2. Conceptual Framework

Question 1

Purpose

Answer 1

Keywords:

1. Assist the Board to develop IFRS Standards, Useful to ILO
2. Assist the preparer of financial reports, Develop consistent accounting policies, allow choice of accounting policies when no standards applies.
3. Assist all parties to understand and interpret Standards.

Question 2

Objective of Financial Reporting

Answer 2

Provide financial information that is useful to users in making decision relating to providing resources to the entity

Question 3

Stewardship

Answer 3

Define: Division of ownership and control between shareholders and mgmt
Assessment: how efficient and effective management has discharged his responsibilities to use the economic resources provided.

Question 4

What makes financial information useful?

Answer 4

Relevance + Faithful Representation

Question 5

Relevance

Answer 5

Keyword: Capable to change the decision made by users where financial information has predictive and confirmatory value.

Question 6

Faithful Representation

Answer 6

• Info must represent the substance of what it purports to represent
• Info is (C) Complete, (N) Neutral and (F) Free from error.
• Affected by measurement uncertainty

Question 7

Prudence

Answer 7

• Exercise of caution when making judgements under condition of uncertainty
• Does not allow for overstatement or understatement of ALIE

Question 8

Element of Financial Statements (CF 2010)

Answer 8

Asset = RC + Probable inflow of FEB
Liability = PO + Probable outflow of FEB

Question 9

Elements of Financial Statements (CF 2018)

Answer 9

Assets: PERC + Right that has the PTP economic benefits.
Liability: POTER + DR NPATA

Question 10

Recognition (CF 2010)

Answer 10

Recognition: Probable inflow of FEB + Measurable Reliably

Question 11

Recognition and Guidance of Derecognition (CF 2018)

Answer 11

Recognition:
Relevance based on: existence uncertainty / low prob for inflow of FEB
Faithful Representation based on: Measurement uncertainty, recognition inconsistency and presentation + disclosure.

Derecognition (Asset): When entity loses control of all or part of the reg asset
Derecognition (Liability): When entity no longer as PO for all or part of the reg liability