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• Half Title
• Title Page
• Copyright Page
• Brief Contents
• Contents
• Preface
• Authors’ acknowledgements
• Part 1 INTRODUCTION TO ACCOUNTING ON A CASH FLOW AND ACCRUAL ACCOUNTING BASIS
• 1 Accounting and reporting on a cash flow basis
• 1.1 Introduction
• 1.2 Shareholders
• 1.3 What skills does an accountant require in respect of external reports?
• 1.4 Managers
• 1.5 What skills does an accountant require in respect of internal reports?
• 1.6 Procedural steps when reporting to internal users
• 1.7 Agency costs
• 1.8 Illustration of periodic financial statements prepared under the cash flow concept to disclose r
• 1.9 Illustration of preparation of statement of financial position
• 1.10 Treatment of non-current assets in the cash flow model
• 1.11 What are the characteristics of these data that make them reliable?
• 1.12 Reports to external users
• 1.13 Micro businesses
• Summary
• Review questions
• Exercises
• Notes
• 2 Accounting and reporting on an accrual accounting basis
• 2.1 Introduction
• 2.2 Historical cost convention
• 2.3 Accrual basis of accounting
• 2.4 Mechanics of accrual accounting – adjusting cash receipts and payments
• 2.5 Reformatting the statement of financial position
• 2.6 Accounting for the sacrifice of non-current assets
• 2.7 Published statement of cash flows
• Summary
• Review questions
• Exercises
• Notes
• Part 2 PREPARATION OF INTERNAL AND PUBLISHED FINANCIAL STATEMENTS
• 3 Preparation of financial statements of profit or loss and other comprehensive income, changes in e
• 3.1 Introduction
• 3.2 Preparing an internal statement of profit or loss from a trial balance
• 3.3 Reorganising the income and expenses into one of the formats required for publication
• 3.4 Format 1: classification of operating expenses and other income by function
• 3.5 Format 2: classification of operating expenses according to their nature
• 3.6 Other information to be presented in the profit or loss section
• 3.7 Other comprehensive income
• 3.8 Presentation of non-recurring items and their effect on operating income
• 3.9 How decision-useful is the statement of profit or loss and other comprehensive income?
• 3.10 Statement of changes in equity
• 3.11 The statement of financial position
• 3.12 The explanatory notes that are part of the financial statements
• 3.13 Has prescribing the formats meant that identical transactions are reported identically?
• 3.14 Fair presentation
• 3.15 What does an investor need in addition to the primary financial statements to make decisions?
• 3.16 IAS 1 ED General Presentation and Disclosures
• Summary
• Review questions
• Exercises
• Notes
• 4 Annual report: additional financial disclosures
• 4.1 Introduction
• 4.2 IAS 10 Events after the Reporting Period
• 4.3 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• 4.4 What do segment reports provide?
• 4.5 IFRS 8 Operating Segments
• 4.6 Benefits and continuing concerns following the issue of IFRS 8
• 4.7 Discontinued operations – IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
• 4.8 Held for sale – IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
• 4.9 IAS 24 Related Party Disclosures
• Summary
• Review questions
• Exercises
• Notes
• 5 Statements of cash flows
• 5.1 Introduction
• 5.2 Development of statements of cash flows
• 5.3 Applying IAS 7 (revised) Statement of Cash Flows
• 5.4 Step approach to preparation of a statement of cash flows – indirect method
• 5.5 Additional notes required by IAS 7
• 5.6 Analysing statements of cash flows
• 5.7 Approach to answering questions with time constraints
• 5.8 Preparing a statement of cash flows when no statement of income is available
• 5.9 Critique of cash flow accounting
• Summary
• Review questions
• Exercises
• Notes
• 6 Accounting for price-level changes
• 6.1 Introduction
• 6.2 Review of the problems of historical cost accounting (HCA)
• 6.3 Inflation accounting
• 6.4 The concepts in principle
• 6.5 The four models illustrated for a company with cash purchases and sales
• 6.6 Critique of each model
• 6.7 Operating capital maintenance – a comprehensive example
• 6.8 Critique of CCA statements
• 6.9 Measurement bases
• 6.10 The IASB position where there is hyperinflation
• 6.11 Future developments
• Summary
• Review questions
• Exercises
• Bibliography
• Notes
• Part 3 REGULATORY FRAMEWORK – AN ATTEMPT TO ACHIEVE UNIFORMITY
• 7 Financial reporting – evolution of global standards
• 7.1 Introduction
• 7.2 Why do we need financial reporting standards?
