KTQTế 1

Kế toán quốc tế 1 28-Sep-21
Learning objectives
Explain the roles and structures of key regulatory bodies.
Learning objectives Describe efforts to construct a conceptual framework.
Understand the objective of financial reporting.
Identify the qualitative characteristics of accounting information.
Define the basic elements of financial statements.
CONCEPTUAL Describe the basic assumptions of accounting.
FRAMEWORK Explain the application of the basic principles of accounting.
Understand the concepts of capital maintenance.

For Financial Reporting
2
1 2
Institutional
structure of
International
standard
setting
4 5
CF - Conceptual Framework 1
International Accounting
➢ The IFRS Foundation is an independent
foundation based in the US. Standards Board
IASB is responsible for developing and issuing
➢ Its activities are directed by the Trustees new international standards which are known as
who appoint the members to the IASB, International Financial Reporting Standards
IFRS.AC and IFRIC. (IFRS).
➢ The trustees are individuals of diverse IASB consists of 15 members and their
geographical and functional backgrounds foremost qualification is technical expertise. All
and comprise of 6 members from North members are appointed for a terms of 5 years,
America, 6 from Europe, 4 from Asia renewable once.
Pacific and 3 from other parts of the world. Before a standard, exposure draft or a final
➢ Of the 19 members, 5 represent the IFRIC interpretation can be published, at least 8
out of the 15 members must approve it.
accounting profession and others
represent the international organisation of All existing IASs and SICs remain in force until
preparers, users and academics. amended or withdrawn in the future. Therefore,
IFRS includes IFRSs, IFRIC, IASs, SICs. 7
6 7
IFRS Interpretation Committee

The objectives of the IFRS
Advisory Council are:
This International Financial Reporting
Interpretation Committee (IFRIC)
• To give advice to the IASB
on agenda decisions and ▪ is a committee of the IASB;
priorities in its work;
▪ review, on a timely basis, new
• To inform the IASB of the
views of organizations and financial reporting issues not
individuals on the Council specifically addressed in IFRS;
on major standards setting
▪ clarify issues where unsatisfactory
projects;
or conflicting interpretations have
• To give other advice to the
developed, with a view to reaching
Board or to the Trustees
a consensus on the most
appropriate treatment.
8 9
Conceptual Framework
V2018
Appendix – IASB Conceptual Framework

10 11
10 11
13
The Conceptual Framework Structure of some IFRS

It is not an accounting standard
Rules/Application guidance
Conceptual
Rules Rules
IFRS
Framework (Exceptions) (interpretations)
establishes
It is a guidance to the the concepts Principles
preparation and presentation of that underlie
financial statements financial reporting. CF Concepts
IFRS
Application guidance to give effect to the principles
It does not override any accounting standards
12
12 13
Contents of the conceptual framework

Apr 1989
Framework for the Preparation and Presentation of
History Jul 1989
Financial Statements was approved by the IASC Board.
Chapter 1: The objectives of general purpose financial reporting
Chapter 2: Qualitative characteristics of useful financial information
The Framework was published.
Chapter 3: Financial statements and the reporting entity
CF 2018
Chapter 4: The elements of financial statements
Apr 2001 Chapter 5: Recognition and derecognition
The Framework was adopted by the IASB.
Chapter 6: Measurement
Sep 2010 Chapter 7: Presentation and disclosure
The Conceptual Framework for Financial
Reporting 2010 was approved by the IASB. Chapter 8: Concepts of capital and capital maintenance
Mar 2018
WWW.IFRS.ORG
Conceptual Framework for Financial Reporting 2018

