Question Tag: Conceptual Framework

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CR – May 2019 – L3 – Q6 – Presentation of Financial Statements (IAS 1)

Discuss reclassification adjustments and integrated reporting objectives and challenges.

Question

Dangogo Plc. has adopted IFRS in the preparation and presentation of its financial statements in line with Financial Reporting Council of Nigeria requirements. During deliberations on their financial statements for the year ended 31 March, 2019 the directors of Dangogo Plc. found the distinction between profit or loss and other comprehensive income confusing. This is the case with many other preparers or users of financial statements in Nigeria who seem to be unclear about the relationship between profit or loss and other comprehensive income (OCI). They blame the conceptual framework for Financial Reporting and IAS 1 regarding the confusing nature of re classification. The emergence of integrated reporting holds promises for better reporting, but preparers are equally uncertain about whether the International Integrated Reporting Councils (IIRC) or Integrated Reporting (IR) Framework constitutes suitable criteria for report preparation.

a. Discuss the nature of a re-classification adjustment and the arguments for and against allowing re-classification of items to profit or loss. (6 Marks)

bi. Discuss the objectives of integrated reporting and key components (content elements) of integrated reports. (6 Marks)

ii. Comment on any concerns which could limit the Framework’s suitability for assessing the performance and prospects of an entity. (3 Marks)

Answer

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Tags: Conceptual Framework, Financial Statements, Integrated Reporting, OCI, Profit or Loss, Reclassification
Level: Level 3

Topic: Presentation of Financial Statements (IAS 1)

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

Question

The Conceptual Framework 2010 was criticized for its lack of clarity, the exclusion of certain important concepts, and for being outdated in terms of the IASB’s current thinking. The revised Conceptual Framework 2018 includes some new concepts such as prudence, provides updated definitions and recognition criteria for assets and liabilities, and clarifies some important concepts in a well-arranged eight chapters. Chapter four of the revised Conceptual Framework 2018 on elements of financial statements redefined some basic elements and concepts.

Required:

a. Evaluate the arguments for and against re-introduction of prudence into the Conceptual Framework.
(7 Marks)

b. Identify TWO of the concepts (Asset and Liability) which definitions were revised and justify the reasons for revised definitions.
(8 Marks)

Answer

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Tags: Asset Definition, Conceptual Framework, Financial Reporting Integrity, Liability Definition, Prudence
Level: Level 3

Topic: Introduction to Corporate Reporting

FR – Nov 2022 – L2 – Q7a – Conceptual Framework Purposes

Short Summary: Summarize the six primary purposes of IASB's Conceptual Framework in international standards development.

Question

Briefly explain SIX purposes of the Conceptual Framework of the International Accounting Standard Board (IASB). (9 Marks)

Answer

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Tags: Accounting principles, Conceptual Framework, Financial Standards, IASB
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2022

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

Question

a. The Conceptual Framework for Financial Reporting sets out the concepts that underlie the preparation and presentation of financial statements and considers the various users of these financial statements.

Required:
Identify and discuss the information needs of the different users of financial statements. (10 Marks)

b. The Companies and Allied Matters Act (CAMA) 2020 is the primary source of company law that establishes the requirements for financial reporting by all companies in Nigeria.

Required:
Briefly explain FIVE issues that must be contained in a directors’ report in accordance with CAMA 2020. (5 Marks)

c. Babanriga Nigeria Limited acquired a factory machine for N10 million on January 1, 2019. The machine had an estimated life and residual value of 10 years and N2 million, respectively, and is depreciated on a straight-line basis. In lieu of depreciation, the tax authority allows a tax expense of 40% of the cost of this type of machine to be claimed against income tax in the year of purchase, with 25% per annum of its tax base subsequently on a reducing balance basis. The prevailing company income tax rate is 30%.

Required:
Calculate the deferred tax charge or credit which will be recorded in Babanriga Nigeria Limited’s Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2021, and the deferred tax balance in the Statement of Financial Position at that date. (5 Marks)

Answer

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Tags: CAMA, Conceptual Framework, Deferred Tax, Financial Reporting, Statement of Financial Position, Tax computation, User Needs
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2023

FR – May 2022 – L2 – SB – Q6 – Conceptual Framework for Financial Reporting

Discuss the qualitative characteristics that make financial information useful and explain the capital maintenance concepts under the IASB framework.

