DipIFR: Diploma in International Financial Reporting (study text)

601 Pages·2012·5.38 MB·English

S
T
U
D
Y

DIPLOMA IN INTERNATIONAL T
FINANCIAL REPORTING E
X
T
BPP Learning Media is the sole ACCA Dip IFR Platinum Approved Learning Partner –
content for the Diploma in International Financial Reporting. In this Study Text:
 We include the revised IFRSs and IASs
 We discuss the best strategies for studying for your exams
 We highlight the most important elements in the syllabus and the key skills you will need
 We signpost how each chapter links to the syllabus and the study guide
 We provide lots of exam focus points demonstrating what the examiner will want you to do
 We emphasise key points in regular fast forward summaries
 We test your knowledge of what you've studied in quick quizzes
 We examine your understanding in our exam question bank
 We reference all the important topics in our full index
FOR EXAMS UP TO JUNE 2014
Ninth edition December 2012
ISBN 9781 4453 9960 7
Previous ISBN 9781 4453 8118 3 All our rights reserved. No part of this publication may
eISBN 9781 4453 9300 1 be reproduced, stored in a retrieval system or
transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise,
without the prior written permission of BPP Learning
Media Ltd.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from
the British Library We are grateful to the Association of Chartered Certified
Accountants for permission to reproduce past
examination questions. The suggested solutions in the
Published by
exam answer bank have been prepared by BPP
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Contents
Page
Introduction
How the BPP ACCA approved Study Text can help you pass vi
Studying for the Diploma in International Financial Reporting viii
Syllabus and Study Guide x
Part A International sources of authority
1 The IASB and the regulatory framework 3
2 Conceptual framework for financial reporting 27
Part B Elements of financial statements
3 Revenue recognition 45
4 Property, plant and equipment 57
5 Impairment of assets 87
6 Leases 97
7 Intangible assets and goodwill 113
8 Inventories and construction contracts 127
9 Liabilities – provisions, contingent assets and liabilities 145
10 Employee benefits 157
11 Financial instruments 181
12 Accounting for taxation 225
13 Foreign currency translation 251
14 Accounting for agriculture and mineral resources 261
15 Share-based payment 275
Part C Presentation and additional disclosures
16 Presentation of published financial statements 291
17 Reporting financial performance 327
18 Earnings per share 343
19 Miscellaneous standards: related party disclosures and segment reporting 359
20 Reporting for small and medium-sized entities 373
Part D Preparation of external financial reports for
combined entities and joint arrangements
21 Constitution of a group 383
22 The consolidated statement of financial position 395
23 The consolidated statement of profit or loss and other comprehensive income 433
24 Accounting for associates 445
25 Accounting for joint arrangements 459
26 Current developments 467
Exam question bank 483
Exam answer bank 509
List of key terms and index 569
Review form

Contents i ii
A note about copyright
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iv Introduction
Learning to Learn Accountancy
BPP's ground-breaking Learning to Learn Accountancy book is designed to be used both at the outset of
your ACCA studies and throughout the process of learning accountancy. It challenges you to consider how
you study and gives you helpful hints about how to approach the various types of paper which you will
encounter. It can help you focus your studies on the subject and exam, enabling you to acquire
knowledge, practise and revise efficiently and effectively.
Introduction v
How the BPP ACCA-approved Study Text can help you
pass
BPP Learning Media – the sole Platinum
Approved Learning Partner – content
As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the
unique opportunity to use examiner-reviewed study materials for the 2012 exams. By incorporating the
examiner’s comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP
Learning Media Study Text provides excellent, ACCA-approved support for your studies.
Tackling studying
Studying can be a daunting prospect, particularly when you have lots of other commitments. The
different features of the text, the purposes of which are explained fully on the Chapter features page, will
help you whilst studying and improve your chances of exam success.
Developing exam awareness
Our Texts are completely focused on helping you pass your exam.
Our advice on Studying for the Diploma in International Financial Reporting (Dip IFR) outlines the
content of the paper, the necessary skills the examiner expects you to demonstrate and any brought
forward knowledge you are expected to have.
Exam focus points are included within the chapters to highlight when and how specific topics were
examined, or how they might be examined in the future.
Using the Syllabus and Study Guide
You can find the syllabus, Study Guide and other useful resources for Dip IFR on the ACCA web site:
http://www.accaglobal.com/en/student/qualification-resources/dip-ifr/
The Study Text covers all aspects of the syllabus to ensure you are as fully prepared for the exam as
possible.
Testing what you can do
Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can
recall what you have learnt.
We include Questions – lots of them – both within chapters and in the Exam Question Bank, as well as
Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.

vi Introduction
Chapter features
Each chapter contains a number of helpful features to guide you through each topic.
Topic list
Tells you what you will be studying in this chapter and the
Topic list Syllabus reference
relevant section numbers, together with the ACCA

syllabus references.

