TABLE OF CONTENTS The conceptual and regulatory framework for financial reporting 3 IAS 1 7 IAS 16 10 IAS 38 – Intangible assets 13 IAS 36 – Impairment of assets 16 IAS 40 – Investment property 18 IAS 2 – Inventories 21 IAS 41 – Agriculture 23 IAS 23 – Borrowing cost 25 IAS 20 - Government grants 26 IAS 8 – Accounting policies, Changes in accounting estimates and Errors 28 IAS 10 – Events after reporting date 30 IAS 37 – Provisions, Contingent liabilities and Contingent assets 32 IAS 17 – Leases 36 IFRS 15 – Revenue from contract with customers 41 IFRS 13 – Fair value measurements 44 IAS 19 – Employee benefits 47 IFRS 2 - Share based payments 59 IAS 12 – Income taxes 65 IFRS 8 – Operating segments 70 IAS 33 – Earnings per share 75 IFRS 5 – Non-current assets held for sale and discontinued operations 78 Financial Instruments 81 IFRS 10 – Consolidation 94 IAS 28 – Investment in Associates 102 IFRS 11 - Joint Arrangements 105 Complex groups 110 Changes in group structure 115 IAS 21 – The effects of changes in foreign exchange rates 122 IAS 7 – Statement of cashflows 130 IAS 24 – Related party transactions 138 IAS 34 – Interim financial reporting 141 Ratio analysis 145 SMEs 151 Not for profit & Public sector entities 155 Current developments 161 Exposure Drafts 168 The professional and ethical duties of the accountant 178 Recommended Practice questions 183 P2 Revision notes Page 3 Summary LPC Notes CLIP (Commercial Law and IP) Revision Notes (80% Distinction) 2022 THE CONCEPTUAL AND REGULATORY FRAMEWORK FOR FINANCIAL REPORTING CONCEPTUAL FRAMEWORK The IFRS Framework describes the basic concepts that underlie the preparation and presentation of financial statements for external users. A conceptual framework can be seen as a statement of generally accepted accounting principles (GAAP) that form a frame of reference for the evaluation of existing practices and the development of new ones. Purpose of framework  Assist in the development of future IFRS and the review of existing standards by setting out the underlying concepts  Promote harmonisation of accounting regulation and standards  Assist the preparers of financial statements in the application of IFRS and dealing with accounting transaction s for which there is not (yet ) an accounting standard Advantages of a conceptual framework  Financial statements are more consistent with each other  Avoids firefighting approach and a has a proactive approach in determining best policy  Less open to criticism of political/external pressure  Has a principles based approach  Some standards may concentrate on effect on statement of financial position; others on statement of profit or loss Disadvantages of a conceptual framework  A single conceptual framework cannot be devised which will suit all users  Need for a variety of standards for different purposes  Preparing and implementing standards may still be difficult with a framework The purpose of financial reporting is to provide useful information as a basis for economic decision making. Qualitative characteristics of useful financial information  They identify the types of information likely to be most useful to users in making decisions about the reporting entity on the basis of information in its financial report. Fundamental qualitative characteristics  Relevance Relevant financial information is capable of making a difference in the decisions made by users if it has predictive value, confirmatory value, or both. Materiality is an entity-specific aspect of relevance based on the nature or magnitude (or both) of the items to which the information relates in the context of an individual entity's financial report  Faithful representation