International Financial Reporting & Analysis, Eighth Edition
By David Alexander, Ann Jorissen, Martin Hoogendoorn, Carien van Mourik and Collette Kirwan
Contents
Preface
Acknowledgements
Part 1: Framework, Theory and Regulation
Chapter 1: A Brief Introduction to International Financial Reporting
Objectives
1.1 Introduction
1.2 International Financial Reporting before and since IFRS Standards
1.3 Financial Accounting and Reporting in Different Types of Business Entity
1.4 The Objectives of Corporate Financial Reporting Standards and Regulation
1.5 IFRS Standards Adopted to Facilitate Integrated Capital Markets
1.6 The Main Functions of General Purpose Financial Reporting
1.7 Users of Financial Reporting Information and their Different Information Needs
1.8 Challenges for the Board
1.9 Terminology and the English Language Use
Summary
Exercises
References
Chapter 2: International Accounting Differences: Past and Present
Objectives
2.1 Introduction
2.2 Differences in Institutions
2.3 Differences in Accounting Standards and Practices
2.4 Country Clusters over Time
2.5 A Closer Look at Some Cluster Variables
2.6 National Differences at the End of the Twentieth Century
2.7 How International Differences Impact on the Application of IFRS Standards
Summary
Exercises
References
Chapter 3: From Harmonization to IFRS Standards as Globally Accepted Standards
Objectives
3.1 Introduction
3.2 International Accounting Harmonization
3.3 International Accounting Convergence
3.4 IFRS Standards
3.5 IFRS Standards as Global Standards?
3.6 The IFRS Foundation, the Board and Related Institutions
3.7 Due Process
3.8 Theories of Regulation
3.9 Challenges for IFRS Standards and the Board
Summary
Exercises
References
Chapter 4: The IASB Conceptual Framework and Accounting Theory
Objectives
4.1 Introduction
4.2 The Role of Accounting Conceptual Frameworks
4.3 The Development of the IASB Conceptual Framework
4.4 The 2018 IASB Conceptual Framework for Financial Reporting
4.5 Financial Accounting and Reporting Theories
4.6 Approaches to the Formulation of Accounting Theory
Summary
Exercises
References
Chapter 5: Accounting and Economic Perspectives on Income and Capital
Objectives
5.1 Introduction
5.2 The Allocation Problem in Financial Accounting
5.3 The Transactions Approach and the Valuation Approach to the Determination of Profit or Loss in A
5.4 Ideal Economic Income and Wealth
5.5 Return of Capital and Return on Capital
5.6 Income Ex Ante and Income Ex Post
5.7 The Residual Income Valuation Model
5.8 Information, Measurement and Efficient Contracting Perspectives
Summary
Exercises
References
Chapter 6: Current Values, Mixed Values Measurement and CPPP Accounting
Objectives
6.1 Introduction
6.2 History of Current Value Accounting Models
6.3 Current Entry Values
6.4 Current Exit Values
6.5 Comparing Current Entry Values and Current Exit Values
6.6 Mixed Measurement Models
6.7 CPPP Accounting
6.8 Combination of Methods
6.9 Some International Practices and Traditions
6.10 EU Accounting Directive
6.11 IAS GAAP
6.12 IAS 29 on Hyperinflationary Economies
Summary
Exercises
References
Chapter 7: Fair Values, Value in Use and Fulfilment Value
Objectives
7.1 Introduction
7.2 What are FV, Value in Use and Fulfilment Value?
7.3 IFRS 13 Fair Value Measurement
7.4 Applying IFRS 13
7.5 The Measurement Process
7.6 Disclosure
7.7 Towards an Appraisal of FV, Value in Use and Fulfilment Value
7.8 Valuation and Income Measurement: Some Overall Considerations
Summary
Exercises
References
Chapter 8: Presentation and Disclosure in Published Financial Statements
Objectives
8.1 Introduction
8.2 IAS 1 Presentation of Financial Statements
8.3 Financial Statements under IAS 1
8.4 IAS 8 Accounting Policies, Changes to Accounting Estimates and Errors
8.5 IFRS 1 First-Time Adoption of International Financial Reporting Standards
8.6 EU Directive 2013/34/EU (The 2013 Accounting Directive)
8.7 Financial Reporting in the UK (written as at 31 March 2019)
Summary
Exercises
References
