Meaning of the term ‘fair value’ as defined by IFRS 13.

Many accounting standards require or permit the use of fair values in measuring assets and liabilities. However, there has not always been consistency between these standards regarding the methods of arriving at fair values. IFRS 13 Fair values was issued on may 2011 as an attempt to remedy this problem. The IFRS aim to define fair value, set out the … Read the rest

Revision question on creative accounting ( NBAA May 2016)

Creative  accounting involves presenting income, expenses, assets or liability with the intent to influence readers towards the interpretations desired by the authors. It becomes the financial number game and is systematic misrepresentation of net income or net assets.  this is achieved through the aggressive choice and application of accounting principles, fraudulent financial reporting , earning management or income smoothing
the … Read the rest

Accounting treatment required to record a change in accounting policy.

An entity shall change an accounting policy only if change:

is required by standard or an interpretation; or if it

result into financial statements providing reliable and relevant information about the effects of transactions, other events or conditions on the entity’s financial position, financial performance or cash flows.

An entity shall account for change in … Read the rest

Revision question on IAS 10 (NBAA May 2017)

(a) Consider the following list of events that occurred between 31st December 2016(reporting date) and 31st March 2017 (date of authorization of financial statement for issue) and decide which one you would classify as adjusting events and which are non-adjusting events.  You should also state clearly the treatment that you are proposing in each case.
(i) The … Read the rest

6 necessary conditions for recognizing development cost as intangible assets

6 necessary conditions for recognizing development cost as intangible assets.

According to IAS 38 intangible assets, development expenditure are capitalized if the entity can demonstrate the following conditions

  • The technical feasibility of completing the intangible asset so that it will be available for use or for sale
  • Its intention is to complete the intangible asset and use or sell it
  • Its ability to use
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Six (6) advantages that companies can derive from disclosing social and environmental information in annual report.

Benefits that companies derive from disclosure of social and environmental information in annual reports:

  • Top Management/Board of Directors: top Management needs the disclosure to respond to press criticisms, answer shareholders‟ questions and ensure that company policies are followed. 
  • Board of Directors, because of their growing legal liability, needs to know in some details what social
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6 limitations of using accounting ratios in appraising financial performance.

Accounting ratio are used to measure the efficiency and profitability of the company based on its financial reports. They provide a way of expressing relationship between one accounting data point to another, and are the basis of ratio analysis.

The following are limitation of accounting ratios in appraising financial performance:

  • Inconsistent definition of ratios
  • Financial
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