C
on
fid
Instructor’s Manual
en
tia
Financial Accounting and
l
Reporting
Fifteenth Edition
Barry Elliott
Jamie Elliott
For further instructor material
please visit:
www.pearsoned.co.uk/elliott-elliott
ISBN: 978-0-273-76081-8
© Pearson Education Limited 2012
Lecturers adopting the main text are permitted to download and photocopy the manual as required.
, C
on
Pearson Education Limited
fid
Edinburgh Gate
Harlow
en
Essex CM20 2JE
England
tia
and
l
Associated Companies around the world
Visit us on the World Wide Web at:
www.pearson.com/uk
----------------------------------
© First published 2011
This edition published 2012
© Pearson Education Limited 2012
The rights of Barry Elliott and Jamie Elliott to be identified as authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-0-273-76081-8
All rights reserved. Permission is hereby given for the material in this publication to be
reproduced for OHP transparencies and student handouts, without express permission of the
Publishers, for educational purposes only. In all other cases, no part of this publication may be
reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise without either the prior written permission of
the Publishers or a licence permitting restricted copying in the United Kingdom issued by the
Copyright Licensing Agency Ltd. Saffron House, 6-10 Kirby Street, London EC1N 8TS. This
book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of
binding or cover other than that in which it is published, without the prior consent of the
Publishers.
, C
on
fid
Contents
en
Chapters Pages
tia
1. Accounting and reporting on a cash flow basis 4
l
2. Accounting and reporting on an accrual accounting basis 9
3. Preparation of financial statements 15
4. Annual Report: additional financial statements 40
5. Statements of cash flows 59
6. Income and asset value measurement: an economist’s approach 73
7. Accounting for price-level changes 87
8. Revenue recognition 110
10. Concepts – evolution of a global conceptual framework 128
11. Ethical behaviour and implications for accountants 131
12. Share capital, distributable profits and reduction of capital 136
13. Liabilities 148
14. Financial instruments 157
15. Employee benefits 179
16. Taxation in company accounts 198
17. Property, plant and equipment (PPE) 206
18. Leasing 225
19. R&D; goodwill; intangible assets and brands 239
20. Inventories 255
21. Construction contracts 268
22. Accounting for groups at the date of acquisition 283
23. Preparation of consolidated statements of financial position after
the date of acquisition 300
24. Preparation of consolidated statements of comprehensive income,
changes in equity and cash flows 307
25. Accounting for associates and joint ventures 330
26. Accounting for the effects of changes in foreign exchange
rates under IAS 21 351
27. Earnings per share 360
28. Review of financial ratio analysis 376
29. Analytical analysis – selective use of ratios 401
31. Corporate governance 432
32. Sustainability – environmental and social reporting 441
3
© Pearson Education Limited 2012
, C
on
CHAPTER 1
fid
en
Accounting and reporting on a cash flow basis
tia
Question 1 – Jane Parker
l
(i) Cash budget (£000)
Jan Feb Mar Apr May June Total
Initial capital 150.00 82.50 232.50
Customers 60.00 75.00 135.00
Total receipts 150.00 82.50 60.00 75.00 367.50
Machinery 30.00 30.00
Motor vehicles 24.00 24.00
Premises 75.00 75.00
Drawings 1.20 1.20 1.20 1.20 1.20 1.20 7.20
Suppliers 30.00 48.00 60.00 60.00 60.00 258.00
Rates 1.20 1.20
Wages 2.25 2.25 2.25 2.25 2.25 2.25 13.50
General expenses 0.75 0.75 0.75 0.75 0.75 3.75
Insurance — — — — — 2.10 2.10
Total payments 132.45 35.40 52.20 64.20 64.20 66.30 414.75
Net cash flow 17.55 (35.40) (52.20) 18.30 (4.20) 8.70
Balance b/f — 17.55 (17.85) (70.05) (51.75) (55.95)
Balance c/f 17.55 (17.85) (70.05) (51.75) (55.95) (47.25) (47.25)
(ii) Statement of cash flows (£000)
Realised operating cash flows for the period ended 30 June 20X1
Receipts from customers 135.00
Payments:
Suppliers 258.00
Rates 1.20
Wages 13.50
General expenses 3.75
Insurance 2.10
278.55
(143.55)
4
© Pearson Education Limited 2012
on
fid
Instructor’s Manual
en
tia
Financial Accounting and
l
Reporting
Fifteenth Edition
Barry Elliott
Jamie Elliott
For further instructor material
please visit:
www.pearsoned.co.uk/elliott-elliott
ISBN: 978-0-273-76081-8
© Pearson Education Limited 2012
Lecturers adopting the main text are permitted to download and photocopy the manual as required.
