BACHELOR OF ACCOUNTING YEAR 2

BBFA2013 FINANCIAL ACCOUNTING FRAMEWORK

TUTORIAL 1
CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING

1)

The objective of general purpose financial reporting forms the foundation of IASB's Conceptual Framework for Financial Reporting (Conceptual Framework). Examine the objective of general purpose financial reporting as outlined in the Conceptual Framework.

2)

The IASB's Conceptual Framework for Financial Reporting (Conceptual Framework) identifies two fundamental qualitative characteristics and four enhancing qualitative characteristics that are essential attributes that make information provided in financial statements useful to users. Identify and differentiate between the above two categories of qualitative characteristics outlined in the Conceptual Framework.

3)

The elements of financial statements are broad classes of financial effects, of transactions and other events, which have been grouped according to their economic characteristics. IASB's Conceptual Framework for Financial Reporting provides definitions of the five elements of financial statements. Required: Identify and explain these elements, giving an example each.

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BBFA2013 FINANCIAL ACCOUNTING FRAMEWORK

FAF-1-Tutorial-1(Q)

4)

YZ Bhd (YZ) publishes various types of books and occasionally produces films which it sells to major film distributors. (i) On 31 March 2010, YZ acquired book publishing and film rights to the next book to be written by an internationally acclaimed author, for RM1 million. The author has not yet started writing the book but expects to complete it by December 2011.

(ii) Between 1 June and 31 July 2010, YZ spent RM500,000 exhibiting its range of products at a major international trade fair. This was the first time YZ had attended this type of event. No new orders were taken as a direct result of the event, although YZ 's directors claim to have made valuable contacts that should generate additional sales or additional funding for its films in the future. No estimate can be made of the additional revenue at present. (iii) During the year, YZ employed an external consultant to redesign YZ's corporate logo and to create advertising materials to improve YZ's corporate image. The total cost charged by the consultant was RM600,000. YZ 's directors want to treat all of the above items of expenditure as assets. Required: Advise YZ's directors on how YZ should treat the above items of expenditure in its financial statements for the year ended 31 December 2010 with reference to IASB's Conceptual Framework for Financial Reporting.

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