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 |