Chapter 9: Corporate Governance
Objectives
9.1 Introduction
9.2 Definitions of and Perspectives on Corporate Governance
9.3 Corporate Governance Issues
9.4 Theories of Corporate Governance
9.5 Taxonomies of Corporate Governance Systems
9.6 A Brief History of Corporations and Corporate Governance Mechanisms
9.7 Principles and Codes of Corporate Governance
Summary
Exercises
References
Chapter 10: Business Ethics, CSR, Sustainability Reporting and SRI
Objectives
10.1 Introduction
10.2 Ethics, Business Ethics and the Morality of the Markets
10.3 Perspectives on CSR
10.4 CSR Principles
10.5 Sustainability Reporting
10.6 Socially Responsible Investment
Summary
Exercises
References
Chapter 11: The Ethics of the Accounting Profession
Objectives
11.1 Introduction
11.2 Professions
11.3 The Accounting Profession
11.4 Ethical Challenges for Accountants
11.5 The 2018 IESBA Code of Ethics
11.6 Applying the Code of Ethics
Summary
Exercises
References
Part 2: Annual Financial Statements
Chapter 12: Fixed (Non-Current) Tangible Assets
Objectives
12.1 Introduction
12.2 Measurement of Fixed (Non- Current) Tangible Assets
12.3 Principles of Accounting for Depreciation
12.4 The Revaluation Model
12.5 Derecognition
12.6 Disclosure
12.7 Determining the Cost of a Fixed Asset: Additional Elements
12.8 Government Grants and Assistance
12.9 Borrowing Costs
12.10 Accounting for Investment Properties
12.11 Measurement of Investment Property
12.12 Accounting for Agriculture and Biological Assets
Summary
Exercises
Chapter 13: Intangible Assets
Objectives
13.1 Introduction
13.2 Intangible Assets
13.3 Recognition of Intangible Assets
13.4 Measurement Subsequent to Initial Recognition
13.5 Useful Life of an Intangible Asset
13.6 Derecognition
13.7 Disclosure
Summary
Exercises
References
Chapter 14: Impairment and Disposal of Assets
Objectives
14.1 Introduction
14.2 Impairment of Assets
14.3 Recognition and Measurement of Impairment Losses
14.4 Non-Current Assets Held for Sale and Discontinued Operations
14.5 Non-Current Assets Held for Sale: Definition
14.6 Measurement of Non-Current Assets and Disposal Groups Held for Sale
14.7 Discontinued Operations
Summary
Exercises
Chapter 15: Leases
Objectives
15.1 Introduction
15.2 Lease Accounting by the Lessee
15.3 Lease Accounting by Lessors
15.4 Accounting and Reporting by Lessors: Finance Leases
15.5 Accounting and Reporting by Lessors: Operating Leases
15.6 Sale and Leaseback Transactions
Summary
Exercises
Chapter 16: Inventories
Objectives
16.1 Introduction
16.2 Inventories
16.3 Inventory Systems
16.4 Reporting Inventory under the Scope of IAS 2
16.5 Cost of Inventory
16.6 Requirements for Inventories under the Scope of IAS 41
Summary
Exercises
Chapter 17: Accounting for Financial Instruments
Objectives
17.1 Introduction
17.2 Short History of Accounting for Financial Instruments
17.3 Problems Identified
17.4 What Is a Financial Instrument?
17.5 Distinction between Financial Liability and Equity
17.6 Recognition and Derecognition of Financial Instruments
17.7 Classification and Measurement
17.8 Compound Financial Instrument Measurement
17.9 Impairment
17.10 Hedge Accounting
17.11 Disclosure
Summary
Exercises
Chapter 18: Revenue
Objectives
18.1 Introduction
18.2 What Is Revenue?
18.3 The Basic Outline of IFRS 15
18.4 Step 1. Identify the Contract(s) with a Customer
18.5 Step 2. Identify the Performance Obligations in the Contract
18.6 Step 3. Determine the Transaction Price
18.7 Step 4. Allocate the Transaction Price to the Separate Performance Obligations in the Contract
18.8 Step 5. Recognize Revenue when (or as) the Entity Satisfies a Performance Obligation
18.9 Construction Contracts
18.10 Contract Costs
18.11 Presentation and Disclosure
Summary
Exercises
Chapter 19: Provisions, Contingent Liabilities and Contingent Assets
Objectives
19.1 Introduction
19.2 Problems Identified
19.3 Provisions, Contingent Liabilities and Contingent Assets
19.4 Accounting for Provisions, Contingent Liabilities and Contingent Assets