• 7.3 Why do we need standards to be mandatory?
• 7.4 Arguments in support of standards
• 7.5 Arguments against standards
• 7.6 The Financial Reporting Council (FRC) as a regulatory body
• 7.7 The International Accounting Standards Board
• 7.8 Standard setting and enforcement in the European Union (EU)
• 7.9 Standard setting and enforcement in the US
• 7.10 Advantages and disadvantages of global standards for publicly accountable entities
• 7.11 How do reporting requirements differ for non-publicly accountable entities?
• 7.12 IFRS for SMEs
• 7.13 Why have there been differences in financial reporting?
• 7.14 Move towards a conceptual framework
• Summary
• Review questions
• Exercises
• Notes
• 8 Concepts – evolution of an international conceptual framework
• 8.1 Introduction
• 8.2 Different countries meant different financial statements
• 8.3 Historical overview of the evolution of financial accounting theory
• 8.4 Developing the Framework for the Preparation and Presentation of Financial Statements
• 8.5 Conceptual Framework for Financial Reporting 2018
• 8.6 Current developments – concept of materiality
• Summary and evaluation of position to date
• Review questions
• Exercises
• 9 Revenue recognition
• 9.1 Introduction
• 9.2 The issues involved in developing the new standard
• 9.3 IFRS 15 Revenue from Contracts with Customers
• 9.4 Five-step process to identify the amount and timing of revenue
• 9.5 Disclosures
• Summary
• Review questions
• Exercises
• Notes
• Part 4 STATEMENT OF FINANCIAL POSITION – EQUITY, LIABILITY AND ASSET MEASUREMENT AND DISCLOSURE
• 10 Share capital, distributable profits and reduction of capital
• 10.1 Introduction
• 10.2 Common themes
• 10.3 Total owners’ equity: an overview
• 10.4 Total shareholders’ funds: more detailed explanation
• 10.5 Accounting entries on issue of shares
• 10.6 Creditor protection: capital maintenance concept
• 10.7 Creditor protection: why capital maintenance rules are necessary
• 10.8 Creditor protection: how to quantify the amounts available to meet creditors’ claims
• 10.9 Issued share capital: minimum share capital
• 10.10 Distributable profits: general considerations
• 10.11 Distributable profits: how to arrive at the amount using relevant accounts
• 10.12 When may capital be reduced?
