Distinguish between a finance lease and an operating lease indicating how they should be treated in the financial statements as per International Accounting Standard (IAS) 17 'Leases'

The purpose of this financial Reporting and Analysis Revision Question and Answer is to equip the candidate with knowledge and skills to enable him or her to prepare well for the Financial reporting exams.

The purpose of this advanced financial reporting revision Questions and Answers is to help the candidate on how to prepare for his or her advanced financial reporting exams

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for various entities and account for specialized transactions in both the public and private sectors

Factors to be considered in choosing the presentation currency 1. Whether the activities of the foreign operation are carried out as an extension of the reporting entity or are being carried out with significant degree of autonomy. 2. Whether the transactions with the reporting entity are high or low proportion of the foreign operations activities. 3. Whether cash flows from the activities of the foreign operation directly affects the cash flows of the reporting entity or not. 4. Whether foreign operations is able to borrow and service its own debts independently. June 2010 Question Two (a) Differences between income statement view and balance sheet view of deferred taxes: When the income statement view of deferred taxes is taken, there is a focus on the differences between the accounting profit and and taxable profit ie timing differences. This was the view of deferred taxes taken internationally and in UK and USA until the 1990s.The balance sheet view focuses on the difference between the carrying amount of assets and liabilities and their tax bases. It is the method recommended by IAS 12. (b) (i) Nil provision This is where the financial statements are prepared without reflecting all the effects of tax iethere is not provision for deferred taxes. (ii) Partial provision Under this approach deferred tax is provided but not on all temporary differences. The management uses a subjective approach in deciding which temporary differences may crystallize.ie you provide for future tax consequences to the extent that you have reasonable evidence that it will reverse within a reasonable period of time usually 3 years.

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for various entities and account for specialized transactions in both the public and private sectors