Case study: Venus cellular



Case study: Venus cellular

Facts

Following are the facts relating to the case study of Venus cellular

Venus cellular prepares its financial statements in accordance with International Financial Reporting Standards (IFRSs).

Venus cellular has adopted include IAS 1 Presentation of Financial Statements in the preparation of financial statements

Venus cellular has adopted include IAS 33 earnings per share in the calculation and disclosure of its earnings per share

The research and developments cost has been treated in accordance with the principles described in the IAS 38 intangible assets (dealing with the research and development cost incurred by companies)

Issues

The following issues that need to be confirmed include

Whether venues cellular presents expenses in profit or loss by nature or function?

The alternative performance (operating) measures available for Venus cellular to present it in the statement of comprehensive income and document your conclusions with regard to the appropriateness of the various performance measures.

To identify any additional issues related to venues cellular

Applicable Laws and Pronouncements

The applicable international Accounting Standards IAS relevant to this case include IAS 1 Presentation of Financial Statements, IAS 33 Earnings per share and IAS 38 intangible assets (dealing with the research and development cost incurred by companies).

Analysis

Venus cellular Venus cellular has adopted IAS 1 Presentation of Financial Statements in the preparation of financial statements. The Presentation of financial statement of is set out under IAS 1 (revised) which sets out the basis for the presentation of financial statements so that comparability and consistency of a company's financial statements can be achieved over time. Furthermore it sets out the principle so that financial statements of different companies can be compared.

Identify whether the analysis of expenses in profit or loss is presented by nature or function

Expenses recognized in the income statement should be categorized either by function (cost of sales, selling, administrative, etc) or nature (raw materials, staffing costs, depreciation, etc.). If an organization categorizes expenses by function, then additional information must be disclosed describing the nature of expenses such as employee benefits expenses, minimum depreciation and amortization

The key advantage of adopting the nature of expense method for classification of expenses by an organization is that its application is easy as entities are not required to classify expenses according to their functional classifications.

Reporting Performance under IAS 1

The Presentation of financial statement of is set out under IAS 1 (revised) which sets out the basis for the presentation of financial statements so that comparability and consistency of a company's financial statements can be achieved over time. Furthermore it sets out the principle so that financial statements of different companies can be compared.

The statement of Comprehensive income is more comprehensive than a statement of profit or loss prepared for a period because, although it is necessary for an organization to recognize all expenses and income profit or loss in the period in which they are incurred, some IFRSs either require or permit otherwise.

Items which may be required to be excluded from profit and loss include the following:

(1) Correction of prior period's errors

(2) Accounting ...