Bachelor 2021/2022

International Financial Reporting Standards

Type: Elective course (Economics and Statistics)

Area of studies: Economics

Delivered by: School of Finance

Where: Faculty of Economic Sciences

When: 2 year, 1, 2 module

Mode of studies: offline

Open to: students of one campus

Instructors: Mariia Evdokimova, Elena Makushina, Tatyana Malofeeva

Language: English

ECTS credits: 5

Contact hours: 58

Course Syllabus

Abstract

Course is designed for bachelor students who have experience with International Financial Reporting Standards. This course covers the IFRS Concepts Framework and major formats of financial statements according to IFRS. Then the course is focused on the recognition, measurement and disclosure for such elements of financial accounting as Revenue, Inventory and biological assets, Long-term assets as Property, Plant and Equipment, Intangible assets and Provisions. In separate topic is impairment of long- term assets. The course contains concepts of accounting and reporting for lease operations (financial and operating lease). One class is devoted to the Cash Flow Statement preparation techniques. The course also covers the topic of Financial Instruments. The last part of the course deals with the consolidated financial statements. It covers the main concepts of control, subsidiary, single and consolidated statements. Special part is accounting at the date of acquisition: goodwill, measuring the consideration transferred, measuring the net assets acquired. The course does not require extensive knowledge of mathematics and statistics.

Learning Objectives

• Recognition and measurement principles for non-current assets (including tangible and intangible), revenue, inventory and biological assets, financial instruments, leases, provisions, contingent liabilities and contingent assets, impairment calculation and reporting.
• Single entity financial statements preparation techniques.
• Consolidated financial statement preparation techniques.