Question

a. The IASB Conceptual Framework for Financial Reporting gives much detail about the qualitative characteristics of financial information that make it useful.

Required:
Discuss the qualitative characteristics that make information useful to users of financial statements. (10 Marks)

b. The Financial Reporting Council of Nigeria (FRCN) is a Federal Government parastatal under the supervision of the Federal Ministry of Industry, Trade, and Investment.

Required:
Identify FOUR main objectives of FRCN as defined in the Act establishing the Institution. (2 Marks)

c. The IASB Conceptual Framework states that there are two concepts of capital maintenance.

Required:
Explain the term financial capital maintenance and physical capital maintenance concepts. (3 Marks)

Answer

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Tags: Conceptual Framework, Financial Reporting, Qualitative Characteristics
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2022

FR – NOV 2016 – L2 – Q2b – Conceptual Framework for Financial Reporting

Question tests understanding of conceptual issues in development costs and application of asset recognition criteria per the conceptual framework.

Question

Evaluate the conceptual issues involved in product development costs and the definition of an asset that may be applied in determining whether development expenditure should be treated as an expense or an asset.

Answer

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Tags: Asset Recognition, Conceptual Framework, Development Costs, Research & Development
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2016

FR – NOV 2016 – L2 – Q2a – Conceptual Framework for Financial Reporting

Question tests understanding of substance over form concept in the conceptual framework and its importance in financial reporting.

Question

Conceptual framework for reporting emphasises the importance that transactions should be recorded on the basis of their substance over their form. Explain the importance of substance over form and why financial statements should show the substance of the underlying transaction different from its legal form.

Answer

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Tags: Conceptual Framework, Faithful Representation, Financial Statements, Substance Over Form
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2016

FR – March 2020 – L2 – Q6b – Financial Reporting

Discuss objectives of FRCON and ethical issues in reporting.

Question

b. The regulatory body responsible for issuing accounting standards in accordance with local and international regulations in Nigeria is the Financial Reporting Council of Nigeria (FRCON).
Required:
Explain briefly THREE main objectives of setting up the Financial Reporting Council of Nigeria (FRCON) and identify TWO ethical issues in financial reporting which companies may be sanctioned for by this body.
(10 Marks)

Answer

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Tags: Conceptual Framework, Economic Decisions, Financial Reporting
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAR/JULY 2020

FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework

This question tests the application of the conceptual framework to determine a liability in the event of an accident and subsequent lawsuit.

Question

Amankwatia Ltd (Amankwatia) is a local construction company. The regulation in the construction sector requires employers to provide personal protective equipment for every employee. The company failed to do that, and a Plumber got involved in an accident in the course of work resulting in a serious and costly injury. The Plumber has sued the company.

The Solicitors of the company have prepared to vigorously defend the company in the lawsuit. They estimated that the company would have to make a compensation of GH¢17,000 to cover the injured party’s costs. A court decision, however, is not expected for at least a year.

Required:
What aspects of the conceptual framework might help you in determining the appropriate accounting treatment for this situation?

Answer

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Tags: Accounting Treatment, Conceptual Framework, Liability, Provisions
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2020

FR – May 2018 – L2 – Q5a – Conceptual Framework for Financial Reporting

Explain the qualitative characteristics of financial statements under IFRS and assess how they make financial information useful

Question

Explain the following qualitative characteristics of financial statements reported under IFRS and assess how they make the information very useful:

i. Relevance
ii. Comparability
iii. Understandability
iv. Faithful Representation

Answer

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Tags: Comparability, Conceptual Framework, Faithful Representation, Financial Reporting, IFRS, Qualitative Characteristics, Relevance, Understandability
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2018

FR – May 2018 – L2 – Q2a – Conceptual Framework for Financial Reporting

Discuss the importance of recording transactions based on their substance over form and explain features that show substance may differ from legal form.

Question

Discuss the importance of the statement that transactions should be recorded in the financial statements based on their substance over form. Explain the features that may show that the substance of a transaction may differ from its legal form.

