a) Calendar has a reporting date of 31 December 20X7. It prepares its financial statements in accordance with International Financial Reporting Standards. Calendar develops biotech products for pharmaceutical companies. These pharmaceutical companies then manufacture and sell the products. Calendar receives stage payments during product development and a share of royalties when the final product is sold to consumers. A new accountant has recently joined Calendar's finance department and has raised a number of queries. The new accountant has been reviewing Calendar's financial reporting processes. She has recommended the following: • All purchases of property, plant and equipment below $500 should be written off to profit or loss. The accountant believes that this will significantly reduce the time and cost involved in maintaining detailed financial records and producing the annual financial statements. • A checklist should be used when finalising the annual financial statements to ensure that all disclosure notes required by specific IFRS and AS Standards are included. Required: With reference to the concept of materiality, discuss the acceptability of the above two proposals. Note: Your answer should refer to the IFRS Practice Statement 2 Making materiality udeements
a) Calendar has a reporting date of 31 December 20X7. It prepares its financial statements in accordance with International Financial Reporting Standards. Calendar develops biotech products for pharmaceutical companies. These pharmaceutical companies then manufacture and sell the products. Calendar receives stage payments during product development and a share of royalties when the final product is sold to consumers. A new accountant has recently joined Calendar's finance department and has raised a number of queries. The new accountant has been reviewing Calendar's financial reporting processes. She has recommended the following: • All purchases of property, plant and equipment below $500 should be written off to profit or loss. The accountant believes that this will significantly reduce the time and cost involved in maintaining detailed financial records and producing the annual financial statements. • A checklist should be used when finalising the annual financial statements to ensure that all disclosure notes required by specific IFRS and AS Standards are included. Required: With reference to the concept of materiality, discuss the acceptability of the above two proposals. Note: Your answer should refer to the IFRS Practice Statement 2 Making materiality udeements
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:a) Calendar has a reporting date of 31 December 20X7. It prepares its financial statements in
accordance with International Financial Reporting Standards. Calendar develops biotech products for
pharmaceutical companies. These pharmaceutical companies then manufacture and sell the products.
Calendar receives stage payments during product development and a share of royalties when the final
product is sold to consumers. A new accountant has recently joined Calendar's finance department
and has raised a number of queries.
The new accountant has been reviewing Calendar's financial reporting processes. She has
recommended the following:
• All purchases of property, plant and equipment below $500 should be written off to profit or loss.
The accountant believes that this will significantly reduce the time and cost involved in
maintaining detailed financial records and producing the annuai financial statements.
• A checklist should be used when finalising the annual financial statements to ensure that all
disclosure notes required by specific IFRS and LAS Standards are included.
Required: With reference to the concept of materiality, discuss the acceptability of the above two
proposals. Note: Your answer should refer to the IFRS Practice Statement 2 Making materiality
judgements
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