SHARIFAH ADLIN HAZWANI BINTI SYED ABD KHADIR, 012022020386, 27/4/22.

ASSIGNMENT 1 (A)
(a) Describe what is meant by the Conceptual Framework for Financial
Reporting.
Conceptual framework for financial accounting means a set of rules and guidelines
for recording financial transactions and reporting financial activities.
(b) Explain the purposes of the Conceptual Framework for Financial Reporting.
The main purpose of Conceptual Framework for Financial Reporting is to
provide useful information as a basis for economic decision making, a conceptual
framework will form a theoretical basis for determining how transactions should be
measured (historical value or current value) and reported on how they are presented
or communicated to users.
There are few purposes of the Conceptual Framework for Financial Reporting.
First and foremost, framework helps to assist the IASB in the development of future
accounting standards and in its review of existing accounting standards, ensuring
consistency across standards.
Second, Conceptual Framework uses to assist the IASB in promoting
harmonisation of regulations, accounting standards and procedures relating to the
presentation of financial statements by providing a basis for reducing the number of
alternative accounting treatments permitted by accounting standards.
Third, Conceptual Framework helps to assist national standard-setting bodies
in developing national accounting standards.
Then, another purpose of Conceptual Framework is to assist preparers of
financial statements in applying international financial reporting standards and in
dealing with topics that have yet to form the subject of an accounting standard.
In addition, Conceptual Framework purpose is to assist users of financial
statements in interpreting the information contained in financial statements prepared
in compliance with international financial reporting standards.
Furthermore, purpose of the Conceptual Framework is to assist auditors in
forming an opinion on whether financial statements comply with international
accounting standards.
Last but not least, Conceptual Framework provide those who are interested in
the work of the IASB with information about its approach to the formulation of
accounting standards.
(c) Explain the main objective of financial reporting.
Main objective of financial reporting is disclosing financial information to
various stakeholders regarding the organization's financial performance and financial
position over a set period of time. Investors, creditors, debt providers, the general
public, governments, and government agencies are among the stakeholders.
Financial Reports forms the backbone for financial planning, analysis, benchmarking
and decision making. These are used for above purposes by various stakeholders.
It’s done regularly and annually for publicly traded companies.

Financial Reporting's objectives are divided into three categories: useful information,
cash flows, and liabilities.
Useful Information:
Providing information to the management of an organization which is used for the
purpose of planning, analysis, benchmarking and decision making. The initial goal is
to deliver helpful information to financial report users. The information should be
useful in a number of situations, including deciding whether to extend credit to a
customer, whether to lend to a borrower, and whether to invest in a business. The
information should be understandable to anyone with a basic to those with a
reasonable grounding business, which means this shouldn't be littered with
complexity or burdened with so much information that it's impossible to extract the
most important facts about a business from its financial statements.
Provide cash flow information:
The second goal is to provide information about an entity's cash flows, particularly
the timing and unpredictability of those cash flows. This data is essential for
determining a company's liquidity, which may then be used to assess whether an
organization can continue as a going concern.
Provide Liability and Economic Resources Information:
The third objective is to disclose the obligations and economic resources of an entity.
There should be an emphasis on the changes in liabilities and resources, which can
be used to predict future cash flows. Plus, it provides an information about the
economic resources of an organization, claims to those resources (liabilities &
owner’s equity) and how these resources and claims have undergone change over a
period of time.
(d) Discuss THREE (3) differences between historical cost, fair value, value in
use and current cost for an asset.
CHARACTERIS HISTORICAL FAIR VALUE VALUE IN CURRENT
TICS COST USE COST
DEFINITION accounting companies current value Current Cost =
method in use to report accounting the cost
which the their assets involves, incurred till
assets listed and liabilities periodically now.
on a at the updating the Current Value
company's estimated value of the = the amount
financial amount of items and to for which we
statements are money they be recorded can dispose it
recorded would receive at that value, as of now
based on the if they were on which they
 price at which to sell the can be
they wereassets or be currently sold
originally alleviated of in the
purchased. their liabilities market. 
in the market
today.
VALUE values an value values of the Value
asset by the whereas items are the expenditure
original price historical cost
selling price incurred on
paid. accounting being less the entity in
than cost consideration
price
ELABORATION Not tested for Tested for based on the 1. Asset Value =
im pairment impairment original cost Factor *
loss on the annually of the asset Original Cost.
balance sheet less any
2. Replacement
depreciation, Cost = Factor
amortization * Cost List
or impairment Value of
costs made Product.
against the
asset

fair basis of Commonly the original valuation

CALCULATION depreciation adopted and cost of the method
and it is a tested asset minus whereby
stable, simpler method in the assets and
and more cost- comparison accumulated goods used in
effective with any depreciation. production are
method other the expected valued at their
valuation future cash actual or
methodology flows that the estimated
asset in its current market
current prices at the
condition will time the
produce, production
discounted to takes place
present value
using an
appropriate
discount rate.