Tài liệu ACCA mới nhất từ BPP môn P2,

Corporate Reporting
Paper P2 (International)
Course Notes
ACP2CN07 (INT)




(i)
BPP provides revision courses, question days,
mock days and specific material to assist you in
this important phase of your studies.
P2 Corporate Reporting (International)
Study Programme
Page
Introduction to the paper and the course (ii)
1 The financial reporting framework 1.1
2 Professional and ethical duty of the accountant 2.1
3 Home study chapter: Environmental and social reporting 3.1
4 Non-current assets 4.1
5 Employee benefits 5.1
6 Income taxes 6.1
End of Day 1 – refer to Course Companion for Home Study 
Progress test 1 
7 Financial instruments 7.1
8 Share-based payment 8.1
9 Provisions, contingencies and events after the balance sheet date 9.1
10 Related parties 10.1
11 Leases 11.1

End of Day 2 – refer to Course Companion for Home Study 
Progress test 2 

Course exam 1 
12 Revision of basic groups 12.1
13 Complex groups 13.1
14 Changes in group structures 14.1
15 Continuing and discontinued interests 15.1
End of Day 3 – refer to Course Companion for Home Study 
Progress test 3 
16 Foreign transactions and entities 16.1
17 Group cash flow statements 17.1
18 Performance reporting 18.1
19 Current developments 19.1
20 Reporting for specialised entities 20.1
21 Home study chapter: Implications of changes in accounting regulation on
financial reporting 21.1
End of Day 4 – refer to Course Companion for Home Study 
Progress test 4 

Course exam 2 
22 Answers to Lecture Examples 22.1
23 Question and Answer bank 23.1
24 Appendix: Pilot Paper questions 24.1
Don't forget to plan your revision phase!
• Revision of syllabus
• Testing of knowledge
• Question practice
• Exam technique practice
INTRODUCTION

(ii)
Introduction to Paper P2
Corporate Reporting (International)

Overall aim of the syllabus
To apply knowledge, skills and exercise professional judgement in the application and evaluation of financial
reporting principles and practices in a range of business contexts and situations.
The syllabus
The broad syllabus headings are:
A The professional and ethical duty of the accountant
B The financial reporting framework
C Reporting the financial performance of entities
D Financial statements of groups of entities
E Specialised entities
F Implications of changes in accounting regulation on financial reporting
G The appraisal of financial performance and position of entities
H Current developments
Main capabilities
On successful completion of this paper, candidates should be able to:
• Discuss the professional and ethical duty of the accountant
• Evaluate the financial reporting framework
• Advise on and report the financial performance of entities
• Prepare the financial statements of groups of entities in accordance with relevant accounting standards
• Explain report issues relating to specialised entities
• Discuss the implications of changes in accounting regulation on financial reporting
• Appraise the financial performance and position of entities
• Evaluate current developments
Links with other papers

This diagram shows where direct (solid line arrows) and indirect (dashed line arrows) links exist between this
paper and other papers that may precede or follow it.
The financial reporting syllabus assumes knowledge acquired in paper F3 Financial Accounting and Paper F7
Financial Reporting and develops and applies this further and in greater depth.
Advanced Audit &
Assurance (P7)
Corporate Reporting
(P2)
Financial Reporting
(F7)
Financial Accounting
(F3)
INTRODUCTION
(iii)
Assessment methods and format of the exam
Examiner: Graham Holt
The examination is a three-hour paper. Requirements may ask for reports to be prepared, as well as for
numbers to be calculated.

Format of the Exam Marks
Section A Compulsory
Section A will be scenario-based and will deal with the preparation of

consolidated financial statements including group cash flow statements and
ethical and social issues in financial reporting.
50
Section B Two from three 25-mark questions
Section B will normally comprise two questions which will be scenario or case
study-based (covering a range of standards and syllabus topics) of which one
question will usually be of an essay style, often encompassing current
developments in corporate reporting.
50
100


INTRODUCTION
(iv)
Course Aims
Achieving ACCA's Study Guide Outcomes
A The professional and ethical duty of the accountant


