The effects of clutter have typically come in for little consideration by the preparers of annual reports. However, the phenomenon is increasingly under discussion, with initiatives recently launched to combat it. It is unusual to think about the effects of ‘clutter’ but, increasingly, this phenomenon is being discussed. One prominent website describes clutter as follows:…
Understanding the business model of an entity is helpful in analysing and communicating the essence of a business and for predicting the implications of a change in circumstance on a business. Strategic Business Reporting (SBR) candidates should use this technique to improve their answers to SBR questions and this article should help them to do…
In 2013, the International Integrated Reporting Council (IIRC) released a framework for integrated reporting. The framework establishes principles and concepts that govern the overall content of an integrated report. Principle-based framework Relationship with stakeholders In 2013, the International Integrated Reporting Council (IIRC) released a framework for integrated reporting. This followed a three-month global consultation and…
This article looks at how reporting capital structure is challenging, but markets are keen for the information. Introduction What is it? Investor needs IAS 1 Disclosures Examples Companies Act Capitalisation table Debt and equity Diversity and difficulty Introduction Often the advice to investors is to focus upon cash and cash flow when analysing corporate reports….
For many years, regulators and standard-setters have debated how entities should best present financial performance and not mislead the user. Introduction Common practice Evaluating the aims Introduction Many jurisdictions have enforced a standard format for performance reporting, with no additional analysis permitted on the face of the Statement of Profit or Loss. Others have allowed…
According to IFRS® 3, Business Combinations, there are two ways to measure the goodwill that arises on the acquisition of a subsidiary and each has a slightly different impairment process. How to calculate goodwill Consider calculating goodwill Basic principles of impairment Consider an impairment review Goodwill and impairment Proportionate goodwill and the impairment review Consider…
This article provides an introduction to IFRS® 3, Business Combinations and IFRS, 10 Consolidated Financial Statements, including piecemeal acquisitions and disposals. Purchase consideration Goodwill and non-controlling interests (NCI) Fair valuing assets and liabilities IFRS 10, Consolidated financial statements Disposal of controlling interest while retaining associate holding Purchase consideration The purchase consideration includes the fair value…
There are many issues that accountants may encounter in practice for which no accounting standard currently exists; one example is cryptocurrencies. For example, as no accounting standard currently exists to explain how cryptocurrency should be accounted for, accountants have no alternative but to refer to existing accounting standards. This article demonstrates to Strategic Business Reporting…
The classification of debt and equity in an entity’s statement of financial position is not always easy for preparers of financial statements. Many financial instruments have both features with the result that this can lead to inconsistency of reporting. IAS® 32 clarifies the definition of financial assets, financial liabilities and equity. In doing so, it…
This two-part article considers the application of IFRS 15, Revenue from Contracts with Customers using the five-step model. Using the five-step model On 28 May 2014, the International Accounting Standards Board (the Board), as a result of the joint project with the US Financial Accounting Standards Board (FASB), issued IFRS® 15, Revenue from Contracts with Customers….
This article considers the relevance of information provided by different measurement methods and explains the effect that they may have on the financial statements. The relevance of information provided by a particular measurement method depends on how it affects the financial statements. The cost should be justified by the benefits of reporting that information to…
Although IFRS 9® Financial Instruments was first issued in November 2009, it has been updated on a frequent basis. A completed version of the IFRS standard was finally issued in July 2014. Whilst IFRS 9 replaced IAS 39® Financial Instruments: Recognition and Measurement, IAS 32 Financial Instruments: Presentation is still applicable. The objective of IFRS…
IFRS 13 has required a significant amount of work by entities to simply understand the nature of the principles and concepts involved. IFRS® 13, Fair Value Measurement was issued in May 2011 and defines fair value, establishes a framework for measuring fair value and requires significant disclosures relating to fair value measurement. The International Accounting Standards Board…
IFRS® 9, Financial Instruments, is the result of work undertaken by the International Accounting Standards Board (the Board) in conjunction with the Financial Accounting Standards Board (FASB) in the US. It was last revised in October 2017. This article focuses on the accounting requirements relating to financial assets and financial liabilities only. Classification of financial…
International Financial Reporting Standard (IFRS®) 2, Share-based Payment, applies when a company acquires or receives goods and services for equity-based payment. Recognition of share-based payment Equity settled transactions Performance conditions Cash settled transactions Deferred tax implications Disclosure These goods can include inventories, property, plant and equipment, intangible assets, and other non-financial assets. There are two…
Deferred tax is a topic that is consistently tested in Financial Reporting (FR) and is often tested in further detail in Strategic Business Reporting (SBR). This article will start by considering aspects of deferred tax that are relevant to FR before moving on to the more complicated situations that may be tested in SBR. The…
In March 2018, the International Accounting Standards Board (the Board) finished its revision of The Framework for Financial Reporting (the Framework). The primary purpose of financial information is to be useful to existing and potential investors, lenders and other creditors (users) when making decisions about the financing of the entity and exercising rights to vote…
This article looks at what differentiates profit or loss from other comprehensive income and where items should be presented. Reclassification: for and against The purpose of the statement of profit or loss and other comprehensive income (OCI) is to show an entity’s financial performance in a way that is useful to a wide range of…
This article explains the current rules and the conceptual debate as to where profits and losses should be recognised in the statement of profit or loss and other comprehensive income– ie when should they be recognised in profit or loss and when in the other comprehensive income. Further, it explores the debate as to whether…
This article considers a variety of ethical threats which a contemporary accountant working in the digital age may encounter and considers how these threats might be addressed.
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