Unit 1 - Framework - Unit 1 The Conceptual and Statutory...

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1 Unit 1 The Conceptual and Statutory Framework of Financial Reporting And Accounting Standards in Hong Kong and Internationally
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2 Accounting Standards in Hong Kong and Internationally Accounting standards can be defined as a method of, or an approach to, preparing financial statements which has been selected by the authoritative government ministry or professional body as the desirable method or approach to apply. In Hong Kong, they call Hong Kong Financial Reporting Standards (HKFRSs)
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3 Pursuant to section 18A of the Professional Accountants Ordinance (Chapter 50) of Hong Kong, the Council of Hong Kong Institute of Certified Public Accountants (HKICPA) may, in relation to the practice of accountancy, issue or specify any standards of accounting practices required to be observed, maintained or otherwise applied by members of the HKICPA. HKICPA has set up the Financial Accounting Standards Committee (FASC) to develop accounting standards to achieve convergence with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). HKICPA approves and publishes Hong Kong Financial Reporting Standards (HKFRS) which set out recognition, measurement, presentation and disclosure requirements dealing with transactions and events that are important in general purpose financial statements including specific industries. Accounting Standards in Hong Kong and Internationally
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4 Accounting Standards in Hong Kong and Internationally Purpose of setting accounting standards (HKFRSs): 1 To regulate and standardise accounting treatment and disclosure practices in financial statements. Types of accounting standards (HKFRSs): 1 Presentation standards, e.g. Cash flow statements Preparation of financial statements 1 Content – derivation standards, e.g. Impairment of assets Property, plant and equipment Investment properties Borrowing costs
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5 Accounting Standards in Hong Kong and Internationally HKFRS are based on a Conceptual Framework, which addresses the concepts underlying the information presented in general purpose financial statements. The objective of the Conceptual Framework is to facilitate the consistent and logical formulation of HKFRS. The Framework also provides a basis for the use of judgement in resolving accounting issues. HKFRS are designed to apply to the general purpose financial statements and other financial reporting of all profit-oriented entities. Although HKFRS are not designed to apply to not-for-profit activities in the private sector, public sector or government, entities with such activities may find them appropriate.
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6 Accounting Standards in Hong Kong and Internationally The financial statements prepared based on HKFRS are directed towards the common information needs of a wide range of users, e.g. shareholders, creditors, employees and the public at large.
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This note was uploaded on 03/21/2011 for the course ACCOUNTING 110 taught by Professor Mcwilliams during the Spring '09 term at San Jose State.

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Unit 1 - Framework - Unit 1 The Conceptual and Statutory...

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