Fianancial reporting and analysis Essay Example | Topics and Well Written Essays - 1000 words

Fianancial reporting and analysis - Essay lawsuitIn 2011, the international accounting standard board revised the existing financial standards, and issued a new-sprung(prenominal) set of standard for purposes of reflecting the changes in global business practices, economies of the world, and markets. The new rules are, consolidated financial statement (IFRS 10), roast arrangements (IFRS 11), disclosure of pleases different entities (IFRS 12), separate financial statements (IAS 27), and revised associates and joint ventures (IAS 28). The consolidated financial statement (IFRS 10) was created for purposes of outlining the presentations of a consolidated financial statement. This rule requires business organizations to consolidate the entities that are under their control, and this includes giving them the rights of variable returns, and the might of affecting the returns acquired over an investee (ACCA, 2012). On this basis therefore, the rule was created to institute the values that will guide the facility of consolidated financial statements when one business organization controls one or more business organizations (ACCA convey text, 2011). This rule was created for purposes of defining the concept of control of a business entity, and as a basis of consolidation. It establishes the principles of identifying whether an investor has somewhat level of control over an investee, and therefore consolidating the investee (ACCA, 2012). This standard has the following key requirements 1. It requires business organizations that support an interest in other business organizations to conduct an assessment in order to determine whether control exists or not. 2. In order for a business organization to control another business organization, the following characteristics essential be present, rights to the benefits of variable returns because of the involvement of the business entity with the investee, authority over the investee, the ability to influence the invest ee for purposes of benefiting the investor. 3. An investor must have substantive rights for purposes of giving him control of an investee and legitimacy to control some affairs of the organization. Joint arrangements on the other hand outline the accounting procedures that business organization that jointly control an entity ought to follow. There must be a contractual agreement that denotes the control of an entity by the business organizations in question. Media (2011) denotes that joint arrangements are of 2 types, namely joint operations, and ventures. In a joint venture, net assets and equity are accounted for, while in a joint operation, accountants factor in the obligation of liability, and right to access the assets by the business organization under collaboration (ACCA study text, 2011). On this basis therefore, the International Accounting dialog box established this standards for purposes of determining the nature of a joint arrangement business organizations engage in. This is to enable stakeholders acquire the capability of analyzing the rights and obligations of these business entities under the joint arrangement. For a joint arrangement to exist, the following are the important requirements (Gray and Manson, 2012) 1. There must be prove of control of the organization by the business entity involved. 2. The concept of unharmed consent must be present, and this