Financial Reporting notes

Financial Reporting Revised and Updated notes

Table of Contents


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 specialised transactions in both the public and private sectors.


A candidate who passes this paper should be able to:

  • Account for various assets and liabilities
  • Prepare financial statements including published financial statements for various types of organisations
  • Account for specialised transactions
  • Prepare group financial statements
  • Analyze and interpret financial statements
  • Apply International Financial Reporting Standards (IFRSs) and International Public Sector Accounting Standards (IPSASs) in preparing non-complex financial statements.


 9.1       Assets of financial statements

  • Assets and liabilities covered in Paper No. 1: Financial Accounting still examinable (in the context of published financial statements)
  • Inventories
  • Borrowing costs
  • Investment property
  • Financial Instruments (presentation, recognition, classes, measurement, de-recognition and disclosures) (excluding impairment, hedging and embedded derivatives)
  • Leases (all aspects including dealers and sale and leaseback)

9.2       Liabilities of financial statements

  • Employee benefits
  • Provisions, contingent liabilities and contingent assets
  • Income tax (current and deferred tax but not deferred tax in the case of groups)
  • events after reporting date

9.3       Further aspects of partnerships

  • Dissolutions (including piece-meal)
  • Amalgamation Conversion and sale of partnership firms 9.4 Special transactions
  • Revenue recognition
  • Contracts with customers
  • Hire purchase and installment sales transactions (split of hire purchase profit into interest and gross profit and using actuarial method and sum of digits to account for interest); sale of goods, construction contracts and real estate, provision of services
  • Government grants

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 9.5       Financial statements for various types of businesses

  • Inventory and biological assets in agriculture
  • Insurance
  • Banks
  • Professional firms (lawyers and accountants)
  • Accounting for branches including foreign branches
  • Co-operative societies

9.6       Published financial statements

  • Presentation of financial statements (income statement, statement of comprehensive incomes, statement of changes in equity, statement of financial position and the notes to financial statements)
  • Accounting policies, changes in accounting estimates and errors (prior period errors)
  • Fair value measurement

9.7       Consolidated financial statements

  • Accounting for one subsidiary (consolidated income statement, consolidated statement of financial position and a statement of cash flows – group financial statements); consolidated statement of cash flows also covers associate companies and jointly controlled entities but excludes acquisition and disposal of subsidiaries during the year
  • Investments in associates and joint ventures

9.8       Financial statements under IPSASs

 [Provisions of the following IPSASs (emphasis on distinctions with equivalent IASs/IFRSs)]

  • Presentation of financial statements
  • Accounting policies, changes in accounting estimates and errors
  • Borrowing costs
  • Consolidated and separate financial statements
  • Investments in associates
  • Interests in joint ventures
  • Events after the reporting date
  • Construction contracts, leases and inventories
  • Provisions, contingent liabilities and contingent assets

9.9       Emerging issues and trends


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