ABSTRACT
In our issue of the 27th May last we drew attention at some length to the position of affairs then obtaining between the directors and shareholders of the Golden Grain Bread Company, Lim., and the company’s auditors, Messrs. Pratt, Norton & Co., Chartered Accountants. It will be remembered that, at the ordinary meeting of the company, held on the 15th May last, accounts were submitted showing a balance available for dividend of £2,913 10s. 5d., out of which the directors recommended that all preference dividends due up to date (amounting to 10 https://www.w3.org/1998/Math/MathML"> 1 2 https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9781315886343/a22f6e26-f5a1-42ea-b779-acf191e06a1d/content/math45_B.tif" xmlns:xlink="https://www.w3.org/1999/xlink"/> per cent.) should be paid. The auditors, however, expressed the view that this balance was not available for dividend, on the ground that the assets were overstated in the Balance Sheet, and that losses actually incurred had not been made good out of revenue. The directors produced in support of their contention a valuation made some four years previously, in which the assets of the company (exclusive of goodwill) were assessed at £50,000. Mr. B. T. Norton, F.C.A., pointed out, however, that the assets were valued in the Balance Sheet at £68,500, of which £18,000 represented an accumulation of expenditure on about 50 depots opened at various times, 42 of which had since been closed without any provision being made in the accounts for the consequent loss in connection with the expenditure of fitting these depots up. Buildings, plant, etc., represented £31,500, the valuation of which the auditors did not contest; while the remaining £19,000 was made up of Goodwill £15,000, and £4,000 for Establishment Account and repairs and renewals. These items Mr. Norton described as “being “altogether fictitious when considered as an “asset.”