Expected Learning Outcomes

• Account for changes in accounting estimates, changes in accounting policy and correction of prior period errors
• Account for goodwill impairment
• Account for revaluation and disposal gains and losses for non-current assets
• Account for right of use assets and lease liabilities in the records of the lessee.
• Account for sale and leaseback agreements.
• Account for the effects (in the financial statements) of intra-group trading
• Account for the effects of fair value adjustments (including their effect on consolidated goodwill) to depreciating and non-depreciating non-current assets; inventory; monetary liabilities and assets and liabilities not included in the subsidiary's own statement of financial position, including contingent assets and liabilities
• Account for the translation of foreign currency transactions and monetary/non-monetary foreign currency items at the reporting date
• Apply the principles of recognition of revenue and specifically account for the following types of transaction: – Principal versus agent – Repurchase agreements – Bill and hold arrangements – Consignments
• Apply the provisions of relevant accounting standards in relation to accounting for government grants.
• Apply the recognition criteria to assets and liabilities and income and expenses
• Apply the requirements of relevant accounting standards for biological assets.
• Apply the requirements of relevant accounting standards for investment property
• Apply the requirements of relevant accounting standards to the issue and finance costs of: –Equity –Redeemable preference shares and debt instruments with no conversion rights (principle of amortised cost) –Convertible debt
• Calculate EPS in accordance with relevant accounting standards dealing with: –Bonus issues –Full market value issues –Rights issues
• Compare the usefulness of cash flow information with that of a statement of profit or loss or statement of profit or loss and other comprehensive income
• Compute depreciation based on the cost and revaluation models and on assets that have two or more significant parts (complex assets)
• Define an associate and explain the principles and reasoning for the use of equity accounting.
• Define an impairment loss
• Define and account for non-current assets held for sale and discontinued operations
• Define and compute the initial measurement of a non-current (including a self-constructed and borrowing costs) asset
• Define contingent assets and liabilities and explain their accounting treatment
• Define financial instruments in terms of financial assets and financial liabilities
• Define what is meant by 'recognition' in financial statements and discuss the recognition criteria
• Describe and apply the principles of inventory valuation
• Describe and apply the requirements of relevant accounting standards to research and development expenditure
• Describe the acceptable methods for measuring progress towards complete satisfaction of a performance obligation.
• Describe the circumstances when a group may claim exemption from the preparation of consolidated financial statements.
• Describe the concept of a group as a single economic unit.
• Describe the criteria for the initial recognition and measurement of intangible assets
• Describe the IASB's Standard setting process including revisions to and interpretations of Standards
• Describe the subsequent accounting treatment, including the principle of impairment tests in relation to goodwill
• Describe what is meant by a cash generating unit
• Describe what is meant by a conceptual framework of accounting
• Discuss the importance of comparability and timeliness to users of financial statements
• Discuss the importance of identifying and reporting the results of discontinued operations
• Discuss the limitations of using EPS as a performance measure
• Discuss the nature and accounting treatment of internally generated and purchased intangibles
• Discuss the principle of comparability in accounting for changes in accounting policies
• Discuss the requirements of relevant accounting standards in relation to the revaluation of non-current assets
• Discuss what is meant by relevance and faithful representation and describe the qualities that enhance these characteristics
• Discuss what is meant by understandability and verifiability in relation to the provision of financial information
• Discuss whether a conceptual framework is necessary and what an alternative system might be
• Discuss whether faithful representation constitutes more than compliance with accounting standards
• Discuss why the treatment of investment properties should differ from other properties
• Distinguish between a principles based and a rules based framework and discuss whether they can be complementary
• Distinguish between and account for adjusting and non-adjusting events after the reporting date
• Distinguish between debt and equity capital
• Distinguish between goodwill and other intangibles
• Distinguish between legal and constructive obligations
• Explain and account for other reserves (eg share premium and revaluation reserves)
• Explain and apply the criteria for recognising revenue generated from contracts where performance obligations are satisfied over time or at a point in time.
• Explain and apply the criteria for the recognition of contract costs.
• Explain and apply the definition of a subsidiary within relevant accounting standards.
• Explain and apply the principles of recognition of revenue: i.Identification of contracts i.Identification of performance obligations ii.Determination of transaction price iii.Allocation of the price to performance obligations iv.Recognition of revenue when/as performance obligations are satisfied
• Explain and illustrate the effect of the disposal of a parent’s investment in a subsidiary in the parent’s individual financial statements and/or those of the group (restricted to disposals of the parent’s entire investment in the subsidiary).
• Explain how provisions should be measured
• Explain the difference between functional and presentation currency and explain why adjustments for foreign currency transactions are necessary
• Explain the exemption from the recognition criteria for leases in the records of the lessee.
• Explain the need for an accounting standard on financial instruments
• Explain the need for using coterminous year ends and uniform accounting policies when preparing consolidated financial statements.
• Explain the objective of consolidated financial statements.
• Explain the relationship of national standard setters to the IASB in respect of the standard setting process
• Explain the relevance of the diluted EPS and calculate the diluted EPS involving convertible debt and share options (warrants)
• Explain why a regulatory framework is needed, also including the advantages and disadvantages of IFRS over a national regulatory framework
• Explain why accounting standards on their own are not a complete regulatory framework
• Explain why an accounting standard on provisions is necessary
• Explain why directors may not wish to consolidate a subsidiary and when this is permitted by accounting standards and other applicable regulation.
• Explain why it is necessary to eliminate intra group transactions.
• Explain why the trend of EPS may be a more accurate indicator of performance than a company's profit trend and the importance of EPS as a stock market indicator
• Identify and account for: –Warranties/guarantees –Onerous contracts –Environmental and similar provisions –Provisions for future repairs or refurbishments
• Identify items requiring separate disclosure, including their accounting treatment and required disclosures
• Identify subsequent expenditure that may be capitalised, distinguishing between capital and revenue items
• Identify the circumstances that may indicate impairments to assets
• Indicate for the following categories of financial instruments how they should be measured and how any gains and losses from subsequent measurement should be treated in the financial statements: –Amortised cost –Fair value (including option to elect to present gains and losses on equity instruments in comprehensive income)
• Indicate why the value of purchase consideration for an investment may be less than the value of the acquired identifiable net assets and how the difference should be accounted for
• Interpret a statement of cash flows (together with other financial information) to assess the performance and financial position of an entity
• Prepare a consolidated statement of financial position for a simple group (parent and one subsidiary) dealing with pre and post acquisition profits, non-controlling interests and consolidated goodwill
• Prepare a consolidated statement of profit or loss and consolidated statement of profit or loss and other comprehensive income for a simple group dealing with an acquisition in the period and non-controlling interest.
• Prepare a statement of cash flows for a single entity (not a group) in accordance with relevant accounting standards using the direct method and the indirect method
• Prepare an entity's statement of financial position and statement of profit or loss and other comprehensive income in accordance with the structure prescribed within IFRS and content drawing on accounting treatments as identified within the syllabus
• Prepare and explain the contents and purpose of the statement of changes in equity
• Prepare consolidated financial statements to include a single subsidiary and an associate.
• Prepare extracts of a statement of financial position from given information.
• Prepare extracts of a statement of profit or loss and statement of profit or loss and other comprehensive income from given information.
• Prepare financial statement extracts for contracts where performance obligations are satisfied over time.
• Recognise how the accounting equation and business entity convention underlie the statement of financial position.
• Skills checkpoint 1. Approach to objective test questions
• Skills checkpoint 2. Approach to objective test case style questions
• Skills checkpoint 3. Using spreadsheets effectively
• Skills checkpoint 4. Application of accounting standards
• State the basis on which impairment losses should be allocated, and allocate an impairment loss to the assets of a cash generating unit
• State when provisions may and may not be made and demonstrate how they should be accounted for
• Understand the nature of reserves and report them in a company statement of financial position.
• Understand the role of International Financial Reporting Standards (IFRS)
• Understand the role of the regulatory system including the roles of the: — International Financial Reporting Standards Foundation (IFRSF) — International Accounting Standards Board (IASB) — International Financial Reporting Standards Advisory Council (IFRSAC) — International Financial Reporting Standards Interpretations Committee (IFRSIC)
• Understand why the heading 'retained earnings' appears in a company statement of financial position.
• Using accounting standards and other applicable regulation identify and outline the circumstances in which a group is required to prepare consolidated financial statements.

