f7課件1 ifrs framework_W

1、The objective of general purpose financial reportingThe Conceptual Framework states that:The objective of general purpose financial reporting is to provide information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about

2、 providing resources to the entity.The Conceptual Framework makes it clear that this information should be prepared on an accruals basis.Accruals basisThe effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are reco

3、rded in the accounting records and reported in the financial statements of the periods to which they relate.Accruals basis Level2Right and obligationUnderlying assumptionGoing concern is the underlying assumption in preparing financial statements.The entity is normally viewed as a going concern, tha

4、t is, as continuing in operation for the foreseeable future. It is assumed that the entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations.Youre a Champion!Thanks for staying with us. You have finished this task.Qualitative character

5、istics of useful financial informationChapter 3 of the Conceptual Framework distinguishes between fundamental and enhancing qualitative characteristics, for analysis purposes. Fundamental qualitative characteristics distinguish useful financial reporting information from information that is not usef

6、ul or misleading. Enhancing qualitative characteristics distinguish more useful information from less useful information.The two fundamental qualitative characteristics are relevance and faithful representation.RelevanceRelevant information is capable of making a difference in the decisions made by

7、users. It is capable of making a difference in decisions if it has predictive value, confirmatory value or both.The relevance of information is affected by itsnature and its materiality.Materiality. Information is material if omitting it or misstating it could influence decisions that users make on

8、the basis of financial information about a specific reporting entity.FaithfulrepresentationFinancial reports represent economic phenomena in words and numbers. To be useful, financial information must not only represent relevant phenomena but must faithfully represent the phenomena that it purports

9、to represent.To be a faithful representation information must becomplete, neutral and free from error.A complete depiction includes all information necessary for a user to understand the phenomenon being depicted, including all necessary descriptions and explanations.A neutral depiction is without b

10、ias in the selection or presentation of financial information. This means that information must not be manipulated in any way in order to influence the decisions of users.Free from error means there are no errors or omissions in the description of the phenomenon and no errors made in the process by

11、which the financial information was produced. It does not mean that no inaccuracies can arise, particularly where estimates have to be made.Substance over formThis is not a separate qualitative characteristic under the Conceptual Framework. The IASB says that to do so would be redundant because it i

12、s implied in faithful representation. Faithful representation of a transaction is only possible if it is accounted for according to its substance and economic reality.Enhancing qualitative characteristicsComparabilityComparability is the qualitative characteristic that enables users to identify and

13、understand similarities in, and differences among, items. Information about a reporting entity is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or date.Consistency, although related to comparabili

14、ty, is not thesame. It refers to the use of the same methods for the same items (i.e. consistency of treatment) either from period to period within a reporting entity or in a single period across entities.The disclosure of accounting policies is particularly important here. Users must be able to dis

15、tinguish between different accounting policies in order to be able to make a valid comparison of similar items in the accounts of different entities.Comparability is not the same as uniformity. Entities should change accounting policies if those policies become inappropriate.Corresponding informatio

16、n for preceding periods should be shown to enable comparison over time.VerifiabilityVerifiability helps assure users that information faithfully represents the economic phenomena it purports to represent. It means that different knowledgeable and independent observers could reach consensus that a pa

17、rticular depiction is a faithful representation.Information that can be independently verified is generally more decision-useful than information that cannot.TimelinessTimeliness means having information available to decision-makers in time to be capable of influencing their decisions. Generally, th

18、e older information is the less useful it is.Information may become less useful if there is a delay in reporting it. There is a balance between timeliness and the provision of reliable information. If information is reported on a timely basis when not all aspects of the transaction are known, it may

19、 not be complete or free from error.UnderstandabilityClassifying, characterising and presenting information clearly and concisely makes it understandable.Financial reports are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the inform

20、ation diligently. Some phenomena are inherently complex and cannot be made easy to understand. Excluding information on those phenomena might make the information easier to understand, but without it those reports would be incomplete and therefore misleading. Therefore matters should not be left out

