International Financial Reporting Standard & Its Key Purpose | Report

Added on -2020-02-05

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InternationalFinancialReporting Standard1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3a) IFRS conceptual framework for Financial Reporting .............................................................3b) Discussing the measures of financial statements.....................................................................5CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................92
INTRODUCTIONFinancial reporting is the most important task which assists corporation to ensure properreporting of all financial information. It assists corporation to deliver important informationrelated to liquidity and other related aspect of the business so as to meet expectation of differentparties in an effectual manner. Present report is based on International Financial ReportingStandard and its key purpose. Further, different measures of financial statements such ashistorical cost, fair value and net realizable value as well as present value of future cash flow areexplained. In addition to this, limitation of each measure has been explained in detail so as toassess the effectiveness of reporting standard.a) IFRS conceptual framework for Financial Reporting International Financial Reporting standard is the most important aspect which state therules and regulations for preparing financial statement for public limited corporation. Accordingto guidelines provided by IFRS, companies need to prepare all necessary statements whichreflects details related to profit, cost and liquidity as well as equity or investment etc. It facilitatesto describe the basic concepts wit regard to preparation as well as present of financial statementsfort meeting expectation of external users (Hail, Leuz and Wysocki, 2010). This proves to beeffective to resolve accounting issues faced by companies and ensure ethical conduct of business.The revised Framework reflects that generally purpose of financial reporting is limited to userslike existing or potential investors, creditors and lenders. This also focuses upon qualitativecharacteristics to useful financial information. In this manner, fundamental qualitative andenhancement of qualitative characteristics are explained with respect to verifiability,understandability and comparability. However, basic focus or purpose of IFRS is on thefollowing aspects-Objective of financial reporting-It is the most important aspect under which reporting isdone for potential and existing investors who generally use the financial information fortaking decision related to selling, buying and holding equity or debt instrument(Armstrong and et. al., 2010). Here, IFRS may not provide all the related information touses for making economic decision. At this juncture, users can refer other sources forpertinent information. Furthermore, IFRS does not consider regulatory as primary usersand in turn general purpose financial report does not direct to them and other parties.3

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