Page 129 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes IFRS 7: Financial Instruments: Disclosures: The IFRS applies to all entities, including
entities that have few financial instruments (for example: a manufacturer whose only
financial instruments are accounts receivable and accounts payable) and those that have
many financial instruments (for example: a financial institution most of whose assets and
liabilities are financial instruments).
The objective of this IFRS is to require entities to provide disclosures in their financial
statements that enable users to evaluate (a) the significance of financial instruments for
the entity’s financial position and performance; and (b) the nature and extent of risks
arising from financial instruments to which the entity is exposed during the period and at
the end of the reporting period, and how the entity manages those risks. The qualitative
disclosures describe management’s objectives, policies and processes for managing those
risks. The quantitative disclosures provide information about the extent to which the
entity is exposed to risk, based on information provided internally to the entity’s key
management personnel. Together, these disclosures provide an overview of the entity’s
use of financial instruments and the exposures to risks they create.

IFRS 8: Operating Segments: This IFRS shall apply to (a) the separate or individual financial
statements of an entity: whose debt or equity instruments are traded in a public market
(a domestic or foreign stock exchange or an over-the-counter market, including local and
regional markets), or (ii) that files, or is in the process of filing, its financial statements
with a securities commission or other regulatory organisation for the purpose of issuing
any class of instruments in a public market; and (b) the consolidated financial statements
of a group with a parent: (i) whose debt or equity instruments are traded in a public
market (a domestic or foreign stock exchange or an over-the-counter market, including
local and regional markets), or (ii) that files, or is in the process of filing, the consolidated
financial statements with a securities commission or other regulatory organisation for the
purpose of issuing any class of instruments in a public market.

!
Caution GAAP provides a general framework for financial accounting—objectives,
standards, concepts, assumptions, methods and rules. It is not comparable to the physical
laws, where causes lead to definite results.

Self Assessment

Fill in the blanks:

5. The objective of …………. is to specify the financial reporting by an entity when it
undertakes a share-based payment transaction.
6. The objective of IFRS 5 is to specify the accounting for assets held for sale, and the
presentation and disclosure of ……………operations.
7. ……………….provides a general framework for financial accounting—objectives,
standards, concepts, assumptions, methods and rules.
8. The ………….. applies to all entities, including entities that have few financial instruments
and those that have many financial instruments.

10.3 Qualitative Characteristics of IFRS Financial Statements

The qualitative characteristics will provide assistance when choices have to be made between
reporting policies – whether by preparers, auditors, those participating in the standard-setting

124 LOVELY PROFESSIONAL UNIVERSITY