19.5 Specific Application of Recognition and Measurement Rules
19.6 Disclosure Requirements
Summary
Exercises
Chapter 20: Income Taxes
Objectives
20.1 Introduction
20.2 The Expense Question
20.3 The Deferred Tax Problem
20.4 IAS 12 and Tax
20.5 IFRIC 23 and Tax Uncertainties
Summary
Exercises
Chapter 21: Employee Benefits and Share-Based Payment
Objectives
21.1 Introduction
21.2 Accounting for Short-Term Employee Benefits
21.3 Accounting for Profit-Sharing and Bonus Plans
21.4 Accounting for Equity Compensation Benefits or Share-Based Payment
21.5 Accounting for Long-Term Employee Benefits: Pension Benefits
21.6 Termination Benefits
21.7 Accounting by the Pension Fund
Summary
Exercises
References
Chapter 22: Insurance Contracts
Objectives
22.1 Introduction
22.2 Insurance Contract
22.3 IFRS 4
22.4 IFRS 17
Summary
Chapter 23: Statement of Cash Flows
Objectives
23.1 Introduction
23.2 Profit versus Cash
23.3 Cash Flow Reporting
23.4 Requirements of IAS 7
23.5 Format of Cash Flow Statement
23.6 Preparation of Statement of Cash Flows
Summary
Exercises
Chapter 24: Disclosure Issues
Objectives
24.1 Introduction
24.2 Disclosure of Segment Information
24.3 Events after the Reporting Period
24.4 Earnings per Share
24.5 Interim Financial Reporting
Summary
Exercises
Reference
Part 3: Consolidated Accounts and the Multinational
Chapter 25: Business Combinations
Objectives
25.1 Introduction
25.2 Accounting for the Business Combination: The Basics
25.3 Accounting for Purchased Goodwill
25.4 Specific Issues on Accounting for the Business Combination
25.5 Loss of Control
25.6 Disclosure Requirements of IFRS 3
25.7 Alternative Methods in Accounting for Business Combinations
Summary
Exercises
Chapter 26: Consolidated Financial Statements
Objectives
26.1 Introduction
26.2 Control
26.3 The Need for Consolidated Accounts
26.4 Preparation of Consolidated Statements of Financial Position
26.5 Preparation of Consolidated Statement of Comprehensive Income
26.6 Investment Entities
26.7 Alternative Concepts on Consolidation
Summary
Exercises
Chapter 27: Accounting for Associates, Joint Arrangements and Related Party Disclosures
Objectives
27.1 Introduction
27.2 Equity Accounting
27.3 IAS 28 Investments in Associates and Joint Ventures
27.4 Equity Accounting in Individual Financial Statements
27.5 IFRS 11 Joint Arrangements
27.6 Accounting for Joint Arrangements
27.7 Overview Activity on Accounting for Associates and Joint Arrangements
27.8 Related Party Disclosures
Summary
Exercises
Chapter 28: Foreign Currency Translation
Objectives
28.1 Introduction
28.2 Currency Conversion
28.3 Currency Translation
28.4 IAS 21 Requirements for Entity’s Foreign Currency Transactions
28.5 IAS 21 Requirements for Translating Foreign Operations for Consolidation Purposes
28.6 Alternative Translation Methods for Financial Statements of Foreign Operations
28.7 Hedge Accounting
28.8 Some Other Issues
Summary
Exercises
Part 4: Financial Analysis
Chapter 29: Introduction to Interpretation of Financial Statements
Objectives
29.1 Introduction
29.2 Accounting Information and Users
29.3 Benchmarking
29.4 Technique of Ratio Analysis
29.5 Additional Information
Summary
Exercises
Chapter 30: Interpretation of Financial Statements
Objectives
30.1 Introduction
30.2 Industry Analysis
30.3 Accounting Analysis
30.4 Accounting Analysis: The Available Accounting Discretion
30.5 Entity Analysis
30.6 The Reversal Effect
30.7 Quality of Disclosure
30.8 Non-GAAP or Pro-Forma Accounting Measures
Summary
Exercises
References
Chapter 31: Techniques of Financial Analysis
Objectives
31.1 Introduction
31.2 Elements of Non-Comparability in Financial Statements
31.3 Trend Analysis or Horizontal Analysis
31.4 Common Size Analysis
31.5 Segmental Analysis
31.6 Ratio Analysis
31.7 Ratio Analysis and the IAS/IFRS Accounts
31.8 Cash Flow Statement
31.9 Limitations of Ratio Analysis
31.10 Multivariate Analysis
31.11 Investment Perspective
31.12 Disclosure of Non-Financial Data
Summary
Appendix I
Appendix II
Exercises
References
Index