ABSTRACT
The Companies Act 1929 (CA29), although the starting point of the present study, itself introduced substantial changes in the law relating to accounting. Chatfield (1977,p.118) comments that the Companies Acts of 1928–29 contained major changes in accounting and audit regulations. He observes that:
For the first time an annual income statement had to be submitted to stockholders though it did not have to be filed with the Registrar of Companies and was not specifically covered by the auditors report.
On the balance sheet current and fixed assets had to be segregated and corporations were required to state how they had valued fixed assets. Authorized and issued capital stock were to be distinguished and formation expenses, goodwill, patents and trademarks, were to be stated as separate items. Disclosure had to be made of loans to directors and officers, of loans made for the purchase of the firm's own shares for the benefit of employees and of discounts on shares issued. Corporations could no longer file out of date balance sheets with the Registrar.
While not requiring a consolidated balance sheet the new law defined holding companies and required disclosure of the treatment of subsidiary income. The holding company's balance sheet was to describe investments in and loans to and from subsidiaries.
Prospectuses of new stock issues were to be accompanied by auditors reports on past profits of the company whose securities were to be issued, as well as past profits of any business that was to be acquired from the proceeds of the sale.
