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Summary LPC Notes CLIP (Commercial Law and IP) Revision Notes (80% Distinction) 2022
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Summary LPC Notes CLIP (Commercial Law and IP)Revision Notes (80% Distinction) 2022
Summary LPC Notes CLIP (Commercial Law and IP)
Revision Notes (80% Distinction) 2022
Summary LPC Notes CLIP (Commercial Law and IP)
Revision Notes (80% Distinction) 2022
P2 Revision notes Page 1
, Summary LPC Notes CLIP (Commercial Law and IP)
Revision Notes (80% Distinction) 2022
TABLE OF CONTENTS
The conceptual and regulatory framework for 3
financial reporting
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 28
estimates and Errors
IAS 10 – Events after reporting date 30
IAS 37 – Provisions, Contingent liabilities and 32
Contingent assets
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 78
discontinued operations
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 122
rates
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 178
accountant
Recommended Practice questions 183
P2 Revision notes Page 2
, 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
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, Summary LPC Notes CLIP (Commercial Law and IP)
Revision Notes (80% Distinction) 2022
Information must be complete, neutral and free from material error
Enhancing qualitative characteristics
Comparability
Comparison with similar information about other entities and with similar information about the
same entity for another period or another date.
Verifiability
It helps to assure users that information represents faithfully the economic phenomena it
purports to represent. Verifiability means that different knowledgeable and independent
observers could reach consensus, although not necessarily complete agreement
Timeliness
It means that information is available to decision-makers in time to be capable of influencing
their decisions.
Understandability
Classifying, characterising and presenting information clearly and concisely. Information should
not be excluded on the grounds that it may be too complex/difficult for some users to understand
The IFRS framework states that going concern assumption is the basic underlying assumption
The five elements of financial statements
Asset: An asset is a resource controlled by the entity as a result of past events and from which
future economic benefits are expected to flow to the entity.
Liability: A liability is a present obligation of the entity arising from past events, the settlement
of which is expected to result in an outflow from the entity of resources embodying economic
benefits.
Equity: Equity is the residual interest in the assets of the entity after deducting all its liabilities.
Income: Income is increases in economic benefits during the accounting period in the form of
inflows or enhancements of assets or decreases of liabilities that result in increases in equity,
other than those relating to contributions from equity participants.
Expense: Expenses are decreases in economic benefits during the accounting period in the form
of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity,
other than those relating to distributions to equity participants.
Recognition of the elements of financial statements
Recognition is the process of incorporating in the statement of financial position or statement of profit or
loss an item that satisfies the following criteria for recognition:
The item that meets the definition of an element
It is probable that any future economic benefit associated with the item will flow to or from the
entity and
P2 Revision notes Page 4
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