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Question on Conceptual Framework and IAS 1.

QUESTION 2 (15 MARKS)
Coastal Limited prepared the following assets division of the statement of financial position for presentation to its shareholders.
COASTAL LIMITED
STATEMENT OF FINANCIAL POSITION ON 28 FEBRUARY 2015
N$
ASSETS
Non-current assets
Property, plant and equipment (plant N$ 100 000 + Vehicles N$ 50 000) 150 000
Financial assets (Listed Shares N$10 000 + saving Account N$ 5 000) 15 000
Current Assets
Cash And Equivalents (Petty cash N$ 6 000 – Bank overdraft N$ 2 000) 4 000
Inventory 5 000
Trade and other debtors 36 000
Shareholders for dividends 10 000
Total Assets 240 000
REQUIRED:
Critically discuss the presentation of the above statement on the basis of the Conceptual Framework and IAS1.

asked Oct 28, 2016 in Trial Balance, Profit & Loss Account and Balance Sheet by Todd (14 points) 234 views

1 Answer

0 votes

Please note the comments made below in the context of presentation of financial statements according to IAS 1.

Materiality and aggregation

Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if the are individually immaterial. [IAS 1.29]

In Non-current assets, Property, Plant and Equipment includes N$ 50,000 of vehicles.  This category should not show vehicles, Vehicles should be shown separately.

Similarly under Financial Assets, Saving Account should not be clubbed with Listed Shares.  Saving Account should be shown under Current Asses Sub-head Cash and Equivalents.

Offsetting

Assets and liabilities, and income and expenses, may not be offset unless required or permitted by an IFRS. [IAS 1.32]

Assets and liabilities, and income and expenses, may not be offset unless required or permitted by an IFRS. [IAS 1.32]

Under Current Asses, Sub-head Cash and Equivalents Bank Overdraft should not be set Off, Bank Overdraft should be shown as a Current Liability.

 

answered Nov 2, 2016 by jbsclasses (3,971 points)
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