Chapter 2 - The Framework Flashcards
What is the IFRS interpretation committee?
Reports to the IASB with interpretations of IFRS.
Provides guidance on financial reporting issues not specifically addressed by IFRS
What is the IASB?
International accounting standard board - the body responsible for developing and issuing IAS & IFRS
What is the IFRS Advisory council?
The take recommendations from individuals, corporations and national standard setters and then provides advice to the IASB on priority areas of accounting
What makes up the The Regulatory Framework?
IAS & IFRS
Companies Act 2006
The Framework
What are the stages of setting standards?
Topic is identified
Topic is discussed and the IASB May set a working group
Discussion paper is issued for public comment
Exposure draft is issued for public comment
IASB consults with SAC (Standards Advisory Council) and working groups before an IFRS is voted on and issued
What is the Companies Act 2006?
UK legislation that governs limited companies.
What are directors responsible for under the Companies Act 2006?
Keeping proper accounts records
Financial statements audited and presented to shareholders
Filing of accounts at companies house
What are the four possible bases of measurement?
Historical cost
Current cost
Realisable value
Present value
What is historical cost?
This is the most usual method as it is the original price paid
What is the current cost?
Measured at replacement cost, what it would cost if you bought it today
What is the realisable value?
Measured at the amount you would receive if you sold the asset today
What is the present value?
Measured at the discounted value of all future cash flows. Eg if the if a liability of due to be settled in 10 years it should be discounted to today’s value to eliminate inflation