21、 of financial statements simply.The cost constraint on useful financial reportingThis is a pervasive constraint, not a qualitative characteristic. When information is provided, its benefits must exceed the costs of obtaining and presenting it. This is a subjective area and there are other difficulti

22、es: others, not the intended users, may gain a benefit; also the cost may be paid by someone other than the users. It is therefore difficult to apply a cost- benefit analysis, but preparers and users should be aware of the constraint.Youre a Champion!Thanks for staying with us. You have finished thi

23、s task.The elements of financial statementsElements of financial statementsElements of financial statementsMeasurement of financial position in Statement of financial positionMeasurement of performance in Statement of profit or loss and other comprehensive incomeAsset. A resource controlled by an en

24、tity as a result of past events and from which future economic benefits are expected to flow to the entity.Liability. A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.Equi

25、ty. The residual interest in the assets of the entity after deducting all its liabilities.Income. Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to

26、contributions from equity participants.Expenses. Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.AssetsAsset

27、s are usually employed to produce goods or services for customers; customers will then pay for these. Cash itself renders a service to the entity due to its command over other resources.The existence of an asset, particularly in terms of control, is not reliant on:(a) physical form (hence patents an

28、d copyrights); nor(b) legal rights (hence leases).Transactions or events in the past give rise to assets; those expected to occur in the future do not in themselves give rise to assets. For example, an intention to purchase a non- current asset does not, in itself, meet the definition of an asset.Li

29、abilitiesObligation. A duty or responsibility to act or perform in a certain way. Obligations may be legally enforceable as a consequence of a binding contract or statutory requirement. Obligations also arise, however, from normal business practice, custom and a desire to maintain good business rela

30、tions or act in an equitable manner.It is important to distinguish between a present obligation and a future commitment. A management decision to purchase assets in the future does not, in itself, give rise to a present obligation.ProvisionsIs a provision a liability?Provision. A present obligation

31、which satisfies the rest of the definition of a liability, even if the amount of the obligation has to be estimated.QuestionConsider the following situations. In each case, do we have an asset or liability within the definitions given by the Conceptual Framework? Give reasons for your answer.a) Pat

32、Co has purchased a patent for $20,000. The patent gives the company sole use of a particular manufacturing process which will save $3,000 a year for the next five years.b) Baldwin Co paid Don Brennan $10,000 to set up a car repair shop, on condition that priority treatment is given to cars from the

33、companys fleet.c) Deals on Wheels Co provides a warranty with every car sold.Answera) This is an asset, albeit an intangible one. There is a past event, control and future economic benefit (through cost savings).b) This cannot be classified as an asset. Baldwin Co has no control over the car repair

34、shop and it is difficult to argue that there are future economic benefits.c) The warranty claims in total constitute a liability; the business has taken on an obligation. It would be recognised when the warranty is issued rather than when a claim is made.EquityEquity is defined above as a residual,

35、but it may be sub- classified in the statement of financial position. This will indicate legal or other restrictions on the ability of the entity to distribute or otherwise apply its equity. Some reserves are required by statute or other law, eg for the future protection of creditors.The amount show

36、n for equity depends on the measurement of assets and liabilities. It has nothing to do with the market value of the entitys shares.IncomeBoth revenue and gains are included in the definition of income. Revenue arises in the course of ordinary activities of an entity.Gains. Increases in economic ben

37、efits. As such they are no different in nature from revenue.Gains include those arising on the disposal of non-current assets. The definition of income also includes unrealised gains, eg on revaluation of marketable securities.ExpensesAs with income, the definition of expenses includes losses as wel

38、l as those expenses that arise in the course of ordinary activities of an entity.Losses. Decreases in economic benefits. As such they are no different in nature from other expenses.Losses will include those arising on the disposal of non- current assets. The definition of expenses will also include

39、unrealised losses, eg the fall in value of an investment.Youre a Champion!Thanks for staying with us. You have finished this task.Financial Position approachDr/Cr 會(huì)計(jì)僅僅是記錄經(jīng)濟(jì)交易的一門語(yǔ)言 撿錢 賣貨物 處置固定資產(chǎn) Youre a Champion!Thanks for staying with us. You have finished this task.Recognition of the elements of fi