A1 Professional behaviour and compliance with accounting standards Chapter 1
A2 Ethical requirements of corporate reporting and the consequences of unethical
behaviour
Chapter 1
A3 Social responsibility Chapter 1

B The financial reporting framework


B1 The contribution and limitations of financial statements in meeting users' and capital
markets' needs

Chapter 2
B2 The applications, strengths and weaknesses of an accounting framework Chapter 2
B3 Critical evaluation of principles and practices Chapter 2

C Reporting the financial performance of entities


C1 Performance reporting Chapter 19
C2 Non-current assets Chapter 3
C3 Financial instruments Chapter 6
C4 Leases Chapter 10
C5 Segment reporting Chapter 19
C6 Employee benefits Chapter 4
C7 Income taxes Chapter 5
C8 Provisions, contingencies and events after the balance sheet date Chapter 8
C9 Related parties Chapter 9
C10 Share-based payment Chapter 7

D Financial statements of groups of entities


D1 Group accounting including cash flow statements Chapters 11-12,
16
D2 Continuing and discontinued interests Chapter 14
D3 Changes in group structures Chapter 13
D4 Foreign transactions and entities Chapter 15

INTRODUCTION
(v)
E Specialised entities

E1 Financial reporting in specialised, not-for-profit and public sector entities Chapter 20
E2 Reporting requirements for small- and medium-sized entities (SMEs) Chapter 20

F Implications of changes in accounting regulation on financial reporting

F1 The effect of changes in accounting standards on accounting systems Chapter 21
F2 Proposed changes to accounting standards Chapter 21

G The appraisal of financial performance and position of entities


G1 The creation of suitable accounting policies Chapter 19
G2 Analysis and interpretation of financial information and measurement of performance Chapter 19

H Current developments


H1 Environmental and social reporting Chapter 17
H2 Convergence between national and international reporting standards Chapter 18
H3 Comparison of national reporting requirements Chapter 18
H4 Current reporting issues Chapter 18

INTRODUCTION
(vi)
Classroom tuition and Home study
Your studies for BPP consist of two elements, classroom tuition and home study.
Classroom tuition
In class we aim to cover the key areas of the syllabus. To ensure examination success you will to spend private

study time reinforcing your classroom course with question practice and reviewing areas of the Course Notes
and Study Text.
Home study
To support you with your private study BPP provides you with a Course Companion which helps you to work at
home and aims to ensure your private study time is effectively used. The Course Companion includes a Home
Study section which breaks down your home study by days, one to be covered at the end of each day of the
course. You will find clear guidance as to the time to spend on various activities and their importance.
You are also provided with progress tests and two course exams which should be submitted for marking as they
become due.
These may include questions on topics covered in class and home study.
BPP Learn Online
Come and visit the BPP Learn Online free at www.bpp.com/acca/learnonline for exam tips, FAQs and syllabus
health check.
ACCA Forum
We have thriving ACCA bulletin boards at www.bpp.com/accaforum. Register and discuss your studies with
tutors and students.
Helpline
If you have any queries during your private study simply contact your class tutor on the telephone number or
e-mail address that they will supply. Alternatively, call +44 (0)20 8740 2222 (or your local training centre if
outside the London area) and ask for a tutor for this paper to speak to you or to call you back within 24 hours.
Feedback
The success of BPP's courses has been built on what you, the students tell us. At the end of the course for each
subject, you will be given a feedback form to complete and return.
If you have any issues or ideas before you are given the form to complete, please raise them with the course
tutor or relevant head of centre.
If this is not possible, please email
INTRODUCTION
(vii)
Key to icons

Question practice from the Study Text
This is a question we recommend you attempt for home study.

Real world examples
These can be found in the Course Companion.

Section reference in the Study Text
Further reading is needed on this area to consolidate your knowledge.

