured as at the balance sheet date are recognized
in other reserves as a part of equity and any losses on revaluation of securities which have not
matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT
securities including amortization of discount are recognized in the profit and loss account. HTM
securities which have not matured as at the balance sheet date are amortized at the year end and gains
or losses on amortization are recognized in other reserve as a part of equity.
iii) Provision on loans and advances/investments:
BFRS: As per requirement of BAS 39 an equity should start the impairment assessment by
considering whether objective evidence of impairment exists for financial assets that are individually
Page 80 of 90
significant. For financial assets that are not individually significant, the assessment can be performed
on individual or collective (portfolio) basis.
Bangladesh Bank: As per BRPD circular no. 14 (23 September 2012), BRPD circular no. 19 (27
December 2012) and BRPD circular no. 05 (29 May 2013) a general provision at 0.25% to 5% under
different categories of unclassified loans (good/ standard loans) has to be maintained regardless of
objective evidence of impairment. Also provision for substandard loans, doubtful loans and bad losses
has to be provided at 20%, 50% and 100% respectively for loans and advances depending on the
duration of overdue. Again, as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular
no. 14 dated 23 September 2012, a general provision at 1% is required to be provided for all offbalance sheet exposures. Such provision policies are not specifically in line with those prescribed by
BAS 39.
iv) Recognition of interest in suspense:
BFRS: Loans and advances to customers are generally classified as loans and receivables as per
BAS 39 and interest income is recognized through effective interest rate method over the term of the
loan. Once a loan is impaired, interest income is recognized in profit and loss account on the same
basis based on revised carrying amount. Dhaka Bank Limited Annual Report 2014 183
Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified,
interest on such loans are not allowed to be recognized as income, rather the corresponding amount
needs to be credited to an interest in suspense account, which is presented as liability in the balance
sheet.
v) Other comprehensive income:
BFRS: As per BAS 1 Other Comprehensive Income (OCI) is a component of financial statements or
the elements of OCI are to be included in a single Other Comprehensive Income statement.
Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly
be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not
include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed
to be included in a single Other Comprehensive Income (OCI) Statement. As such the Bank does not
prepare the other comprehensive income statement. However, elements of OCI, if any, are shown in
the statements of changes in equity.
vi) Financial instruments presentation and disclosure:
In several cases Bangladesh Bank guidelines categories, recognize, measure and present financial
instruments differently from those prescribed in BAS 39. As such full disclosure and presentation
requirements of BFRS 7 and BAS 32 cannot be made in the financial statements.
vii) Financial guarantees:
BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are
recognized initially at their fair value, and the initial fair value is amortized over the life of the
financial guarantee. The financial guarantee liability is subsequently carried at the higher of this
Page 81 of 90
amortized amount and the present value of any expected payment when a payment under the
guarantee has become probable. Financial guarantees are included within other liabilities.
Bangladesh Bank: As per BRPD 14, financial guarantees such as letter of credit, letter of guarantee
will be treated as off balance sheet items. No liability is recognized for the guarantee except the cash
margin.
viii) Cash and cash equivalent:
BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7.
Bangladesh Bank: Some cash and cash equivalent items such as money at call and on short notice,
treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents.
Money at call and on short notice presented on the face of the balance sheet, and treasury bills, prize
bonds are shown in investments.
(ix) Non-banking asset:
BFRS: No indication of Non-banking asset is found in any BFRS.
Bangladesh Bank: As per BRPD 14, there must exist a face item named Non-banking asset.
x) Cash flow statement:
BFRS: The Cash flow statement can be prepared using either the direct method or the indirect
method. The presentation is selected to present these cash flows in a manner that is most appropriate
for the business or industry. The method selected is applied consistently.
Bangladesh Bank: As per BRPD 14, cash flow is the mixture of direct and indirect methods.
xi) Balance with Bangladesh Bank: (Cash Reserve Requirement)
BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in
day to day operations as per BAS 7.
Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.
xii) Presentation of intangible asset:
BFRS: An intangible asset must be identified and recognized, and the disclosure must be given as per
BAS 38.
Bangladesh Bank: There is no regulation for intangible assets in BRPD 14.
xiii) Off-balance sheet items:
BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement for
disclosure of off balance sheet items on the face of the balance sheet.
Page 82 of 90
Chapter 05
Brief Summary of BAS and BFRS
Application
Page 83 of 90
Compliance with Financial Reporting Standards as applicable in Bangladesh