40、nancial statementsItems which meet the definition of assets or liabilities may still not be recognised in financial statements because they must also meet certain recognition criteria.An item that meets the definition of an element and satisfies the following criteria for recognition:a) it is probab

41、le that any future economic benefit associated with the item will flow to or from the entity; andb) the item has a cost or value that can be measured with reliability.切一向錢看Assets which cannot be recognisedThe recognition criteria do not cover items which many businesses may regard as assets.A skille

42、d workforce is an undoubted asset but workers can leave at any time so there can be no certainty about the probability of future economic benefits.A company may have come up with a new name for its product which is greatly increasing sales but, as it did not buy the name, the name does not have a co

43、st or value that can be reliably measured, so it is not recognised.Youre a Champion!Thanks for staying with us. You have finished this task.Measurement of the elements of financial statementsMeasurement. The process of determining the monetary amounts at which the elements of the financial statement

44、s are to be recognised and carried in the statement of financial position and statement of profit or loss and other comprehensive income.A number of different measurement bases are used in financial statements. They include Historical cost Current cost Realisable (settlement) value Present value of

45、future cash flowsCurrent cost.Assets are carried at the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently.Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligati

46、on currently.Realisable value. The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal.Present value. A current estimate of the present discounted value of the future net cash flows in the normal course of business.Historical cost is the mos

47、t commonly adopted measurement basis, but this is usually combined with other bases, eg inventory is carried at the lower of cost and net realisable value.Recent standards use the concept of fair value, which is defined by IFRS 13 as the price that would be received to sell an asset or paid to trans

48、fer a liability in an orderly transaction between market participants at the measurement date.ExampleA machine was purchased on 1 January 20X8 for $3m. That was its original cost. It has a useful like of 10 years and under the historical cost convention it will be carried at original cost less accum

49、ulated depreciation. So in the financial statements at 31 December 20X9 it will be carried at: $3m (0.3 x 2) = $2.4mThe current cost of the machine, which will probably also be its fair value, will be fairly easy to ascertain if it is not too specialised. For instance, two year old machines like thi

50、s one may currently be changing hands for $2.5m, so that will be an appropriate fair value.The net realisable value of the machine will be the amount that could be obtained from selling it, less any costs involved in making the sale. If the machine had to be dismantled and transported to the buyers

51、premises at a cost of $200,000, the NRV would be $2.3m.The replacement cost of the machine will be the cost of a new model less two years depreciation. The cost of a new machine may now be $3.5m. Assuming a 10-year life, the replacement cost will therefore be $2.8m.The present value of the machine w

52、ill be the discounted value of the future cash flows that it is expected to generate. If the machine is expected to generate $500,000 per annum for the remaining 8 years of its life and if the companys cost of capital is 10%, present value will be calculated as: $500,000 x 5.335* = $2667,500* Cumula

53、tive present of $1 per annum for 8 years discounted at 10%Youre a Champion!Thanks for staying with us. You have finished this task.OT1Conceptual frameworkB1-1How does the Conceptual Framework define an asset?A. A resource owned by an entity as a result of past events and from which future economic b

54、enefits are expected to flow to the entityB. A resource over which an entity has legal rights as a result of past events and from which economic benefits are expected to flow to the entityC. A resource controlled by an entity as a result of past events and from which future economic benefits are exp

55、ected to flow to the entityD. A resource to which an entity has a future commitment as a result of past events and from which future economic benefits are expected to flow from the entity(2 marks)B1Answer CA resource controlled by an entity as a result of past events and from which future economic b

56、enefits are expected to flow to the entityB2-2Which one of the following would be classified as a liability?A. Dexters business manufactures a product under licence. In 12 months time the licence expires and Dexter will have to pay$50,000 for it to be renewed.B. Reckless purchased an investment 9 months ago for $120,000. The market for these investments has now fallen and Recklesss investment is valued at $90,000.C. Carter has estimated the tax charge on its profits for the year just ended as $165,00