1453378
Description
Mind Map by Thiffany Martin, updated more than 1 year ago
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Created by Thiffany Martin
over 10 years ago
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|
Conceptual
Framework for
Financial
Reporting
- Purpose &
Scope of CF
- 2010 - issued by IASB
- revised & retained portions -
original framework - Framework for
the Preparation & Presentation of
F/S - 1989
- revised & retained portions -
original framework - Framework for
the Preparation & Presentation of
F/S - 1989
- addresses concepts
underlying the preparation
and presentation of F/S
for external users
- Objective
of F/S
- to facilitate the consistent &
logical formulation of IFRS
- to provide a basis - use of
judgement - resolving
accounting issues
- to assist the ones who
prepares the F/s - applying
accounting standards
- to assists the users of F/S -
interpreting the F/S prepared in
accordance with the relevant
accounting standards
- to facilitate the consistent &
logical formulation of IFRS
- CF ≠ IFRS
- CF = guidelines
- IFRS = standards
- ROle of IFRS
overights CF
- CF = guidelines
- 2010 - issued by IASB
- Objective of
F/S
- provide financial information about the
reporting entity - useful to existing &
potential investors, lenders & other
creditors - making economic decisions
about providing resources to the entity
- IAS 1
- to provide the user-oriented
information need - set of F/S
comprises
- SFP - end
of the period
- SCI for the
period
- SOCE for
the period
- SCF for
the period
- Notes - summary of
significant accounting policies &
other explanatory information
- SFP - beginning of the earliest
comparative period (3 yrs
balance sheet)
- when an entity applies an
accounting policy retrospectively /
makes a retrospective restatement
of items in its F/S
- when it
reclassifies items
in the F/S
- when an entity applies an
accounting policy retrospectively /
makes a retrospective restatement
of items in its F/S
- SFP - end
of the period
- to provide the user-oriented
information need - set of F/S
comprises
- In order to meet the
objectives of F/S - F/s are
prepared on
- Accrual basis
- Going concern basis
- Accrual basis
- provide financial information about the
reporting entity - useful to existing &
potential investors, lenders & other
creditors - making economic decisions
about providing resources to the entity
- Qualitative
Characteristics of
Useful Financial
Information
- Fundamental
- Relevance
- Materiality
- Predictive
value - future value
- Confirmatory
value - past value
- Predictive
value - future value
- Materiality
- Faithfully
representation
- Complete
- Neutral
- Free from bias
- Complete
- Relevance
- Enhancing
- Comparability
- Verifiability - standard
- can be verified
- Timeliness -
provide current info
- Understandability
- Comparability
- Cost constraints - useful
financial information - reporting
financial information imposes
costs - justify the benefits of
reporting that information
- True & Fair
View / Fair
Presentation
- Fundamental
- Elements of
F/S
- Asset
- resource controlled - enterprise - past
events - future economic benefits -
expected to flow to the enterprise
- resource controlled - enterprise - past
events - future economic benefits -
expected to flow to the enterprise
- Liability
- present obligation of the enterprise arising
from past events - settlement - expected
to result in an outflow from the enterprise
- resources embodying economic benefits
- present obligation of the enterprise arising
from past events - settlement - expected
to result in an outflow from the enterprise
- resources embodying economic benefits
- Equity
- residual interest - assets
of the enterprise after
deducting all its liabilities
- residual interest - assets
of the enterprise after
deducting all its liabilities
- Income
- increases in
economic benefits
- inflows of
assets
- decreses of
liabilities
- inflows of
assets
- increases in
economic benefits
- Expenses
- decreses in
economic benefits
- outflows of assets
- incurrences of
liabilities
- outflows of assets
- decreses in
economic benefits
- Definition
- Recognition
- Measurement
- Presentation
& Disclosure
- Presentation
& Disclosure
- Measurement
- Recognition
- Asset
- Recognition & measurement
of Elements of F/S
- Recognition
- process of incorporating
- BS / IS an item that
- meets the
definition of
an element
- satisfies the
Criteria of
Recognition
- probable that any future
economic benefit associated
with the item will flow to or
from the enterprise
- the item has a cost/value that
can be measured with reliability
(cannot predict)
- probable that any future
economic benefit associated
with the item will flow to or
from the enterprise
- meets the
definition of
an element
- process of incorporating
- BS / IS an item that
- Measurement
- Historical
cost
- Current
cost
- Realisable value =
(Fair value - Cost to
sell)
- Present value
(Value in use)
- Fair
value
- Initial
measurement
- Held-to-maturity &
LOans and Receivables
(IAS 39)
- Business combination
(IFRS 3)
- Held-to-maturity &
LOans and Receivables
(IAS 39)
- Subsequent
measurement
- PPE
(IAS 16)
- Intangible Assets
(IAS 38)
- Investment property
(IAS 40)
- PPE
(IAS 16)
- Initial
measurement
- Historical
cost
- Recognition
- Concept of Capital &
Capital Maintenance
- Capital
- Physical concept
- operating
capability
- productive capacity
of the enterprise
based on
- e.g. units of
output per day
- e.g. units of
output per day
- productive capacity
of the enterprise
based on
- operating
capability
- Financial concept
- invested money /
purchasing power
- net assets /
equity of the
enterprise
- net assets /
equity of the
enterprise
- invested money /
purchasing power
- Physical concept
- Capital
Maintenance
- Physical
concept
- profit is
earned
only if
- physical productive
capacity / funds
needed to achieve
that capacity - end
of the period
- exceeds - physical
productive capacity -
beginning of the period
- after excluding any
distributions to / contributions
from owners during the period
- after excluding any
distributions to / contributions
from owners during the period
- exceeds - physical
productive capacity -
beginning of the period
- physical productive
capacity / funds
needed to achieve
that capacity - end
of the period
- profit is
earned
only if
- Physical
concept
- Capital
- Development of
Single Converged
Framework
- 2004, IASB + FASB - joint
project - improved common
conceptual framework
- aims - update & refine
existing concepts - reflect the
changes in markets, business
practices & economic
environment
- objective - create a sound
foundation - future accounting
standards - principles-based,
internally consistent &
internationally converged
- objective - create a sound
foundation - future accounting
standards - principles-based,
internally consistent &
internationally converged
- focus on changes in environment -
original framework were issued -
omissions of the original framework
- cross-cutting issues
- initially consider concepts -
private sector business entities
- later - private sector
not-for-profit organisations
- later - private sector
not-for-profit organisations
- initially consider concepts -
private sector business entities
- cross-cutting issues
- aims - update & refine
existing concepts - reflect the
changes in markets, business
practices & economic
environment
- 2004, IASB + FASB - joint
project - improved common
conceptual framework
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