Reference no: EM132631221
The Conceptual Framework refers to "Qualitative characteristics", qualities that should characterize financial information in order to be useful to users of the financial statements. Namwandi Trading is busy preparing its financial statements for the reporting period ended 30 June 2015.
You are the Assistant Accountant of Namwandi Trading and are required to advise the CFO (Chief Financial Officer) which qualitative characteristics will have an impact on its financial statements.
The following is a list of issues that you have identified during your investigation:
1. In order to be as transparent as possible, the owner would like to disclose his date of birth and home address in the financial statements.
2. The CFO decided to only show the current reporting period's information as he could not find last year's file on his computer.
3. The CFO decided to take sabbatical leave for 7 months and will only release the financial statements upon his return.
4. The CFO will be in Japan for the 7 months of his sabbatical leave and informed you that he is planning to learn Japanese while on holiday and then to report the financial statements in Japanese only.
5. One of the company's largest receivables, Namib Ltd, encountered financial problems and can therefore settle only 25% of the outstanding debt. With the preparation of financial statements of Namwandi Trading, the entity decided not to take this information into account. This may influence the user's decisions.
Required:
Problem 1: In each case listed above, indicate which qualitative characteristic is at risk of not being adhered to and also indicate the respective group in which it is classified.
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