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Introduction

International Financial reporting is usually known as IFRS and these standards are issued by IFRS foundation and IASB which is International accounting standards board. It makes easy for company and organizations by giving common language which is globally understood for business affairs. The main motive of IFRS is that company accounts are being understandable and comparable across the international and national boundaries. The present report is all about IFRS and its application. The income statement on the basis of IFRS standard has been drawn with some specific adjustments. In the next part there is critical understanding of international accounting standards as per the module APC311. Accounting for intangible assets on the specific area of capitalizing development and research costs has been explained in this report with the proper application based example. Further, reports also depicts current key issues present in international financial reporting and the conceptual framework for accounting. As per the IAS 2 inventories should be valued at lower cost and net realisable value has been justified in this.

Q1 Prepare Income statement of Able Plc for the year 2017 and explain International Financial Reporting Standards

International Financial Reporting standards can be referred as a set of accounting standards which are developed by not for profit and independent organisations. The main objective of IFRS is to give a basic global framework that how organisations should prepare financial statements and disclose them. It gives guidance or directions about preparing financial statements instead of setting rules for specific industry reporting. International standards plays vital role in big companies, multinational companies who have their subsidiaries in different countries. If single set of worldwide standards will be adopted then it will simplify the procedures of accounting by giving permission to a company for using throughout one reporting language. And this single standard will give cohesive views of funds to investors and auditors. The financial performance of an organization is been represented as statement of comprehensive income whose sub parts can be statement of profit and loss and statement of comprehensive income. It includes the elements as per IFRS standard such as revenue and expenses. While the accounting period where inflows and enhancements of assets raise the economic benefit. Equity is been raised if liabilities are decreased. Contributions made by equity are not included in revenues such as partners, shareholders and owners. In the accounting period in the outflow s or the depletions of assets decreases the economic benefit and more liabilities gives the result of equity decrement. Distributions are not been included in the equity participants. Some circumstances related to comprehensive income can be: Number of assets and liabilities are remeasured. The financial asset's fair value may increase or decrease which can be modified as available for sale. Revaluation of intangible assets, property, plant may increase or decrease.

There is the requirement of faithful and fair representations for the effects of transactions and all other events and the conditions which are according with recognised criteria for liabilities, assets, income and expenses which are set in the framework. IFRS has generally forbidden offsetting. As the standards require offsetting whenever some specific conditions are satisfied. It requires the entity for comparative information in context of preceding year for all amount which is mentioned in current year's financial statements. This comparative information also provides descriptive and narrative information which is related to financial statements of current year. The additional statement of financial position which is also known as balance sheet of International accounting standard 1 when any organisation applies for accounting policy or if it again classifies item of the financial statements. If the important changes in the nature of organisation's operations or the preview of financial statements, that classifies more appropriately with regard for choosing and selecting application of accounting policies.

Income statement of the year ending 31 December 2017

Particulars

Details

Amount (in £)

Sales

205000

 

Sales return

-10000