, C
on
Pearson Education Limited
fid
Edinburgh Gate
Harlow
en
Essex CM20 2JE
England
tia
and
l
Associated Companies around the world
Visit us on the World Wide Web at:
www.pearson.com/uk
----------------------------------
© First published 2011
This edition published 2012
© Pearson Education Limited 2012
The rights of Barry Elliott and Jamie Elliott to be identified as authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-0-273-76081-8
All rights reserved. Permission is hereby given for the material in this publication to be
reproduced for OHP transparencies and student handouts, without express permission of the
Publishers, for educational purposes only. In all other cases, no part of this publication may be
reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise without either the prior written permission of
the Publishers or a licence permitting restricted copying in the United Kingdom issued by the
Copyright Licensing Agency Ltd. Saffron House, 6-10 Kirby Street, London EC1N 8TS. This
book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of
binding or cover other than that in which it is published, without the prior consent of the
Publishers.
, C
on
fid
Contents
en
Chapters Pages
tia
1. Accounting and reporting on a cash flow basis 4
l
2. Accounting and reporting on an accrual accounting basis 9
3. Preparation of financial statements 15
4. Annual Report: additional financial statements 40
5. Statements of cash flows 59
6. Income and asset value measurement: an economist’s approach 73
7. Accounting for price-level changes 87
8. Revenue recognition 110
10. Concepts – evolution of a global conceptual framework 128
11. Ethical behaviour and implications for accountants 131
12. Share capital, distributable profits and reduction of capital 136
13. Liabilities 148
14. Financial instruments 157
15. Employee benefits 179
16. Taxation in company accounts 198
17. Property, plant and equipment (PPE) 206
18. Leasing 225
19. R&D; goodwill; intangible assets and brands 239
20. Inventories 255
21. Construction contracts 268
22. Accounting for groups at the date of acquisition 283
23. Preparation of consolidated statements of financial position after
the date of acquisition 300
24. Preparation of consolidated statements of comprehensive income,
changes in equity and cash flows 307
25. Accounting for associates and joint ventures 330
26. Accounting for the effects of changes in foreign exchange
rates under IAS 21 351
27. Earnings per share 360
28. Review of financial ratio analysis 376
29. Analytical analysis – selective use of ratios 401
31. Corporate governance 432
32. Sustainability – environmental and social reporting 441
3
© Pearson Education Limited 2012
, C
on
CHAPTER 1
fid
en
Accounting and reporting on a cash flow basis
tia
Question 1 – Jane Parker
l
(i) Cash budget (£000)
Jan Feb Mar Apr May June Total
Initial capital 150.00 82.50 232.50
Customers 60.00 75.00 135.00
Total receipts 150.00 82.50 60.00 75.00 367.50
Machinery 30.00 30.00
Motor vehicles 24.00 24.00
Premises 75.00 75.00
Drawings 1.20 1.20 1.20 1.20 1.20 1.20 7.20
Suppliers 30.00 48.00 60.00 60.00 60.00 258.00
Rates 1.20 1.20
Wages 2.25 2.25 2.25 2.25 2.25 2.25 13.50
General expenses 0.75 0.75 0.75 0.75 0.75 3.75
Insurance — — — — — 2.10 2.10
Total payments 132.45 35.40 52.20 64.20 64.20 66.30 414.75
Net cash flow 17.55 (35.40) (52.20) 18.30 (4.20) 8.70
Balance b/f — 17.55 (17.85) (70.05) (51.75) (55.95)
Balance c/f 17.55 (17.85) (70.05) (51.75) (55.95) (47.25) (47.25)
(ii) Statement of cash flows (£000)
Realised operating cash flows for the period ended 30 June 20X1
Receipts from customers 135.00
Payments:
Suppliers 258.00
Rates 1.20
Wages 13.50
General expenses 3.75
Insurance 2.10
278.55
(143.55)
4
© Pearson Education Limited 2012