INTRODUCTION
(viii)



1.1

Syllabus Guide Detailed Outcomes
Having studied this chapter you will be able to:
• Evaluate the consistency and clarity of corporate reports.
• Assess the insight into financial and operational risks provided by corporate reports.
• Discuss the usefulness of corporate reports in making investment decisions
• Evaluate the 'balance sheet' and 'fair value' models adopted by standard setters.
• Discuss the use of an accounting framework in underpinning the production of accounting standards.
• Assess the success of such a framework in introducing rigorous and consistent accounting standards.
• Identify the relationship between accounting theory and practice.
• Critically evaluate accounting principles and practices used in corporate reporting.
Exam Context
In Section B of the exam there will always be a discussion question and this could be based on some of the topics
covered in this chapter. The examiner could also ask you to discuss accounting treatments, or to criticise existing
Standards in the light of the Framework in some of the more practical questions in this section.

Qualification Context
The basic issues in this chapter, of accounting principles and the Framework were introduced in the Fundamentals level
Paper F7 Financial Reporting. At this level you will be expected to have a greater depth of understanding of these
areas.
Business Context
The debates over the usefulness of corporate reports and the respective advantages and disadvantages of the balance
sheet and fair value models are very much live arguments currently both within the standard-setting bodies and the
wider business and investment community. The fair value model is particularly controversial, especially among smaller
entities.

The financial reporting
framework
1: THE FINANCIAL REPORTING FRAMEWORK
1.2
Overview



The financial reporting
framework
Applications, strengths and
weaknesses of an accounting
framework
Contribution and limitations
of financial statements
Revenue recognition
1: THE FINANCIAL REPORTING FRAMEWORK
1.3
1 Contribution and limitations of financial statements
Contributions

1.1 The usual definition of the role of financial statements is that they are designed to provide
useful information for a range of users. The existence of accounting standards, and the
increasing harmonisation of these standards internationally is seen as improving the
consistency and clarity of financial statements.
Clarity and usefulness of financial statements is considered to have improved due to:
(a) The growth in narrative reporting as discussed in Chapter 1, allowing users a
greater insight into the risks faced by companies, both financial and operational,
and the policies they are implementing to address these.
(b) Increasing use of fair values in recent accounting standards. Fair values are
generally seen as being more relevant than historical balance sheet values for
investors assessing the position and performance of companies.
Limitations
1.2 Despite the improvements brought about by recent standards it can still be argued that there
are limitations to the usefulness of financial statements. These include:
(a) All information within financial statements is historical.
(b) All IASB standards are developed with the 'capital markets of the world' as the
perceived primary user. This is seen as limiting their usefulness in the context of
smaller entities.
(c) There are arguments over the usefulness of fair values themselves. It is generally
accepted that fair values that are based on market values of liquid assets are relevant
and reliable. There is no such general acceptance of hypothetical calculations of fair
values for assets where no actual market value exists. In these cases difficulties arise
due to the variety of assumptions that can be used. The complexity of the models
used for these valuations can also detract from the understandability of the resulting
information.
(d) Different users of financial statements will have different needs. Even within
'investors' it could be argued that a fixed income investor may be more interested in
the proceeds that could realised from the sale of an asset, while an equity investor
may be more interested in the cash spent on acquiring an asset in order to calculate
return on capital invested.

Disclosures
1.3 One answer to the conflicting needs of users and other limitations in the usefulness of
financial statements is to increase the amount of disclosure. For example, if management
disclose all the assumptions and inputs into valuation models used investors can reassess
the values independently.
1: THE FINANCIAL REPORTING FRAMEWORK
1.4
2 Application, strengths and weaknesses of an
accounting framework
Fair presentation and compliance with IFRSs
2.1 'Fair presentation' is the term used in IAS 1 Presentation of Financial Statements equivalent
to the concept of 'true and fair view'.
2.2 In order to achieve fair presentation, an entity must comply with:
• International Financial Reporting Standards. These comprise:
– International Financial Reporting Standards
– International Accounting Standards
– Interpretations originated by the IFRIC or the former SIC; and
• The Framework for the Preparation and Presentation of Financial Statements.
The IASB's Framework
2.3 The Framework consists of seven sections:
(a) The objective of financial statements
‘To provide information about the financial position, performance and changes in
financial position of an entity that is useful to a wide range of users in making
economic decisions.’
This section discusses the ways financial statements provide information about the
financial position, performance and changes in financial performance and why it is
necessary.
(b) Underlying assumptions
Financial statements are prepared based on the following assumptions:
(i) Accruals basis

