Chapter 1 - Framework

Question 1

How is the FV of a non-financial asset measured

Answer 1

It is based on the highest and best version

Question 2

What are examples of a financial asset

Answer 2

Trade receivables
Investments
Debt instruments

Question 3

An economic Resource

Answer 3

A right that has the potential to produce economic benifits

Question 4

Purpose of the conceptual framework are to assist

Answer 4

• assist the IASB to develop and revise its standards
• assist entities to develop consistent accounting policies when no standard applies to a particular transaction or other event, or when a standard allows a choice of accounting policy, and
• assist all stakeholders to understand and interpret the standards

Question 5

what is the conceptual framework

Answer 5

Aconceptual frameworkcan be defined as a system of ideas and objectives that lead to the creation of a consistent set of rules and standards. Specifically inaccounting, the rule and standards set the the nature, function and limits of financialaccountingand financial statements.

Question 6

What is regulatory framwork

Answer 6

A regulatory framework for the preparation of financial statements is necessary for a number of reasons: Financial reporting standards on their own would not be sufficient to achieve these aims. In addition there must be some legal and market-based regulation. To ensure that all the information provided in the relevant economic arena is both comparable and consistent. Given the growth in multinational companies and global investment this arena is an increasing international one.

Question 7

Fundamental charec

Answer 7

Relevant
-materiality

faithful rep

• complete
• neutral
• free from error

Question 8

Enhancing charec

Answer 8

• Comparability
• timeliness
• verifiability
• understandable

Question 9

Prudence and conceptual framwork

Answer 9

Prudence is introduced in support of the principle of neutrality for the purposes of faithful representation. Prudence is understood here as the exercise of caution when making judgements under conditions of uncertainty. Users find this concept important as they feel that it should help counteract the natural optimistic bias of management. By acknowledging neutrality and prudence, the Framework includes all conceptual underpinnings for the development of IFRSs.

Question 10

IASB and IFRS

Answer 10

The International Accounting Standards Board (IASB) issue new accounting standards, known as International Financial Reporting Standards (IFRS). The IFRS Foundation supervises the IASB, which the IFRS Interpretations Committee gives guidance where conflicting interpretations of standards exist. The IFRS advisory council provides a forum for the IASB to consult interested parties affected by the standard-setting process.

Question 11

Conceptual Framework

Concept?
5 points/explantions of the framework

Answer 11

• Guides the approach
• Enables preparers to resolve issues
• Explains how C.F can be applied to acc standards and this reflects it

1. Why are FS prepared
2. Qual charect
3. Enhancing charec
4. Elements of FS
5. Measurement