Summary FAC2601 Learning Unit 2.pdf

FAC2601/103/3/2019




Tutorial Letter 103/3/2019

Financial Accounting for Companies

FAC2601

Semester 1 & 2

Department of Financial Accounting

IMPORTANT INFORMATION:
Please activate your myUnisa profile and myLife email address and ensure you have regular
access to the myUnisa module site FAC2601 as well as to your group site.


Note: This is an online module, and therefore your module is available on myUnisa.
However, in order to support you in your learning process, you will also receive study
material in printed format.



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, CONTENTS


1 INTRODUCTION ........................................................................................................................ 2

2 LECTURERS AND CONTACT DETAILS................................................................................... 2

3 NEW CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING ...................................... 3

4 LEASES – IFRS 16 (REPLACES IAS 17 LEASES) ................................................................. 12


1 INTRODUCTION

Dear Student

In this tutorial letter, you will find the learning unit on leases (IFRS 16). Please make use of your available
time wisely and work through this study material as soon as possible and in a thorough manner.

All the tutorial letters are available on myUnisa on the internet. Refer to tutorial letter 101/3/2019 on how
to access the study material.

2 LECTURERS AND CONTACT DETAILS

Lecturers Office number
Mr F Montgomery AJH van der Walt Building 2-31
Mr A Eysele AJH van der Walt Building 2-33
Mr C Mkefa AJH van der Walt Building 2-40
Mrs F Aboo AJH van der Walt Building 2-68
Mr M Mokgobinyane AJH van der Walt Building 2-57


012 429 4238

You can contact your lecturers telephonically, by making use of the course contact
number provided above. An available lecturer will take your call and assist you as
promptly as they can.

If you do not get hold of your lecturer telephonically, please send an email to FAC2601 with your student
number and contact number and one of the lecturers will phone you back.

Please make use of the following email address, which is specific to the FAC2601 module to ensure a
prompt reply:




Semester 1 and 2:




2

, FAC2601/103

3 IMPORTANT INFORMATION REGARDING LEARNING UNIT 2

During the 2019 academic year, Learning Unit 2 (THE FRAMEWORK OF ACCOUNTING) will change
due to the issue of the new accounting CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING
issued in March 2018.

Students registered for the first and second semester of 2019 must study and will be examined on THE
NEW CONCEPTUAL FRAMEWORK in this Tutorial Letter 103.

Learning Unit 2 (Conceptual Framework for Financial Reporting) is included in this tutorial letter
103/2/2019

CONCEPTUAL FRAMEWORK FOR SEMESTER 1 & 2 (2019):

 Learning Unit 2 in your Study Guide 2019 is based on The Conceptual Framework for Financial
Reporting 2010. This tutorial letter replaces Learning Unit 2 in your Study Guide.
 The 7th edition of your prescribed text book for 2019 (as prescribed in tutorial letter 101/3/2019) is
based on the Conceptual Framework for Financial Reporting 2010 and should be replaced with
this Tutorial Letter 103.
 Students must consult this tutorial letter 103/2/2019 for the first and second semester to gain an
understanding of the new Conceptual Framework for Financial Reporting.

SEMESTER 1 of 2019: SUPPLEMENTARY STUDENTS:

Students registered in semester 2 of 2018 that did not pass FAC2601 and obtained a supplementary
exam to be written in semester 1 in 2019 will again be examined on The Conceptual Framework for
Financial Reporting 2010 (as examined in the second semester of 2018).

From 2019, the Conceptual Framework for Financial Reporting will no longer be examined and only
the Conceptual Framework for Financial Reporting 2018.


LEARNING OUTCOMES

Learners will be able to prepare and present annual financial statements according to the concepts
which underline the preparation and presentation of annual financial statements.


OVERVIEW

This learning unit is divided into the following:

3.1 Chapter 1 – The objective of financial reporting
3.2 Chapter 2 – Qualitative characteristics of useful financial information
3.3 Chapter 3 – Financial statements and the reporting entity
3.4 Chapter 4 – The elements of financial statements
3.5 Chapter 5 – Recognition and derecognition
3.6 Chapter 6 – Measurement
3.7 Chapter 7 – Presentation and disclosure


STUDY – THIS TUTORIAL LETTER

IGNORE CHAPTER 1 OF THE PRESCRIBED TEXTBOOK
Introduction to IFRS – Latest edition - Chapter 1
IGNORE LEARNING UNIT 2 IN THE STUDY GUIDE

3

, EFFECTIVE DATE

Entities are required to apply the Conceptual Framework for Financial Reporting 2018
for all reporting periods beginning on or after 1 March 2018.

3.1 CHAPTER 1: THE OBJECTIVE OF FINANCIAL REPORTING


OBJECTIVE OF FINANCIAL REPORTING



The objective of general purpose financial reporting is to provide financial information about the reporting
entity that is useful to existing and potential investors, lenders and other creditors in making decision
relating to providing resources to the entity. Those decisions involve decisions about:

 Buying, selling or holding equity and debt instruments;
 Providing or settling loans and other forms of credit; or
 Exercising rights to vote on, or otherwise influence, management’s actions that affect the use of the
entity’s economic resources.

To make the above decisions, users assess:
 Prospects for future net cash inflows to the entity;
 Management’s stewardship of the entity’s economic resources.

To be able to make both the above assessments, users need information about both:
 The entity’s economic resources, claims against the entity and changes in those resources and
claims; and
 How efficiently and effectively management has discharged its responsibilities to use the entity’s
economic resources.


STEWARDSHIP IS THEREFORE NEEDED TO ACHIEVE THE OBJECTIVE OF FINANCIAL
REPORTING



WHAT IS STEWARDSHIP?

Users of financial reports need information to assist them assessing management’s stewardship (The
idea that management has the responsibility to manage wealth and other assets equitably and
sustainably. That is, stewardship holds that owners do not have an absolute right to use their property
however they see fit but have the obligation to use it to help others and it ensure that no harm is done
to the poor, one’s employees, the environment or anything else.) The Conceptual Framework explicitly
discuss this need as well as the need for information that helps users assess the prospects for future
net cash inflows to the entity.

WHO ARE THE USERS OF FINANCIAL REPORTS?

Users of financial reports are an entity’s existing and potential investors, lenders and other creditors.
Those users must rely on financial reports for much of the financial information they need.




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