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3 Which one of the following would correctly describe the net realisable value of a
two year old
asset?
AThe original cost of the asset less two years' depreciation
B The amount that could be obtained from selling the asset. less any costs of
disposal
CThe cost of an equivalent new asset less two years depreciation
D The present value of the future cash flows obtainable from continuing to use
the asset
Following receipt and review of comments on a Discussion Paper, what will be the next step
undertaken by the IASB?
7 Which of the following statements regarding systems of regulation of accounting are true?
(i) A principles-based system is more prescriptive than a rules-based system.
(ii) A rules-based system will require more detailed regulations than a principles-based system.
(iii) A principles-based system will tend to give rise to a larger number of accounting
standards than a rules-based system.
(iv) A rules-based system seeks to cover every eventuality.
(v) A rules-based system requires the exercise of more judgement in application than
a principles —based system.
Question 1
The qualitative characteristics of relevance, faithful representation, comparability and
understandability identified in the IASB's Conceptual Framework for Financial Reporting are
some of the attributes that make financial information useful to the various users of financial
statements.
Required
Explain what is meant by relevance, faithful representation, comparability and understandability
and how they make financial information useful.
Question 2
Explain the purpose of Conceptual Framework.
Question 3
The US is currently contemplating the transition to IFRS. US GAAP is regarded by many in the
US as the 'gold standard'. It is detailed and rules-based and in many cases industry-specific and
there is a perception among some that the adoption of IFRS will compromise the quality of
financial reporting.
Required
Explain in what ways IFRS differs from US GAAP, as described above.
Question 4
Historically financial reporting throughout the world has differed widely. The IFRS Foundation
is committed to developing, in the public interest, a single set of high quality, understandable
and enforceable global accounting standards that require transparent and comparable
information in general purpose financial statements. The various pronouncements of the IFRS
Foundation are sometimes collectively referred to as International Financial Reporting
Standards (IFRS) GAAP.
Required
Describe the IFRS Foundation's standard setting process, i.e. how standards are produced.