Course Contents

• Topic 1. The IFRS Conceptual Framework. The regulatory Framework.
• Topic 2. Tangible non-current assets.
• Topic 3. Intangible non-current assets. Impairment of assets.
• Topic 4. Revenue recognition
• Topic 5. Financial instruments
• Topic 6. Leases
• Topic 7. Provisions, events after the reporting date
• Topic 8. Reporting financial performance
• Topic 9. Earnings per share.
• Topic 10. Presentation of published financial statements
• Topic 11. Group accounts: basic principals. Consolidated accounts.
• Topic 12. Consolidated statement of financial position
• Topic 13. The consolidated statement of profit or loss and other comprehensive income. Group accounts: associates.
• The repetition of the basics learned in the course Financial accounting and reporting
• Revision lecture 1
• Revision lecture 2

Assessment Elements

• Homework
• Class participation
  0 - absence at the class; 1 - attendance at the class but low active; 2 - attendance at the class and high active
• Mid-term
  Online via SmartLMS without proctoring
• Final exam (remotely)
  Online with proctoring

Interim Assessment

• 2021/2022 2nd module

Bibliography

Recommended Core Bibliography

• Association of Chartered Certified Accountants (Great Britain), & BPP Learning Media (Firm). (2017). Foundations in Accountancy : For Exams From 1 September 2017 to 31 August 2018 (Vol. Sixth edition). London: BPP Learning Media. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1525702
• BPP Learning Media (Firm). (2017). ACCA Paper F7 (Vol. Eleventh edition). London: BPP Learning Media. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1515138
• Joubert, M., Garvie, L., & Parle, G. (2017). Implications of the New Accounting Standard for Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance Sheet. Journal of New Business Ideas & Trends, 15(2), 1–11.

Recommended Additional Bibliography

• Association of Chartered Certified Accountants (Great Britain), & BPP Learning Media (Firm). (2017). ACCA : For Exams in September 2017, December 2017, March 2018 and June 2018: Vol. Eleventh edition. BPP Learning Media.
• BPP Learning Media (Firm). (2016). Foundations in Accountancy : Practice & Revision Kit: FFA, ACCA: Paper F3: Financial Accounting: for Exams From 1 September 2016 to 31 August 2017: Vol. Fifth edtion. BPP Learning Media.

Authors

• MAKUSHINA ELENA YUREVNA
• MALOFEEVA TATYANA NIKOLAEVNA