International Financial Reporting (2021/22)

Table of Contents
Part One......................................................................................................................................................4
Answer to the question number 1...........................................................................................................4
Answer to the question number 2...........................................................................................................6
Part two.......................................................................................................................................................8
Answer to the question number 3...........................................................................................................8
Answer to the question 4......................................................................................................................10
References.............................................................................................................................................12

Table 1: Inventory Cost & Wastage.............................................................................................................9

Table 2: Interest Income & Loan Amount..................................................................................................12
Assets and liabilities are defined more precisely in the amended guidance, which also contains
new standards for measuring and de-recognizing, as well as new requirements for presenting and
reporting those items. The new Conceptual Framework was not intended to constitute a large
rewrite of the text, and this was clearly not the case. However, the Standard setting body
concentrated on problems that had not previously been addressed or that were manifestly
problematic in their current format.
Since its beginnings in 1989, the Conceptual Framework has remained mostly intact in terms of
content. In September 2010, a joint project was completed and the results were included into the
present framework as Chapters 1 and 3 of the original joint project. Despite the fact that a Phase
D plan had been submitted, it was never completely implemented and implemented properly.
Due to the lack of a consultation document, Boards of Directors spent a great deal of time
discussing Phases B and C, while Phases E through H were left largely undiscussed.
Given that many of the IASB's current activities are still dealing with unsolved conceptual
difficulties, it was highly recommended that IASB members restart and complete the conceptual
framework project during the 2011 agenda consultation. It was as a result of this that had
formally revived the project in September 2012 as an IASB-only effort, focusing on subjects that
had not previously been addressed (such as presentation and disclosure) or had obvious problems
that needed to be addressed, rather than making fundamental modifications to the framework.
The publishing of Discussion Papers and Exposure Drafts in July 2013 and May 2015,
respectively, marked the beginning of the framework project's development.

Do not make the mistake of assuming that the conceptual framework will act as a substitute for
the financial reporting rules in your nation.
 Part: One

Answer to the question number 1

A)
For one, The Conceptual Framework assists the IASB in developing and amending IFRSs in
accordance with consistent concepts, assisting preparation firms adopt consistent accounting
principles for areas not covered by a standard, and assisting all parties understand and interpret
the standards. With the approach, no particular standards are overturned. If and when IASB
pronouncements deviate from the framework's definitions, an explanation will be provided to
stakeholders.
The International Accounting Standards Board's primary purpose in developing the standard was
to aid the creation of future rules & regulations as well as the evaluation of current IFRSs, which
it accomplished in large part.
Additionally, financial statement preparers may benefit from the Conceptual Framework's
capacity to establish accounting rules for transactions and occurrences that do not already fall
inside the scope of existing accounting standards.
In rare instances, new or modified may be in contradiction with the Conceptual Framework. If
this is the case, the IASB would be required to explain and justify this deviation from the
Framework, which serves as the foundation for its standard making.

B)
When preparing financial accounts for a corporation, the following assumptions must be made:
Accrual Basis: Accrual accounting is used to create the financial statements that are presented to
the public. Because the accrual basis of accounting is used, the consequences of transactions and
other events are recorded as they occur rather than when cash is received or paid. Transactions
are documented in the books of accounts in the order in which they occur, rather than in the
order in which money is received or paid. Accounting, on the other hand, is founded on the
concept of money. As a result of the accrual principle, revenue and costs should be matched to
the period in which they were earned or spent rather than the period in which they were received
or paid, according to the accounting standard.
Going Concern Basis: These financial statements have been produced in accordance with
GAAP based on the assumption that the company would continue to operate normally. A
company is considered a continuing concern for the purposes of this definition if it has no
imminent intentions to discontinue operations or dramatically reduce the scope of its activities.
In this case, there is a basic presumption that the company will continue to exist in the long run.
When a company goes out of business, its assets must be sold and the value of those assets
recorded in the firm's financial records. This is a critical assumption to make. Companies, even if
this is not the case, make extensive use of their assets over an extended period of time.

C)
The International Accounting Standards Board's IAS 29 Financial Reporting in
Hyperinflationary Economies standard emphasizes capital preservation. Due to the need of
capital preservation, only profits that exceed the amount required to preserve capital are taken
into consideration for consideration. Among the concepts that form part of the current conceptual
framework for capital asset maintenance are the following:
The preservation of financial resources: In order to make a profit after removing any dividends
and payments from shareholders, the net assets of a company must surpass the net assets of the
company's starting assets at the end of each year. The preservation of financial capital may be
defined in nominal monetary units as well as units of continuous buying power, depending on the
context.
Maintenance of physical assets: In order to turn a profit, a company's physical production
capacity (also known as operational capacity) must be bigger at the conclusion of a given time
than it was at the beginning of that same period (i.e., at the beginning of the period).

