Financial Reporting and Ethics - The Institute of Chartered ...

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FINANCIAL REPORTING AND ETHICS(d)(e)MaterialityThe principle holds that only items of material values are accordedtheir strict accounting treatment.PrudenceThis principle demands exercising great care in the recognition of profitwhilst all known losses are adequately provided for.2.4 METHODS OF RECOGNIZING ASSETS AND LIABILITIESAssets are resources controlled by the enterprise as a result of past events andfrom which future economic benefits are expected to flow to the enterprise.Liabilities on the other hand, represent obligations of the enterprise arisingfrom past events, settlement of which is expected to result in an outflow ofresources from the enterprise and embodying economic benefits.In circumstances where legal principles contradict the financial realities of atransaction, the substance of the transaction should be accounted for while itslegal principles are ignored. Accountants are often faced with this conflict incertain transactions such as:Sale and Repurchase Agreement: These arrangements occur where an assetis sold by the seller to a buyer on terms that the seller repurchases the assetfrom the buyer at a future date. This transaction has two possible interpretationsof either a secured loan or a sale and lease back. If the arrangements providethat the seller retains right to determine asset’s use while the buyer onlyreceives return (secured loan) the asset will only be recognized in the books ofthe seller. The transfer of title by way of purchase is ignored.Where the transaction resembles a finance lease arrangement, that is, theownership title passes to the buyer, the assets shall be recorded as that of thebuyer.2.5 SUMMARY AND CONCLUSIONSThis chapter discussed the general and specific policies that could be adoptedby a reporting entity. The chapter also delved into guidelines for selectingrelevant policies, methods of recognising assets and liabilities as well as thedistinction between legal and commercial views of accounting. Excerpts fromannual reports which highlight accounting policy implementation are givenin the chapter.Refer to Comprehensive Questions and Suggested Solutions in Appendix II,page 269.16
ACCOUNTING AND REPORTING POLICIES2.6 REVISION QUESTIONS2.6.1 MULTIPLE-TIPLE-CHOICE QUESTIONS1. The Statement of Accounting Standard Number 1 requires every companyto disclose its accounting policies in relation to all the following except:A. FranchisesB. TaxationC. Board of DirectorsD. Long Term ContractsE. Leases.2. Goodwill on consolidation represents:A. Excess of cost of acquisition over the value acquired.B. Excess of Assets over Liabilities.C. Excess of liabilities over assets.D. Excess of tangible assets over intangible assets.E. Excess of the purchase consideration over the fair value of assetsacquired.3. Which of the following is not an asset related item:A. Stock and Work-In-Progress.B. Research and Development.C. Warranties.D. Patent and TrademarksE. Investments.4. A commercial bank’s cash and short-term funds comprise:(i) cash balances on hand(ii) cash deposited with the Central Bank of Nigeria(iii) cash deposited with other banks and financial institutions.A. (i) onlyB. (i) and (ii) onlyC. (ii) onlyD. (i), (ii) and (iii)E. (ii) and (iii) only.5. A bank loan is regarded as lost if the interest and/or principal is outstandingfor:A. More than 30 days but less than 60 days.B. More than 60 days but less than 90 days.C. More than 90 days but less than 180 days.D. More than 180 days but less than 360 days.E. 360 days and above.2.6.2 SHORT ANSWER QUESTIONS1. In the preparation of consolidation schedule, goodwill represents the excessof purchase consideration over the...........2. The excess of the cost of acquiring a controlling interest in a subsidiaryover the value of interest acquired is the....................17
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4ANALYSIS AND INTERPRETATION TION O
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ANALYSIS AND INTERPRETATION OF FINA
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5ACCOUNTING STANDARDS5.0 LEARNING O
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ACCOUNTING STANDARDS(i)(ii)(iii)(iv
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ACCOUNTING STANDARDSThere is no SAS
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ACCOUNTING STANDARDS5.2.4 Borrowing
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ACCOUNTING STANDARDS(iii)Certain pe
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ACCOUNTING STANDARDSby venture capi
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ACCOUNTING STANDARDSIFRS 7 Financia
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ACCOUNTING STANDARDSactivity, non-c
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ACCOUNTING STANDARDSin the year inc
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ACCOUNTING STANDARDS(v)(vi)(vii)whe
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ACCOUNTING STANDARDS(v)Actions requ
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ACCOUNTING STANDARDSAccounting stud
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6ETHICAL FRAMEWORK, CONCEPTSAND VAL
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ETHICAL FRAMEWORK, CONCEPTS AND VAL
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7THE ENVIRONMENT: CORPORATE,PROFESS
