Professional Documents
Culture Documents
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Introduction
Learning out come
Explain the Conceptual Framework
for Financial Accounting
Explain the
Regulatory
Framework
Explain the Recogonition and
Measurement
of elements of
financial statements
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Divided in 2
1. the regulatory and the
2. conceptual frame work.
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Question
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Harmonization of Accounting
standards
Accounting standard have
been harmonized to apply
internationally.
This
means
that
all
Accountants
should
be
governed by same standards
Solution
to ensure that relevant and
reliable financial reporting is
achieved to meet the needs of
shareholders and other users
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Benefits of Harmonization
Disadvantages of harmonization
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financial
reporting between countries.
(iv) Countries may be unwilling to
accept another countrys standards
(i.e. nationalism);
(v) Its Costly to develop a fully
detailed set of accounting
standards.
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(iii)Different purposes of
Disadvantages of harmonization
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standard setter .
It deals with domestic barriers to
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IFRS Foundation
THE IFRS
FOUNDATION
IASB
IFRS AC
IFRS IC
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International Accounting
Standards Board (IASB)
solely responsible for issuing
International Accounting
Standards (IASs) now called
International Financial
Reporting Standards (IFRSs)
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matters
where
divergent
interpretations of IFRSs have arisen.
The interpretations cover both:
Newly identified financial reporting issues;
or Issues where unsatisfactory or
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Development of an IFRS
IASB identifies a
subject
IASB publishes an
exposure draft for
public comment
final IFRS
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Date of issue
IAS 1 Presentation of Financial Statements
2007
IAS 2 Inventories
2003
IAS 7 Statement of cash flow
1992
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 2003
IAS 10 Events after the Reporting Period
2007
IAS 11Construction Contracts
1993
IAS 12 Income Taxes
2000
IAS 16 Properties, Plant and Equipment
2003
IAS 17 Leases
2003
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IAS 41 Agriculture
IFRS1 First-time Adoption of International Financial Reporting Standards
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 Explorations for and Evaluation of Mineral Resources
IFRS 7 Financial Instruments: Disclosures
IFRS 8 Operating Segments
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1995
2003
2008
2003
1995
2003
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1995
2003
2003
1998
2004
1998
2004
2004
2003
1993
2004
2001
2003
2004
2008
2008
2004
2004
2005
2006
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Approaches to accounting
2 main approaches to accounting
2009
2013
2013
2013
2013
2014
1.
2.
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Approaches to accounting
Conceptual Framework
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Conceptual Framework
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7 major contents
1. The
objective
of
financial
reporting
2. The qualitative characteristics of
financial information
3. The
elements
of
financial
statements
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2. Qualitative Characteristic
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2. Qualitative Characteristic
3.Relevance, it influences
economic decisions of users
the
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3.Elements of Financial
Statements
5 classes namely
1. Assets,
2. liabilities,
3. equity
4. Income
5. Expenses.
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3.Elements of Financial
Statements
Question
Assets
These are resources controlled by
the entity as a result of past events
from which future economic
benefits are expected to flow to the
entity
It is cash or the right to cash in
future
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2.Liabilities
These are an entitys present
obligations to transfer economic
benefits as a result of past
transactions or events
An Obligation is a duty or
responsibility to act or perform in a
certain way
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Question
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Solution
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3.Elements of Financial
Statements
Solution
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3.Elements of Financial
Statements
3.Equity interest
is the residual amount found by
deducting all liabilities of the entity
from all of the entitys assets. It is
the residual of assets less liabilities,
so the amount at which it is shown
is dependent on the measurement
of assets and liabilities.
Regulatory & Conseptual Framework Compiled by
Nsama Musawa Njebele
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3.Elements of Financial
Statements
4.Income
Income is an increase in
economic benefits during the
accounting period in the
form
of
inflows
or
enhancements of assets or
decreases in liabilities
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3.Elements of Financial
Statements
4. Recognition of elements in
financial statements
5.Expenses
Decreases in economic benefits
during the accounting period in
the form of outflows or depletions
of assets or incurrence of liabilities
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Recognized in
Statement
Financial
Position
When
Liability
Statement
Position
Income
income statement
Expenses
income statement
Asset
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Financial
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5.Measurement in financial
statements
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5.Measurement in financial
statements
5.Measurement in financial
statements
1.Historical cost.
2.Current cost.
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5.Measurement in financial
statements
4.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 most
commonly adopted measurement
basis
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5.Measurement in financial
statements
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2 underlying assumptions
1. The accrual basis of accounting
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