(ii) Going concern.
(c) Qualitative characteristics of financial statements
The four principal qualitative characteristics are as follows:
(i) Understandability
(ii) Relevance
(iii) Reliability
(iv) Comparability.
Within reliability, faithful representation, substance over form, neutrality, prudence and
completeness should be followed. Materiality is detailed as being a factor in
relevance.
Chapter 1
Section 4.1-4.3
1: THE FINANCIAL REPORTING FRAMEWORK
1.5
(d) The elements of financial statements
Asset
A resource controlled by an entity as a result of past events and from
which future economic benefits are expected to flow to the entity.
Liability
A present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits.
Equity
The residual interest in the assets of an entity after deducting all its
liabilities.
Income
Increases in economic benefits during the accounting period in the form
of inflows or enhancements of assets or decreases of liabilities that
result in increases in equity, other than those relating to contributions
from equity participants.

Expenses
Decreases in economic benefits during the accounting period in the form
of outflows or depletions of assets or increases of liabilities that
result in decreases in equity, other than those relating to distributions
to equity participants.
(e) Recognition of the elements of financial statements
An item that meets the definition of an element should be recognised if:
• it is probable that any future economic benefit associated with the item will flow
to or from the entity; and
• the item has a cost or value that can be measured with reliability.
Consequently, in accordance with the Framework, in order for an item to be
recognised in the financial statements, the following questions need to be answered:
(1) Is the item one of the elements of financial statements?
↓
(2) Is it probable that economic benefits associated with the item will flow to or
from the entity?
↓
(3) Can the item be measured with reliability?
(f) Measurement of the elements of financial statements
Defines different bases of measurement of the elements of the financial statements
including specifically:
(i) historical cost;
(ii) current cost:
(iii) realisable value; and
(iv) present value.
Historical cost is the basis most commonly used.
(g) Concepts of capital and capital maintenance
Discusses alternative capital maintenance concepts and determination.
1: THE FINANCIAL REPORTING FRAMEWORK
1.6

Application of an accounting framework
2.4 Main uses
• Defines the concepts underpinning the production of new Standards
• Provides a common base for the evaluation of current Standards
• Source of accounting treatment where there is no Standard (IAS 8 – see Chapter 18)
Strengths and weaknesses of an accounting framework
2.5 Strengths
• Allows Standards to be developed on a consistent basis
• Can protect Standard-setters from political interference
Weaknesses
• It is open to question whether a single framework can be appropriate to the needs of
all users of financial statements
• It is not clear that the existence of a framework makes the task of preparing and
implementing standards any easier than it would be without a framework.
3 Revenue recognition (IAS 18)
3.1 Classes of revenue:
• Sales of goods
• Rendering of services
• Interest
• Royalties
• Dividends.
Sales of goods
3.2 Criteria for revenue recognition:
(a) Transfer to buyer of significant risks and rewards of ownership.
(b) Entity retains no continuing managerial involvement nor effective control over the
goods sold.
(c) Revenue can be measured reliably.
(d) Probable that the economic benefits associated with the transaction will flow to the
seller.
(e) Costs incurred in the transaction can be measured reliably.

Rendering of services
3.3 Criteria for revenue recognition:
(c)-(e) as above
+ Stage of completion can be measured reliably
Measurement
3.4 Revenue recognised ⇒ Fair value of consideration received or receivable.
Discount if material.
1: THE FINANCIAL REPORTING FRAMEWORK
1.7
Specific guidance
3.5 Type Revenue recognised:

Consignment sales
• When goods are sold to third party

Sale and repurchase
agreements
• Only when risks and rewards of ownership transferred
(even though legal title may have been transferred)

Subscriptions to
publications
• On a straight line basis over the period in which the
items are despatched (when items are of similar value in
each period)
• On the basis of sales value despatched in relation to
estimated total sales value of the subscription (when
items vary in value)

Instalment sales

(consideration receivable in
instalments)
• Present value at date of sale. Interest element
recognised as earned

Real estate sales
• Normally when legal title passes to the buyer
• If the seller is obliged to perform any significant acts
after transfer of title ⇒ as the acts are performed

