Publishing 2013 ACCA F7 (INT) Financial Reporting Study Text emilewoolfpublishing.com   ACCA Paper F7 (INT) Financial Reporting (International) Welcome to Emile Woolf‘s study text for Paper F7 Financial Reporting (International) which is: „ Written by tutors „ Comprehensive but concise „ In simple English „ Used around the world by Emile Woolf Colleges including China, Russia and the UK Publishing Sixth edition published by   Emile Woolf Publishing Limited  Crowthorne Enterprise Centre, Crowthorne Business Estate, Old Wokingham Road,   Crowthorne, Berkshire   RG45 6AW  Email: info@ewiglobal.com  www.emilewoolfpublishing.com       © Emile Woolf Publishing Limited, January 2013    All rights reserved. No part of this publication may be reproduced, stored in a retrieval  system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,  recording, scanning or otherwise, without the prior permission in writing of Emile Woolf  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Financial Reporting c Contents Page Syllabus and study guide v Chapter 1: The conceptual framework Chapter 2: Recognition and measurement 19 Chapter 3: Accounting for the substance of transactions 43 Chapter 4: The regulatory framework 53 Chapter 5: The financial statements of a single company 65 Chapter 6: Reporting financial performance 87 Chapter 7: Tangible non-current assets 105 Chapter 8: Intangible assets 135 Chapter 9: Impairment of assets 147 Chapter 10: Inventory 157 Chapter 11: Financial assets and financial liabilities 171 Chapter 12: Leases 195 Chapter 13: Provisions, contingent liabilities and contingent assets 213 Chapter 14: Taxation 235 Chapter 15: Reporting of non-group financial statements 257 Chapter 16: Earnings per share 277 Chapter 17: Statements of cash flows 303 Chapter 18: Consolidated accounts 343 Chapter 19: Consolidated accounts: intra-group adjustments 393 Chapter 20: Associates 421 Chapter 21: Analysis and interpretation of financial statements 435 © Emile Woolf Publishing Limited iii iv Practice questions 463 Answers to practice questions 493 Index 545 © Emile Woolf Publishing Limited Paper F7 (INT) Financial Reporting S       Syllabus and study guide       Aim To develop knowledge and skills in understanding and applying accounting standards and the theoretical framework in the preparation of financial statements of entities, including groups and how to analyse and interpret those financial statements Main capabilities On successful completion of this paper candidates should be able to: A Discuss and apply a conceptual framework for financial reporting B Discuss a regulatory framework for financial reporting C Prepare and present financial statements which conform with International accounting standards D Account for business combinations in accordance with International accounting standards E Analyse and interpret financial statements © Emile Woolf Publishing Limited v Paper F7: Financial Reporting (International) Rationale The financial reporting syllabus assumes knowledge acquired in Paper F3, Financial Accounting, and develops and applies this further and in greater depth The syllabus begins with the conceptual framework of accounting with reference to the qualitative characteristics of useful information and the fundamental bases of accounting introduced in the Paper F3 syllabus within the Knowledge module It then moves into a detailed examination of the regulatory framework of accounting and how this informs the standard setting process The main areas of the syllabus cover the reporting of financial information for single companies and for groups in accordance with generally accepted accounting principles and relevant accounting standards Finally, the syllabus covers the analysis and interpretation of information from financial reports Detailed Syllabus A B C vi A conceptual framework for financial reporting The need for a conceptual framework The fundamental concepts of relevance and faithful representation (‘true and fair view’) The enhancing characteristics of comparability, verifiability, timeliness and understandability Recognition and measurement The legal versus the commercial view of accounting Alternative models and practices A regulatory framework for financial reporting Reasons for the existence of a