• 10.13 Writing off part of capital which has already been lost and is not represented by assets
• 10.14 Repayment of part of paid-in capital to shareholders or cancellation of unpaid share capital
• 10.15 Purchase of own shares
• Summary
• Review questions
• Exercises
• Notes
• 11 Liabilities
• 11.1 Introduction
• 11.2 Provisions – a decision tree approach to their impact on the statement of financial position
• 11.3 Treatment of provisions
• 11.4 The general principles that IAS 37 applies to the recognition of a provision
• 11.5 Management approach to measuring the amount of a provision
• 11.6 Application of criteria illustrated
• 11.7 Provisions for specific purposes
• 11.8 Contingent liabilities
• 11.9 Contingent assets
• 11.10 Criticisms of IAS 37
• 11.11 Future progress
• Summary
• Review questions
• Exercises
• Notes
• 12 Financial instruments
• 12.1 Introduction
• 12.2 Financial instruments – the IASB’s problem child
• 12.3 IAS 32 Financial Instruments: Disclosure and Presentation
• 12.4 IFRS 9 Financial Instruments
• 12.5 IFRS 7 Financial Instruments: Disclosure
• Summary
• Review questions
• Exercises
• Notes
• 13 Employee benefits
• 13.1 Introduction
• 13.2 Greater employee interest in pensions
• 13.3 Financial reporting implications
• 13.4 Types of scheme
• 13.5 Accounting for defined contribution pension schemes
• 13.6 Accounting for defined benefit pension schemes
• 13.7 IAS 19 Employee Benefits
• 13.8 The asset or liability for pension and other post-retirement costs
• 13.9 Changes in the pension asset or liability position
• 13.10 Comprehensive illustration
• 13.11 Multi-employer plans
• 13.12 Disclosures
• 13.13 Other long-service benefits
• 13.14 Short-term benefits
• 13.15 Termination benefits
• 13.16 IFRS 2 Share-based Payment
• 13.17 Scope of IFRS 2
• 13.18 Recognition and measurement
• 13.19 Equity-settled share-based payments
• 13.20 Cash-settled share-based payments
• 13.21 Transactions which may be settled in cash or shares
• 13.22 IAS 26 Accounting and Reporting by Retirement Benefit Plans
• Summary
• Review questions
• Exercises
• Notes
• 14 Taxation in company accounts
• 14.1 Introduction
• 14.2 Corporation tax
• 14.3 Corporation tax systems – the theoretical background
• 14.4 Dividends pre- and post-2016
• 14.5 Corporation tax systems – avoidance and evasion
• 14.6 IAS 12 – accounting for current taxation
• 14.7 Deferred tax
• 14.8 A critique of deferred taxation
• 14.9 Value added tax (VAT)
• Summary
• Review questions
• Exercises
• Notes
• 15 Property, plant and equipment (PPE)
• 15.1 Introduction
• 15.2 PPE – concepts and the relevant IASs and IFRSs
• 15.3 What is PPE?
• 15.4 How is the cost of PPE determined?
• 15.5 What is depreciation?
• 15.6 What are the constituents in the depreciation formula?
• 15.7 Calculation of depreciation
• 15.8 Measurement subsequent to initial recognition
• 15.9 IAS 36 Impairment of Assets
• 15.10 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
• 15.11 Disclosure requirements
• 15.12 Government grants towards the cost of PPE
• 15.13 Investment properties
• 15.14 Effect of accounting policy for PPE on the interpretation of the financial statements
• Summary
• Review questions
• Exercises
• Notes
• 16 Leasing
• 16.1 Introduction
• 16.2 Need for an accounting standard on leasing
• 16.3 Terms and conditions of a lease
• 16.4 Leases in the financial statements of lessees under IFRS 16
• 16.5 Leases in the financial statements of lessors
• 16.6 Sale and leaseback transactions
• Summary
• Review questions
• Exercises
• Note
• 17 Intangible assets
• 17.1 Introduction
• 17.2 Intangible assets defined
• 17.3 Accounting treatment for research and development
• 17.4 Why is research expenditure not capitalised?
