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, Melville: International Financial Reporting, Instructor's Manual, 5th edition
Preface
As indicated in the preface to International Financial Reporting, the main book does not
contain solutions for those exercises which are marked with an asterisk. This provides lecturers
who have adopted the textbook with a source of problems which may be used for tutorial work
and revision. The purpose of this Instructor's Manual is to supply suggested solutions to those
exercises and questions.
I should like to remind the reader that, whilst some of the exercises are drawn from the past
examination papers of the professional accounting bodies, the answers provided here to those
questions are entirely my own responsibility.
, Melville: International Financial Reporting, Instructor's Manual, 5th edition
Chapter 1
The regulatory framework
1.8
(a) The objectives of the IASB are:
(i) to develop, in the public interest, a single set of high-quality, understandable, enforceable and
globally accepted financial reporting standards based upon clearly articulated principles; these
standards should require high quality, transparent and comparable information in financial
statements and other financial reporting to help investors, participants in the world's capital
markets and other users of financial information to make economic decisions;
(ii) to promote the use and rigorous application of those standards;
(iii) in fulfilling objectives (i) and (ii), to take appropriate account of the needs of a range of sizes
and types of entities in diverse economic settings;
(iv) to bring about convergence of national accounting standards and international standards.
(b) The Preface states that IFRSs and IASs are designed to apply to the general purpose financial
statements and other financial reporting of profit-oriented entities, whether these are organised in
corporate form or in other forms.
(c) The main stages in the IASB due process are:
– identification and review of all the issues associated with the topic concerned
– consideration of the way in which the IASB's Conceptual Framework applies to these issues
– a study of national accounting requirements in relation to the topic and an exchange of views
with national standard-setters
– consultation with the Trustees and the Advisory Council about the advisability of adding this
topic to the IASB's agenda
– publication of a discussion document for public comment
– consideration of comments received within the stated comment period
– publication of an exposure draft for public comment
– consideration of comments received within the stated comment period
– approval and publication of the standard.
, Melville: International Financial Reporting, Instructor's Manual, 5th edition
1.9
(a) The objective of IFRS1 is to ensure that an entity's first financial statements that comply with inter-
national standards should contain high-quality information that:
– is transparent for users and comparable for all periods presented
– provides a suitable starting point for accounting under international standards
– can be generated at a cost that does not exceed the benefits to users.
(b) An entity's "first IFRS reporting period" is the reporting period covered by the first IFRS financial
statements. The first IFRS financial statements are the first financial statements in which the entity
adopts international standards and makes an explicit and unreserved statement of compliance with
those standards.
The "date of transition to IFRS" is the date at the beginning of the earliest period for which an entity
presents comparative information in its first IFRS financial statements.
(c) The company's first IFRS reporting period is the year to 31 October 2016. The earliest period for
which comparative figures are presented in the first IFRS financial statements is the year to 31
October 2011. Therefore the date of transition is 1 November 2010. The company must:
(i) prepare an IFRS statement of financial position as at the start of business on 1 November 2010
(i.e. as at the close of business on 31 October 2010)
(ii) use identical accounting policies in this "opening" IFRS statement of financial position and in
the financial statements for the year to 31 October 2016 and in the comparative figures
provided for the previous five years; these accounting policies must comply with international
standards in force for periods ending on 31 October 2016
(iii) provide a reconciliation of equity as reported under previous GAAP with equity reported
under IFRS, for 31 October 2010 and 31 October 2015
(iv) provide a reconciliation of total comprehensive income as reported under previous GAAP with
total comprehensive income as it would have been reported under IFRS, for the year to 31
October 2015.
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