Importance of Professional Ethics in Accounting

Financial Accounting

Table of Contents
Question 1........................................................................................................................................3
a) Consolidated statement of financial position for the Pee group..............................................3
b) Relevance, reliability and comparability.................................................................................4
Question 2........................................................................................................................................7
a)..................................................................................................................................................7
b) Briefly discuss why professional ethics are important in accounting.....................................9
References......................................................................................................................................13

Question 1
a) Consolidated statement of financial position for the Pee group
Pee Plc
£ Cee Ltd. £
Adjustment
s Group
Non-current assets:
Property, plant and
equipment 160,000 50,000 210,000
Cost of investment 60,000 -60,000
Goodwill 12,000 12,000
220,000 50,000 222,000
Current assets 30,000 10,000 40,000
Total assets 250,000 60,000 262,000
Equity and liabilities
Ordinary shares of £1 each 100,000 20,000
(16000);
(4000) 100,000
Retained profits 150,000 40,000
(32000);
(8000) 150,000
NCI 12,000 12,000
Equity and liabilities 250,000 60,000 262,000
Working Note:
Non-controlling Interest
The amount of net assets attributable to non-controlling interests is calculated as follows:
NCI share of share capital (20% × 20,000) = 4,000
NCI share of retained earnings (20% × 40,000) = 8,000
12,000
Calculation of goodwill
Fair value of consideration transferred = 60,000
Plus Amount of NCI = 12,000
72,000
Less: Fair value of identifiable net assets

Share capital = 20,000
Retained earnings = 40,000
Goodwill on acquisition date 12,000
b) Relevance, reliability and comparability
Relevance:
Relevance is a general quality that is used as a selection criterion at all stages of the
financial reporting process. The data provided by the tax summaries should be relevant.
Furthermore, where decisions need to be made between relevant and reliable but not
fundamentally related alternatives, the option chosen should be the one that affects portfolio
adequacy data in general - on the whole, what is difficult and would be of great use to make
financial choices.
Relevant information has predictive value or confirmatory value. It has reasonable value
for the opportunity that does not encourage clients to evaluate or analyze past, present or future
activities and should not be a yardstick unparalleled measurement for prescient value. The data
has a positive value in that it does not induce messengers to corroborate or manipulate previous
assessments and assessments. Data can have both sensory and contemplative value. For example,
data on the current size and structure of buildings prompts customers to examine the element's
ability to misuse openings and respond to unfavorable conditions. Similar data helps confirm
past evaluations of the element structure and the outcome of actions.
The ability to use data in tax summaries to make assessments is augmented by the way it is
introduced. For example, the suppression estimate of the data provided by the presentation
statement of the financial statements will be updated if strange or rare items are revealed about
increases or mishaps and if data are provided that on customers finding additional or unfortunate
events, even unusual or inconsistent. after that. Similarly, an introduction that helps clients
understand the repetitive / non-repetitive nature of the various ups and downs further develops
the show’s approximate articulation estimate.
There are a number of different perspectives where it will be possible to see the cash
position and balance sheet position of content and the included viewpoint could have a
significant impact on assets and liabilities that are see and the movement of sums. Considering
the purpose of the tax reports, the generally more rational view depends on the assumption that