Edrftgyihu jiuh
TU S
International
Financial Reporting
VI U
T
8th Edition
A_V
SOLUTIONS
MIA
E_DA
MANUAL
CPO
Alan Melville
PNR
NOO
Comprehensive Solutions Manual for Instructors
and Students
VIESS
||| ||| || ||| || | || ||| | || ||| |
9781292439426
DE?U
© Alan Melville. All rights reserved. Reproduction or distribution
without permission is prohibited.
R?
© MEDGEEK
,TU S
TABLE OF CONTENTS
Solutions Manual – International Financial Reporting (8th Edition)
Author: Alan Melville
ISBN: 9781292439426
VI U
PART I: THE FRAMEWORK
T
Chapter 1: The regulatory framework
A_V
Chapter 2: The IASB conceptual framework
PART II: ELEMENTS OF FINANCIAL STATEMENTS
Chapter 3: Presentation of financial statements
MIA
Chapter 4: Accounting policies, estimates and errors
Chapter 5: Property, plant and equipment
Chapter 6: Intangible assets
Chapter 7: Impairment of assets
E_DA
Chapter 8: Non-current assets held for sale and discontinued operations
Chapter 9: Leases
Chapter 10: Inventories
Chapter 11: Financial instruments
Chapter 12: Provisions and events after the reporting period
CPO
Chapter 13: Revenue from contracts with customers
Chapter 14: Employee benefits
Chapter 15: Taxation in financial statements
PNR
PART III: CONSOLIDATED FINANCIAL STATEMENTS
Chapter 16: Statement of cash flows
Chapter 17: Financial reporting in hyperinflationary economies
NOO
Chapter 18: Groups of companies (1)
Chapter 19: Groups of companies (2)
Chapter 20: Associates and joint arrangements
PART IV: ANALYSIS AND DISCLOSURE
VIESS
Chapter 21: Related parties and changes in foreign exchange rates
Chapter 22: Ratio analysis
Chapter 23: Earnings per share
Chapter 24: Segmental analysis
DE?U
R?
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
Chapter 1
The regulatory framework
TU S
1.8
The advantages of adopting IFRS® Accounting Standards might include:
VI U
(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
T
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
A_V
company to raise fresh capital in the form of share issues or borrowings.
(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.
MIA
(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
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.
E_DA
(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
(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.
CPO
(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.
(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
PNR
another. This would certainly reduce staff training costs.
NOO
VIESS
DE?U
R?
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-
TU S
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.
VI U
(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
T
adopts international standards and makes an explicit and unreserved statement of compliance with
those standards.
A_V
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
MIA
October 2018. Therefore the date of transition is 1 November 2017. The company must:
(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
E_DA
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
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
CPO
(iv) provide a reconciliation of total comprehensive income as reported under previous GAAP with
total comprehensive income as it would have been reported under international standards, for
the year to 31 October 2022.
PNR
NOO
VIESS
DE?U
R?
2
© 2022 Pearson Education Limited. All Rights Reserved.
TU S
International
Financial Reporting
VI U
T
8th Edition
A_V
SOLUTIONS
MIA
E_DA
MANUAL
CPO
Alan Melville
PNR
NOO
Comprehensive Solutions Manual for Instructors
and Students
VIESS
||| ||| || ||| || | || ||| | || ||| |
9781292439426
DE?U
© Alan Melville. All rights reserved. Reproduction or distribution
without permission is prohibited.
R?
© MEDGEEK
,TU S
TABLE OF CONTENTS
Solutions Manual – International Financial Reporting (8th Edition)
Author: Alan Melville
ISBN: 9781292439426
VI U
PART I: THE FRAMEWORK
T
Chapter 1: The regulatory framework
A_V
Chapter 2: The IASB conceptual framework
PART II: ELEMENTS OF FINANCIAL STATEMENTS
Chapter 3: Presentation of financial statements
MIA
Chapter 4: Accounting policies, estimates and errors
Chapter 5: Property, plant and equipment
Chapter 6: Intangible assets
Chapter 7: Impairment of assets
E_DA
Chapter 8: Non-current assets held for sale and discontinued operations
Chapter 9: Leases
Chapter 10: Inventories
Chapter 11: Financial instruments
Chapter 12: Provisions and events after the reporting period
CPO
Chapter 13: Revenue from contracts with customers
Chapter 14: Employee benefits
Chapter 15: Taxation in financial statements
PNR
PART III: CONSOLIDATED FINANCIAL STATEMENTS
Chapter 16: Statement of cash flows
Chapter 17: Financial reporting in hyperinflationary economies
NOO
Chapter 18: Groups of companies (1)
Chapter 19: Groups of companies (2)
Chapter 20: Associates and joint arrangements
PART IV: ANALYSIS AND DISCLOSURE
VIESS
Chapter 21: Related parties and changes in foreign exchange rates
Chapter 22: Ratio analysis
Chapter 23: Earnings per share
Chapter 24: Segmental analysis
DE?U
R?
, Melville: International Financial Reporting, Instructor's Manual, 8th edition
Chapter 1
The regulatory framework
TU S
1.8
The advantages of adopting IFRS® Accounting Standards might include:
VI U
(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
T
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
A_V
company to raise fresh capital in the form of share issues or borrowings.
(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.
MIA
(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
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.
E_DA
(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
(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.
CPO
(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.
(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
PNR
another. This would certainly reduce staff training costs.
NOO
VIESS
DE?U
R?
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-
TU S
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.
VI U
(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
T
adopts international standards and makes an explicit and unreserved statement of compliance with
those standards.
A_V
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
MIA
October 2018. Therefore the date of transition is 1 November 2017. The company must:
(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
E_DA
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
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
CPO
(iv) provide a reconciliation of total comprehensive income as reported under previous GAAP with
total comprehensive income as it would have been reported under international standards, for
the year to 31 October 2022.
PNR
NOO
VIESS
DE?U
R?
2
© 2022 Pearson Education Limited. All Rights Reserved.