• 17.5 Capitalising development costs
• 17.6 Disclosure of R&D
• 17.7 IFRS for SME’s treatment of intangible assets
• 17.8 Internally generated and purchased goodwill
• 17.9 The accounting treatment of goodwill
• 17.10 Critical comment on the various methods that have been used to account for goodwill
• 17.11 Negative goodwill/badwill
• 17.12 Brands
• 17.13 Accounting for acquired brands
• 17.14 Intellectual capital disclosures (ICDs) in the annual report
• 17.15 Review of implementation of IFRS 3
• 17.16 Review of the implementation of identified intangibles under IAS 38
• Summary
• Review questions
• Exercises
• Notes
• 18 Inventories
• 18.1 Introduction
• 18.2 Inventory defined
• 18.3 The impact of inventory valuation on profits
• 18.4 IAS 2 Inventories
• 18.5 Inventory valuation
• 18.6 Work in progress
• 18.7 Inventory control
• 18.8 Creative accounting
• 18.9 Audit of the year-end physical inventory count
• 18.10 Published accounts
• 18.11 Agricultural activity
• Summary
• Review questions
• Exercises
• Notes
• 19 Construction contracts
• 19.1 Introduction
• 19.2 Construction contracts
• 19.3 IFRS 15 treatment of construction contracts
• 19.4 Accounting for a contract – an example
• 19.5 Illustration – loss-making contract using the step approach
• 19.6 Public – private partnerships
• 19.7 Requirements of IFRIC 12 Service Concession Arrangements
• 19.8 Worked example of service concession accounting
• Summary
• Review questions
• Exercises
• Note
• Part 5 CONSOLIDATED ACCOUNTS
• 20 Accounting for groups at the date of acquisition
• 20.1 Introduction
• 20.2 Preparing consolidated accounts for a wholly owned subsidiary
• 20.3 IFRS 10 Consolidated Financial Statements
• 20.4 Fair values
• 20.5 Illustration where there is a wholly owned subsidiary
• 20.6 Preparing consolidated accounts when there is a partly owned subsidiary
• 20.7 The treatment of differences between a subsidiary’s fair value and book value
• 20.8 The parent issues shares to acquire shares in a subsidiary
• 20.9 IFRS 3 Business Combinations treatment of goodwill at the date of acquisition
• 20.10 When may a parent company not be required to prepare consolidated accounts?
• 20.11 When may a parent company exclude or not exclude a subsidiary from a consolidation?
• 20.12 IFRS 13 Fair Value Measurement
• 20.13 What advantages are there for stakeholders from requiring groups to prepare consolidated accou
• Summary
• Review questions
• Exercises
• Notes
• 21 Preparation of consolidated statements of financial position after the date of acquisition
• 21.1 Introduction
• 21.2 Uniform accounting policies and reporting dates
• 21.3 Pre- and post-acquisition profits/losses
• 21.4 The Bend Group – assuming there have been no inter-group transactions
• 21.5 Inter-company transactions
• 21.6 The Prose Group – assuming there have been inter-group transactions
• Summary
• Review questions
• Exercises
• Notes
• 22 Preparation of consolidated statements of profit or loss, changes in equity and cash flows
• 22.1 Introduction
• 22.2 Eliminate inter-company transactions
• 22.3 Preparation of a consolidated statement of profit or loss – the Ante Group
• 22.4 The statement of changes in equity (SOCE)
• 22.5 Other consolidation adjustments
• 22.6 A subsidiary acquired part-way through the year
• 22.7 Published format statement of profit or loss
• 22.8 Consolidated statements of cash flows
• Summary
• Review questions
• Exercises
• Notes
• 23 Accounting for associates and joint arrangements
• 23.1 Introduction
• 23.2 Definitions of associates and of significant influence
• 23.3 The treatment of associated companies in the financial statements of the investor
• 23.4 The Brill Group – group accounts with a profit-making associate
• 23.5 The Brill Group – group accounts with a loss-making associate
• 23.6 The acquisition of an associate part-way through the year
• 23.7 Joint arrangements
• 23.8 Disclosure in the financial statements
• Summary
• Review questions
• Exercises
• Notes
• 24 Introduction to accounting for exchange differences
• 24.1 Introduction
• 24.2 How to record foreign currency transactions in a company’s own books
• 24.3 Boil plc – a more detailed illustration
• 24.4 IAS 21 Concept of Functional and Presentation Currencies
• 24.5 Translating the functional currency into the presentation currency
• 24.6 Preparation of consolidated accounts
• 24.7 How to reduce the risk of translation differences
• 24.8 Critique of the use of presentational currency
• 24.9 IAS 29 Financial Reporting in Hyperinflationary Economies
• Summary
• Review questions
• Exercises
• Notes
• Part 6 INTERPRETATION
• 25 Earnings per share
• 25.1 Introduction
• 25.2 Why is the earnings per share figure important?
• 25.3 How is the EPS figure calculated?
