International Financial Reporting

International Financial Reporting

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
QUESTION 1 IASB’s Conceptual Framework ..............................................................................3
a) Brief description regarding main purpose of IASB's conceptual framework document........3
b) Brief explanation regarding assumptions use for preparation of financial statements...........4
Explanation regarding concept of capital maintenance under IASB's framework.....................5
IASB's framework is based on two assumption which is related with financial as well as
physical concept of capital, both are defined below:..................................................................5
d) Brief description regarding 5 qualitative characteristics & attributes of financial statement
use in IASB's conceptual framework. ........................................................................................5
e) Concept of materiality in financial reporting..........................................................................6
QUESTION 2 : IFRS1 ....................................................................................................................6
a) Brief description regarding mention within IFRS 1................................................................6
b) Essential requirement of IFRS 1 which required by Prisca Plc used for preparing financial
statement.....................................................................................................................................7
PART 2............................................................................................................................................8
QUESTION 4...................................................................................................................................8
Brief description regarding how leases should be accounted in financial statement for lessee..8
b) Calculation of interest rate inherent in lease agreement.........................................................9
QUESTION 6...................................................................................................................................9
Cash flow statement of Cross Dale Limited as per indirect method.........................................9
Cash flow statement of Cross Dale Limited as per direct method. ........................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
International financial reporting is a framework which define various standard in order to
formulate and represent financial statement in ethical manner. This retort has been formulated to
define the relevance of IASB's conceptual framework by showing purpose, importance of this
standard. It is useful for maintain consistency and transparency during the time of compound of
financial statement. In other part use of IFRS for calculating of lease as well as formulation of
statement of cash flow by applying IAS 7 is define in systematic manner.
PART A
QUESTION 1 IASB’s Conceptual Framework
a) Brief description regarding main purpose of IASB's conceptual framework document.
The term conceptual purpose is used to determine the concept that only those items which
fulfil the criteria of being an assets, or liability or equity are used to recognize as financial
position as well as only those item which fulfill the criteria of expenses and income are treated
consider as showing financial performance (Barker, Lennard Nobes, Trombetta and Walton,
2014).
The main purpose of this conceptual framework is to developed future policies of IFRS
as well as receive the current policy and performance of various department of international
accounting board. This is also focus on formulating those policies and rules m as well as
regulation regarding items which are not consider and tenter during the time of preparation of
financial statement. Following are the purpose of IASB which define below
 To formulate those policies which help in developing norms of IFRS.
 To focus on cut throat those policies which are not useful during the time of formulation
of financial statements.
 Focus on development of national standards.
 To focus on assist those standard which help in formulate financial statement in
accordance with following norms of international accounting standard.
 To assist, auditor of companies in forming opinion regarding with internation standard
complied whit rules and regulation of audit or not.
 To formulate those policies which help users at the time of interpreting financial
statement.

 Focus on amendment of the rules of IFRS International financial reporting in order to
create ethical conceptual framework.
 IASB’s Conceptual Framework also focus on formulation of various guideline which
help in interpret useless business transactions.
 To assist accountability and creditability business activities.
b) Brief explanation regarding assumptions use for preparation of financial statements.
Financial statements are consider as essential document for every business organization .
As with the use of financial statement investors able to recognize their financial position of
organization for specific or given time period. As per the requirement of conceptual framework
of IASB's following assumption needs to be follow by companies or personal during the time of
formulation of financial statement:
 Going concern: Every business organization run their operation by assumption that their
organization run for long term purpose and working for foreseeable future operations
without the fear of liquidation or winding up of business (Bauer'Brien and Saeed, 2014).
This assumption is used by personal at the time of formulation of financials statement as
on the basis of that transaction related with recording and selling of business asset has
been recorded. This assumption is based on the concept that business entity will never
affected from any kind of operation which may lead to reason of failure of project.
Organization is work on continuous basis and it only end up or stop their operation with
the mutual concept of their members or by following systematic legal winding up
process.
 Accrual basis: This concept is based on the assumption is that organization needs to
record every business transaction activity which affect running business cycle at the time
of it occurs not on the basis of when cash collected.This type of assumption is basically
suitable for large business organization. It is focus on match the amount of expenses and
income generate for particular financial year. According to this concept credit sale must
be record at the time of transaction incurred not when cash received from debtors. This
assumption beneficial for recording transaction in systematic manner.
 Assumption related with time period: In order to fulfil the norms of IASB, every
organization need to follow the assumption of time period. According to this concept
every business entity whether it was small or large or work in national or international