Q1: Technical terms in IFRS 5 and Kaplan Study Text
Is "Statement of comprehensive income" completely the same as "Statement of profit or loss"? Why?
If they are different from each other by any means, why does Kaplan writers decide to paraphrase the former term from original IFRS 5 to the latter term in their books?
Thanks ./
Q2: "faithful representation"
Which of the following is an example of following the principle of faithful representation?
A. Showing lease payments as a rental expense
B. Being prudent by recording the entire amount of a convertible loan as a liability
C. Creating a provision for staff relocation costs as part of a planned restructuring
D. Recording a sale and repurchase transaction with a bank as a loan rather than a sale
Ans: D
The answer explains:
Faithful representation means presenting transactions according to their economic substance rather than their legal form. Items A to C all represent incorrect accounting treatments, and item D reflects that a sale and repurchase agreement with a bank is likely to represent a secured loan rather than a sale.
With this questions, I made a guess and luckily it was right. But I do not understand clearly accounting entries for each of them either.
Could you explain further? Thanks.
Ask the Tutor ACCA FA
Terms & faithful presentation
5y ago#1Which exam are you studying for? It would appear from your previous questions that you are studying for Paper FR (because you keep quoting from a Paper FR Study Text). If so, then why on earth do you keep asking questions in this forum when you should be asking in the Paper FR forum?
Q1 The statement of comprehensive income is not the same as the statement of profit and loss. The SOPL forms part of the Statement of Comprehensive Income, but the latter then has unrealised gains below. As far as Paper FA is concerned the only unrealised profit examinable is the surplus on revaluation. This is all explained in my free lectures, which are a compete free course for Paper FA and cover everything needed to be able to pass the exam well.
Q2 Is not examinable in full in Paper FA, and the accounting entries are not examinable at all in Paper FA.
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