The impact of application of IAS 16 to determine capital adequacy Applied research in the Rasheed bank

Abstract

The research aims to achieve the following studying, analysis and showing the accounting procedures followed by Rashed Bank and determining deficiencies in these accounting procedures as a result of non-compliance with the requirements of International Accounting Standard No. (16). Showing the impact of the application of International Accounting Standard No. (16) of the property, plant and equipment on the capital adequacy of the bank.

Hence the research problem is represented by the need for supporting the Capital of Rafidain and Rasheed banks, especially the bookeneds capital as the properties owned by banks are still recorded by their historical cost so that there is a big difference between the historical cost and fair value of these properties and the researcher relied on a hypothesis that the application of International Accounting standard, IAS (16) property, plant and equipment is one of the practical solutions to support the bookends capital of the research sample banks subjected to the financial restructuring, and then raising the capital adequacy. The researcher found that the application of IAS 16 has an impact on capital adequacy, and this is shown by the results in Rasheed Bank unlike the Rafidain Bank, that the capital adequacy ratio was not affected by the application of the standard because of the concentration of loans. The researcher has recommended the need for the application of international Accounting standard (16) of the sample research banks with the commitment of Rafidain bank to consider the long-term loans received in order to raise the capital adequacy.