The Institute of Chartered Accountants of Bangladesh (ICAB) in the sole authority for adoption of
Bangladesh Financial Reporting Standards (BFRS). While reporting the financial statements, Dhaka
Bank Limited applied all the applicable of BAS and BFRS as adopted by ICAB. Details are given below:
Serial
No.
1
2
3
4
BAS
No.
1
2
7
8
5
6
7
8
9
10
11
12
10
11
12
16
17
18
19
20
13
21
14
15
16
23
24
26
17
18
19
20
21
22
23
24
27
28
31
32
33
34
36
37
25
26
38
39
27
28
40
41
BAS Title
Presentation of Financial Statements
Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting
Estimates and Errors
Events after the Balance Sheet Date
Construction Contracts
Income Taxes
Property, Plant & Equipment
Leases
Revenue
Employee Benefits
Accounting for Government Grants and
Discloser of Government Assistance
The Effects of Changes in Foreign Exchanges
Rates
Borrowing Costs
Related Party Disclosures
Accounting and Reporting by Retirement
Benefit Plans
Consolidated and Separate Financial Statements
Investment in Associates
Interest in Joint Venture
Financial Instruments: Presentation
Earnings per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent liabilities and Contingent
Assets
Intangible Assets
Financial Instruments: Recognition and
Measurement
Investment Property
Agriculture
Compliance Status
Complied *
Not Applicable
Complied
Complied
Complied
Not Applicable
Complied
Complied
Complied
Complied
Complied
Not Applicable
Complied
Complied
Complied
Complied
Complied
Not Applicable
Not Applicable
Complied *
Complied
Complied
Complied
Complied
Complied
Complied *
Not Applicable
Not Applicable
Page 84 of 90
Serial BFRS
No.
No.
1
1
2
3
4
5
2
3
4
5
6
7
8
9
10
11
12
6
7
8
10
11
12
13
BFRS Title
First-time Adoption of Bangladesh Financial
Reporting Standards
Share-based Payment
Business Combinations
Insurance contracts
Non-Current Assets Held for Sale and
Discontinued Operations
Exploration for and Evaluation of Mineral
Financial Instruments: Disclosures
Operating Segments
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interest in other Entities
Fair Value Measurement
Compliance Status
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Complied
Not Applicable
Complied *
Complied
Complied
Not Applicable
Complied
Complied
* In order to comply with certain specific rules and regulations of the Central Bank (Bangladesh
Bank) which are different from BAS/BFRS, some of the requirements specified in these BAS/BFRSs
are not applied
Page 85 of 90
Chapter 06
Recommendation
Page 86 of 90
The recommendations that should be followed by Dhaka Bank Limited are given below:
1. In case of sector wise loans and advances the percentage of garment sector has increased
from 20.6% to 25.71% in 2014. It increases risk because diversification of investment
portfolio is necessary to adapt with any unwanted economic changes. So, Dhaka Bank
Limited has to try to diversify their investments.
2. There is a decline in liquidity and profitability ratios in 2014. So, DBL have to improve the
conditions of these ratios.
3. Despite the fact that the Company earned an EPS of Tk. 0.47 in 2014, in order to strengthen
the financial position of the company, the Board of Directors of the company has not
recommended any dividend for the year 2014. But in 2015 the board has to think more
consciously about declaring dividend.
4. Dhaka Bank have to contribute more amount of money in Corporate Social Responsibilities.
Such as they can arrange scholarship system for poor but talented students.
5.
They have to hire and the talented graduates to develop new ideas of service and maintain
service profit chain.
Page 87 of 90
Page 88 of 90
Conclusion:
The study of the financial statement of Dhaka Bank Limited was done on the basis of the
principles of Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting
standards (BFRS) to prepare an effective financial analysis for the year of 2014.
In the very first starting with the company information this report has shown the financial
statements of the company for the year of 2014 and ultimately a huge chapter of financial
analysis covers the most important part of this report. The whole report finds out how much
of the accounting treatments of the company Dhaka Bank Limited has been done on
congruence with the compliance with the BAS and BFRS. Here, we have find out that almost
all of the accounting treatments of Dhaka Bank Limited was done on the basis of the BAS
and BFRs and also the company has gained much more recognition from the Credit Rating
Agency of Bangladesh for having a good and transparent accounting presentation in its
annual report.
In this whole report, the financial analysis was done on a sequential process and the analysis
was nothing but the test of the compliance with BAS and BFRS where necessary. The study
was performed with impeccable efficiency on the basis of the data available and the company
on an overall basis was a healthy financially capable and investable one.
So, we are ambitious of the reports sufficient efficiency and it can also work as an
informative resource for further study on such sector in future as a trustable secondary data
source.
Page 89 of 90
Bibliography:
Bangladesh Accounting Standards (BAS); Volume-2 (BAS 1- BAS 27)
Bangladesh Accounting Standards (BAS); Volume-3 (BAS 28- BAS 41)
Annual Report of Dhaka Bank Limited 2014
Institute of Chartered Accountants of Bangladesh (1999b), International Accounting
Standards, Present Status, Institute of Chartered Accountants of Bangladesh, Dhaka.
Akkas, M. (1999), Social responsibility of businesses: the Bangladesh perspective, The
Cost and Management, Vol. XXVII No. 4, pp. 1420. [Infotrieve]
AlAnzi, K. (2000), Corporate financial reporting and foreign investment in Kuwait,
unpublished doctoral thesis, University of Wollongong, Wollongong.
AlRai, Z. and Dahmash, N. (1998), The effects of applying international accounting and
auditing standards to the accounting profession in Jordan, Advances in International
Accounting, Supplement 1, pp. 17993.
Bailey, G. and Wild, K. (1998), International Accounting Standards: A Guide to Preparing
Accounts,Accountancy Books, London.
Banerjee, B., Martens, S. and McEnroe, J. (1998), Accounting standardsetting: a
comparison of India and the United States, Advances in International Accounting,
Supplement 1, pp. 23951.
Baree, M. (1999), Application of IAS in Bangladesh: problems and prospects, paper
presented at seminar at the Institute of Chartered Accountants of Bangladesh Continuing
Professional Education Programme, October.
Institute of Cost and Management Accountants of Bangladesh (ICMAB) (1999), Annual
Report 1999,Institute of Cost and Management Accountants of Bangladesh, Dhaka.
Securities and Exchange Commission (SEC) (19931994), Annual Report, 19931994,
available at: www.secbd.org/annual.html.
Websites:
1. http://www.emeraldinsight.com/doi/full/10.1108/09513570510627720
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Table of Contents

