ATC

INTERNATIONAL

ACCA

PAPER F7

FINANCIAL REPORTING
(INTERNATIONAL)

STUDY SYSTEM
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 SESSION 00 - CONTENTS

CONTENTS
Session Page

1 GAAP and the IASB 0101

2 Framework for the Preparation and Presentation of Financial Statements 0201
3 Substance over Form 0301
4 IAS 1 - Presentation of Financial Statements 0401
5 IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors 0501
6 IAS 18 - Revenue 0601
7 IAS 16 - Property, Plant and Equipment 0701
8 IAS 23 - Borrowing Costs 0801
9 IAS 20 - Accounting for Government Grants &
Disclosure of Government Assistance 0901
10 IAS 17 - Leases 1001
11 IAS 38 - Intangible Assets 1101
12 IAS 40 - Investment Properties 1201
13 IAS 36 - Impairment of Assets 1301
14 IAS 2 - Inventories 1401
15 IAS 11 - Construction Contracts 1501
16 IAS 37 - Provisions, Contingent Liabilities and Contingent Assets 1601
17 IAS 12 - Income Taxes 1701
18 Financial Instruments 1801
19 Regulatory Framework 1901
20 Basic principles - Consolidated Statement of Financial Positions 2001
21 Consolidated Statement of Financial Positions - Cosmetic adjustments 2101
22 Consolidated Statement of Financial Position - Further adjustments 2201
23 Consolidated Statement of comprehensive income 2301
24 IAS 28 - Investments in Associates 2401
25 Analysis and Interpretation 2501
26 IAS 7 - Statement of Cash Flows 2601
27 IAS 33 - Earnings Per Share 2701
28 IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations 2801
29 IAS 10 - Events after the Reporting Period 2901
Index 3001

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SESSION 00 - CONTENTS

(iv)
 SESSION 00 - INTRODUCTION

INTRODUCTION
This Study System has been specifically written for the Association of Chartered Certified
Accountants fundamentals level examination, Paper F7 Financial Reporting.

It provides comprehensive coverage of the core syllabus areas and is designed to be used
both as a reference text and interactively with the ATC Learning System to provide you with
the knowledge, skill and confidence to succeed in your ACCA studies.

SYLLABUS
CR (P2) BA (P3)

CL (F4) FR (F7) AA (F8)

FA (F3)

Aim

To develop knowledge and skills in understanding and applying accounting standards and
the theoretical framework in the preparation of financial statements of entities, including
groups and how to analyse and interpret those financial statements.

Main capabilities

On successful completion of this paper, candidates should be able to: A

Discuss and apply a conceptual framework for financial reporting B

Discuss a regulatory framework for financial reporting

C Prepare and present financial statements which conform with International accounting
standards

D Account for business combinations in accordance with International accounting

standards

E Analyse and interpret financial statements.

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SESSION 00 - SYLLABUS

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

A conceptual A regulatory
framework for framework for
financial reporting financial reporting
(A) (B)

Financial statements (C) Analysis and

interpreting
financial
statements
(E)

Business combinations (D)

RATIONALE

The financial reporting syllabus assumes knowledge acquired in Paper F3, Financial
Accounting, and develops and applies this further and in greater depth.

The syllabus begins with the conceptual framework of accounting with reference to the
qualitative characteristics of useful information and the fundamental bases of accounting
introduced in the Paper F3 syllabus within the Knowledge module. It then moves into a
detailed examination of the regulatory framework of accounting and how this informs the
standard setting process.

The main areas of the syllabus cover the reporting of financial information for single
companies and for groups in accordance with generally accepted accounting principles and
relevant accounting standards.

Finally, the syllabus covers the analysis and interpretation of information from financial
reports.

Detailed syllabus

A A conceptual framework for financial reporting

1. The need for a conceptual framework

2. Understandability, relevance, reliability and comparability

3. Recognition and measurement

4. The legal versus the commercial view of accounting

5. Alternative models and practices

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 SESSION 00 - SYLLABUS

6. The concept of faithful representation (true and fair view)

B A regulatory framework for financial reporting

1. Reasons for the existence of a regulatory framework

2. The standard setting process

3. Specialised, not-for-profit, and public sector entities

C Financial statements

1. Statements of cash flows

2. Tangible non-current assets

3. Intangible assets

4. Inventory

5. Financial assets and financial liabilities

6. Leases

7. Provisions, contingent liabilities, and contingent assets

8. Impairment of assets

9. Taxation

10. Regulatory requirements relating to the preparation of financial statements

11. Reporting financial performance

D Business combinations

1. The concept and principles of a group

2. The concept of consolidated financial statements

3. Preparation of consolidated financial statements including an associate

E Analysing and interpreting financial statements

1. Limitations of financial statements

2. Calculation and interpretation of accounting ratios and trends to address users and
stakeholders needs

3. Limitations of interpretation techniques

4. Specialised, not-for-profit, and public sector entities

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SESSION 00 - SYLLABUS

Approach to examining the syllabus

The syllabus is assessed by a three-hour paper-based examination.

