National Grid PLC

Background to the National Grid PLC

The National Grid PLC serves as a gas utility and electricity company and is headquartered in London UK. The company has its primary activities in Northeastern US and United Kingdom. It is primarily listed on the London Stock Exchange (LSE) where it is traded as NG and has secondary listing on the NYSE where it is traded as NGG. National Grid PLC was founded in 1990 in the city of London to deal with transmission and distribution of electricity and gas. By the end of the financial year 2014, the company had employed 23909 employees. The company has sound performance where it generated a net income of £ 2055 million in the financial year 2014, which translated into 11.7 returns on equity and £ 40.85 dividend per share (Great Britain: Parliament 2012). The company operations are overseeing by an 11-members board of governors. The company operates in two regulatory frameworks that guide its annual reporting, the USA reporting framework (which used mainly the US GAAP in financial reporting, where the IFRS is expected to be fully adopted by the need of 2015), and the UK regulatory financial reporting which uses the IFRS.

Since its inception, National Grid PLC has acquired and merged with many companies. In 2000, the company acquired Eastern Utilities Associates and New England Electric Systems companies. In 2002, the company acquired Niagara Mohawk Holdings, which was a utility company, based in New York and the Lattice Group plc. The investment proposition of the National Grid PLC is to be low risk entity that is focused on generating the shareholders’ value by equity and dividend growth through investing in the vital assets under the predominantly regulated business market environment. The company seeks to have perpetual growth in its ordinary dividend in line with the RPI (Great Britain: Parliament 2012). The company reduces the investment risk by balancing its investing activities. The company has adopted both geographical and investment diversification where it has invested in both US and UK regions and offers a variety of services in the electricity and gas industry.

Analysis and Discussion on the Accounting Policies of the National Grid PLC

  1. National Grid PLC impairment Review

The IAS 36 stipulates that assets and cash generating units of an entity should not be carried at no more value than their recoverable amount. The assets and CGU’s that fall within the scope of the IAS 36 include PPE (IAS 36) and the intangible assets (as defined in IAS 38). The cash generating units including ones whose goodwill stemming from business integration has been allocated (IFRS 3), the investment property, which are measured at cost (IAS 40), and investment interest in various entities that in………………..

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