(the Conceptual Framework) was published.
16
14 16
Contents of the conceptual framework The objective of general purpose

financial reporting

to provide financial information about the reporting entity that is
Chapter 2: Qualitative characteristics of useful financial information useful to existing and potential investors, lenders and other creditors
Chapter 3: Financial statements and the reporting entity in making decisions relating to providing resources to the entity
CF 2018
Chapter 4: The elements of financial statements Users’ decisions involve decisions about:
Chapter 5: Recognition and derecognition
Chapter 7: Presentation and disclosure
Chapter 8: Concepts of capital and capital maintenance
buying, selling or providing or settling voting, or
holding equity and loans and other otherwise influence to
debt instruments forms of credit management’s actions
18
18 19
The objective of general purpose Information to make decisions

financial reporting
To make decisions users must:

Claims
Economic resources
assess of the amount,
timing and uncertainty of
future net cash inflows to
the entity
Changes in
economic resources and claims
assess of management’s Changes in not resulting from
stewardship of the entity’s economic resources and claims financial performance
economic resources by financial performance
20 21
20 21
Contents of the conceptual framework Qualitative

characteristics of
useful financial
information
CF 2018

22 23
22 23
Fundamental qualitative characteristics Fundamental qualitative characteristics
Fundamental Quality—Relevance Fundamental Quality—Relevance

To be relevant, accounting information must be capable of
making a difference in a decision.
Financial information has predictive value if it has value as an input to

predictive processes used by investors to form their own expectations
about the future.
LO 4 24 LO 4 25
24 25
Fundamental Quality—Relevance Fundamental Quality—Relevance
Relevant information also helps users confirm or correct prior expectations Information is material if omitting it or misstating it could influence decisions
that users make on the basis of the reported financial information.
LO 4 26 LO 4 27
26 27
Fundamental Quality—Faithful Representation Fundamental Quality—Faithful Representation

Faithful representation means that the numbers and
descriptions match what really existed or happened.
Completeness means that all the information that is necessary for faithful
representation is provided.
LO 4 28 LO 4 29
28 29
Fundamental Quality—Faithful Representation Fundamental Quality—Faithful Representation
Neutrality means that a company cannot select information to favor one An information item that is free from error will be a more accurate
set of interested parties over another. (faithful) representation of a financial item.
LO 4 30 LO 4 31
30 31
Enhancing qualitative characteristics Enhancing qualitative characteristics
Enhancing Qualities Enhancing Qualities
Information that is measured and reported in a similar manner for different Verifiability occurs when independent measurers, using the same
companies is considered comparable. methods, obtain similar results.
LO 4 32 LO 4 33
32 33
Enhancing qualitative characteristics Enhancing qualitative characteristics
Enhancing Qualities Enhancing Qualities
Timeliness means having information available to decision-makers before Understandability is the quality of information that lets reasonably
it loses its capacity to influence decisions. informed users see its significance.
LO 4 34 LO 4 35
34 35
Qualitative characteristics - Exercises Qualitative characteristics - Exercises

Exercise: Identify the qualitative characteristic(s) to be used given Exercise: Identify the qualitative characteristic(s) to be used given
the information provided. Characteristics the information provided. Characteristics
(a) Qualitative characteristic being Relevance (e) Requires a high degree of consensus Relevance
displayed when companies in the Faithful representation among individuals on a given Faithful representation
same industry are using the same Predictive value measurement. Predictive value
accounting principles.
Confirmatory value (f) Predictive value is an ingredient of this Confirmatory value
(b) Quality of information that confirms Neutrality fundamental quality of information. Neutrality
users’ earlier expectations.
Materiality (g) Four qualitative characteristics that Materiality
(c) Imperative for providing comparisons Timeliness enhance both relevance and faithful Timeliness
of a company from period to period. representation.
Verifiability Verifiability
(d) Ignores the economic consequences Understandability (h) An item is not reported because its Understandability
of a standard or rule. Comparability effect on income would not change a Comparability
decision.
LO 5 36 LO 5 37
36 37
Qualitative characteristics - Exercises

