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ACCA FR Theory

The document outlines a conceptual framework for financial statements, emphasizing the qualitative characteristics that enhance decision-making for users. It details the elements of financial statements, including assets, liabilities, equity, expenses, and income, along with their recognition and measurement principles. Additionally, it contrasts historical cost and current value measurement methods, highlighting their advantages and disadvantages.

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Aditi Pandit
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27 views19 pages

ACCA FR Theory

The document outlines a conceptual framework for financial statements, emphasizing the qualitative characteristics that enhance decision-making for users. It details the elements of financial statements, including assets, liabilities, equity, expenses, and income, along with their recognition and measurement principles. Additionally, it contrasts historical cost and current value measurement methods, highlighting their advantages and disadvantages.

Uploaded by

Aditi Pandit
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FR

Theory

standards others
based conceptual Framework
theory
eguaoryFramwk
discussed
in Revision SBR FR

video
1 Framework

Conceptual Framework Regulatory


Framewor

Y Qualitative char Principles vs Rules


Elements of FS standard setting
Process
Rewg and Deverg
Measurement
Historical cost
current value
CONCEPTUAL FRAMEWORK
useful fin.info
1 Qualitative characteristics of FS
α
Fundamental Enhancing

Relevance comparability
that impacts decisions verifiability
of users Timeliness
Materiality understandability

Faithful representation
complete
Neutral Prudence
Free from error

components of FS Elements
SOFP PSL CFS Assets Liab
cap
SOCIE Notes to Expenses Revenue
Alc ALCER
2 Elements of Financial statements ALCER

I
A L C E R
Asset Liability Expenses Incomes
Equity
Resource Residual Assett Asset
obligation
Future Interest Liat Left
outflow
benefits in Net I
of
control resources assets Equity Equity
of
Entity
Extpense

Dividend

Pay

Income
New
capital
Element
De
Recognition recognition

Meets the definition For an asset


and when control is lost
Provides users with
Relevant info for a
liability
fm when there is no

longer
a
present
to
subject obligation
constraints
Cost Benefit
fundamental
Onalt
ch
4 Measurement if Historical cost
iiy current value
a Fair value
b Value in use
c
current cost

Historical cost cost


original

Advantages Disadvantages

No manipulation over under Profit


Reliable out of date value
SOFP s CF consistent ROCE is distorted
Understandable trend of
Misleading
Results
Current value

Fair value value in use current


Exit Price PV of future cost
IFRS 13 CF Replacement
MP cost to dispose cost

Advantages Disadvantages

stability of business subjective judgements


some A L
Judge future prospects

Represents future Historical cost


or

benefits current value


Standard Process
setting
PERT FEB Control

unavoidable PE of

PVofFCF
comparability
being
0000 790
132900 500000 1,2
384000 600 90
600000 2

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