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International Financial Reporting

International Financial Reporting

Alan Melville

(2017)

Additional Information

Book Details

Abstract

With more than 120 countries in the world now using international financial reporting standards (IFRS®  Standards), knowledge of the standards issued by the International Accounting Standards Board (IASB®) is vital to students’ success in financial accounting. Melville’s International Financial Reporting employs a practical, applied approach in exploring and explaining the key international standards. With a focus on how to implement the standards, this text delivers a focused, user-friendly introduction to international financial reporting.


Renowned for clear and concise language, this sixth edition brings the book completely up-to-date with international standards issued as of 1 January 2017.

 

Key features

  • Unique practical approach
  • Class-tested by professional and degree students
  • Worked examples with solutions in every chapter
  • Chapter-end exercises featuring questions from past exam papers of key professional accountancy bodies

Table of Contents

Section Title Page Action Price
Cover\r Cover
Title Page\r iii
Copyright Page\r iv
Contents\r v
Preface ix
Acknowledgements x
List of international standards xi
Part 1 Introduction to Financial Reporting 1
1. The regulatory framework 3
The need for regulation 4
Sources of regulation 4
Generally accepted accounting practice 6
The International Accounting Standards Board (IASB) 7
The standard-setting process 9
The purpose of accounting standards 10
Worldwide use of international standards 11
First-time adoption of international standards 11
2 The IASB conceptual framework 17
Purpose and scope of the IASB Conceptual Framework 18
Objective of general purpose financial reporting 19
Qualitative characteristics of financial information 21
Underlying assumption 24
Elements of financial statements 25
Recognition of the elements of financial statements 27
Measurement of the elements of financial statements 28
Concepts of capital and capital maintenance 28
Discounting and present value 32
Completed version of the Conceptual Framework 33
3 Presentation of financial statements 36
Purpose of financial statements 37
Components of financial statements 37
General features 38
Structure and content of financial statements 40
The statement of financial position 41
The statement of comprehensive income 45
The statement of changes in equity 49
The notes to the financial statements 51
Interim financial reporting 52
Management commentary 53
4 Accounting policies, accounting estimates and errors 61
Accounting policies 61
Accounting estimates 66
Prior period errors 66
Part 2 Financial Reporting in Practice 73
5 Property, plant and equipment 75
Definition of property, plant and equipment 76
Recognition of property, plant and equipment 77
Initial measurement of property, plant and equipment 79
Subsequent measurement of property, plant and equipment 80
Depreciation 82
Disclosure requirements 86
Borrowing costs 87
Government grants 89
Investment property 92
IFRS13 Fair Value Measurement 95
6 Intangible assets\r 100
Definition of an intangible asset\r 101
Initial recognition and measurement of intangible assets 102
Subsequent measurement of intangible assets 106
Amortisation of intangible assets 108
Derecognition 110
Disclosure requirements 110
Goodwill 111
IFRS3 Business Combinations 112
7 Impairment of assets 118
Indications of impairment 119
Recoverable amount 120
Recognition and measurement of an impairment loss 123
Cash-generating units 124
Reversal of impairment losses 128
Disclosure requirements 129
8 Non-current assets held for sale and discontinued operations 134
Classification of non-current assets as held for sale 135
Measurement of non-current assets held for sale 137
Presentation of non-current assets held for sale 141
Discontinued operations 142
9 Leases 148
Classification of leases (IAS17) 149
Accounting for operating leases 150
Accounting for finance leases 150
Disclosure requirements 154
New leases standard (IFRS16) 155
Lease accounting by lessees 155
Lease accounting by lessors 159
10 Inventories 164
Inventories 165
Cost of inventories 165
Cost formulas 167
Net realisable value 170
Disclosures relating to inventories 171
11 Financial instruments 175
Definitions 176
Classification of financial instruments 177
Recognition and measurement 180
Initial measurement of financial assets and liabilities 180
Subsequent measurement of financial assets 181
The effective interest method 182