Exercise: Identify the qualitative characteristic(s) to be used given
the information provided. Characteristics
(i) Neutrality is a key ingredient of this Relevance
fundamental quality of accounting Faithful representation
information. Predictive value
(j) Two fundamental qualities that make Confirmatory value
accounting information useful for Neutrality
decision-making purposes.
Materiality
(k) Issuance of interim reports is an Timeliness
example of what enhancing
Verifiability
ingredient?
Understandability
Comparability
LO 5 38 39
38 39
Contents of the conceptual framework Financial statements and reporting entity
Chapter 1: The objectives of general purpose financial reporting Statement of financial position
Chapter 2: Qualitative characteristics of useful financial information Liquidity
Current liability
CF 2018

Chapter 5: Recognition and derecognition Current asset Non current liability
Chapter 7: Presentation and disclosure Economic resources and claims
Non current asset Equity Strengths & weaknesses
Liquidity & solvency
40 41
40 41
Financial statements and reporting entity Financial statements and reporting entity
Statement of comprehensive income Statement of changes in equity
Share Retain Revaluation
Revenue Profit or loss from capital earnings surplus
Total
Expenses operating activity
Balance as at 1/1/XX
Financial income Profit or loss from
Financial expenses financial activity Retrospective application
Issuance of new share
Other income Profit or loss from
Other expenses other activity Dividend
Transfers between equity components
Profit or loss before tax Changes in resources and claims
Balance as at 31/12/XX
Income tax from financial performance
Profit or loss after tax - Components of that return Changes in Resources and claims
➔ Efficiently effective use of the reporting NOT from financial performance
Other comprehensive income entity’s resources debt or equity instruments
42 43
42 43
Financial statements and reporting entity
Statement of cash flows

Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Changes in cash flows

Cash generating ability
Cash usage
44
44 45
Contents of the conceptual framework The elements of financial statements

Chapter 3: Financial statements and the reporting entity Liability Income
CF 2018
Chapter 4: The elements of financial statements Asset

Equity
Expenses
46 47
46 47
Basic elements Basic elements

Elements of Financial Statements Elements of Financial Statements
A present economic resource
Asset controlled by the entity as a
Asset
result of past events.
A present obligation of the entity
Liability An economic resource is a right Liability to transfer an economic resource
that has the potential to produce as a result of past events.
economic benefits.
Equity Equity
Income Income
Expenses Expenses
LO 5 LO 5
48 49
Basic elements Basic elements

Elements of Financial Statements Elements of Financial Statements
Asset Asset
Liability Liability
The residual interest in the assets of

Equity Equity
the entity after deducting all its liabilities. Increases in economic benefits during
the accounting period in the form of inflows
or enhancements of assets or decreases of
Income Income
liabilities that result in increases in equity,
other than those relating to contributions
from equity participants.
Expenses Expenses
LO 5 LO 5
50 51
Basic elements
Elements of Financial Statements
Asset
Liability
Equity
Decreases in economic benefits during
Income the accounting period in the form of outflows
or depletions of assets or incurrences of
liabilities that result in decreases in equity,
Expenses other than those relating to distributions to
equity participants.
LO 5
52 53

CF 2018
54 55
54 55
Recognition, measurement, disclosure concepts Basic assumptions Economic entity

Company keeps its activity separate
from its owners and other business unit.
These concepts explain how companies should

recognize, measure, and report financial elements and events.
Accrual
Going concern
Recognition, Measurement, and Disclosure Concepts Transactions are recorded in the
Company to last long enough to fulfill
periods in which the events occur.
ASSUMPTIONS PRINCIPLES CONSTRAINTS
objectives and commitments.
1. Economic entity 1. Measurement 1. Cost

2. Going concern 2. Recognition
3. Monetary unit 3. Derecognition Periodicity Monetary unit
4. Periodicity 4. Presentation and
disclosure Company can divide its economic Money is the common denominator.
5. Accrual
activities into time periods.
LO 6 57
56 57
Recognition Recognition criteria