Companies operating in high inflation economies, according to the International Accounting

Standards Board, are most likely to be affected by these accounting principles (IASB). Whether
IAS 29 is not updated, the Standard setting body intends to conduct a study to examine if the
standard should be amended. While the Standard setting body believes that the Conceptual
Framework project is the best way to deal with the difficulties of capital upkeep, they believe
that a future standards-level project on accounting for high inflation, rather than as part of the
Conceptual Framework project, is the most effective way to deal with the difficulties of capital
upkeep. Unless any standards-level action on accounting for high inflation demonstrates that it is
necessary to update the definitions and explanations of capital maintenance principles in the new
Conceptual Framework, the Standard setting body intends to keep them unmodified.

D)
When it comes to financial information, one of the most important factors to consider is the
relevancy and accuracy with which it is presented.
Financial accounting is concerned with information that has the potential to influence economic
choices or to have an effect on the appraisal of past occurrences and future projections.
The term "faithful representation" refers to information that is accurate, thorough, and devoid of
prejudice in its presentation. The others are:
Comparability: Financial statements should be presented consistently between businesses and
time periods, and this should be true across all industries.
Verifiability: It is the consistency of outcomes obtained by independent observers using the
same methodology.
Timeliness: Decision-makers are able to take action as soon as the information is made
accessible to them.
Understandability: If you have any business knowledge, you should be able to follow along
with what the author is trying to express.

E)
For a reasonable user, any facts or data that are important enough to warrant inclusion in
financial statements should be included in financial statements. In financial reporting, the idea of
materiality is the most fundamental topic to understand. It is necessary to consider the
transactions in the financial statements, whether any misstatements should be corrected, whether
assets and liabilities should be represented separately in the financial statements, and how the
financial statements should be presented in order to be able to understand the financial
statements. True and fair" or "present fairly" are terms that refer to financial information that is
at least partially accurate, and this is the center of most definitions of "true and fair" or "present
fairly." According to accounting standards, a company's financial statements cannot be regarded
as credible if particular information is excluded or is incorrectly reported.

Answer to the question number 2

A)
In order to use International Financial Reporting Standards (IFRSs) as the foundation for its
financial reporting, an organization must complete a number of procedures. In accordance with
Standard setting body, a limited number of exemptions are granted at the conclusion of the first
reporting period.
For organizations reporting their first IFRS financial statements starting on or after July 1, 2009,
a revised version of Standard setting body 1 was adopted in November 2008.
For the first time, a company is considered to have adopted the Standard setting body for the first
time (IFRSs). IFRS 1 (International Financial Reporting Standards) is a set of standards for
financial reporting.
As long as the financial statements are not made available to investors or creditors, a firm may
qualify as a first-time adopter for the purposes of accounting and financial reporting. Anyone
who has read the company's IFRS financial statements from the previous year is immune from
the requirements of Standard setting body. In accordance with IAS 1].
It is possible that the financial statements from the previous year [IFRS 1] will be taken into
account in the case of first-time adopters.
In the IFRS to GAAP reconciliation, either partial but not complete IFRS compliance was
claimed, or just a few chosen statistics were provided, depending on the situation. Prior GAAP
refers to accounting rules that were in use prior to the implementation of Standard setting body,
which are now known as IFRS.
Despite the fact that a corporation is not a first-time user, if its financial statements indicated the
following:
The auditor's report contains a disclaimer about IFRS compliance; nevertheless, this does not
relieve the corporation of its responsibility to comply with the standards. All previous GAAPs
and International Financial Reporting Standards (IFRSs) must be followed.
According to IAS 8 Accounting policies, changes in accounting estimates, and mistakes, it is
possible for an organization that previously used IFRSs but whose most recent annual financial
statements did not openly and unreservedly indicate conformity with IFRS to retrospectively
apply IFRSs if their most recent annual financial statements did not openly and unreservedly
indicate conformity with IFRS.
As per IAS 1, the opening statement of financial status must include at least one year's worth of
comparable previous period financial information. This means that Prisca Plc's initial financial
statements should contain at least the following information: IAS 1] .21]

 3 Balance Sheet
 2 Income Statement
 2 independent profit or loss statements (if presented) two monetary assertions of equity
changes, with accompanying notes, that provide comparable data

As of 1 January 2013, the financial position of a 31 December 2014 adopter of IFRS is

unchanged.

