Presentation on "IFRS" by Shabbir Akhtar (PGPM 10, Globsyn Business School - Global Campus) for the subject "Financial Management"

1. International Financial
Reporting Standards:
objectives | assumptions | characteristics | elements
Presented by – Shabbir Akhtar
(PGPM 10, Globsyn Business School – Global Campus)

2. Objectives of Financial Statement
• Primary objective is to assist in
decision making
• Other objectives include; to
provide information about...
 resources and obligations
 changes in such resources and
obligations
 changes in net resources
• And; information that...
 assists in estimating the earning
potentials
 is needed by the users of the
statements

3. Two Basic Accounting Models
Authorized by IFRS
Financial capital maintenance in Financial capital maintenance in units
nominal monitory units of constant purchasing power
Historical cost accounting during It is the constant item purchasing
low inflation and deflation – power accounting during low
Under this concept, a profit is
inflation and deflation and
earned only if the financial
amount of the net assets at the constant purchasing power
end of the period exceeds the accounting during hyperinflation.
financial amount of net assets at Financial capital maintenance in
the beginning of the period, after units of constant purchasing
excluding any distributions to,
power is not authorized under
and contributions from, owners
during the period. US GAAP.

4. Four Underlying Assumptions of IFRS
• Accrual basis: transactions are recorded as and when they
occur even if the amount is not received or paid.
• Going concern: an entity will continue for the following years.
• Stable measuring unit assumption: financial capital
maintenance in nominal monetary units or traditional
Historical cost accounting
• Units of constant purchasing power: financial capital
maintains a constant purchasing power during low inflation
and deflation

5. Characteristics of Financial Statements
• Understandability
• Reliability
• Relevance
• Comparability

6. Elements of Financial Statements
• Asset: An asset is what is owned by the company from the
past events which gives future benefits.
• Liability: A liability is a present obligation of the enterprise
arising from the past events, which is to be settled in the
future if required from its available assets.
• Equity: Equity is also known as owner's equity. It is the
constant real value of shareholders´ equity.
• Statement of Changes in Equity: It states the total
comprehensive income, owners investment, dividends,
reconciliations etc.

7. Elements of Financial Statements
• Revenues: It is the income that a company receives during its
normal business activities usually from sale of goods and
services to customers. Some companies receive revenue from
interest, dividend and royalties as well.
• Expenses: It is outflow of money to another person or group
to pay for an item or service. It reduces owners equity.
• Statement of Cash Flows: It is a financial statement that
shows changes in balance sheet accounts and income affects
cash and cash equivalents and breaks the activities down to
operating, financial and investing activities. It shows the
inflow and outflow of cash.

8. Thank You