regulatory framework The standard setting process Specialised, not-for-profit, and public sector entities Financial statements Statements of cash flows Tangible non-current assets Intangible assets Inventory Financial assets and financial liabilities Leases © Emile Woolf Publishing Limited Syllabus and study guide D E Provisions, contingent liabilities, and contingent assets Impairment of assets Taxation 10 Regulatory requirements relating to the preparation of financial statements 11 Reporting financial performance Business combinations The concept and principles of a group The concept of consolidated financial statements Preparation of consolidated financial statements including an associate Analysing and interpreting financial statements Limitations of financial statements Calculation and interpretation of accounting ratios address users’ and stakeholders’ needs Limitations of interpretation techniques Specialised, not-for-profit, and public sector and trends to entities Approach to examining the syllabus The syllabus is assessed by a three-hour paper-based examination All questions are compulsory It will contain both computational and discursive elements Some questions will adopt a scenario/case study approach Question will be a 25 mark question on the preparation of group financial statements and/or extracts thereof, and may include a small discussion element Computations will be designed to test an understanding of principles Question 2, for 25 marks, will test the reporting of non-group financial statements This may be from information in a trial balance or by restating draft financial statements Question 3, for 25 marks, is likely to be an appraisal of an entity’s performance and may involve statements of cash flows Questions and will cover the remainder of the syllabus and will be worth 15 and 10 marks respectively © Emile Woolf Publishing Limited vii Paper F7: Financial Reporting (International) An individual question may often involve elements that relate to different subject areas of the syllabus For example the preparation of an entity’s financial statements could include matters relating to several accounting standards Questions may ask candidates to comment on the appropriateness or acceptability of management’s opinion or chosen accounting treatment An understanding of accounting principles and concepts and how these are applied to practical examples will be tested Questions on topic areas that are also included in Paper F3 will be examined at an appropriately greater depth in this paper Candidates will be expected to have an appreciation of the need for specified accounting standards and why they have been issued For detailed or complex standards, candidates need to be aware of their principles and key elements   viii © Emile Woolf Publishing Limited Answers to practice questions (c)     Revenue  Cost of sales - Per question - Unrealised profit  Gross profit  Polly   Solly $    800     (600)   $  500 –––––– 200 ––––––   Adjustments  (300) (6.25) $  (50)       50  Consolidated       $  1,250  (856.25)  –––––– –––––––– 193.75     ––––––   393.75 –––––––– Unrealised profit in inventory Inventory held at year end Selling price (50 x 1/2)  Cost  Unrealised profit  37 % $000  100  (75) –––– 25 –––– 25  (18.75)  ––––––  6.25  –––––– Parent Consolidated income statement for the year ended 31 December Year $000   Revenue  Cost of sales Gross profit Administrative expenses  Profit before tax  Income tax expense  Profit for the period  1,300.0  (607.5) ––––––– 692.5 (430.0) ––––––– 262.5 (90.0) ––––––– 172.5 –––––––       $000 Attributable to:  Owners of the parent (balancing figure)  Non-controlling interests (W3)   165.25 7.25 ––––––– 172.5   ––––––– Workings (1) Group structure   Parent share  Non-controlling interests   © Emile Woolf Publishing Limited % 90 10 100 537 Paper F7: Financial Reporting (International) (2) Consolidation schedule     Revenue  Cost of sales - Per question - Unrealised profit (W4)  Gross profit  Administrative expenses Profit before tax  Income tax expense  Profit for the period  (3) Parent Subsidiary Adjustments Consolidated $000  900 $000  700 (500)   (400) (7.5)  400 (250) 292.5 (180)     150 (50) 112.5 (40)     72.5   ––––– ––––– ––––– 100 ––––– $000  (300)  $000  1,300 300   –––––– –––––– –––––– –––––– (607.5)  ––––––– 692.5 (430) ––––––– 262.5 (90) ––––––– 172.5 ––––––– Non-controlling interests 10% × 72,500 (W2) = $7,250 (4) Unrealised profit in inventory Inventory held at year end  Selling price  Cost  Unrealised profit  38 % 133  (100) –––– 33 –––– $000 30.0 (22.5) –––– 7.5 –––– Porthos Consolidated statement of financial position $   Investment in associate (W)  391,000 Consolidated income statement   Share of profits of associate (30% × 50,000) 15,000 Working Investment in associate   Investment at cost  Investor’s share of post-acquisition profits of Aramis (30% × (400,000 – 250,000)) Minus accumulated impairment in the investment   538 $  350,000  45,000  (4,000)  ––––––––  391,000  –––––––– © Emile Woolf Publishing Limited Answers to practice questions 39 Anna Investment in associate Reduce by group share of unrealised profit in inventory held by Anna purchased from Paula ($6,400 (W) × 30%) = $1,920 Consolidated inventory (Paula + Susie) Reduce by unrealised profit in inventory purchased by Paula from Susie = $16,000 (W) Consolidated retained earnings (Paula plus group share of post-acquisition profits of Susie + group share of post-acquisition profits of Anna) Reduce by „ group share of unrealised profit in inventory sold by Susie to Paula ($16,000 (W) × 60%) = $9,600, and „ group share of unrealised profit in inventory sold by Paula to Anna ($6,400 (W) × 30%) = $1,920 Non-controlling interests Reduce by non-controlling interests’ share of unrealised profit in inventory sold by Susie to Paula ($16,000 (W) × 40%) = $6,400 Working Unrealised profit in inventory Held by Paula    Inventory held at year end  Selling price Cost  Unrealised profit  40 %  125 (100) –––– $  80,000 (64,000)        16,000   ––––––– 25 –––– Held by Anna ––––––– $  32,000 (25,600) ––––––– 6,400 ––––––– Sam Ratios Year 7    Year Gross profit % = Gross profit Sales 405 x 100   x 100 = 19%   2,160 362 1,806 x 100 = 20% Net profit % = Net profit Sales x 100   2,160 x 100 = 0.4%   53 1,806 x 100 = 2.9% Return on capital employed = Profit before interest and tax 15 Share capital and reserves+ Long - term debt capital 246 © Emile Woolf Publishing Limited x 100 = 6%   56 190 x 100 = 29% 539 Paper F7: Financial Reporting (International) Asset turnover = Sales x 100  Share capital and reserves +Long- term debt capital 2,160 246 = 8.8 times   1,806 190 = 9.5 times Current ratio = Current assets Current liabilities 422   254 = 1.7 times   265 147 = 1.8 times Quick ratio = Current assets excluding inventory Current liabilities   422 - 106 254 = 1.2 times   265 - 61 147 = 1.4 times Average time to collect = Trade receivables Sales x 365   316 x 365 2,160 = 53 days   198 x 365 1,806 = 40 days Average time to pay = Trade payables Cost of purchases x 365   198 x 365 1,755 = 41 days   142 x 365 1, 444 = 36 days Inventory turnover = Inventory Cost of sales x 365   106 x 365 1,755 = 22 days   61 x 365 1, 444 = 15 days Commentary Profitability Although revenue has increased by 20% this has not led to increased profitability, as shown by the gross profit and net profit percentages The gross profit percentage is largely unchanged suggesting that Sam has maintained its profit margins However, the net profit percentage has fallen significantly (from 2.9% to 0.4%) There may be increased costs because of the increased level of business (e.g recruitment of new employees) but it may also mean that overheads are getting out of control Return on capital employed has fallen even more significantly (from 29% to 6%) The asset base has increased over the last year and revenue has increased accordingly, but the company has not been able to maintain its profitability 540 © Emile Woolf Publishing Limited Answers to practice questions Efficiency/liquidity Inventory turnover has also fallen (from 15 days to 22 days) showing that, whilst there has been an increased volume of business, Sam is exercising less control over working capital as the amount tied up in inventory has increased However, the main indicators of liquidity, the current and quick ratios, show that there has been little change in the last year, suggesting that Sam is not having problems meeting its debts as they fall due The average time to collect debts has worsened from 40 