Financial Reporting and Analysis - Finance Assignment Help

Assignment Task :

Question 1
Under the IASB’s Conceptual Framework for Financial Reporting, certain qualitative characteristics of useful financial information are identified. These are subdivided into characteristics considered fundamental and those considered to be enhancing. The two fundamental characteristics identified by the framework are ‘relevance’ and ‘faithful representation’. In order for financial transactions to be represented faithfully in the financial statements, the principle of ‘substance over form’ should be applied. This means that wherever there is a difference between the legal form of a transaction and its economic substance, the financial statements should reflect the economic substance.
 

Required:
i) Discuss the importance of the concept ‘substance over form’. 
ii) Describe FOUR (4) features of a transaction that suggest that its economic substance may differ from its legal form.
iii) Define ‘equity’, and explain why the conceptual framework does not prescribe any recognition criteria for equity.

Question 2
It is widely argued that global harmonization of financial reporting standards will bring about uniformity in financial reporting and ensure consistency and comparability in published financial information by enterprises. However, there are some barriers to global harmonization.
 

Required:
Explain any FIVE barriers to global harmonization of financial reporting standards.
 

Question 3
A conceptual framework of accounting is a coherent system of interrelated objectives and fundamental principles which prescribes the nature, function and limits of financial accounting and financial statements.
 

Required:
i. Outline five (5) objectives the IASB’s conceptual framework of accounting seeks to achieve. 
ii. State the main contents of the IASB’s conceptual framework for financial reporting 
iii. Explain how Chigumula Ltd should account for the following items, justifying your answer by reference to the definitions and recognition criteria in the IASB Conceptual

Framework for Financial Reporting.
a) Photographs of the company’s founders, which are of great sentimental and historical value.
b) Donation of MWK100,000 received from a philanthropist.
c) Obsolete plant now retired from use

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