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The following information was extracted from the books of Engwen Ltd. As at 30 June 2008The company’s activities had a negative impact on the cost of living of the community, which increased by shs.3, 500,000 during the year ended 30 June 2008.Required:A statement of net social benefits to staff and community for the year ended 30 June 2008.
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The International Accounting Standards Board (IASB) is currently working with other accounting standards setting bodies in the world to have a global application of International Financial Reporting Standards. An important point of focus is conceptual framework.Required:Explain the importance of a conceptual framework and the key issues that such a framework should address.
Date posted: February 13, 2019 . Answers (1)
Amos Tiriki Headline Electronics (ATHE) develops and manufactures innovative computer peripherals. It sells its products to variety of vendors in its home country and the vendors sell in turn to corporate and individual customers.The company is in the process of finalizing its draft financial statements for the year ended 31 December 2007. The finance director is locked in a major debate with a partner in charge of external audit. During the year the company spent a material amount on attending a major tradefair in Cheptulu Town. This was the first time that the company had attended the event. The trade fair is the biggest opportunity for the companies such as ATHE to talk to potential customers from all over the world. All major multinational electronics companies are represented at this annual event. The fair lasted for five days in June 2007. It is now January 2008 and not a single order has been generated from new customers who might have seen ATHE’s presentation at the trade fair.The partner in charge of the external audit feels very strongly that the cost of attending the fair should be written off as an expense. ATHE’s finance director feels equally strongly that the cost should be capitalized as an asset. He argues that the contacts made at the trade fair are likely to take years to generate new business and that the investment in attending should be carried forward until those orders start to come in. He argues further that the cost should be capitalized on the grounds that they meet the definition of an asset, as laid down by the IASB’s Frame work for the preparation and presentation of financial statements (Framework)Required:a) Discuss the finance director assertion that the money spent on attending the fair should be treated as an asset.b) Explain the importance of the Framework to the reporting of corporate performance and whether it takes into account the business and legal constraints placed.c) Discuss the assertion that the external auditor might be the primary beneficiary of having a clear and unequivocal Framework that sets out the basis for financial reporting
Evaluate the main steps followed in the development and issue of international financial reporting standards (IFRS)
In the context of IFRS 4(Insurance Contracts), identify four items that are excluded from requirements of this standard.
a)Accounting reports are not sufficiently accurate to be truthful and they are not sufficiently truthful to be accurate. Hence, they are neither accurate nor truthful.Critically comment on the above statement.b) Evaluate the importance of ethics in the practice of accounting.
The International Accounting Standards Board (IASB) Framework for the preparation and presentation of financial statements has seven main sections. Analyse any four sections and indicate how they contribute to the quality of financial statements.
The International Accounting Standards Board (IASB) Framework requires that a useful set of financial statements should be reliable.Explain five qualities of financial statements that make them reliable