How recognition links the elements of financial statement
When?
Principles
➢Meets the definition of an element
Recognition is
process of capturing for
the ➢Provides users of financial statements with relevant information and
inclusion in the statement
of financial position or
faithful representation
the statement(s) of ➢And information which results in beneﬁts which exceed the cost
financial performance an
item that meets the of providing that information.
definition of one of the
elements of financial
statements—an asset, a
liability, equity, income or
expenses.
58 59
58 59
Recognition criteria Recognition criteria

whether recognition of an item results in relevant a faithful representation may be affected by the level
information may be affected
v by, for example: of measurement uncertainty
v or by other factors.
Existence uncertainty Low probability of an inflow or Measurement uncertainty Other factors

outflow of economic benefits
› the depiction of resulting income,

expenses and changes in equity.
› it is uncertain whether an › An asset or liability can exist › a measurement of an asset or › whether related assets and liabilities
liability is available but the level of
asset exists or is separable even if the probability of an are recognized.
measurement uncertainty is so high. › presentation and disclosure of
from goodwill, or whether a inflow or outflow of economic
related information can enable a
liability exists. benefits is low. recognized amount to form part of a
faithful representation.
60 61
60 61
Derecognition Recognition
Derecognition is
the removal of all
or part of a
recognised asset
or liability from
› Derecognition an entity’s › derecognition
Liabilities
normally occurs statement of normally occurs

Assets
when the entity no

when the entity financial
loses control of all longer has a
position. present obligation
or part of the
recognised asset for all or part of the
recognised liability. 62 63
62 63

CF 2018
64 65
64 65
Measurement Measurement
Historical cost Current cost
Assets are recorded at the amount of Assets are carried at the ➢ Measurement bases
cash or cash equivalent paid or the fair amount of cash or cash
value of the consideration given to equivalent that would be
acquire them. Liabilities are recorded at paid if the asset were
acquired currently. Liabilities Historical cost Current value
the amount of proceeds received in
exchange for the debt. are carried at the discounted
value or cash equivalent that
would be required to settle ➢ Historical cost, Amortized cost, ➢ Fair value, Value in use,
the debt currently. Carrying amount... Fulfilment value
➢ Derived from the transaction or event ➢ Updated at measurement date.
Realisable value Present value that created them ➢ Capture any positive or negative
Assets are carried at the amount of cash Assets are carried at the discounted value ➢ Do not reflect changes in prices, do changes.
or cash equivalent that could currently of the future cash inflows that the items reflect change in consumption
be obtained by selling the asset in an are expected to generate in the normal (depreciation / amortization), impairment,
orderly disposal. The liabilities are course of business. Liabilities are carried or fulfilment.
carried at their settlement values being at the discounted value of the future net ➢ Historical cost of the asset is no longer
undiscounted amounts of cash that need cash outflows required to settle the recoverable.
to be paid in the course of business. liabilities in the normal course of business.
66 67
66 67
Measurement Cost constraint
Companies must weigh the costs of providing the information

against the benefits that can be derived from using it.
◆ Rule-making bodies and governmental agencies use cost-

➢ Factors to consider when selecting a measurement basis
benefit analysis before making final their informational
✓ Must be relevant and it must faithfully represent what it purports to represent requirements.
✓ Should, as far as possible, be comparable, verifiable, timely and understandable ◆ In order to justify requiring a particular measurement or
✓ Benefits of the information must be sufficient to justify the cost of providing that information disclosure, the benefits perceived to be derived from it must
exceed the costs perceived to be associated with it.
68 LO 8
68 69
70 71
Contents of the conceptual framework Presentation and disclosure
Chapter 1: The objectives of general purpose financial reporting PRESENTATION & DISCLOSURE PRINCIPLES
CLASSIFICATION
CF 2018
Chapter 4: The elements of financial statements ➢ Classification of assets and liabilities

Offsetting
Chapter 7: Presentation and disclosure ➢ Classification of equity
➢ Classification of income and expenses
72 73
72 73
Presentation and disclosure principles