Puts the chapter content in the context of the syllabus as
Introduction
a whole.
Study Guide
Links the chapter content with ACCA guidance.
Highlights how examinable the chapter content is likely to
Exam Guide
be and the ways in which it could be examined.
What you are assumed to know from previous
Knowledge brought forward from earlier studies
studies/exams.
Summarises the content of main chapter headings,
FAST FORWARD allowing you to preview and review each section easily.
Demonstrate how to apply key knowledge and
Examples
techniques.
Definitions of important concepts that can often earn you
Key terms
easy marks in exams.
Tell you when and how specific topics were examined, or
Exam focus points
how they may be examined in the future.

Give you essential practice of techniques covered in the
Question
chapter.

A full list of the Fast Forwards included in the chapter,
Chapter Roundup providing an easy source of review.
A quick test of your knowledge of the main topics in the
Quick Quiz chapter.
Found at the back of the Study Text with more
comprehensive chapter questions. Cross referenced for
Exam Question Bank
easy navigation.

Introduction v ii
Studying for the Diploma in International Financial
Reporting

Aim
To develop knowledge, understanding and application of International Financial Reporting Standards and
the concepts and principles which underpin them.
Objectives
On completion of the Diploma candidates should be able to:
 Understand and explain the structure of the international professional and conceptual framework of
accounting
 Apply relevant financial reporting standards to key elements of financial reports
 Identify and apply disclosure requirements for companies relating to the presentation of financial
reports and notes
 Prepare group financial statements (excluding statements of cash flows for groups) including
subsidiaries, associates and joint ventures
Position of the course within the overall portfolio of ACCA's qualification framework
Dip IFR builds on the technical and/or practical knowledge acquired from recognised country specific
accountancy qualifications or relevant work experience. The course introduces the candidate to the wider
international framework of accounting and the system of standard setting.
This conversion course concentrates on the application of conceptual and technical financial accounting
knowledge that candidates have already obtained to the specific requirements of financial reporting under
international professional regulation and standards.
Dip IFR also provides essential international financial reporting knowledge and principles that will prepare
candidates for the increasingly global market place and keep them abreast of international developments
and how they might apply to companies and businesses.
Dip IFR is intended for professional accountants and auditors working in practice and industry who are
qualified in accordance with national accounting standards. Official documentation is required.
The prerequisite knowledge for Dip IFR can come from:
 A relevant degree plus two years’ work experience
 Three years’ work experience
 ACCA affiliate status
 ACCA Certificate in International Financial Reporting plus two years’ work experience
viii Introduction
Approach to examining the syllabus
The examination is a three hour paper in two sections. The questions within the examination are all
compulsory thereby ensuring that a candidate is examined on all the main syllabus areas within any one
examination session. The examination will comprise the following:
The first question will be 40 mark question covering group accounting and individual company
adjustments.
The following three questions will be 20 mark questions covering a variety of accounting standards.
An individual question may often involve elements that relate to different areas of the syllabus. For
example a question on the preparation of financial statements for public issue could include elements
relating to several accounting standards. In scenario questions candidates may be expected to comment
on management's chosen accounting treatment and determine a more appropriate one, based on
circumstances described in the question.
Some International Financial Reporting Standards are very detailed and complex. In the Dip IFR exam
candidates need to be aware of the principles and key elements of these Standards. Candidates will also be
expected to have an appreciation of the background and need for international accounting and financial
reporting and issues related to harmonisation of accounting in a global context.
The overall passmark for the Diploma in International Financial Reporting is 50%.
Number of
marks
Section A: One 'groups' question 40
Section B: 3 scenario questions 60
100
Additional information
Candidates need to be aware that the exam year will run from 1 September to the following 31 August. The
cut off relating to examinable documents will be set 12 months before the start of the year.
This Study Text is for exams up to and including June 2014.
Introduction i x