4.3 BAS 7(Cash Flow Statement) ....................................................................................................... 36

1.1 Origin of the Report:

1.2 Purpose of the Study:

1.3 Objectives of the Report:

1.5 Limitations of the Report:

The mission of Dhaka Bank Limited is given below:

2.3 Corporate Values:

2.4 Strategic Objectives:

2.5 Ethical Principles:

Complying with countries laws and regulations.

2.6 Customer Charter:

2.7 Shareholders information:

Fig 2.1 : Shareholding position of Dhaka Bank Ltd 2014

Shareholding position 2013

Fig 2.2 : Shareholding position of Dhaka Bank Ltd of 2013

2.8 Annual balance sheet overview:

Asset mix 2014

Fig 2.3: Asset mix Dhaka Bank Ltd of 2014

Asset mix 2013

Loan and Advances

Fig 2.4: Asset mix of Dhaka Bank Ltd of 2013

Asset funding mix 2014

Fig 2.5 : Asset funding mix of Dhaka Bank Ltd of 2014

Asset funding mix 2013

Fig 2.6 : Asset funding mix of Dhaka Bank Ltd of 2013

Deposit mix 2014

Fig 2.7: Deposit mix of Dhaka Bank Ltd of 2014

Deposit mix 2013

Fig 2.8: Deposit mix of Dhaka Bank Ltd of 2013

Revenue- Bank 2014

Net interest income

Fig 2.9 : Revenue of Dhaka Bank Ltd 2014

Revenue- Bank 2013

Net Interest Income

Non Interest Income

Fig 2.10: Revenue of Dhaka Bank Ltd 2013

Dhaka Bank Limited

Interest Income/profit on investments

Interest paid/paid on Deposits & Borrowings

Net interest Income

Commission, exchange and brokerage

Other operating income

Salary and Allowances

Rent, taxes, insurance, electricity, etc

Postage, stamps, telecommunication, etc

Stationary, printing, advertisements, etc

Chief executives salary and fees

Total operating income (a)

Depreciation and repairs of Banks assets

Total operating expense (b)

Profit before provision (c=(a-b))

Provision against loan and advances

Provision for diminution in value of 13,499,886

Profit before taxation (c-d)

Provision for taxation

Net profit after taxation

Retained surplus from previous year

Add: Retained earnings of current year

Profit available for distribution:

Earnings per Share (EPS)

Explanation: Perspective of Dhaka Bank Limited:

Net Profit after