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Financial Reporting - Investment Decisions

   

Added on  2021-06-17

12 Pages2488 Words44 Views
Running head: FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTINGName of the StudentName of the UniversityAuthor Note

FINANCIAL ACCOUNTING1Table of ContentsAnswer to Part A.............................................................................................................................2Answer to Part B..............................................................................................................................4Answer to Part C..............................................................................................................................6Answer to Part D.............................................................................................................................7Motivation behind not revaluing the assets.....................................................................................7Effects the decision not to revalue the assets in financial statements..............................................8Effect on the wealth of the shareholders..........................................................................................8References........................................................................................................................................9

FINANCIAL ACCOUNTING2Answer to Part AThe primary reasons behind the criticism of the financial accounting standards and theIFRS in the article, `Unwieldy rules useless for investors`` has various reasons behind it. Theprimary objectives of the financial reporting have been given as below:They provide useful information which assists in making various investment decisionsThe different years cash flow are analyzed carefully using these decisions.The different changes in the structure of the business can also be analyzed.Given below are the conceptual framework`s characteristics:1.Comparability- The information which is given is required to be compared with otherentities that belong to the same financial year. The given characteristic which definecomparability help the users of the system in order to evaluate the similarity and thedifferences among the different items.2.Relevancy- The information which is present needs to be relevant in nature and mustpossess the capacity to influence the investor`s decisions. The primary key aspect of thefinancial reporting is relevancy.3.Representation of information faithfully- It is necessary for the users of the financialstatements who are commonly known as the stakeholders to have access to the faithfulinformation represented in the financial statement. The meaning of faithful representationis that the information which has been represented in the financial statements needs to befree in terms of error, should be complete in nature and needs to represent neutrality. The

FINANCIAL ACCOUNTING3framework also states that there needs to be prudence while all judgements are to bemade with respect to uncertainty.4.Timeliness- The information that needs to be provided should be available and utilized intime so that the decisions can be taken in a timely manner.5.Understandability- The information in the statements needs to be understood by the users.The given information should not be misleading the users in any manner (Scott 2015). Ifthis is not followed, then the purpose of the financial reporting will not be withheld. After these points it has been analyzed that, the article information varies and the articlequotes that the characteristics which have been stated above have not been satisfied by thepresent reporting practices which are related to the IFRS. The article mentions that IFRSadjustments are not relevant to the scenario and not faithful to it. The given information is quitemisleading for the given set of investors. Additionally, the different investors are unable tocompare the information while making investment dictions.However, the views which have been given in the article match with the view andperception that the financial reports of the corporates just tend to satisfy the objective of financialreporting which have been stated in the Conceptual Framework. The primary motives of thefinancial reports is to provide relevant data and information to the different users of the systemwith regard to the assets, liabilities and the equity of the organization (Ahmed, Neel and Wang2013). This tends to be useful to all the stakeholders who are present.It is the duty of the financial reports of the corporates to satisfy all the mentionedcharacteristics of the Financial Framework which acts as a guideline required to meet the

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