Professional Documents
Culture Documents
Tutorial 2.1
(Solution included in
SQB)
New Conceptual
Framework
Chapter 2
Basic level
Chapter 2.2
Application of Framework
Chapter 2
Basic level
Maria Carves (Pty) Ltd is a company specialising in the sale of high quality glassware. Given
a spate of recent successes over the past few years, management are contemplating the
construction of a new head office. During their preliminary investigations, management
asked three prominent architects each to submit a design for the building. The architects
were collectively paid R150 000 during the current financial year, which ended on
31 December 20x8, for their design plans.
Given the recent economic downturn, management are yet to make any serious construction
plans; but they are concerned that the architect fees will negatively affect their profits for the
year. They have argued that they prefer to capitalise the amount paid as an asset in the
current financial year, as they intend to use these plans at some point in the future.
Required:
Discuss, with reference to the Conceptual Framework (2010), whether the decision of the
management of Maria Carves (Pty) Limited would be acceptable, and any information that
you may need in order to make that treatment appropriate.
Tutorial 2.3
Explaining a Framework
Chapter 2
Intermediate level
You have been asked to assist in the writing of certain paragraphs and providing some
examples for a presentation of the Conceptual Framework (2010) to non-accountants. You
have met with the team responsible for the presentation, and they have requested your help
with the following issues:
1. Prepare an explanation of the entity concept in the preparation of financial statements.
2. Prepare an explanation of the objective of financial reporting.
3. Prepare an explanation of the definition and recognition criteria of an asset. You should
include in this explanation at least two examples highlighting the circumstances when an
asset will meet the definition and recognition criteria of an asset, and when not.
4. Prepare examples to explain the definition of an expense and how this would be
different from recognising an asset.
5. Explain the accrual basis of accounting.
Tutorial 2.4
Application of
Framework
Chapter 2
Intermediate level
There has been speculation that one day financial statements will be replaced by users
immediate access to companies databases. Direct and immediate access to a database
which stores data relating to transactions or other events in the companys experience would
enable users to select and analyse the information in whatever manner they felt was
appropriate.
Required:
Discuss in terms of the Conceptual Framework (and Section 2 of IFRS for SMEs) the merits
of access to databases in lieu of the publication of financial reports.