Accounting theory practice Essay Example | Topics and Well Written Essays - 2000 words

Accounting theory practice - Essay Example This revised IAS 1 is applicable to all entities whether those are profit oriented or not- for profit entities. ‘Not- for profits entities in both the public and private sectors can apply this standard, however they may need to change the description used for particular line items within their financial statements and for the financial statements themselves. This standard applies to those entities that present consolidated financial statements and those that present financial statements as defined in IAS 27: Consolidated and Separate Financial Statements. It does not apply to the structure and contents of condensed interim financial statements prepared in accordance with IAS 34: Interim Financial Reporting.’ (Barry and Jermakowicz, page 22)2. In other words IAS 1 is applicable to all financial statements that cater general purpose needs. ‘General purpose financial statements are those intended to meet the needs of users who are not in a position to demand reports t ailored to meet their specific information needs. They include statements presented separately or those within another public document, such as annual report or prospectus.’(David Alexander and Simon Archer, 3.04)3 IAS 1 revised in September 2007, issued by International Accounting Standard Board (IASB), is the first of the series of expected revisions on the standard. While issuing the revised IAS 1, IASB (2007)4 stated in the press release that ‘the changes made are to require information in financial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income. This will enable the readers to analyze changes in a company’s equity resulting from transactions with owners (such as dividend and share purchase) separately from non- owner changes (such as transactions with third parties)’. This indicates that the basic objective of changes is to present each financial