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International
Financial Reporting
ST
8th Edition
UV
SOLUTIONS
IA
_A
MANUAL
PP
Alan Melville
RO
Comprehensive Solutions Manual for Instructors
and Students
VE
||| ||| || ||| || | || ||| | || ||| |
9781292439426
D?
© Alan Melville. All rights reserved. Reproduction or distribution
without permission is prohibited.
© MEDGEEK
, TABLE OF CONTENTS
Solutions Manual – International Financial Reporting (8th Edition)
Author: Alan Melville
ISBN: 9781292439426
ST
PART I: THE FRAMEWORK
Chapter 1: The regulatory framework
Chapter 2: The IASB conceptual framework
UV
PART II: ELEMENTS OF FINANCIAL STATEMENTS
Chapter 3: Presentation of financial statements
Chapter 4: Accounting policies, estimates and errors
Chapter 5: Property, plant and equipment
IA
Chapter 6: Intangible assets
Chapter 7: Impairment of assets
Chapter 8: Non-current assets held for sale and discontinued operations
Chapter 9: Leases
_A
Chapter 10: Inventories
Chapter 11: Financial instruments
Chapter 12: Provisions and events after the reporting period
Chapter 13: Revenue from contracts with customers
Chapter 14: Employee benefits
PP
Chapter 15: Taxation in financial statements
PART III: CONSOLIDATED FINANCIAL STATEMENTS
Chapter 16: Statement of cash flows
RO
Chapter 17: Financial reporting in hyperinflationary economies
Chapter 18: Groups of companies (1)
Chapter 19: Groups of companies (2)
Chapter 20: Associates and joint arrangements
PART IV: ANALYSIS AND DISCLOSURE
VE
Chapter 21: Related parties and changes in foreign exchange rates
Chapter 22: Ratio analysis
Chapter 23: Earnings per share
Chapter 24: Segmental analysis
D?
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards might include:
ST
(a) Application of the international standards should ensure that the company's financial statements
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
UV
(b) Furthermore, adoption of IFRS should allow Baxen to obtain a listing on stock exchanges around the
world, most of which now require listed companies to comply with international standards. This
would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use IFRS. This should help Baxen
to compare its own financial statements with theirs and perhaps to identify foreign companies that
IA
might be suitable candidates as prospective subsidiaries. Baxen would also be able to compare its
own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
the financial statements of the group members into a single set of consolidated financial statements
_A
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
PP
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
another. This would certainly reduce staff training costs.
RO
VE
D?
1
© 2022 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
1.9
(a) The objective of IFRS1 is to ensure that an entity's first financial statements that comply with inter-
national standards should contain high-quality information that:
– is transparent for users and comparable for all periods presented
– provides a suitable starting point for accounting under international standards
– can be generated at a cost that does not exceed the benefits to users.
ST
(b) An entity's "first IFRS reporting period" is the reporting period covered by the first IFRS financial
statements. The first IFRS financial statements are the first financial statements in which the entity
adopts international standards and makes an explicit and unreserved statement of compliance with
those standards.
UV
The "date of transition" to international standards is the date at the beginning of the earliest period
for which an entity presents comparative information in its first IFRS financial statements.
(c) The company's first IFRS reporting period is the year to 31 October 2023. The earliest period for
which comparative figures are presented in the first IFRS financial statements is the year to 31
October 2018. Therefore the date of transition is 1 November 2017. The company must:
IA
(i) prepare an IFRS statement of financial position as at the start of business on 1 November 2017
(i.e. as at the close of business on 31 October 2017)
(ii) use identical accounting policies in this "opening" IFRS statement of financial position and in
the financial statements for the year to 31 October 2023 and in the comparative figures provided
for the previous five years; these accounting policies (and all these financial statements) must
_A
comply with international standards in force for periods ending on 31 October 2023
(iii) provide a reconciliation of equity as reported under previous GAAP with equity reported under
international standards, for 31 October 2017 and 31 October 2022
(iv) provide a reconciliation of total comprehensive income as reported under previous GAAP with
PP
total comprehensive income as it would have been reported under international standards, for
the year to 31 October 2022.
RO
VE
D?
2
© 2022 Pearson Education Limited. All Rights Reserved.