Installation fees
• By reference to the stage of completion of the
installation (unless incidental to sale of the product ⇒
when goods sold)

Servicing fees included in
the price of the product
• Over period during which service is performed

Advertising commissions
• When advertisement or commercial appears before the
public

Admission fees from artistic
performances, banquets etc
• When event takes place

Initiation, entrance and
membership fees
• If membership only ⇒ when no significant uncertainty

as to collectability
• If entitles member to services/publications etc ⇒ on
basis that represents timing, nature and value of
benefits provided

Fees from development of
customised software
• By reference to stage of completion of development,
including completion of services provided for post-
delivery service support

Licence fees and royalties
• In accordance with the substance of the agreement, e.g.
straight line over the life of the agreement
• Immediately where the substance is a sale, e.g. a non-
cancellable contract where the licensee can exploit the
rights freely
1: THE FINANCIAL REPORTING FRAMEWORK
1.8
Lecture example 1
(Each part) Exam standard for 3-4 marks

(a) Realbuild operates in the house building sector and currently does not report under IFRS.
In the market in which Realbuild operates, the custom is to sign a contract which includes a
completion date when funds are transferred and the keys passed to the buyer. Realbuild's
accounting policy is to recognise revenue on signing the contract. Where there is still
building work to be completed, Realbuild delays revenue recognition until the completion of
the work.
(b) BCN Productions is a film production house. The company licences one of its new films to a
distributor in a foreign country over which BCN Productions has no control. The film is

expected to appear before the public over a period of six months and BCN Productions
intends to recognise the revenue over this period.
(c) KSoft is a start-up company that will develop bespoke software systems for corporate
clients. The company's policy is to invoice fixed amounts which include the software
development and fees for ongoing post-delivery support while the new software system is
implemented. KSoft intends to recognise the revenue for both elements on installation of
the software.
Required
Advise the directors as to the acceptability of the above accounting policies for revenue recognition
under IAS 18 Revenue.

Solution

1: THE FINANCIAL REPORTING FRAMEWORK
1.9
4 Chapter summary
4.1
Section Topic Summary
1 Contributions and
limitations of financial
statements
Financial statements are designed to provide clear and
consistent information that is useful for a wide range of
users. However, there are limitations to how useful the
information can be to any one specific user.
2 Applications, strengths
and weaknesses of an
accounting framework
The Framework establishes the objectives and
principles underlying financial statements and
underlies the development of new Standards.
3 Revenue recognition
(IAS 18)
Revenue recognition is also determined by the
principle of substance.
Revenue from sale of goods is recognised when
criteria establishing whether the risks and rewards of
ownership are transferred and the Framework
recognition criteria are met.
Revenue from services is recognised when the
Framework recognition criteria are met by reference
to the stage of completion of the service. Where the

outcome cannot be estimated reliably, revenue is
only recognised to the extent of expenses incurred
expected to be recovered, consistent with the
treatment of construction contract revenue.


Q11 Tree
1: THE FINANCIAL REPORTING FRAMEWORK
1.10

END OF CHAPTER

2.1

Syllabus Guide Detailed Outcomes
Having studied this chapter you will be able to:
• Appraise and discuss the ethical and professional issues in advising on corporate reporting.
• Assess the relevance and importance of ethical and professional issues in complying with accounting standards.
• Appraise the potential ethical implications of professional and managerial decisions in the preparation of
corporate reports.
• Assess the consequences of not upholding ethical principles in the preparation of corporate reports
• Discuss the increased demand for transparency in corporate reports, and the emergence of non-financial
reporting standards.

Exam Context
The ethical topics will be examined as part of question 1, the 50-mark case study. The examiner has said that he is not
going to take a 'rules-based' approach to these. He does not expect candidates to quote chunks of the ACCA or IFAC
codes. His emphasis will be on professional skills, presenting problems and asking candidates to explain how they
would deal with the practical issues involved.
Current developments such as the increased demand for transparency in corporate reports and the emergence of non-

financial reporting standards are more likely to appear in Section B of the exam, where they could form the basis of the
essay question.
Qualification Context
Ethical and professional issues are at the heart of the new ACCA qualification and feature in all of the papers at the
professional stage.
Business Context
The public reputation of the accounting and auditing profession was seriously damaged by the major corporate failures
such as Enron and Worldcom. The role of accountants operating within these entities as directors, or associated with
them as auditors has raised questions about the integrity of the profession. Globally, ethics in organisations have been
subject to increased scrutiny and criticism from the media, regulators and public interest groups.