Classification
Effective communication in
Classification is applied to the unit of
financial statements 01 account selected for an asset or liability.
entity-specific information No duplication Classification Offsetting
› entity-specific information
› duplication of information of assets and 02
Offsetting occurs when an entity
recognises and measures both an asset
and liability as separate units of account,
in different parts of the
is more useful than
standardised descriptions,
financial statements is liabilities but groups them into a single net amount
in the statement of financial position.
usually unnecessary and

sometimes referred to as
can make financial
‘boilerplate’ 03 Offsetting vs. A set
statements less Offsetting assets and liabilities differs
understandable. from treating a set of rights and
obligations as a single unit of account.
74 75
74 75
Classification of equity Classification of income and expenses
Classify components of equity separately if some of Classification is applied to

(a) income and expenses resulting from the unit of account selected for an asset or liability; or
those components are subject to particular legal,
regulatory or other requirements. (b) components of such income and expenses if those components have different characteristics and are
identified separately. me and expenses resulting from the unit of account selected for an asset or liability;
The statement of profit or loss

• The statement of profit or loss is the primary source of information about an entity’s financial performance
for the reporting period;
• Profit or loss could be a section of a single statement of financial performance or a separate statement;
• The statement(s) of financial performance include(s) a total (subtotal) for profit or loss;
• In principle, all income and expenses are classified and included in the statement of profit or loss;
• Income and expenses that arise on a historical cost measurement basis are included in the statement of
profit or loss. That is also the case when income and expenses of that type are separately identified as a
component of a change in the current value of an asset or liability.
76 77
76 77
Classification of income and expenses Contents of the conceptual framework

Other comprehensive income
• In exceptional circumstances, the Board may decide to exclude from the statement of profit or loss income Chapter 1: The objectives of general purpose financial reporting
or expenses arising from a change in current value of an asset or liability and include those income and
expenses in other comprehensive income
• The Board may make such a decision when doing so would result in the statement of profit or loss providing Chapter 3: Financial statements and the reporting entity
CF 2018
more relevant information or a more faithful representation Chapter 4: The elements of financial statements
Recycling Chapter 6: Measurement
• In principle, income and expenses included in other comprehensive income in one period are recycled to Chapter 7: Presentation and disclosure
the statement of profit or loss in a future period when doing so results in the statement of profit or loss
providing more relevant information or a more faithful representation Chapter 8: Concepts of capital and capital maintenance
• When recycling does not result in the statement of profit or loss providing more relevant information or a
more faithful representation, the Board may decide income and expenses included in other comprehensive
income are not to be subsequently recycled
78 79
78 79
Capital concept Concepts of capital maintenance

Financial Physical
Capital can be capital maintenance capital maintenance
Nominal monetary units or
• the net assets of an entity or units of constant purchasing power
• the amount of capital contributed
by the owners plus increases in the
net assets that remain in the entity. Capital = Net asset or equity of the entity. Capital = Productive capacity of the entity
(measured as units of output per day)
Capital can be expressed as money Used if the main concern of the user of the
invested or purchasing power financial statements is the maintenance of Used if the main concern of the user of the
invested. the nominal value invested capital. financial statements is the operating
It can also be expressed in terms of capacity of the entity.
Profit is the difference in money terms
productive capacity. between the opening and closing capital Profit is earned only if the operating
excluding any contributions from and capacity at the end of the period exceeds
distribution to owners. that of the beginning of the period.
80 81
80 81
Concepts of capital maintenance Example
FCM – Constant Physical capital On 1 Jan X0, an inventory was purchased with the price of
FCM - Monetary term
Purchasing Power maintenance
100 CU.
➢ Profit represents the ➢ Profit represents the ➢ Profit represents the
increase in nominal increase in invested increase in that capital
Profit money capital over the purchasing power over the over the period. On 31 Dec X0, the purchasing power increase by 10%.
period. period.
The present value of the inventory was 130 CU.
➢ Increases in the prices of ➢ Only that part of the ➢ All price changes of the On 1 Jan X1, the inventory was sold at the price of 150 CU.
assets may not be increase in the prices of assets and liabilities are
recognized until the assets that exceeds the viewed as changes in the
assets are disposed of in increase in the general measurement of the Required: Calculate the carrying amount of inventory, P/L
Increase in an exchange transaction. level of prices is regarded physical productive
the prices as profit. The rest of the capacity of the entity and OCI under different capital maintenance views.
increase is treated as a as capital maintenance
capital maintenance adjustments that are part
adjustment and, hence, as of equity and not as profit.
part of equity.
82 83
82 83
Answer
Accounting items FCM – Monetary term FCM – Constant PP term Physical CM
Inventory (1.1.x0) 100 100 100