Subsequent measurement of financial liabilities 184
Disclosure requirements 185
12 Provisions and events after the reporting period 190
Recognition of a provision 191
Measurement of a provision 193
Application of the recognition and measurement rules 194
Contingent liabilities and contingent assets 196
Disclosure requirements 197
Events after the reporting period 198
13 Revenue from contracts with customers 204
Purpose and scope of IFRS15 205
The five-step model 205
Identifying the contract 206
Identifying performance obligations 208
Determining the transaction price 209
Allocating the transaction price 211
Satisfaction of performance obligations 212
Contract costs 213
Presentation and disclosure 214
Guidance to the application of IFRS15 216
14 Employee benefits 220
Short-term employee benefits 221
Post-employment benefits 223
Accounting for defined contribution plans 223
Accounting for defined benefit plans 224
Other long-term employee benefits 229
Termination benefits 229
Share-based payments 230
15 Taxation in financial statements 236
Current tax 237
Deferred tax 239
The tax base concept 241
IAS12 requirements with regard to deferred tax 246
Disclosure requirements 246
16 Statement of cash flows 251
Cash and cash equivalents 252
Classification of cash flows by activity 253
Interest, dividends and taxes 254
Reporting cash flows from operating activities 255
Disclosures 262
17 Financial reporting in hyperinflationary economies 272
Historical cost accounting and its weaknesses 273
Strengths of historical cost accounting 278
Alternatives to historical cost accounting 279
Hyperinflationary economies 280
The restatement of financial statements 280
Disclosures required by IAS29 285
Part 3 Consolidated Financial Statements 289
18 Groups of companies (1) 291
Requirement to prepare consolidated financial statements 292
Group statement of financial position at date of acquisition 293
Group statement of financial position in subsequent years 297
Partly-owned subsidiaries 300
Preference shares 303
Elimination of intra-group balances 305
Unrealised profits 306
Reporting period and accounting policies 307
Disclosure requirements 307
19 Groups of companies (2) 316
Group statement of comprehensive income 317
Group statement of changes in equity 317
Subsidiary acquired part way through an accounting period 323
20 Associates and joint arrangements 331
Associates and significant influence 332
The equity method 333
Application of the equity method 333
Joint arrangements 340
Disclosure requirements 341
21 Related parties and changes in foreign exchange rates 347
Related parties 348
Definition of related party and related party transaction 348
Disclosures required by IAS24 350
Foreign exchange accounting 351
Reporting foreign currency transactions 352
Translation to a presentation currency 354
Part 4 Analysis of Financial Statements 359
22 Ratio analysis 361
Accounting ratios 362
Profitability ratios 363
Liquidity ratios 367
Efficiency ratios 369
Investment ratios 372
Limitations of ratio analysis 379
Multivariate ratio analysis 380
23 Earnings per share 388
Significance of EPS 388
Calculation of basic EPS 389
Shares issued during the accounting period 391
Bonus issues 393
Rights issues 394
Calculation of diluted EPS 397
Presentation and disclosure requirements 399
24 Segmental analysis 404
Operating segments 405
Reportable segments 405
Disclosures required by IFRS8 407
Part 5 Small and Medium-sized Entities 415
25 The IFRS for SMEs Standard 417 417
Small and medium-sized entities 418
Concepts and pervasive principles 419
Financial statement presentation 420
Statement of financial position 421
Statement of comprehensive income and income statement 421
Statement of changes in equity and Statement of income and retained earnings 422
Statement of cash flows 422
Notes to the financial statements 422
Consolidated and separate financial statements 423
Accounting policies, estimates and errors 423
Financial instruments 424
Inventories 424
Investments in associates and joint ventures 424
Investment property 425
Property, plant and equipment 425
Intangible assets other than goodwill 426
Business combinations and goodwill 426
Leases 426
Provisions and contingencies 426
Liabilities and equity 427
Revenue 427
Government grants 428
Borrowing costs 428
Share-based payment 428
Impairment of assets 428
Employee benefits 429
Income tax 429
Foreign currency translation and Hyperinflation 429
Events after the end of the reporting period 429
Related party disclosures 430
Specialised activities 430
Transition to the IFRS for SMEs Standard 430
Part 6 Answers 431
Answers to exercises 433
Index 497