All questions are compulsory. It will contain both computational and discursive elements.
Some questions will adopt a scenario/case study approach.

Question 1 will be a 25 mark question on the preparation of group financial statements

and/or extracts thereof, and may include a small discussion element. Computations will be
designed to test an understanding of principles.

Question 2, for 25 marks, will test the reporting of non-group financial statements. This may
be from information in a trial balance or by restating draft financial statements.

Question 3, for 25 marks, is likely to be an appraisal of an entitys performance and may

involve statements of cash flow.

Questions 4 and 5 will cover the remainder of the syllabus and will be worth 15 and 10
marks respectively.

An individual question may often involve elements that relate to different subject areas of
the syllabus. For example the preparation of an entitys financial statements could include
matters relating to several accounting standards.

Questions may ask candidates to comment on the appropriateness or acceptability of

managements opinion or chosen accounting treatment. An understanding of accounting
principles and concepts and how these are applied to practical examples will be tested.

Questions on topic areas that are also included in Paper F3 will be examined at an
appropriately greater depth in this paper.

Candidates will be expected to have an appreciation of the need for specified accounting
standards and why they have been issued. For detailed or complex standards, candidates
need to be aware of their principles and key elements.

Guide to examination assessment

For financial accounting papers ACCA will publish examinable documents once a year to
indicate exactly what regulations and legislation could potentially be assessed within
identified examination sessions.

For the F7 exam, regulation issued or legislation passed on or before 30th September will be
assessed from 1st June of the following year to 31st May of the year after that.

Therefore any regulation issued or legislation passed by 30th September 2008 is examinable in
the June 2009 and December 2009 examination sessions.

Check the ACCA website for a list of examinable documents for each examination session.

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 SESSION 00 - EXAM TECHNIQUE

EXAMINATION TECHNIQUE
Time allocation

Divide your time in proportion to the marks on offer. To allocate your time
multiply the marks for each question by 1.7 minutes. If you allocate 1.8
minutes per mark you will find that at the end of the exam you need a
couple more minutes!

e.g. 25 mark question should take you 25 1.7 = 43 minutes

Stick to this time allocation.

The first marks are the easiest to gain in each question, so dont be tempted
to overstep the time allocation on one question to tidy up a complicated
answer, start the next question instead.

Numerical questions

Before starting a computation, picture your route. Do this by jotting down the steps you are
going to take and imagining the layout of your answer.

Set up a pro-forma structure to your answer before working the numbers.

Use a columnar layout if appropriate. This helps to avoid mistakes and is

easier for the marker to follow.

Include all your workings and cross-reference them to the face of your
answer.

A clear approach and workings will help earn marks even if you make an
arithmetic mistake.

If you do spot a mistake in your answer, it is not worthwhile spending time

amending the consequent effects of it. The marker of your script will not
punish you for errors caused by an earlier mistake.

Dont ignore marks for written recommendations or comments based upon

your computation. These are easy marks to gain.

If you could not complete the calculations required for comment then
assume an answer to the calculations. As long as your comments are
consistent with your assumed answer you can still pick up all the marks for
the comments.

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SESSION 00 - EXAM TECHNIQUE

Case Study/Scenario based questions

Read the requirements carefully to identify

Instruction e.g. outline, discuss .....

Content e.g. the factors, the advantages ......
Vehicle/Format e.g. report, memo, letter ......
Addressee e.g. the board, the accountant ........

Read the scenario quickly to identify

Company name, dates, nature of business, performance.

Recall the technical knowledge you have learned relating to the content
from the requirements and your quick read of the scenario.

Read the scenario again slowly and actively

highlighting key points, or

noting implications in the margin, and
noting points on a plan of your answer.

Draw together your technical knowledge and the points from the scenario.
Do this by thinking and rearranging your plan, before you write up your
answer.

Written questions

Planning

Read the requirements carefully at least twice to identify exactly how many
points you are being asked to address.

Jot down relevant thoughts on your plan

Give your plan a structure which you will follow when you write up the
answer.

Presentation

Use headings, indentation and bullet points to give your answer structure
and to make it more digestible for the marker.

Use short paragraphs for each point that you are making.

Use bullet points where this seems appropriate.

Separate paragraphs by leaving at least one line of space between each one.

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 SESSION 00 - EXAM TECHNIQUE

Style

Long philosophical debate does not impress markers. Concise, easily

understood language scores marks.

Lots of points briefly explained tends to score higher marks than one or two
points elaborately explained.

Imagine that you are a marker, you would like to see a short, concise answer
which clearly addresses the requirement.

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SESSION 00 - EXAM TECHNIQUE

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