During the year ended 31 March 2016, BrookView Ltd. experienced the following transactions
i. Entered into a finance lease to rent an asset for substantially the whole of its economic life.
ii. A decision was made by the Board to change the company’s accounting policy from one of expensing the finance costs on building new retail outlets to one of capitalizing such costs.
iii. The company’s income statement prepared using historical costs showed a loss from operating its hotels, but the company is aware that the increase in the value of its properties during the period far outweighed the operating loss.
Explain how you would treat the items in (i) to (iii) above in BrookView’s financial statements and indicate on which of the IASB’s Conceptual Framework for Financial Reporting 2010 (the IFRS Framework) qualitative characteristics your treatment is based. (10 Marks).
***Try to explain your answers based on the framework.
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This question was asked on Jul 20, 2016 and answered on Jul 20, 2016.
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