Advanced Financial Reporting and Theory

Running head: ADVANCED FINANCIAL REPORTING AND THEORY
Advanced Financial Reporting and Theory
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2ADVANCED FINANCIAL REPORTING AND THEORY
Introduction
The current study analytically examines theoretical foundation and content of financial
accounting systems that can provide financial information for the communication to different
users. In addition to this, the current segment also presents a research on current issues in
financial reporting and explains the effect of the issues on the overall regulatory structure
within the purview of UK. The section also presents specific guidance of IFRS 2 that is
related to the manner share based payments have the need to be accounted and reported in the
financial assertions. Moving further, the study also states about Positive Accounting Theory
that indicates towards altering accounting policies, handling discretionary accruals, timing of
implementation of novel accounting standards, altering real variables and many others. The
study also helps in relating important application of the notion in the current case.
Critical assessment of the theoretical basis and content of financial accounting systems
The current section intends to analyse the theoretical basis as well as content of financial
accounting system with special reference to article “Get Grips with IFRS 2” accounting
standard. The utilization of the grant dated alternative to enumerate the fair value of
particularly the equity settled remuneration can be considered as an important component of
IFRS 2. However, critics are of the opinion that it can necessarily lead to inaccuracy in the
process of reporting (Brigham and Ehrhardt 2013). Analysis of prior reports reveal the fact
that share based payment in IFRS 2 presently sits on the list of diverse research projects
designed by the International Accounting Standards Board and is also one of more intricate
of IFRS directives.
Theoretical Basis and content of financial accounting system

3ADVANCED FINANCIAL REPORTING AND THEORY
The standard IFRS 2 mainly calls for entities to detect diverse awards of share based payment
in different financial assertions founded on fair value (Leuz and Wysocki 2016). This
happens at the time when both goods as well as services are accepted and that is presently
determined at specific grant date for particular share based payments that are issued to
different members of the staff. IASB also settled on grant date model. Under this specific
model, a specific entity enumerates fair value of particular share based payment award issued
to a specific worker on the grant date (Zeff et al. 2016).
Scope of IFRS
The scope of IFRS 2 mainly includes equity based share based payment deal; cash settled
share based payment deal and share based payment deal with cash alternatives (Lusardi and
Mitchell 2014). However, the IFRS 2 also does not include the transactions counting transfers
of particularly equity instruments that are evidently not disbursement for products as well as
services. In addition to this, IFRS 2 also does not include transactions/deals with shareholders
that are essentially at the time when shareholders act solely in the capability as shareholders
(Zeff 2013). Again, transactions that are within the scope of the regulation IAS 32 as well as
IAS 39 are also not included within the purview of IFRS 2.
Recognition Principle:
the requirements of the directives of IFRS 2 essentially requires business entities to recognize
the expends or else an asset in case if the goods as well services accepted satisfy the criteria
for detecting a specific asset (Sunder 2016). In addition to this, an enhancement in equity
(that mainly refers to transactions that are settled in various equity instruments) or else in
liabilities (that primarily refers to cash settled deals). Nevertheless, IFRS mentions that for
specifically awards to diverse employees, a particular entity have the need to utilize fair value
of instruments of equity enumerated particularly at the grant date. Furthermore, according to