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International Financial Reporting Standards : Assignment

   

Added on  2021-04-24

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Running head: INTERNATIONAL FINANCIAL REPORTINGInternational financial reportingUniversity NameStudent NameAuthors’ Note

2INTERNATIONAL FINANCIAL REPORTINGTable of ContentsIntroduction:...............................................................................................................................3Conceptual framework for financial reporting:..........................................................................3Background:...............................................................................................................................3Objectives of financial reporting:...............................................................................................3Underlying assumptions:............................................................................................................3Elements of financial statements:...............................................................................................3Concept of capital and capital maintenance:..............................................................................3Use of fair value in preparation and presentation of financial statements:................................3Conclusion:................................................................................................................................3

3INTERNATIONAL FINANCIAL REPORTINGIntroduction:The evaluation of the scope of new conceptual framework for financial reporting isthe main purpose of the report. Presentation and preparation of financial report is explained inthe report by comparing the 1989 IASB framework with that of new framework. Report alsodemonstrates the arguments that are against the use of fair values and the arguments that arein favour of the use of fair value in the presentation of financial reporting. In the financialstatements preparation the fair value has been compared to the historical method valuationtechniques. Conceptual framework for financial reporting:Background:The primary purpose of conceptual framework issues by International Accountingstandard board (IASB) is to assist the board in reviewing existing financial reporting standardand the development of future financial reporting. Concepts are set out in the conceptualframework that provides details regarding the presentation of financial statements and themanner of preparation of the financial statement for external users. Such framework intendsto assist the financial statements preparers in applying the international financial reportingstandard board and assisting board in promoting harmonization of regulations. The purposeof framework is to interpret information that financial information presented in the financialstatements comply with the financial reporting standard (Cascino and Gassen 2015). Theintention for the framework is to reduce the number of different accounting treatments thatare officially recognized by IFRS. Conceptual framework also has the purpose of providinginformation who is interested in working for IASB with the information about the approachesof IFRS formulation. The need of conceptual framework arises from the requirement ofinformation about the reporting entity financial position (Hoyle et al. 2015). Such

4INTERNATIONAL FINANCIAL REPORTINGinformation might be related to economic resources of entity and any claim against thereporting entity. Effect of economic transactions, other events, and any change in claims andeconomic resources of reporting entity is also depicted in the financial report. All suchinformation provided in the financial report in accordance with the conceptual frameworkwould provide useful information for decision-making purpose. Objectives of financial reporting:The external user uses the financial statement for decision making and it is the mainpurpose of the financial reporting. It helps users in providing useful information about cashflows including the uncertainty and timing of cash flows. Information that are critical fordetermining the business liquidity is provided in the financial reporting (Weygandt et al.2015). Financial reporting helps users such as lenders, potential investors and creditors formaking decisions regarding selling, purchasing, equity and debt or settlement of other typesof credit and loans. The main users seeking information about the resources of entity usesfinancial reporting for not only assessing the prospect of future net cash flow of entity butalso efficiently and effectively managing the existing resources of entity for discharging theirresponsibilities (Shenkar et al. 2014). It helps in assessing the prospects of entity in discharging the responsibilities forusing the resources of entity along with prospects of entity for existing potential and existinginvestors and future net cash flows. Examples of some of the responsibilities to be dischargedin lieu of financial reporting is protecting resources of entity from economic factors thatmight have unfavourable effect such as technological and price change (Wang 2014).

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