• 25.4 The use to shareholders of the EPS
• 25.5 Illustration of the basic EPS calculation
• 25.6 Adjusting the number of shares used in the basic EPS calculation
• 25.7 Rights issues
• 25.8 Adjusting the earnings and number of shares used in the diluted EPS calculation
• 25.9 Procedure where there are several potential dilutions
• 25.10 Exercise of conversion rights during the financial year
• 25.11 Disclosure requirements of IAS 33
• 25.12 Enhanced disclosures
• Summary
• Review questions
• Exercises
• Notes
• 26 Review of financial ratio analysis
• 26.1 Introduction
• 26.2 Overview of techniques for the analysis of financial data
• 26.3 Ratio analysis – a case study
• 26.4 Introductory review
• 26.5 Financial statement analysis, part 1 – financial performance
• 26.6 Financial statement analysis, part 2 – liquidity
• 26.7 Financial statement analysis, part 3 – financing
• 26.8 Peer comparison
• 26.9 Report based on the analysis
• 26.10 Caution when using ratios for prediction
• Summary
• Review questions
• Exercises
• 27 Analysis of published financial statements
• 27.1 Introduction
• 27.2 Alternative performance measures
• 27.3 EBITDA
• 27.4 EBITDAR
• 27.5 EBITDARM
• 27.6 Regulator’s reaction to use of an alternative management performance measure (APM)
• 27.7 Use of ratios as thresholds
• 27.8 Predicting corporate failure
• 27.9 Investor-specific ratios
• 27.10 Published financial statements – their limitations for interpretation purposes
• 27.11 Improvement of information for shareholders
• 27.12 Valuing shares of an unquoted company – quantitative process
• 27.13 Valuing shares of an unquoted company – qualitative process
• 27.14 Possible effects of a pandemic (Covid-19)
• 27.15 Possible effects of Brexit
• Summary
• Review questions
• Exercises
• Notes
• Part 7 ACCOUNTABILITY
• 28 Corporate governance
• 28.1 Introduction
• 28.2 A systems perspective
• 28.3 Different jurisdictions have different governance priorities
• 28.4 The effect on capital markets of good corporate governance
• 28.5 Risk management
• 28.6 The role of internal control, internal audit and audit committees in corporate governance
• 28.7 External audits in corporate governance
• 28.8 Detection of fraud
• 28.9 The Regulator’s approach to promoting improved disclosures
• 28.10 International perspective (IFIAR)
• 28.11 The future of audit
• 28.12 Executive remuneration in the UK
• 28.13 Corporate governance – ways to make directors accountable
• Summary
• Review questions
• Exercises
• Notes
• 29 Ethical behaviour and implications for accountants
• 29.1 Introduction
• 29.2 The meaning of ethical behaviour
• 29.3 The accounting standard-setting process and ethics
• 29.4 The International Code of Ethics for Professional Accountants 2018
• 29.5 Implications of ethical values for the principles – versus rules-based approaches to accounti
• 29.6 Ethics in the accountant’s work environment – a research report
• 29.7 Implications of unethical behaviour for stakeholders using the financial reports
• 29.8 The increasing role of whistle-blowing
• 29.9 Legal requirement to report – national and international regulation
• 29.10 Why should students learn ethics?
• Summary
• Review questions
• Exercises
• Notes
• 30 Integrated reporting: sustainability, environmental and social
• 30.1 Introduction
• 30.2 Environmental and social disasters, the adverse consequences that can follow and the lessons to
• 30.3 Management accountability for environmental and social responsibility
• 30.4 Integrated reporting concepts
• 30.5 The historical context of the evolution of integrated reporting including the drivers of this m
• 30.6 The seriousness of current threats: sustainability – climate change and pollution
• 30.7 The efforts on which integrated reporting builds
• 30.8 The contribution of accountants
• 30.9 Integrated reporting – its impact on the future development of financial reporting and accoun
• 30.10 Reporting to stakeholders to account for stewardship
• 30.11 Reporting to stakeholders to assist decision making
• 30.12 Real-time reporting
• 30.13 Other means of communication with stakeholders
• 30.14 The way forward for improved sustainability disclosure
• Summary
• Review questions
• Exercises
• Notes
• Publisher’s acknowledgements
• Index
• Back Cover