The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 60
58 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC
Notes to the Financial Statements
1. PRINCIPAL ACCOUNTING POLICIES
Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and
the position of the Company at the year end.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been
consistently applied during the year and the preceding year.
A. Basis of Preparation
Accounting Standards Applied
The financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice (UK GAAP)) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and
Republic of Ireland’ and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture
Capital Trusts, issued by the Association of Investment Companies (SORP) in April 2021.
The financial statements are issued on a going concern basis. Details of the Directors assessment of the going concern status of the
Company, which considered the adequacy of the Company’s resources and the impacts of the COVID-19 Pandemic, are given on page 39.
As an investment fund the Company has the option not to present a cash flow statement. A cash flow statement is not required when
an investment fund meets all the following conditions: substantially all investments are highly liquid and are carried at market value, and
where a Statement of Changes in Equity is provided: all of which are satisfied.
However the Directors' have elected to present a cash flow statement in the annual financial report this year to present additional
relevant information to readers of the accounts.
Significant Accounting Estimates, Assumptions and Judgements
The preparation of the financial statements may require the use of estimates, assumptions and judgements which may affect the
reported amounts of assets and liabilities at the reporting date. While estimates are based on best judgement using information and
financial data available the actual outcome may differ from these estimates. The Directors have applied their judgement for the allocation
of the investment management fee and finance costs between capital and revenue in the income statement as set out in Note 1G and
the treatment of special dividend income between capital and income, as set out in Note 1J. The directors do not believe that these
judgements nor any accounting estimates, assumptions or judgements that have been applied to the financial statements have a
significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year.
B. Foreign Currency and Segmental Reporting
(i) Functional and presentational currency
The financial statements are presented in sterling, which is the Company’s functional and presentational currency and the currency in
which the Company’s share capital and expenses, as well as its assets and liabilities, are denominated.
(ii) Transactions and balances
Transactions in foreign currency, whether of a revenue or capital nature, are translated to sterling at the rates of exchange ruling on
the dates of such transactions. Foreign currency assets and liabilities are translated to sterling at the rates of exchange ruling at the
balance sheet date. Any gains or losses, whether realised or unrealised, are taken to the capital reserve or to the revenue account,
depending on whether the gain or loss is of a capital or revenue nature. All gains and losses are recognised in the income statement.
(iii) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business of investing in equity and debt
securities, issued by companies quoted mainly on the UK or other recognised stock exchanges.