days to 53 days This may indicate a loss of credit control or that more favourable terms have been given to customers in order to gain sales In either case, it indicates an increased bad debt risk, although, to some extent, it is mitigated by the small increase in average time to pay from 36 to 41 days © Emile Woolf Publishing Limited 541 41 542   x 100 x 100 Sales 50,000 - 12,000 22,605 Current assets excluding inventory Current liabilities Quick ratio = 22,605 Current liabilities = 0.7 times = 1.7 times = 2.2 times 207, 395 +10,000 150,000 207, 395 +10,000 x 100 = 28.5% x 100 = 30% x 100 = 60% 61,500 + 500 50,000 x 100 x 100 150,000 44,895 150,000 90,000 Chris Current assets Current ratio = Share capital and reserves + Long - term debt capital Asset turnover = Share capital and reserves + Long - term debt capital Profit before interest and tax Return on capital employed = Sales Net profit Net profit % = Sales Gross profit Gross profit % = Ratios Chris and Caroline = 0.85 times 117,670 = 1.1 times = 1.3 times 153,250 - 26,250 117,670 153,250 565,580 + 250,000 700,000 565,580 + 250,000 x 100 = 47% x 100 = 39% x 100 = 70% 371,000 +12,000 700,000 270,830 700,000 490,000 Caroline Paper F7: Financial Reporting (International) © Emile Woolf Publishing Limited © Emile Woolf Publishing Limited x 365 x 365 x 365 500 = 124 times x 100 = 4.8% Interest charges in the year 207, 395 10,000 x 365 = 73 days x 365 = 137 days x 365 = 91 days 61,500 + 500 x 100 60,000 12,000 60,000 22,605 150,000 37,500 Chris Profit before interest and tax Interest cover = Share capital and reserves Long - term debt Gearing ratio = Cost of sales Inventory Inventory turnover = Cost of purchases Trade payables Average time to pay = Sales Trade receivables Average time to collect = Table continues   12,000 = 32 times x 100 = 44% x 365 = 46 days x 365 = 204 days x 365 = 55 days 371,000 +12,000 565,580 250,000 210,000 26,250 210,000 117,670 700,000 105,000 Caroline Answers to practice questions 543 Paper F7: Financial Reporting (International) Commentary Profitability The return on capital employed achieved by Chris (28.5%) is substantially lower than that achieved by Caroline (47%) This variation in performance is also seen at the gross profit (60% compared to 70%) and net profit levels (30% compared to 39%) The variation in gross profit percentage could be caused by differences in sales mix, inventory valuation methods or mark-up Since these entities operate in the same sector it is unlikely that their selling prices differ significantly However, Caroline, as a much larger entity, may be able to negotiate better prices from its suppliers Caroline is also more efficient at using its assets It is generating 85c per $1 of assets whereby Chris is only generating 70c per $1 Efficiency/liquidity The liquidity of both entities appears satisfactory, although Caroline has less funds tied up in its current assets Caroline is also more efficient at collecting its debts (55 days compared to Chris’s 91 days), and takes a longer credit period from its suppliers Solvency Caroline is much more highly geared than Chris (44% compared to 4.8%) Caroline has the ability to raise debt more easily because of its greater profitability and its property, on which debt can be secured Both companies can easily cover their interest payments suggesting that neither entity’s debt is at risk Conclusion Caroline is the stronger entity © Emile Woolf Publishing Limited 544 Paper F7 (INT) Financial Reporting i       Index A C Accounting concepts 20 Accounting equation approach 96 Accounting estimates 90 Accounting for substance 44 Accounting policies 15, 88 Accounting standards 54 Acid test ratio 448 Acquired intangible assets 361 Acquisition costs 353 Active market 39, 193 Adjusting events after the reporting period 230 Adjustments for working capital 317 Aggregation 20 Amortisation 142 Amortised cost 181, 183, 189 Amounts recoverable on contracts 167 Analysis of expenses 78 Asset 12, 46, 71 Associate 422 Average time for holding inventory 444 Average time to collect 443 Average time to pay suppliers 444 Capital items Capital maintenance Capitalisation of borrowing costs Cash and cash equivalents Cash flow from financing activities Cash flow information Cash flows from financing activities