International
Financial Reporting
ST
8th Edition
UV
SOLUTIONS
IA
_A
MANUAL
PP
Alan Melville
RO
Comprehensive Solutions Manual for Instructors
and Students
VE
||| ||| || ||| || | || ||| | || ||| |
9781292439426
D?
© Alan Melville. All rights reserved. Reproduction or distribution
without permission is prohibited.
© MEDGEEK
, TABLE OF CONTENTS
Solutions Manual – International Financial Reporting (8th Edition)
Author: Alan Melville
ISBN: 9781292439426
ST
PART I: THE FRAMEWORK
Chapter 1: The regulatory framework
Chapter 2: The IASB conceptual framework
UV
PART II: ELEMENTS OF FINANCIAL STATEMENTS
Chapter 3: Presentation of financial statements
Chapter 4: Accounting policies, estimates and errors
Chapter 5: Property, plant and equipment
IA
Chapter 6: Intangible assets
Chapter 7: Impairment of assets
Chapter 8: Non-current assets held for sale and discontinued operations
Chapter 9: Leases
_A
Chapter 10: Inventories
Chapter 11: Financial instruments
Chapter 12: Provisions and events after the reporting period
Chapter 13: Revenue from contracts with customers
Chapter 14: Employee benefits
PP
Chapter 15: Taxation in financial statements
PART III: CONSOLIDATED FINANCIAL STATEMENTS
Chapter 16: Statement of cash flows
RO
Chapter 17: Financial reporting in hyperinflationary economies
Chapter 18: Groups of companies (1)
Chapter 19: Groups of companies (2)
Chapter 20: Associates and joint arrangements
PART IV: ANALYSIS AND DISCLOSURE
VE
Chapter 21: Related parties and changes in foreign exchange rates
Chapter 22: Ratio analysis
Chapter 23: Earnings per share
Chapter 24: Segmental analysis
D?
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards might include:
ST
(a) Application of the international standards should ensure that the company's financial statements
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
UV
(b) Furthermore, adoption of IFRS should allow Baxen to obtain a listing on stock exchanges around the
world, most of which now require listed companies to comply with international standards. This
would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use IFRS. This should help Baxen
to compare its own financial statements with theirs and perhaps to identify foreign companies that
IA
might be suitable candidates as prospective subsidiaries. Baxen would also be able to compare its
own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
the financial statements of the group members into a single set of consolidated financial statements
_A
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
PP
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
another. This would certainly reduce staff training costs.
RO
VE
D?
1
© 2022 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
1.9
(a) The objective of IFRS1 is to ensure that an entity's first financial statements that comply with inter-
national standards should contain high-quality information that:
– is transparent for users and comparable for all periods presented
– provides a suitable starting point for accounting under international standards
– can be generated at a cost that does not exceed the benefits to users.
ST
(b) An entity's "first IFRS reporting period" is the reporting period covered by the first IFRS financial
statements. The first IFRS financial statements are the first financial statements in which the entity
adopts international standards and makes an explicit and unreserved statement of compliance with
those standards.
UV
The "date of transition" to international standards is the date at the beginning of the earliest period
for which an entity presents comparative information in its first IFRS financial statements.
(c) The company's first IFRS reporting period is the year to 31 October 2023. The earliest period for
which comparative figures are presented in the first IFRS financial statements is the year to 31
October 2018. Therefore the date of transition is 1 November 2017. The company must:
IA
(i) prepare an IFRS statement of financial position as at the start of business on 1 November 2017
(i.e. as at the close of business on 31 October 2017)
(ii) use identical accounting policies in this "opening" IFRS statement of financial position and in
the financial statements for the year to 31 October 2023 and in the comparative figures provided
for the previous five years; these accounting policies (and all these financial statements) must
_A
comply with international standards in force for periods ending on 31 October 2023
(iii) provide a reconciliation of equity as reported under previous GAAP with equity reported under
international standards, for 31 October 2017 and 31 October 2022
(iv) provide a reconciliation of total comprehensive income as reported under previous GAAP with
PP
total comprehensive income as it would have been reported under international standards, for
the year to 31 October 2022.
RO
VE
D?
2
© 2022 Pearson Education Limited. All Rights Reserved.
