ACCA F7 Financial Reporting Notes

1 Se pt e 20 mb 16 er ex /De am ce Free resources for accountancy students s mb er F7. ACCA Paper Financial Reporting Please spread the word about OpenTuition, so that all ACCA students can benefit. ONLY with your support can the site exist and continue to provide free study materials! Visit for the latest updates - watch the free lectures that accompany these Notes ; attempt free tests online;. get free tutor support, and much more. OpenTuition Lecture Notes can be downloaded FREE from Copyright belongs to - please do not support piracy by downloading from other websites. The best things in life are free IMPORTANT!!! PLEASE READ CAREFULLY. To benefit from these Notes you must watch the free lectures on the OpenTuition website in which we explain and expand on the topics covered In addition question practice is vital!

2 ! You must obtain a current edition of a Revision / Exam Kit from one of the ACCA approved content providers. They contain a great number of exam standard questions (and answers) to practice on. You should also use the free Online Multiple Choice Tests and the Flashcards which you can find on the OpenTuition website. CONTENTS. 1 Financial Reporting basic concepts 1. 2 The regulatory framework 3. 3 Published Financial Statements 7. 4 IFRS5 Discontinued operations and assets held for sale 17. 5 IAS 8 21. 6 Group Accounts: An Introduction 25. 7 Preparation of the Consolidated Statement of Financial Position 31. 8 Group Accounts: Inter-entity Transactions 45.

3 9 Group Accounts: Comprehensive Example 55. 10 Preparation of the Consolidated Statement of Profit or Loss and Other Comprehensive Income 57. 11 Accounting for Investments in Associates (IFRS3 Revised) 63. 12 IAS 2 Inventories 67. 13 Calculation of Construction Contract Profits 69. 14 IAS 36 Impairment of Assets 77. 15 IAS 37 Provisions, Contingent Liabilities and Contingent Assets 81. 16 IAS 17 Leases 87. 17 IAS 23 Borrowing Costs 95. 18 IAS 12 Income Taxes 97. 19 IAS 7 (Revised): Statements of Cash Flows 103. 20 Interpretation of Accounts Ratio Analysis 113. 21 IAS 33 Earnings Per Share 119. 22 Theoretical matters 127. 23 IAS 16 Property, Plant and Equipment 131.

4 24 IFRS 15 Revenue from contracts with customers 133. 25 IAS 20 Government Grants 139. 26 IAS 38 Intangible Assets 141. 27 IAS 40 Investment Properties 143. 28 IFRS 9 Financial Instruments 145. 29 Agriculture 151. 30 The Effects of Changes in Foreign Exchange Rates 155. Answers to Examples 159. Mini Exercises Questions 203. Mini Exercises Answers 231. Visit and use our FREE Online Multiple Choice Tests OpenTuition Lecture Notes can be downloaded FREE from Copyright belongs to - please do not support piracy by downloading from other websites. Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums Paper F7 1.

5 Chapter 1 Free lectures available for Paper F7 - click here Financial Reporting BASIC CONCEPTS. Underlying assumptions accruals going concern consistency materiality off-setting E xample 1. Laima has recently bought a shop called Sweet for $1 million and included the full amount in her cost of sales account. How does each of the five concepts affect the way Laima should treat the cost of $1 million? Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums 2 Chapter 1 Paper F7. Financial Reporting basic concepts September/December 2016. Advantages and disadvantages of standardisation of accounting practices provide a focal point for debate require disclosure of policies adopted encourage global discussion flexible enable meaningful comparison reduce penumbral areas of divergent possibilities pressure groups may succeed in asking for amendments allowed alternative treatments standardisation?

6 Inappropriate treatment could result from following a standard rules take away use of skill and judgement Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums Paper F7 3. Chapter 2 Free lectures available for Paper F7 - click here THE REGULATORY FRAMEWORK. A conceptual framework framework has been developed defined as a constitution, a coherent system of interrelated objectives and fundamentals which can lead to consistent standards and which prescribe the nature, function and limits of Financial accounting and Financial statements . generally accepted accounting practice ( gaap ). a combination of: each country's own law international Financial Reporting standards stock exchange requirements but gaap does not have any statutory authority changes and evolves with changing circumstances The framework provides a set of principles purpose defined as assisting.

7 - IASC in development of new standards review of existing standards harmonisation of standards and procedures reduction of penumbral areas of divergent possibilities development of new standards by national accounting bodies preparers of Financial statements auditors in forming audit opinions users in their interpretation of Financial statements Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums 4 Chapter 2 Paper F7. The regulatory framework September/December 2016. Framework contents objectives of Financial statements underlying assumptions ( accruals and going concern ). qualitative characteristics ( see next ).

8 Elements of Financial statements (assets, liabilities, equity, income, expenses and capital maintenance). recognition of the elements measurement concept of capital and capital maintenance as a set of principles, it requires entities to follow the spirit of the framework it's not a standard, so does not override any existing standard requirements nor does it define any standard for measurement or disclosure of any particular issue Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums Chapter 2 Paper F7 5. The regulatory framework September/December 2016. Framework qualitative characteristics understandable D12, D13.

9 Comparable pilot, J08, D12, D13. relevant pilot, D13. faithful representation D07, D13. complete D13. material J08, D13. substance over form J08, J10. reliable pilot, D07. neutral D13. provable J08, D13. (you can remember framework contents. Mike says remember nine principles!). Fundamental characteristics Enhancing characteristics (Relevant, and faithful representation) (Reliability). completeness understandability neutrality, and verifiability material accuracy comparability, and timeliness Free ACCA Notes Free ACCA lectures Free ACCA tests Free tutor support StudyBuddies ACCA forums 6 Chapter 2 Paper F7. The regulatory framework September/December 2016.

10 Financial statements comprise: Statement of Financial position Statement of profit or loss and other comprehensive income Statement of changes in equity Statement of cash flows Notes ( accounting policy and explanations ). some elements of the report of the executives are also auditable remuneration committee's report report on the appropriateness of the system of internal control purpose of IAS 1 ( revised ) is to ensure greater clarity and understandability of Financial statements within the Financial statements there should be disclosed name of the entity date of the end of the accounting period period covered by the Financial statements Reporting currency degree of precision used country of incorporation and address of registered office description of the nature of operations name of parent entity and ultimate holding entity number of employees at end of period ( or average during the period ).