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- August 9, 2015 at 4:01 pm #266408
In the P2 exam, the requirement contains words like principles, accounting treatment, practices etc. What is their specific meaning? If there is any.
August 9, 2015 at 5:26 pm #266423“Principles” could well mean (it depends on context) the possible courses of alternative treatment and the justification for why IASB has settled on the one included in the IAS / IFRS
“Accounting Treatment” means the way in which a matter is treated within the financial statements – whether it should be recognised (and, if it is to be recognised, then how it should be treated (debits and credits and where to include the matter within the figures). If it isn’t to be recognised, then is it appropriate to show relevant disclosure within the notes to the financial statements
“Practices” really depends upon the context in which the word is used but some countries that haven’t adopted IFRS may have radically different practices in how items are treated. For example, the UK has not fully adopted the IFRS on Employee Benefits (at least they hadn’t last time I looked!)
Does that help?
What you could do is find past exam questions that use these words and see how the official answer has dealt with them
August 9, 2015 at 5:31 pm #266424And policies? Okay, I will look into the answers, and thank you for your kind answer. 🙂
August 9, 2015 at 5:55 pm #266425You didn’t ask about policies!
“Policies” includes matters such as “Do we capitalise items of a capital nature that cost less than (say) $1,000 or should we expense them” The decision to expense them would be the policy that the company has adopted
August 10, 2015 at 5:38 am #266479Thank you.
I had included “etc.” in the question, hoping for an exhaustive answer, but I apologise for that.August 10, 2015 at 7:18 am #266483No problem, and you’re welcome
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