• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

International Accounting Standard.

Extracts from this document...

Introduction

Professional Skills - Topic 4 International Accounting Standard IAS 16 Explain The Nature and Purpose of this Document and Provide A Critical Evaluation The International Accounting Standards Committee (IASC) was founded in 1973 and comprises of 34 International Accounting Standards. IAS 16 deals with property plant and equipment, examples of other IAS' are 1, which provides the framework for the Preparation of Financial Statements, and 2, which describes how to deal with Inventories. Much revision of these accounting standards has taken place, in December 1993 IAS 16 was revised as part of a project on 'Comparability and Improvements of Financial Statements.' More recently revisions have occurred to ensure consistency with other standards and to keep it up to date with amendments, for example in July 1997 when IAS 1 was approved, one of the paragraphs in IAS 16 was changed. These standards are a guideline to ensure consistency amongst numerous nations. It is also important that financial reporting (the product of financial accounting) is accessible to all users of the information for example, managers, investors, employees, suppliers, the government and the public. Accounting is the process of identifying, measuring, recording and communicating economic transactions. Measurement is normally made in monetary terms, and the accountant will prepare records in the form of financial statements such as a profit and loss account and a balance sheet. ...read more.

Middle

Significant costs to be incurred at the end of an assets useful life should be reflected as an expense. The document also considers how re-valuations should be dealt with, it says that they should be made with sufficient regularity such that the carrying amount does not differ from that which would be determined using fair value at the balance sheet date. If an item of PPE has been revalued the entire class to which the asset belongs must be revalued and revaluations should be credited to equity. Decreases in valuation should be charged to income unless reversing a previous credit to equity. Other factors covered in the document are as follows. If an assets recoverable amount falls below its carrying amount (the balance sheet value of an asset or liability), the decline should be recognised and charged to income. Gains or losses on retirement or disposal of an asset should be calculated by reference to the carrying amount and finally the document says that required disclosures are, reconciliation of movements, capital commitments, items pledged as security and a change in revaluation surplus. The nature of this document is very formal because it is a form of legislation that must be followed internationally, it can be described as accounting law, so it is an informed description of what to do and what not to do when preparing final accounts. ...read more.

Conclusion

Understandability suggests that the financial reports must be readily comprehensible by its users who are assumed to have a reasonable knowledge of business and economic activities. The presence of this accounting standard therefore has a great purpose in the accountancy profession and on an international scale. There are however some downsides to an accounting standard like IAS 16. Firstly there is a lot of information in it, so accountants have to be aware of every detail in order to keep to the guidelines. Parts of it can be a little bit complex, especially where it is necessary to refer to another standard in a situation where there has been an amendment or revision for example paragraph sixty-eight says 'This standard supersedes IAS 16, Property, Plant and Equipment, approved in 1993', in addition, in paragraph four, it indicates that one must refer to IAS 15 for 'Information Reflecting the Effects of Changing Prices'. To conclude, International Accounting Standards are of the utmost importance as a form of regulation of financial reporting. IAS 16, Property, Plant and Equipment is in itself very important as it concerns items that usually make up the most substantial part of the final accounts in terms of monetary value. In my opinion although it does have a few down points, any form of regulation that is important has to be quite detailed and thorough. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    Paul money also invests �5000 of his in money in his children account as they may need it in future for university. I would recommend Paul to invest �3000 in four different kinds of business that are doing well on the FTSE 100.

  2. Free essay

    planning personal finances

    �1,666.66 �1,666.66 �1,666.66 �14,999.94 Total �897.71 �897.71 �897.71 �2,007.37 �2,007.37 �1,835.87 �1,835.87 �2,007.37 �1,835.87 �1,835.87 �2,007.37 �2,007.37 �20,073.46 Expenditure Tution fees �93.75 �93.75 �93.75 �93.75 �93.75 �93.75 �93.75 �93.75 �93.75 �750.00 Rent �280.00 �280.00 �280.00 �280.00 �280.00 �280.00 �280.00 �280.00 �280.00 �2,520.00 Books �140.00 �50.00 �190.00 leisure �250.00 �250.00 �250.00

  1. International reporting Standards.

    This again gives a better picture of how the company is performing. The reported profits on such accounts are subjected to professional judgement and can sometimes vary widely. Currently there is a lot of differences in the financial reporting of various figures on accounts in different country's.

  2. International Accounting Standarts

    While German commercial law asks for security in evaluation and prefers an under-evaluation, instead of over-evaluation, the IAS is more value oriented. The IAS is also more short term oriented in terms of actuality. An imaginable reason might be the financial short time investment (speculation), shareholders keep themselves busy with.

  1. Harmonisation of accounting standards in Europe

    which might be a force for de-harmonisation.5 Those four obstacles were reasons that EU member states were not being able to take on an EU-wide financial reporting system in the past. Many EU countries feared that some would have to make fundamental changes to their national systems whilst other countries would only have to make minor adjustments.

  2. The Purpose of Keeping Accurate Accounts

    Limited companies have share capital; authorised share capital is what the company decides originally how many shares they have. Dividends are appropriations of profit; debenture holders take priority when there is a payout of dividends. There is an order of preference debenture holders come first, and then preference share holders, and ordinary share holders.

  1. Identifying and describing the main financial service needs for a student starting at university

    You will have to pay the loan back, with interest, after you graduate, but as the interest is linked to inflation this is still one of the cheapest ways of borrowing money. You'll need to apply for a Student Loan each year through your Local Education Authority (LEA)

  2. Unit 5 Introduction to Accounting

    The main disadvantages of being a sole trader are: * Unlimited liability. * Can be difficult to raise finance, because they are small, banks will not lend them large sums and they will not be able to use any other form of long-term finance unless they change their ownership status.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work