Cash flows from investing activities Cash flows from operating activities Cash generated from operations Cash in transit Cash operating cycle Cash-generating units Changes in accounting estimates Changes in accounting policies Common reporting date Company law Comparability Comparative information Components of equity Compound financial instrument Comprehensive income Conceptual framework Consignment inventory Consistency of presentation Consolidated financial statements Consolidated income statement Consolidated statement of comprehensive income Constant purchasing power accounting (CPP) B Bank overdrafts Bargain purchase Basic EPS Bonus issue of shares © Emile Woolf Publishing Limited 306 146, 359 282 180, 274, 285 108 34 109 304 308 340 335 308, 329 307 307 400 445 153 91 16, 88 348 54 10 67 84 272 75 48 20 345 384 383 33 545 Paper F7: Financial Reporting (International) Construction contracts: IAS 11 160 Constructive obligation 218 Contingent asset 228 Contingent consideration 362 Contingent liability 227 Contract costs 162 Contract revenue 161 Controlled non-subsidiaries 44 Convertible bonds 175, 185, 272, 292 Convertible loan stock 175 Convertible preference shares 292 Correction of prior period errors 93 Cost constraint on useful information 11 Cost model 107, 141 Cost model for investment property 129 Cost of acquisition 354 Cost of inventory 159 Cost/sales ratios 440 Costs basis 161 Creative accounting 4, 457 Credit risk 177 Current assets 69 Current cost 24 Current liabilities 70 Current purchasing power accounting 33 Current ratio 447 Current tax and other comprehensive income 243 Current tax: IAS 12 238 Current value accounting 31 D Days sales outstanding Debt Debt ratios Deferred consideration Deferred tax account Deferred tax assets Deferred tax liabilities and assets Deferred tax relating to revaluations Deferred tax: IAS 12 Depreciable amount Depreciation Depreciation methods Deprival value Derecognition Derecognition of non-current assets 546 443 174 449 391 247 251 247 251 245 115 115 116 31 47 119 Derivatives Development costs Diluted EPS options and warrants Direct method Direct or indirect method Directly attributable costs Directly-related acquisition costs Discontinued operations Dismantling and restoring a site Disposal group Disposal of assets held for sale Disposal of non-current assets Dividend cover Dividend paid by a subsidiary Dividend payments to equity shareholders Dividend yield Dividends Dividends paid Dividends paid by a subsidiary Dividends received by the parent Due Process Oversight Committee (DPOC) 173 140m 250 291 295 308, 323 327 108 353, 354 77, 98 225 99 119 329 453 416 338 452 73, 232 314 418 417 56 E Earnings per share (EPS) 278, 452 Earnings per share and trends 301 Economic substance 44 Economic value 31 Effective annual rate of interest 181 Effective rate 190 Elements of financial statements 12 Enhancing qualitative characteristics 10 Environmental and similar provisions 223 EPS and IAS33 278 EPS: convertible preference shares and convertible bonds 292 Equity 13, 71, 174 Equity accounting 425 Equity capital 73 Equity method 424 Equity shares 179 Errors 92 Estimates 90 Events after the reporting period: IAS 10 230 Expenses 14 © Emile Woolf Publishing Limited Index Exposure Draft Extraordinary items 61 77 F Factoring of accounts receivable 51 Fair presentation 17 Fair presentation and compliance with IFRSs 67 Fair value 37 Fair value adjustments 372, 390 Fair value formula 378 Fair value method 371 Fair value method of accounting for NCI 364, 378 Fair value model for investment property 129 Faithful representation 10 FASB 60 Finance costs 273 Finance lease 196, 199, 262 Financial 187 Financial asset 172, 187 Financial capital maintenance 34 Financial derivatives 173 Financial instruments 172 Financial liabilities 172 Financial liability 189 Financial performance 96 Financing activities 335 Fixed rate debt 183 Format of published accounts 66 Future operating losses 223 G GAAP Gains on revaluation Gearing ratio Going concern assumption Goods in transit Goodwill Goodwill attributable to the NCI Goodwill: impairment Government grants: IAS 20 Grants related to assets Grants related to income Gross profit ratio Group accounts © Emile Woolf Publishing Limited 111 449 233 