Value-Added Accounting: An Empirical Illustration with Reference to the Port of Visakhapatnam

Value-added statements are gaining importance in today’s corporate world as another source of accounting disclosure of corporate results. In this study, value-added statements are prepared from the data obtained from the Port of Visakhapatnam, an emerging high-tech natural port on the coastal belt of India. The study is based on the hypothesis that the concept of value-added accounting is somehow integrated in the several areas of accounting of Visakhapatnam Port Trust, a public sector organization. Efforts have been made to investigate the above hypothesis to establish a comprehensive overview of the different uses of the value-added statements in various areas of accounting in the port. In particular, the role of value-added accounting in financial reporting and analysis is investigated and explained. As an illustration, the value-added accounting for the past 10 years of the port is presented. Gross value-added and net value-added by the port is calculated by using Serge and Ahmed (1998) value-added equation and compared graphically. Similarly, polynomial equation is derived for projection of value-added contribution of the port for the next 10 years, and R2 of the trend showed more than 80% accuracy of the projections. Simple statistical tools are used for testing statistical significance of the data and for analysis.