Part: Two

Answer to the question number 3

A)
IAS 2 Inventories is the accounting standard that covers the vast bulk of inventory accounting.
When evaluating the lowest of cost and net realizable value, the weighted average cost (WAC)
and first-in, first-out (FIFO) methodologies are both feasible options to consider (NRV).
An inventory write-down to net realizable value and the subsequent recognition of those costs as
an expenditure are both covered under International Accounting Standards (IAS). Inventories are
also described in terms of the formulae that are used to assign costs to items in the inventory. An
inventory's value is determined by its cost and its net realizable value. The net realizable value is
computed by deducting the selling price from the estimated finishing costs and transaction costs.
Stocking up on inventory comprises the costs of acquiring, converting (including direct labor and
manufacturing overhead), and incurring extra transportation and storage expenses. Commodities
stored in inventory that are not commonly interchangeable in price, It is preferable to use a
weighted average cost calculation for goods that are typically interchangeable (generally large
quantities of individually insignificant items).
After sales are made and revenues are produced, a charge for the carrying value of the inventory
that was sold is recorded as an expense in the same period that sales are made and revenues are
recorded. Inventory losses or write-downs to net realizable value are reported as soon as they are
recognized, and the expenditures are combined together.

B)
Following are the computed amounts of inventories, the value at which the inventory of vehicles as of
30 June 2020 shall be recorded in the final accounts of Portville Plc in Inventories, as well as the total
cost of anomalous waste of materials that has been incurred during the conversion of the four vehicles

Include [IAS 2.10] N X Y Z

costs of purchase 9,470 12,83 3,55 7,680
0 0
costs of conversion 880 1540 1260 0
Transportation cost to bring it to premises 1,080 940 750 460

Deduct: [IAS 2.16 and 2.18]

Wastage (abnormal) 44 77 63 0
Costs of storing
Indirect overheads
Sales cost
Forex gain

Interest cost
Total of each 11,38 15,23 5,49 8,140
6 3 7
Vehicles shown on Balance Sheet 40,256
Abnormal wastage of materials that has been incurred on the 184
conversion of the four
Table 1: Inventory Cost & Wastage
Answer to the question 4

A)
1) Measured at Fair value which will flow through Income Statement
2) Measured at Fair value which will flow through Income Statement
3) Measured at historical cost; Amortized Cost
Measured at Fair value which will flow through Comprehensive Other Income
4) Statement

B)
Under Standard setting body 7 Financial Instruments: Disclosure, all financial instruments must
be stated both qualitatively and quantitatively in order to be considered. Transferring financial
assets, among other things, requires the submission of a number of certain statements. There are
three categories of dangers that you could consider: Some further illustrations include the
following:

Credit Risk: When the two parties to a financial instrument are unable to meet their obligations,
this is referred to as credit risk.
The following are examples of credit risk disclosures:
[IFRS 7] The credit quality of non-due and non-impaired financial assets, as well as financial
assets whose circumstances have changed, is essential.
In line with IFRS 7, delinquent or impaired financial assets must be evaluated. This section
covers the information needed by [IFRS 7].
Liquidity Risk:
In the event that a firm is unable to satisfy its financial commitments, this is referred to as being
exposed to the liquidity risk.
Disclosure of liquidity risk is not the only means of revealing liquidity risk under International
Financial Reporting Standards [IFRS 7], according to the International Financial Reporting
Standards the following are examples of risk disclosures related to liquidity risk:
The concept of financial obligation maturity analysis is discussed in the context of risk
mitigation.
Depreciation and inflation are two terms that are used to describe the same thing.
Market Risk:
Stock price variations may have a significant influence on the fair value or cash flow of a
financial instrument, and this is something to consider. Interest rate risk, currency risk, and other
price hazards are all factors that may affect the performance of the financial markets.
International Financial Reporting Standards (IFRS 7) is an abbreviation that stands for
International Financial Reporting Standards (International Financial Reporting Standards).
The following are examples of market risk disclosures:
More information is required to establish the sensitivity of each market risk category to an
entity's genuine risk exposure (for example because exposures during the year were different to
exposures at year-end). A value-at-risk sensitivity study is permitted under IFRS 7 since the
outcomes of each category of market risk are interdependent.

C)
The interest income amounts of CitiFin Plc at the end of the years and the amount at which the
loan stock should be shown in the statement of financial position at each of these dates 31
December, 2020, 2021, 2022, 2023 and 2024. are as follows:

Interest Rate 10%

Instalment 179638.1705 PVIFA (12%,5 3.7907868
years)
Loan Schedule (AT THE END)
Year Beginning Instalment Interest Principal Ending
Balance
2020 680,970 179638.17 68,097 111541.1705 569,429
2021 569,429 179638.17 56,942.88295 122695.2875 446,734
2022 446,734 179638.17 44,673.3542 134964.8163 311,769
2023 311,769 179638.17 31,176.87257 148461.2979 163,307
2024 163,307 179638.17 16,330.74277 163307.4277 0.00
Table 2: Interest Income & Loan Amount

Both the interest income and the loan amounts decrease as the years roll over.
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