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(Solved): Question One (a) The IASB Conceptual Framework provides the underlying rules, conventions and defin ...

Question One (a) The IASB Conceptual Framework provides the underlying rules, conventions and definitions that underpin the preparation of all financial statements prepared under International Financial Reporting Standards (IFRS) and; i) Ensures standards developed within a conceptual framework ii) Provide guidance on areas where no standard exists iii) Aids process to improve existing standards iv) Ensures financial statements contain information that is useful to users v) Helps prevent creative accounting However, the Conceptual Framework has several notable omissions. For example, it does not include an explicit reference to substance over form. The International Accounting Standards Board has also removed prudence from its framework and has attracted criticism from the academic and practitioner communities for doing so. Required: (i) Discuss the features of the concept of prudence and the arguments for and against its reintroduction into the Conceptual Framework. (6 marks) (ii) Explain the important of guidance in the Conceptual Framework as it relates to the role of fundamental and enhancing qualitative characteristics of financial reporting information in financial reporting. (8 marks) (b). Yamikani Limited owns 90% of the shares in Lemekani Limited. Yamikani originally acquired 25% of the Lemekani shares many years ago. On 1st January 2021 year Yamikani acquired a further 55% to take its holding to 80%. In the year 2022, Yamikani acquired a further 10% to take its holding to 90%. Required: Explain how the accounting treatment for Lemekani Ltd should have been accounted for each time Yamikani Ltd acquired shares. (6 marks) [Total: 20 marks

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