Ifrs

Assignment 1

Assignment 1

Question 1:

International Financial Reporting Standards (IFRS) are principle based standards, interpretations and framework adopted by the International Accounting Standards Board (IASB).

IFRS comprise:

* International Financial Reporting Standards (IFRS).

* International Accounting Standards (IAS).

* Standing Interpretations Committee (SIC).

* Conceptual Framework for the Preparation and Presentation of Financial Statements.

The IFRS Framework addresses:

* the objective of financial reporting

* the qualitative characteristics of useful financial information

* the reporting entity

* the definition, recognition and measurement of the elements from which financial statements are constructed

* concepts of capital and capital maintenance

IFRS is used by investors to make economic decisions but in some cases they need to consider pertinent information from other sources.

Useful financial information is based on many qualitative characteristics summarized bellow:

* Relevance (Be up-to-date and used by the reader)

* Faithful representation (The reader must have faith in the information)

* Comparability (could be compared with other entities)

* Verifiability (information represent faithfully the economic phenomena)

* Timeliness

* Understandability

Question 2:

Historically talking, countries have had their own national accounting standards. However, with such a compulsion to be part of the globalization movement, businesses across national boundaries are realizing that it’s an astute business strategy to embrace the world as their workplace and marketplace, having different rules or standards of accounting for the purpose of reporting financial results would not help them at all. The use of a single set of high quality accounting standards would facilitate investment and other economic decisions across borders, increase market efficiency, and reduce the cost of raising...