Answer

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Tags: Conceptual Framework, Economic Substance, Financial Reporting, Legal form, Substance Over Form, True and Fair View
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAY 2018

FR – Nov 2018 – L2 – SC – Q7c – Conceptual Framework for Financial Reporting

State the underlying assumptions of financial statements according to the Conceptual Framework.

Question

State the underlying assumptions of financial statements as enunciated by “The Conceptual Framework for Financial Reporting”.

Answer

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Tags: Conceptual Framework, Financial Statements, Underlying Assumptions
Level: Level 1

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2018

FR – Nov 2018 – L2 – SC – Q7a – Conceptual Framework for Financial Reporting

Identify and discuss the limitations of financial statements.

Question

Identify and discuss the limitations of financial statements.

Answer

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Tags: Conceptual Framework, Financial Statements, Limitations
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2018

FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

Question

Which of the following is NOT a purpose of the Conceptual Framework for Financial Reporting?
A. To assist national standard-setting bodies in developing national standards.
B. To assist preparers of financial statements in applying IFRSs and in dealing with topics that have yet to form the subject of an IFRS.
C. To assist auditors in forming an opinion on whether financial statements comply with IFRS.
D. To assist users of financial statements in interpreting the information contained in financial statements prepared in compliance with IFRS.
E. To define standards for measurement or disclosure.

Answer

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Tags: Accounting Standards, Conceptual Framework, IFRS
Level: Level 1

Topic: Scope of Management Accounting
Series: MAY 2018

FA – Nov 2014 – L1 – SB – Q1a – Accounting Concepts

Writing short notes on five fundamental accounting concepts.

Question

A reliable financial statement is the product of properly maintained financial records and adequate use of necessary accounting concepts.

Write short notes on the following accounting concepts:

i. Business entity (2 Marks)
ii. Going concern (2 Marks)
iii. Matching (2 Marks)
iv. Consistency (2 Marks)
v. Materiality and aggregation (2 Marks)
(Total 10 Marks)

Answer

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Tags: Accounting Concepts, Conceptual Framework, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2014

FR – Mar/July 2020 – L2 – Q6a – Economic Decisions and Conceptual Framework Advantages

Outline economic decisions for financial statements and objectives of FRCON with ethical issues they may sanction.

Question

a. The conceptual framework specifies the fundamental reasons why financial statements are produced worldwide which, is to satisfy the requirement of external users.
Required:
Outline FIVE types of economic decisions for which financial statements are likely to be used for and identify TWO advantages of conceptual framework.
(10 Marks)

Answer

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Tags: Conceptual Framework, Economic Decisions, Ethical Issues, Financial Reporting Council of Nigeria
Level: Level 2

Topic: Conceptual Framework for Financial Reporting, Regulatory Framework for Financial Reporting
Series: MAR/JULY 2020

FR – March 2023 – L2 – Q5a – Conceptual Framework for Financial Reporting

This question asks for an explanation of why faithful representation is important in financial reporting.

Question

The Conceptual Framework for Financial Reporting identifies faithful representation as a fundamental qualitative characteristic of useful financial information.

Required:
Explain why faithful representation is important. (5 marks)

Answer

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Tags: Conceptual Framework, Faithful Representation, Financial Reporting, Qualitative Characteristics
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAR 2023

FR – July 2023 – L2 – Q5a – Conceptual Framework for Financial Reporting

Discuss the importance of recording transactions based on substance over form in financial reporting.

Question

An important aspect of the International Accounting Standards Board’s Framework for the preparation and presentation of financial statements is that transactions should be recorded based on their substance over their form.

Required:
Explain why it is critical for financial statements to reflect substance over their form.
(5 marks)

Answer

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Tags: Conceptual Framework, Financial Reporting, Substance Over Form
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: JULY 2023

AA – Mar 2023 – L2 – Q2b – Professional and Ethical Considerations

Discuss the conceptual framework for maintaining independence in audit and assurance engagements.

Question

The independence of a practicing accounting firm needs to be critically assessed, whether performing an audit or other assurance engagements. The independence requirements for audit and review engagements apply to the firm, network firms, and members of the audit review team. The IESBA Code for Professional Accountants outlines a key conceptual framework approach to be applied by accountants in practice.

Required:
Discuss this key conceptual framework approach.

