International Financial Reporting

International Financial
Reporting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Question 1 IASB's conceptual framework.......................................................................................1
(a) Main purpose of the IASB's conceptual framework document.............................................1
(b) Assumptions of preparation of financial statements.............................................................2
(c) Main concepts of capital maintenance, make references to the IASB's conceptual
framework...................................................................................................................................2
(d) Five qualitative characteristics and attributes of financial statements in the IASB's
conceptual framework.................................................................................................................3
(e) Concept of materiality...........................................................................................................4
Question 2 IFRS1 - First-time Adoption of International Financial Reporting Standard................4
Explain the terms "first IFRS reporting period" and "date of transition" as defined by IFRS1..4
Requirements of IFRS1...............................................................................................................5
PART B............................................................................................................................................6
Question 4 IFRS16 - Lease.........................................................................................................6
Question 6 : IAS7 - Statement of Cash Flows............................................................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
International financial reporting standard (IFRS) is accounting framework which is used
by the organisation to proper organize financial report. This framework uses to make financial
statement in consistent, transparent and comparable manner. IFRS use by businesses to carry out
all the financial outcomes and actual worth of company with same rules. On the basis of IFRS
framework public and non public organisations prepare their financial statements and present
their actual financial position (Lakew and Musa, 2019). It is also providing common guidelines
for the preparation of financial statements instead of set out rules for particular industry. This
report categorised into two parts Part A and Part B. In Part A, define the purpose of IASB's
conceptual framework, assumptions to prepare financial statements. Along with explain
qualitative characteristics and attributes of financial statements and critically define materiality
concept to financial reporting. In Part B, sort out the practicals of lease, cash flow statement to
analysis the actual position of business.
PART A
Question 1 IASB's conceptual framework
(a) Main purpose of the IASB's conceptual framework document
Conceptual framework is use to analysis the IASB in developing and revising IFRSs.
This concept mainly used for preparation of accounting policies and focus on those areas that are
not covered as per accounting policy and assistance of all users to know the IFRS. There are
mentioned different purpose of conceptual framework such as:
 The main purpose of IASB conceptual framework to analysis the development of future
IFRS and determine of existing IFRSs.
 The conceptual framework uses to preparation of financial statements in set up
accounting guidelines for different transactions or event not included into existing
standards (Lisowsky and Minnis, 2020).
 In some cases, the IASB might require to amended IFRS that create issue with other
activities of the conceptual framework. Thus, IASB require to define and explain the
departure from the framework as the basis for conclusions.
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 The another purpose of conceptual framework is it carry out different guidelines to
interpret unusual transactions. Along with it improve the credibility and accounting
activities on overall basis.
(b) Assumptions of preparation of financial statements
To prepare of the financial statements requires to follow IASB assumptions that guide
how to prepare authentic and effective financial statements that present actual financial position
of business. These assumptions are mention below such as:
 Going concern: This assumption use by the organisation to prepare financial statements
and present all operation for the foreseeable future. It is most essential assumption
because it is using at the end of financial year, that time all the assets have to be sold and
sales value recorded at book value (Mnif Sellami and Gafsi, 2019).
 Accrual basis: This is another assumption which is using by the business entity to match
the all income and expenditure in particular financial year. There is earned or incurred
not in the particular time in which payment was accepted or made.
 Time period assumption: It refers that company presents all the necessary financial
information in brief time of period like months, quarter and years. On the basis of these
information compare and analysis activity easily. These information will be timely and
and help to present actual picture of business entity.
(c) Main concepts of capital maintenance, make references to the IASB's conceptual framework
Capital maintenance: It is most important concept that use for only income generation
in excess manner and manage capital in regard of profit. The particular IASB conceptual
framework define the concept of capital maintenance such as:
 Financial capital maintenance: In this concept profit is generated by business when
financial amount of net assets increase at the end of financial year as compare of stating
net assets amount after excludes any distributions to contribution from owners at
financial year. Financial capital maintenance used for nominal monetary units and for
purchasing power units (Mohammadi and et.al, 2020).
 Physical capital maintenance: As per the concept a profit is generated by the business
when physical productive capacity use at the end of financial year because it increases the
physical productive capacity at the starting of financial year. In this excludes all the
distribution and contribution as per owner.
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