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THE ENVIRONMENT: CORPORATE, PROFESS
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8PROFESSIONAL ETHICS8. 0 LEARNING O
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PROFESSIONAL ETHICSobjectivity are
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PROFESSIONAL ETHICS(c)(d)The type o
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PROFESSIONAL ETHICSabout conflicts
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PROFESSIONAL ETHICS(d)(e)Confidenti
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PROFESSIONAL ETHICSA. III onlyB. II
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9DECISION MAKING IN ETHICS9. 0 LEAR
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DECISION MAKING IN ETHICS9.2 A FRAM
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ETHICAL THREATS AND SAFEGUARDS(d)We
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DECISION MAKING IN ETHICS4. A perso
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10ETHICAL THREATS TS AND SAFEGUARDS
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ETHICAL THREATS AND SAFEGUARDS(iv)(
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ETHICAL THREATS AND SAFEGUARDSto th
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ETHICAL THREATS AND SAFEGUARDSpayab
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ETHICAL THREATS AND SAFEGUARDS(a)Fi
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ETHICAL THREATS AND SAFEGUARDSimmin
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ETHICAL THREATS AND SAFEGUARDSHowev
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ETHICAL THREATS AND SAFEGUARDS(iii)
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11CORPORATE GOVERNANCE11.0 LEARNING
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CORPORATE GOVERNANCE11.3.1 Nature(a
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CORPORATE GOVERNANCEThe company sho
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CORPORATE GOVERNANCEtrust, possible
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CORPORATE GOVERNANCEAn agent has im
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CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
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CORPORATE GOVERNANCE11.6.1 The law
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CORPORATE GOVERNANCEILLUSTRAUSTRATI
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CORPORATE GOVERNANCEimitated. They
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CORPORATE GOVERNANCE(a)(b)Greenbury
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CORPORATE GOVERNANCE11.9.2 Boards d
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CORPORATE GOVERNANCErelationship wi
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CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
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CORPORATE GOVERNANCE(vi)Inquisitive
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CORPORATE GOVERNANCE(e)ConsultancyA
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CORPORATE GOVERNANCEThe incoming au
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CORPORATE GOVERNANCEIn summary, acc
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CORPORATE GOVERNANCEAccording to Th
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CORPORATE GOVERNANCE3. A body corpo
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12SOCIAL AND ENVIRONMENTALISSUES IN
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SOCIAL AND ENVIRONMENTAL ISSUES IN
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APPENDIX ISUGGESTED SOLUTIONS TO RE
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SUGGESTED SOLUTIONS TO REVISION QUE
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SUGGESTED SOLUTIONS TO REVISION QUE
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APPENDIX IICOMPREHENSIVE QUESTIONS
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COMPREHENSIVE QUESTIONS AND SUGGEST
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APPENDIX IIICASE STUDY 1Karsashi, a
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CASE STUDIES(iii)(iv)The floor sale
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CASE STUDIESShare price and dividen
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CASE STUDIESSUGGESTED SOLUTION(A) A
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CASE STUDY 3The following informati
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CASE STUDIESCASE STUDY 4Ologobojo i
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APPENDIX IVTable 1:SUMMARY OF INTER
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SUMMARY OF INTERNATIONAL ACCOUNTING
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APPENDIX VGLOSSARY OF TERMSAbsorpti
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GLOSSARY OF TERMSEthical Objectivis
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APPENDIX VIBIBLIOGRAPHYChambers Ham
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APPENDIX VIISTUDY AND EXAMINATION T
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STUDY AND EXAMINATION TECHNIQUES7.3
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INDEXAAbsorption, 17, 19, 39, 40, 4
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INDEXProfessional Behaviour, 136, 1
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