Financial Accounting 4e Contents

Preface

About the authors

1 The financial reporting environment
Financial reporting framework
Reporting entities
The statutory aspect
Setting accounting standards
Directors’ obligations
New Zealand Stock Exchange regulations
Summary and review questions

2 The New Zealand Framework (NZ Framework)
Purpose of the framework
NZ Framework
Assumptions underlying the preparation of general purpose financial reports
Definition and recognition of the financial elements of general purpose financial reports
Relationship between the NZ Framework and traditional accounting principles
Measurement of the elements of financial statements
The concepts of capital and capital maintenance
Summary and review questions

3 Accounting for equity
Nature of company shares and share transactions
Accounting for share issues
The solvency test
Accounting for dividends
Accounting for share issues that do not raise cash
Accounting for options and convertible securities
Repurchase and redemption of shares
Disclosures
Summary and review questions

4 Financial reporting presentation and disclosures
True and fair view
Fair presentation and compliance with NZ IFRSs
Disclosure of accounting policies
Concept of materiality
Presentation of financial reports
Information to be disclosed in financial statements
Events following the Balance Sheet date
Prior period errors
Appendix 4.1: Briscoes’ Notes to financial statements
Appendix 4.2: Converting Comprehensive Income Statement and Balance Sheet items to cash flow
Appendix 4.3: Full illustration: Preparing financial statements from a Trial Balance
Summary and review questions

5 Accounting for property, plant and equipment
Objectives and definitions in the Standards
Assets included in the definitions
Determining costs – initial recognition and measurement of non-current assets
Determining costs — subsequent expenditure on property, plant and equipment
Depreciation
Revaluations of property, plant and equipment
Impairment
Disposals
Disclosures
Summary and review questions

6 Accounting for inventory
Purpose and definitions in the Standard
The nature of inventories
Cost of inventories
Recognition as an expense
Disclosures
Summary and review questions

7 Accounting for intangibles, provisions and contingencies
Intangibles defined
Recognition of an intangible asset
Research and development defined
Alternative approaches to accounting for research and development
Recognition as an expense
Measurement subsequent to initial recognition
Internally generated intangibles not recognised
Retirement and disposals
Disclosures
Provisions and contingencies
Measurement of provisions
Application of the recognition and measurement rules
Disclosures
Decision trees
Summary and review questions

8 Accounting for leases and hire-purchase contracts
What is a lease?
The advantages of leasing
What are the two main categories of lease?
Classifying and distinguishing between finance and operating leases
Accounting for operating leases in the records of the lessee and lessor
Accounting for finance leases
Sale and leaseback transactions
Accounting for hire-purchase (instalment) sales contract
Leases of land and buildings
Future developments – NZ IFRS 16
Summary and review questions

9 Accounting for Goods and Services Tax
Purpose and definitions
Goods and Services Tax
Compliance with the NZ Framework
Accounting for GST
GST accounting periods
Financial reporting
Summary and review questions

10 Analysis and interpretation of financial statements
Sources of information
The users and their needs – objectives of financial analysis
Analysing business performance
The accounting methods and estimates use
Using ratios to make business decisions
Financial stability ratios
Asset utilisation ratios
Profitability ratios
Investor ratios
Inter-relationship of ratios
Reporting and the usefulness of ratio analysis
Analysing the Statement of Cash Flows
Summary and review questions

11 Accounting for business combinations
The nature of business combinations
Determining whether a parent–subsidiary relationship exists
Application of the standards in NZ IFRS 3
The effect of control between entities
Basic consolidation principles
Limitations of consolidated financial statements
Summary and review questions

12 Accounting for liquidations and receiverships
Definitions
Introduction
Appointment of a receiver
The powers of a receiver
The duties of a receiver
Liquidations
Appointment of a liquidator
The powers of a liquidator
The duties of a liquidator
Priority of claimants
Reports
Worked example of a liquidation
Worked example of a receivership
Summary and review questions

13 Environmental and social responsibility accounting
Introduction
What are the responsibilities of business entities?
Statutory and other requirements for social responsibility accountability in New Zealand
Methods of accounting for social responsibility
Historical development of social responsibility reporting in New Zealand
International social responsibility reporting
Investor reaction to social responsibility reporting
Summary and review questions

Glossary
Present value tables 
Index