second editioo Jennifer maynard

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1 financial accounting, reporting & analysis second editioo Jennifer maynard OXTORD UNIVERSITY PRESS

2 CONTENTS Preface Acknowledgements How to use this book How to use the Online Resource Centre xv xix xx xxii Chapter 1 Financial reporting and accounting Financial reporting The difference between profit and cash flow Qualitative characteristics Financial accounting Limited companies'financial statements Accruals principle Prudence Pulling everything together 38 Chapter 2 The financial reporting systern High quality financial reporting Companies legislation International financial reporting Standards The International Accounting Standards Board (IASB) Principles based international financial reporting Standards (IFRS) The conceptual framework The consequencesof global IFRS adoption The future of IFRS 87 Chapter 3 Corporate governance, sustainability and ethics A wider financial reporting systern Corporate governance The UK Corporate Governance Code

3 Contents ap 3.4 Reporting of corporate governance Corporate sustainability Ethics 136 Chapter 4 Published financial statements of companies ' " ' Key financial statements IAS1 Presentation of Financial Statements Structure and content of financial statements Statement of financial position Statement of profit or loss and other comprehensive income Statement of changes in equity Statement of cash flows Notes to the financial statements Proposed changes to the presentation of financial statements 204 Chapter 5 Techniques for the Interpretation of financial statements Where does an Interpretation begin? Overview of financial statements Ratio analysis Profitability ratios Liquidity ratios Efficiency ratios Gearing Investor ratios Statements of cash flows and their Interpretation Limitations in ratio analysis 255 Chapter 6 Reporting Performance Underpinning principles of Performance One-off, unusual items Discontinued Operations and non-current assets held for sale Operating segment reporting Related party disclosures 303 Chapter 7 Revenue from contracts with customers Issues with revenue IFRS 15 Revenue from Contracts with Customers Recognition steps 330

4 Contents 7.4 Measurement steps Contract costs Contract assets and liabilities Other aspects of contracts with customers Disclosures Impact of IFRS 15 Revenue from Contracts with Customers 357 Chapter 8 Earnings per share Earnings per share (EPS) Earnings Changes in shares Diluted earnings per share Disclosure of EPS Future changes to IAS Chapter 9 Taxation Taxation on companies'profits Current tax Deferred tax The effect of accounting for deferred tax Is the approach of IAS 12 Income Taxes to accounting for deferred tax relevant? Disclosures Users' interpretation of tax 425 Chapter 10 Property, plant and equipment, and impairmeht Significance of property, plant and equipment Definition of property, plant and equipment Recognition of property, plant and equipment Initial measurement of property, plant and equipment Subsequent measurement depreciation Subsequent measurement alternative models Impairment of assets Derecognition of property, plant and equipment Investment properties Non-current assets held for sale Disclosures Understanding property, plant and equipment Information 470

5 Intangibte assets 11.1 Why is accounting for intangibles important? 11.2 Issues in accounting for intangibte assets 11.3 IAS 38 Intangible Assets 11.4 Initial measurement 11.5 Intangible assets and goodwill acquired in a business combination 11.6 Financial reporting in practice 11.7 Intemally generated intangible assets 11.8 Measurement of an intangible asset after recognition 11.9 Disclosures What do the accounting treatment and disclosures of intangible assets mean to the user? Does this mean the current accounting and reporting of intangible assets is acceptable? The current IASB position Inventories 12.1 Significance of inventories 12.2 Issues with accounting for inventories 12.3 Measurement of inventories 12.4 Cost of inventories 12.5 Costmethods 12.6 Net realisable value 12.7 Disclosures Liabilities 13.1 Accounting for liabilities 13.2 Provisions 13.3 Contingent liabilities 13.4 Issues with IAS 37 and its future 13.5 Events after the reporting period Financial Instruments 14.1 Why is accounting for financial Instruments important? 14.2 What are financial Instruments? 14.3 Debt and equity Instruments 14.4 Recognition and derecognition of financial Instruments 14.5 Measurement of financial Instruments 14.6 Impairmentof financial assets

6 14.7 Disclosures 14.8 Evaluation of IFRS 9 Leases 15.1 Off balance sheet financing 15.2 Leases 15.3 Accounting for leases under IAS Accounting for leases under IAS 17 in lessees' financial statements 15.5 Accounting for leases under IAS 17 in lessors' financial statements 15.6 Sale and leaseback transactions 15.7 Future accounting for leases 15.8 Accounting for leases under IFRS Impact of IFRS 16 Leases Employee benefits and share-based payments 16.1 Employee remuneration 16.2 Short-term employee benefits 16.3 Post-retirement issues 16.4 Types of retirement benefit plans 16.5 Accounting for retirement benefit plans 16.6 Share-based payment 16.7 Basic principles 16.8 Equity-settled share-based payment transactions 16.9 Cash-settled share-based payment transactions Share-based transactions with a choice of settlement Disclosures The future of IFRS Consolidated financial statements Subsidiäres 17.1 Categorisation of Investments 17.2 Control 17.3 Exemptions from the preparation of Consolidated financial statements 17.4 Consolidation techniques 17.5 Goodwill arising on acquisition 17.6 Consolidated Statement of financial position after acquisition date

7 Contents 17.7 Acquisition of preference shares and other financial Instruments in the subsidiary Intragroup transactions and balances Consolidated Statement of profit or [oss Consolidated statement of changes in equity Disclosures in the financial statements 765 Chapter 18 Associates, joint arrangements and statements of cash flow Associate companies Joint arrangements Future of the equity method of accounting Consolidated statements of cash flow 805 Chapter 19 Interpretation of financial statements revisited Interpretation of financial statements in the context of material covered in the textbook A CORE approach The effect of recognition and measurement issues and accounting policies on Interpretation Case study Industry statistics use of databases 867 Terminology Converter Glossary Index

Diploma in IFRS. Units with Learning Outcomes and Assessment Criteria

Diploma in IFRS. Units with Learning Outcomes and Assessment Criteria Diploma in IFRS Units with Learning Outcomes and Assessment Criteria Unit 1-IASB and regulatory framework Understand the need and role of the regulatory system Describe the impact of globalization Describe