Answer

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Tags: Audit Engagement, Conceptual Framework, IESBA Code, Independence
Level: Level 2

Topic: Professional and Ethical Considerations
Series: MAR 2023

FR – Nov 2021 – L2 – Q5a – Conceptual Framework for Financial Reporting

Explanation of how the fundamental qualitative characteristics of financial statements apply to intangible assets.

Question

The IASB’s Conceptual Framework identifies the fundamental qualitative characteristics of Financial Statements.

Required:

Explain how these fundamental qualitative characteristics apply to the treatment of intangible assets. (5 marks)

Answer

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Tags: Conceptual Framework, Financial Statements, Intangible Assets, Qualitative Characteristics
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2021

Question Tag: Conceptual Framework

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CR – May 2019 – L3 – Q6 – Presentation of Financial Statements (IAS 1)

Discuss reclassification adjustments and integrated reporting objectives and challenges.

You're reporting an error for "CR – May 2019 – L3 – Q6 – Presentation of Financial Statements (IAS 1)"

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

You're reporting an error for "CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting"

FR – Nov 2022 – L2 – Q7a – Conceptual Framework Purposes

Short Summary: Summarize the six primary purposes of IASB's Conceptual Framework in international standards development.

You're reporting an error for "FR – Nov 2022 – L2 – Q7a – Conceptual Framework Purposes"

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

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FR – May 2022 – L2 – SB – Q6 – Conceptual Framework for Financial Reporting

Discuss the qualitative characteristics that make financial information useful and explain the capital maintenance concepts under the IASB framework.

You're reporting an error for "FR – May 2022 – L2 – SB – Q6 – Conceptual Framework for Financial Reporting"

FR – NOV 2016 – L2 – Q2b – Conceptual Framework for Financial Reporting

Question tests understanding of conceptual issues in development costs and application of asset recognition criteria per the conceptual framework.

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FR – NOV 2016 – L2 – Q2a – Conceptual Framework for Financial Reporting

Question tests understanding of substance over form concept in the conceptual framework and its importance in financial reporting.

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FR – March 2020 – L2 – Q6b – Financial Reporting

Discuss objectives of FRCON and ethical issues in reporting.

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FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework

This question tests the application of the conceptual framework to determine a liability in the event of an accident and subsequent lawsuit.

You're reporting an error for "FR – May 2020 – L2 – Q5b – Determining Liability Under the Conceptual Framework"

FR – May 2018 – L2 – Q5a – Conceptual Framework for Financial Reporting

Explain the qualitative characteristics of financial statements under IFRS and assess how they make financial information useful

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FR – May 2018 – L2 – Q2a – Conceptual Framework for Financial Reporting

Discuss the importance of recording transactions based on their substance over form and explain features that show substance may differ from legal form.

You're reporting an error for "FR – May 2018 – L2 – Q2a – Conceptual Framework for Financial Reporting"

FR – Nov 2018 – L2 – SC – Q7c – Conceptual Framework for Financial Reporting

State the underlying assumptions of financial statements according to the Conceptual Framework.

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FR – Nov 2018 – L2 – SC – Q7a – Conceptual Framework for Financial Reporting

Identify and discuss the limitations of financial statements.

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FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

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FA – Nov 2014 – L1 – SB – Q1a – Accounting Concepts

Writing short notes on five fundamental accounting concepts.

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FR – Mar/July 2020 – L2 – Q6a – Economic Decisions and Conceptual Framework Advantages

Outline economic decisions for financial statements and objectives of FRCON with ethical issues they may sanction.

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FR – March 2023 – L2 – Q5a – Conceptual Framework for Financial Reporting

This question asks for an explanation of why faithful representation is important in financial reporting.

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FR – July 2023 – L2 – Q5a – Conceptual Framework for Financial Reporting

Discuss the importance of recording transactions based on substance over form in financial reporting.

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AA – Mar 2023 – L2 – Q2b – Professional and Ethical Considerations

Discuss the conceptual framework for maintaining independence in audit and assurance engagements.

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FR – Nov 2021 – L2 – Q5a – Conceptual Framework for Financial Reporting

Explanation of how the fundamental qualitative characteristics of financial statements apply to intangible assets.

You're reporting an error for "FR – Nov 2021 – L2 – Q5a – Conceptual Framework for Financial Reporting"

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