ATC

INTERNATIONAL

ACCA

PAPER F7
FINANCIAL REPORTING
(INTERNATIONAL)

STUDY SYSTEM

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SESSION 00 CONTENTS

CONTENTS
Session

Page

GAAP and the IASB

0101

Framework for the Preparation and Presentation of Financial Statements

0201

Substance over Form

0301

IAS 1 Presentation of Financial Statements

0401

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

0501

IAS 18 Revenue

0601

IAS 16 Property, Plant and Equipment

0701

IAS 23 Borrowing Costs

0801

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

(iii)

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

CL (F4)

CR (P2)

BA (P3)

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

Discuss a regulatory framework for financial reporting

Prepare and present financial statements which conform with International accounting
standards

Account for business combinations in accordance with International accounting

standards

Analyse and interpret financial statements.

(v)

SESSION 00 SYLLABUS

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

A conceptual
framework for
financial reporting
(A)

A regulatory
framework for
financial reporting
(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

(vi)

SESSION 00 SYLLABUS
6.

The concept of faithful representation (true and fair view)

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

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

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

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

(vii)

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.

(viii)

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.

(ix)

SESSION 00 EXAM TECHNIQUE

Case Study/Scenario based questions

Read the requirements carefully to identify

Instruction e.g. outline, discuss .....
Content eg the factors, the advantages ......
Vehicle/Format eg report, memo, letter ......
Addressee eg 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.

(x)

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.

(xi)

SESSION 00 EXAM TECHNIQUE

(xii)