Financial Reporting Revised and Updated notes

GENERAL OBJECTIVE

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for various entities and account for specialised transactions in both the public and private sectors.

9.0       LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Account for various assets and liabilities
• Prepare financial statements including published financial statements for various types of organisations
• Account for specialised transactions
• Prepare group financial statements
• Analyze and interpret financial statements
• Apply International Financial Reporting Standards (IFRSs) and International Public Sector Accounting Standards (IPSASs) in preparing non-complex financial statements.

CONTENT

 9.1       Assets of financial statements

• Assets and liabilities covered in Paper No. 1: Financial Accounting still examinable (in the context of published financial statements)
• Inventories
• Borrowing costs
• Investment property
• Financial Instruments (presentation, recognition, classes, measurement, de-recognition and disclosures) (excluding impairment, hedging and embedded derivatives)
• Leases (all aspects including dealers and sale and leaseback)

9.2       Liabilities of financial statements

• Employee benefits
• Provisions, contingent liabilities and contingent assets
• Income tax (current and deferred tax but not deferred tax in the case of groups)
• events after reporting date

9.3       Further aspects of partnerships

• Dissolutions (including piece-meal)
• Amalgamation Conversion and sale of partnership firms 9.4 Special transactions
• Revenue recognition
• Contracts with customers
• Hire purchase and installment sales transactions (split of hire purchase profit into interest and gross profit and using actuarial method and sum of digits to account for interest); sale of goods, construction contracts and real estate, provision of services
• Government grants

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 9.5       Financial statements for various types of businesses

• Inventory and biological assets in agriculture
• Insurance
• Banks
• Professional firms (lawyers and accountants)
• Accounting for branches including foreign branches
• Co-operative societies

9.6       Published financial statements

• Presentation of financial statements (income statement, statement of comprehensive incomes, statement of changes in equity, statement of financial position and the notes to financial statements)
• Accounting policies, changes in accounting estimates and errors (prior period errors)
• Fair value measurement

9.7       Consolidated financial statements

• Accounting for one subsidiary (consolidated income statement, consolidated statement of financial position and a statement of cash flows – group financial statements); consolidated statement of cash flows also covers associate companies and jointly controlled entities but excludes acquisition and disposal of subsidiaries during the year
• Investments in associates and joint ventures

9.8       Financial statements under IPSASs

 [Provisions of the following IPSASs (emphasis on distinctions with equivalent IASs/IFRSs)]

• Presentation of financial statements
• Accounting policies, changes in accounting estimates and errors
• Borrowing costs
• Consolidated and separate financial statements
• Investments in associates
• Interests in joint ventures
• Events after the reporting date
• Construction contracts, leases and inventories
• Provisions, contingent liabilities and contingent assets

9.9       Emerging issues and trends

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