Professional and ethical
duty of the accountant
2: PROFESSIONAL AND ETHICAL DUTY OF THE ACCOUNTANT
2.2
Overview



Complying with
accounting standards
Professional and ethical duty of the
accountant
Non-financial reporting
standards
Professional and ethical
issues
Transparency Standards
Framework for
decisions

Ethical principles in
corporate reporting
2: PROFESSIONAL AND ETHICAL DUTY OF THE ACCOUNTANT
2.3
1 Professional and ethical issues
Ethical principles in corporate reporting
1.1 The ACCA Code of Ethics and Conduct identifies the fundamental principles most relevant
to accountants in business involved in corporate reporting:
• Objectivity
• Integrity
• Professional competence and due care
• Confidentiality
• Professional behaviour.
Complying with accounting standards
1.2 In preparing financial statements or advising on corporate reporting, a variety of ethical
problems may arise:
(a) Professional competence is clearly a key issue when decisions are made about
accounting treatments and disclosures. Company directors and their advisers have a
duty to keep up to date with developments in IFRS and other relevant regulations.
Circumstances that may threaten the ability of accountants in these roles to perform
their duties with the appropriate degree of professional competence and due care
include:
• Insufficient time
• Incomplete, restricted or inadequate information
• Insufficient experience, training or education
• Inadequate resources
(b) Objectivity and integrity may be threatened in a number of ways:
• Financial interests, such as profit-related bonuses or share options
• Inducements to encourage unethical behaviour
(c) ACCA's Code of Ethics and Conduct identifies that accountants may be pressurised,

either externally or by the possibility of personal gain, to become associated with
misleading information. The Code clearly states that members should not be
associated with reports, returns, communications or other information where they
believe that the information:
• Contains a materially misleading statement
• Contains statements or information furnished recklessly
• Has been prepared with bias, or
• Omits or obscures information required to be included where such omission or
obscurity would be misleading
Chapter 2
Section 3
2: PROFESSIONAL AND ETHICAL DUTY OF THE ACCOUNTANT
2.4
What is the real issue?
Are there threats to compliance with the
fundamental principles?
Are the threats clearly significant?
Are there safeguards that will eliminate
the threats or reduce them to an
acceptable level?
Can you face yourself in the mirror?
Framework for decisions
1.3 ACCA has developed an overall framework to help its members make ethical decisions in a
wide range of circumstances:

Lecture example 1
Exam standard for 5 marks


You are the assistant group accountant of Bateleur Group. It is two weeks after the company's
financial year-end and you are currently preparing the first draft of the statutory financial
statements for the group.
When the consolidation return was received from Eagle Corp, one of the major operating
subsidiaries, it was apparent that Eagle's results fell well below what had been budgeted for the
year. Your immediate line manager, the group accountant, has suggested that you contact the
managers of Eagle to discuss the possibility of reassessing the estimates in relation to two
substantial construction contracts.
You are aware of the following:
(a) Your manager has suggested increasing the estimated proportion complete on the
contracts. She has explained that it only amounts to recognising a portion of contract
revenue that is expected to be certified as complete by surveyors within the next month and
that this is immaterial in the context of a contract that extends over a period of two years.
(b) Bateleur Group is planning to raise new capital in a rights issue shortly after the year-end.
2: PROFESSIONAL AND ETHICAL DUTY OF THE ACCOUNTANT

2.5
(c) Annual bonuses for all group staff, including those for you and the group accountant are
linked to the total group profit as reported in the statutory financial statements.
Another operating subsidiary has been the subject of litigation relating to the safety of its products.
The individual company accounts disclose a contingent liability relating to the litigation but the
group accountant has instructed you to omit the disclosure from the group financial statements.
Required
Explain any ethical and professional issues arising in the above scenario and the appropriate
action that you should take in response to your manager's request.

Solution