1. According to the Conceptual Framework for financial reporting, what are the qualities that make financial information useful? (2 marks)

1.2 How does the Conceptual Framework for financial reporting define assets and liabilities? (3 marks)

1.3 Fresh Forest Ltd bought a machine on 30 June 2020 for N$ 400 000. A loan was entered into with First Impression Bank Ltd for financing the machine. On 31 December 2020 (year-end), the outstanding amount on the loan was N$ 300 000. Depreciation of N$ 40 000 has been written off to date which brings the carrying value to N$ 360 000. In the statement of financial position the machine is measured at N$ 60 000 and no loan is disclosed. There is no further disclosure in the statements about the event.

Required: Explain to the management based on the Conceptual Framework, why the abovementioned disclosure is not correct. (7 Marks)

1.4 Discuss “fair presentation and compliance with IFRS” as one of the eight general features when preparing financial statements under the following heading:

1.4.1 How can it be presumed that financial statements comply with “fair presentation”? (2 marks)

1.4.2 When should financial statements be described as complying with IFRSs? (2 marks)

1.4.3 Discuss whether it is possible to rectify inappropriate accounting treatment. (2 marks)

1.5 When can management according to IAS 1 decide not to prepare financial statements on a going concern basis? (2 marks)

Answer rating: 100% (QA)

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