Inventory (31.12.x0) 100 100 x 110% = 110 130
Changes in equity (31.12.x0) 0 110 – 100 = 10 130 – 100 = 30
Profit or Loss (31.12.x1) 150 – 100 = 50 150 – 110 = 40 150 – 130 = 20
84
84 93
The
End!
Address: Contact:
279 Nguyen Tri Phuong st., School of Accounting –
District 10, HCMC, Vietnam University of Economics, HCMC
95
94 95

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Kế toán quốc tế 1 28-Sep-21

Explain the roles and structures of key regulatory bodies.

Learning objectives Describe efforts to construct a conceptual framework.

Understand the objective of financial reporting.

Identify the qualitative characteristics of accounting information.

Define the basic elements of financial statements.

CONCEPTUAL Describe the basic assumptions of accounting.

FRAMEWORK Explain the application of the basic principles of accounting.

Understand the concepts of capital maintenance.

IFRS Interpretation Committee

Appendix – IASB Conceptual Framework

The Conceptual Framework Structure of some IFRS

It does not override any accounting standards

Contents of the conceptual framework

Conceptual Framework for Financial Reporting 2018

Contents of the conceptual framework The objective of general purpose

Chapter 1: The objectives of general purpose financial reporting

The objective of general purpose Information to make decisions

To make decisions users must:

Contents of the conceptual framework Qualitative

Chapter 4: The elements of financial statements

Fundamental qualitative characteristics Fundamental qualitative characteristics

Fundamental Quality—Relevance Fundamental Quality—Relevance

Financial information has predictive value if it has value as an input to

Fundamental qualitative characteristics Fundamental qualitative characteristics

Fundamental Quality—Relevance Fundamental Quality—Relevance

Fundamental qualitative characteristics Fundamental qualitative characteristics

Fundamental Quality—Faithful Representation Fundamental Quality—Faithful Representation

Fundamental qualitative characteristics Fundamental qualitative characteristics

Fundamental Quality—Faithful Representation Fundamental Quality—Faithful Representation

Enhancing qualitative characteristics Enhancing qualitative characteristics

Enhancing Qualities Enhancing Qualities

Enhancing qualitative characteristics Enhancing qualitative characteristics

Enhancing Qualities Enhancing Qualities

Qualitative characteristics - Exercises Qualitative characteristics - Exercises

Qualitative characteristics - Exercises

Contents of the conceptual framework Financial statements and reporting entity

Chapter 4: The elements of financial statements

Financial statements and reporting entity

Statement of cash flows

Changes in cash flows

Contents of the conceptual framework The elements of financial statements

Chapter 1: The objectives of general purpose financial reporting

Chapter 4: The elements of financial statements Asset

Basic elements Basic elements

Basic elements Basic elements

The residual interest in the assets of

Contents of the conceptual framework

Chapter 1: The objectives of general purpose financial reporting

Recognition, measurement, disclosure concepts Basic assumptions Economic entity

These concepts explain how companies should

1. Economic entity 1. Measurement 1. Cost

Recognition Recognition criteria

Recognition criteria Recognition criteria

Existence uncertainty Low probability of an inflow or Measurement uncertainty Other factors

› the depiction of resulting income,

normally occurs statement of normally occurs

when the entity no

Contents of the conceptual framework

Chapter 1: The objectives of general purpose financial reporting

Measurement Cost constraint

Companies must weigh the costs of providing the information