Report on Preparation of Financial Statement
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Added on 2020-06-04
Report on Preparation of Financial Statement
Added on 2020-06-04
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International FinancialReport
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Q1 Income Statement of Able Plc for the year 2017 and International Financial reportingstandards......................................................................................................................................1Q2 Explaining accounting for intangible assets according to International AccountingStandards.....................................................................................................................................4Specifying the intangible assets for specific area of capitalising R and D costs........................5Q3 Elaborating statement Inventories should be valued at “ Lower of cost and net realisablevalue”..........................................................................................................................................7CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONInternational Financial reporting standard can be also known as IFRS in which thestandards are usually issued by IFRS foundation and IASB which is known as Internationalaccounting standards board. It gives an easy understanding to companies and organisation forcomparing the financial performance and it also provides common language which can beunderstood globally for every business affairs. Its main objective is to compare financialperformance across national and international boundaries. This report gives us a briefunderstanding about preparation of financial statements, data set and report which providesdetails which are informative database which will be needed for applying authentic frameworkfor performing each and every activity. In the same series, there is preparation of incomestatement of Able Plc which consists of present revenue and expenses in proposed period. And inthis report facts are been justified and applications of financial statement in context of regulatoryframework of international accounting standards. The significance of such techniques and howaccounting professionals are required to prepare financial statement.Q1 Income Statement of Able Plc for the year 2017 and International Financial reportingstandardsInternational Financial reporting standards can be defined as set of accounting principleswhich are formed by independent organizations and organizations who are not for profit. IFRSusually provides a basic framework of guiding organizations for the preparation of financialstatements and there disclosure. Guidance and directions are provided by IFRS for statingfinancial statements but it does not set rules for any particular industry reporting. Organizationswho have subsidiaries in different countries has a major role of International standards. Theprocedures of accounting will be simplified if single set of worldwide standards will be adoptedby allowing an organisation for its application via one reporting language. Single standard willprovide some characterized views of finance to auditors and investors. The financialperformance of the company is been stated as comprehensive income statement. As thiscomprehensive income statement is divided into sub parts of profit and loss statement ofcomprehensive income. Revenues and expenses are elements which are included as per IFRSstandards (Cairns and et.al, 2011).The economic benefit has been raised by inflows and enhancement of assets during theaccounting period. If liabilities are decreased then there is raise of equity. Revenue does not1
include contributions which are performed by equity like owners, partners and shareholders. Theassets are depleted during accounting period decreases the economic benefit and if equity isdecreased then there is raise in liabilities. Equity participants does not include distributions.Circumstances which are related to comprehensive income that remeasurement of number ofassets and liabilities. The fair value of financial asset may rise or fall and even it can be modifiedaccording to its availability for sale. There may be increase or decrease in revaluation ofproperty, intangible assets and plant.International financial reporting standards also gives a picture of generally acceptedaccounting principles which gives its application for financial statements which are publishedyearly and helps in the understanding of stakeholders like clients, shareholders, debtors,employees and government for tracking the financial position and stability of the company.These standards are adopted by more than 100 countries and because of increase in globalisationcost of process of preparing financial statements is minimised and conducted business by manygroup of companies in world. IFRS standards has forbidden offsetting but in some specificconditions offsetting is allowed. There is requirement of fair and faithful picture which effects allconditions who are according to framework of IFRS and even there should be recognition ofcriteria of assets, liabilities, expenses and income (Cotter, 2012). The comparative informationwhich is related to financial statement of current year make the information narrative anddescriptive and in alternative to know financial performance is balance sheet of Internationalaccounting standard 1 and classification of items in financial statements. Able Plc.'s incomestatement for the year ending 31 December 2017 is represented as: Able Plc. Income statement of the year ending 31 December 2017ParticularsDetailsAmount (in £)Net sales 205000Less: Return Inwards-10000Net Revenue195000Cost of salesOpening inventory20000Purchases 130000Less: Return outwards-1000Adjusted purchase129000Goods available for sale150000Closing inventory-26000Cost of sales124000Gross Margin397000Operating Expenses2
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