400 144, 354 378, 380 356 124 124, 125 124 441 346 H Held for sale High-geared Historical cost Historical cost accounting Holding company 98 449 24 30 345 I IAS Presentation of Financial Statements 66 IAS Accounting policies, changes in accounting estimates and errors 15, 18, 88 IAS 10 Events after the reporting period 230 IAS 11 Construction contracts 160 IAS 16 Property, plant and equipment 106 IAS 17 Leases 196, 208 IAS 18 Revenue 26 IAS 23 Borrowing costs 109 IAS 28 Investments in associates and joint ventures 422 IAS 36 Impairment of assets 148 IAS 38 Intangible assets 136 IAS 32 Financial instruments: Presentation 174 IAS 33 and diluted EPS 291 IAS 33 Earnings per share 278 IAS 40 Investment property 269 IASB Conceptual Framework 5, 22, 34, 44 IASB Framework 2, 15 IASC Foundation 56 IASs 59 IFRS (revised) 378 IFRS Non-current assets held for sale and discontinued operations 98 IFRS Financial instruments: Disclosure 176 IFRS 13 Fair Value Measurement 37, 38 IFRSs 59 IFRSs and financial performance 96 Impairment of assets: IAS 36 148 Impairment of goodwill 383, 388 Impairment of goodwill after acquisition 381 Impairment of intangible assets 142 Impairment review 142 Income 13 Income statement 75 Indirect method 309, 311 Intangible assets 136 Interest and dividends received 314 547 Paper F7: Financial Reporting (International) Interest cover ratio 450 Interest paid and tax paid 315 Interest payments 314, 316 Interest, royalties and dividends 29 Interest, taxation and dividends 314 Internally-generated goodwill 144 Internally-generated intangibles 138 International Accounting Standards Board (IASB) 56, 57 International GAAP 17 Interpretations of IFRSs 61 Intra-group balances 397 items in transit 400 Intra-group dividends 416 Intra-group interest 414 Intra-group loans 414 Intra-group sales 396 Intra-group transactions 394 Inventories on sale or return 48 Inventories: IAS 158 Inventory turnover 444 Investing activities 329 Investment property: IAS 40 128 Investor ratios 452 IOSCO 58 Irredeemable non-cumulative preference shares 175 Issued shares 179 L Lease Lease payment table Lease payments made in advance Lease payments made in arrears Leases of land and buildings Leasing Legal form Legal obligation Leverage Liabilities Liability Liquidity ratios Liquidity risk Listing Rules Loan notes Losses on revaluation Low-geared 548 196 201 205 204 197 45 44 217 449 13, 71 46 447 177 55 262 111 449 M Market risk Material items Material non-adjusting events Materiality Measurement of revenue Minority interest Monitoring Board Most advantageous market 177 78, 97 232 20 26 363 56 39 N NCI and goodwill 364 Negative goodwill 359 IFRS 146 Net cash from operating activities 307 Net profit ratio 441 Net realisable value (NRV) 31, 37, 158 Nil provision method 253 Non-adjusting events after the reporting period 231 Non-controlling interest in the consolidated income statement 386 Non-controlling interests 363 Non-controlling interests and intragroup loans 414 Non-current assets 106 Non-current assets held for sale 99 Non-financial information 459 Non-financial ratios 462 Not-for-profit entities 62 O Off balance sheet finance Offsetting Onerous contracts Operating lease Options Ordinary share Other comprehensive income 457 20 221 196, 208, 263 295 280 76 P Parent entity Partial provision method 344 253 © Emile Woolf Publishing Limited Index Payments of taxation Percentage annual growth in sales Percentage of completion method Permanent differences Physical capital maintenance Post-acquisition profits Potential ordinary share Potential ordinary shares that are not dilutive Pre- and post-acquisition profits Pre-acquisition profits Preference dividend Preference shares in a subsidiary Preference shares: debt or equity? Present value Price/earnings ratio Price-earnings ratio (P/E ratio) Principal market Principles and rules Prior period errors Profit/sales ratio Proposed dividends Prospective application Provision Provision for environmental costs Public sector entities Purchased goodwill 315 442 28 245 35 351 280 296 385 351 175, 176 415 174 24 278 452 39 55 92 440 232 91 214 224 62 144, 354 Q Qualifying asset Qualitative characteristics of useful financial information Quick ratio S 109 448 R Realisable value Receivables days Reclassification