Advanced Financial Accounting: Assignment
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Added on 2020-12-18
Advanced Financial Accounting: Assignment
Added on 2020-12-18
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ADVANCE FINANCIALACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................11. The objectives and purpose of the conceptual framework.................................................12. IASB revised conceptual framework..................................................................................23. Identify and explain main improvements according to the IASB......................................44. Revised conceptual framework..........................................................................................65. Information used in assessing stewardship is needed to achieve the objective of financialreporting.................................................................................................................................76. Argument and evaluation of effectiveness of conceptual framework needed to revised...9CONSLUSION................................................................................................................................9REFERENCES..............................................................................................................................11
Research topic: “A review and revision of the Conceptual Framework for Financial Reporting”INTRODUCTIONConceptual frame work of financial reporting provides deep knowledge and informationto prepare financial statements and reports for effective management (Van Deventer, Imai andMesler, 2013). This report defines the IFRS with relevant accounting literature. Objectives andthe purpose of the conceptual framework in respect of measurement, presentation andrecognition are also covered in organisational context. IASB and the main improvements aremeasured with organisational context. Factors which are considered with effect of IFRS rules aregulations illustrated properly in this report. Importance of IASB and IFRS subject to attain thefinancial reporting objectives also covered in this report.1. The objectives and purpose of the conceptual frameworkConceptual Framework include the structure and the categories regarding presentation,measurement and disclosure of accounting reports and statements. There is a vital role of thisframework subject to present accurate financial record. In financial reporting proper legal andethical structure used to make financial reports and records legal and viable to stakeholders.There are main objectives and purpose of the conceptual framework are defined as follows;Objective of conceptual frameworkA conceptual framework for financial reporting is a part of a joint project between IASBand the financial accounting standard board (FASB).An accounting is not completed without proper framework, as these fundamentals leadsto prescribe the nature, functions and limits of financial accounting and financial statements. Themain reason for developing a conceptual standard is that to provide a framework for settingaccounting standard, it will make easy for resolving accounting disputes and reduce thereputation of accounting principle in accounting standard (Gordon, 2011). The main objective of Conceptual framework in accounting is defined below:To provide financial information that is useful to users in making decisions relating toproviding resources to the entity. Makes easy to select the easiest and appropriate accountingsolution permitted by financial accounting standard. These frameworks are useful for investortoo, as it discloses the risk capital to them and help them to advise and remove the same riskfactor from their investment (Richard Barker 2015).1
It enables lender to make sure that the amount of loan and interest will be paid when due.Purpose of conceptual framework-The main important purpose of the conceptual framework was to help internationalaccounting standard board in the development of new future IFRS and have a look on upon theexisting IFRS (Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information, Accounting in Europe, 4:1). Framework bringuniformity in accounting method that help in improving he reliability of the financial statements,simplify the accounting information. It assets the auditor to prepare financial statement in theapplication of IFRS, which include dealing with a particular transaction for which there is not yetan accounting standard. It also promotes similar rules of accounting regulation and standard byreducing the number of pre-reputation of alternative accounting standard (May, 2013).As a purpose of financial reporting it provides useful information for economic decisionmaking, it also helps to determine how trans should be measured and reported. 2. IASB revised conceptual frameworkInternational Accounting Standard Board has revised the conceptual framework whichincludes revised definitions of an assets and liabilities and new guidelines for measurement,presentation, disclosure and prudence in financial reporting. IASB focused on disadvantages thatrequired to be dealt with. It is observed that the existing financial reporting standards wereinsufficient to meet the reporting criteria (Mohammed Sarea and Mohd Hanefah, 2013). To builda strong criteria and reporting standard for legal and authentic reporting standard IASB publishedconceptual framework with more concepts and financial rules. a) Measurement, presentation and disclosure Measurement is devoted to the various measurement bases, details that they provide andtheir merits and demerits. Measurement bases includes historical cost and current value i.e. fairvalue, current cost and fulfilment value. Current cost is recently introduced into the conceptualframework as it is broadly recommended in academic profession. This framework doesn'tinclude detailed guidance on specific measurement bases which would be suitable because thesuitability of specific measurement bases will change depending on facts and conditions. Presentation and disclosure is the framework refers to concepts which determine whichinformation is enclosed in the financial statement and how it is presented and disclosed. Thestatement of comprehensive income is currently described as 'statement of financial2
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