Importance of Financial Reporting and Impacts of Asset Revaluation

Running head: ACCOUNTS
ACCOUNTS
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................3
Answer to Question 3......................................................................................................................6
Answer to Question 4......................................................................................................................7
References......................................................................................................................................10

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Answer to Question 1
The purpose of financial reporting is to provide a true picture of the organization in front
off its stakeholders. The objectives of the financial are many and as follows:
 Helps in the assessment of the business structure of an organization.
 Helps in future assessment of the cash flow of the future (Ahmed, Neel and Wang 2013).
 Provides useful information to support different investing decisions.
It is important that the primary conceptual framework of any organization’s statement
comprises of the following:
 The information provided needs to be comparable in nature. This means that they can be
easily compared with other elements in the same year or could be compared with other
values during different years.
 The statements must have the capability of faithfully representing the actual information
of the given organization. This means that the data needs to be free, completeness, neutral
in nature. The statement also needs to be prudent in nature so that the judgements are
made carefully (Deegan 2013).
 The information available must be in context of the decision which need to be made at
present and also should be available whenever required.
 The information present needs to be clearly portrayed and must be understood carefully
by the users. It should not have an impact on the investor’s decision making.
It is a fact that if these information are not present, the purpose of financial statement
goes for a toll.

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However, in the given article, `Unwieldly rules useless for investors` it has been recorded
that the different requirements and statements of essential components which has been stated
does not appear to be satisfied by the current reporting practices, which have been undertaken by
the IFRS practices. The article critically analysis the current practices and states that the current
adjustments are not faithful and relevant and tends to lead to misleading information.
Furthermore, due to this they are not being able to compare the different companies and make
sound investments.
The views stated in the article state that it is very important for the financial reports to
satisfy the requirements in the conceptual framework and that it is the duty of the statements to
provide useful information with regard to liabilities assets, incomes and equity (Christensen et al.
2015). It is important for the financial reports to satisfy all the characteristics of the framework
and the article provided a critical analysis of how they were unable to do so and that the
requirements of all stakeholders were not being met.
Answer to Question 2
Public interest theory
The Public Interest Theory states that the economic markets are quite delicate and thus it
is the duty of the market to convey information about the security and share prices. However,
they do not operate in a manner in which they are supposed to be operating and this leads to a
misbalance. The industry gives more importance to the people and economic entities rather than
the society. Hence, due to this misbalance it is important that the economic markets and their
operations are assessed through government intervention (Hoyle, Schaefer and Doupnik 2015).
The given theory was developed by A.C.Pigou in 1932. The author stated that it is the public