adjustments Recognition Recognition criteria for intangible assets Recognition in the financial statements Recognition of assets Recognition of expenses Recognition of financial instruments Recognition of income Recognition of liabilities © Emile Woolf Publishing Limited Recoverable amount 152 Redeemable preference shares 175, 181 Regulatory framework 54 Related party transaction 458 Relevance 10 Reliability of measurement 22 Rendering of services: revenue recognition 28 Repayments on finance leases 339 Replacement cost 31 Reporting period 68 Research and development expenditure 139 Research costs 139 Reserves 73 Restructuring 222 Retrospective adjustments 84 Retrospective application 89 Retrospective correction 94 Return on capital employed 438 Return on shareholder capital 439 Revaluation model 110, 141 Revaluation of leasehold property 263 Revenue 26, 271 Revenue items 108 Revenue recognition and substance 28 Reversal of an impairment loss 154 Rights issues of shares 288 24 443 77 47 138 22 23 23 187 23 23 Sale and leaseback 51 Sale and repurchase agreements 49 Sale of goods: revenue recognition 27 Sale with an option to repurchase 50 Sales basis 161 Sales tax 236 Sales/capital employed ratio 441 Settlement value 24 Share options 295 Share warrants 295 SOCIE 84 Specialised entities 62 Stage of completion of a contract 161 Standard-setting process 61 Statement of changes in equity 84, 97, 267, 276 Statement of comprehensive income 75, 82, 265 Statement of financial position 72 Statements of cash flows 304 549 Paper F7: Financial Reporting (International) Step-by-step approach to accounting for NCI Stepped bond Subsequent expenditure Subsidiary Substance over form 365 190 109 344 199 T Tax base 248 Tax withheld at source 239 Taxable profit 238 Taxable temporary differences 245 Temporary differences 245, 248 The conceptual framework for financial reporting The IFRS Advisory Council (IFRSAC) 58 The IFRS Foundation 56 The IFRS Interpretations Committee (IFRSIC) 58 Timeliness 11 Total comprehensive income 76 Transaction costs of issuing new equity shares 179 Transactions with owners in their capacity as owners 84 Transfers of non-current assets 411 Transit 400 Transitional provisions 88 550 True and fair view Twenty per cent or more rule 17 423 U Under-provision or over-provision of tax Understandability Uniform accounting policies Unrealised profit in inventory Users and their information needs 242 11 348 404 V Value added tax Value in use Verifiability 236 152 11 W Warranties Warrants Window dressing Working capital Working capital adjustments Working capital cycle 220 295 457 317 313 445 Working capital efficiency ratios 443 © Emile Woolf Publishing Limited 2013 ACCA F7 (INT) Financial Reporting A well-written and focused text, which will prepare you for the examination and which does not contain unnecessary information • Comprehensive but concise coverage of the examination syllabus • • • • Simple English with clear and attractive layout A large bank of practice questions which test knowledge and application for each chapter A full index The text is written by Emile Woolf International’s Publishing division (EWIP) The only publishing company focused purely on the ACCA examinations • EWIP’s highly experienced tutors / writers produce study materials for the professional examinations of the ACCA • EWIP’s books are reliable and up-to-date with a user-friendly style and focused on what students need to know to pass the ACCA examinations • EWIP’s association with the world renowned Emile Woolf Colleges means it has incorporated student feedback from around the world including China, Russia and the UK emilewoolfpublishing.com ... IASB has published a new document called ”The conceptual framework for financial reporting” which, includes the new chapters and those retained from the original framework The new document is made... Paper F7: Financial Reporting (International) A conceptual framework for financial reporting „ The meaning of GAAP „ The meaning of a conceptual framework „ The purpose of a conceptual framework... CHAPTER Paper F7 (INT) Financial reporting The conceptual framework Contents © Emile Woolf Publishing Limited A conceptual framework for financial reporting The IASB Conceptual Framework Qualitative