Solutions Manual
International
Financial Reporting
Ninth edition
Alan Melville
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Contents
Preface v
Acknowledgements vi
Chapter 1 The regulatory framework
Solutions 1.8 and 1.9 1
Chapter 2 The IASB® conceptual framework
Solutions 2.7 and 2.8 3
Chapter 3 Presentation of financial statements
Solution 3.7 5
Chapter 4 Accounting policies, estimates and errors
Solution 4.7, 4.8 and 4.9 8
Chapter 5 Property, plant and equipment
Solutions 5.7 and 5.8 10
Chapter 6 Intangible assets
Solutions 6.8 and 6.9 13
Chapter 7 Impairment of assets
Solutions 7.7 and 7.8 15
Chapter 8 Non-current assets held for sale and discontinued operations
Solution 8.7 16
Chapter 9 Leases
Solutions 9.7 and 9.8 17
Chapter 10 Inventories
Solutions 10.5 and 10.6 19
Chapter 11 Financial instruments
Solution 11.6 21
Chapter 12 Provisions and events after the reporting period
Solution 12.8 23
Chapter 13 Revenue from contracts with customers
Solutions 13.7 and 13.8 24
Chapter 14 Employee benefits
Solutions 14.6 and 14.7 26
Chapter 15 Taxation in financial statements
Solutions 15.7, 15.8 and 15.9 28
Chapter 16 Statement of cash flows
Solutions 16.8, 16.9 and 16.10 34
Chapter 17 Financial reporting in hyperinflationary economies
Solution 17.5 39
iii
© 2025 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 18 Groups of companies (1)
Solutions 18.6 and 18.7 40
Chapter 19 Groups of companies (2)
Solutions 19.5 and 19.6 45
Chapter 20 Associates and joint arrangements
Solution 20.5 51
Chapter 21 Related parties and changes in foreign exchange rates
Solution 21.4 53
Chapter 22 Ratio analysis
Solutions 22.5, 22.6 and 22.7 54
Chapter 23 Earnings per share
Solutions 23.6, 23.7, 23.8 and 23.9 59
Chapter 24 Segmental analysis
Solution 24.6 61
iv
© 2025 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards (and IAS® Standards) might include:
(a) Application of the international standards should ensure that the company's financial statements
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
(b) Furthermore, adoption of the international standards should allow Baxen to obtain a listing on stock
exchanges around the world, most of which now require listed companies to comply with these
standards. This would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use international standards. This
should help Baxen to compare its own financial statements with theirs and perhaps to identify foreign
companies that might be suitable candidates as prospective subsidiaries. Baxen would also be able to
compare its own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
the financial statements of the group members into a single set of consolidated financial statements
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
another. This would certainly reduce staff training costs.
1
© 2025 Pearson Education Limited. All Rights Reserved.
International
Financial Reporting
Ninth edition
Alan Melville
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Contents
Preface v
Acknowledgements vi
Chapter 1 The regulatory framework
Solutions 1.8 and 1.9 1
Chapter 2 The IASB® conceptual framework
Solutions 2.7 and 2.8 3
Chapter 3 Presentation of financial statements
Solution 3.7 5
Chapter 4 Accounting policies, estimates and errors
Solution 4.7, 4.8 and 4.9 8
Chapter 5 Property, plant and equipment
Solutions 5.7 and 5.8 10
Chapter 6 Intangible assets
Solutions 6.8 and 6.9 13
Chapter 7 Impairment of assets
Solutions 7.7 and 7.8 15
Chapter 8 Non-current assets held for sale and discontinued operations
Solution 8.7 16
Chapter 9 Leases
Solutions 9.7 and 9.8 17
Chapter 10 Inventories
Solutions 10.5 and 10.6 19
Chapter 11 Financial instruments
Solution 11.6 21
Chapter 12 Provisions and events after the reporting period
Solution 12.8 23
Chapter 13 Revenue from contracts with customers
Solutions 13.7 and 13.8 24
Chapter 14 Employee benefits
Solutions 14.6 and 14.7 26
Chapter 15 Taxation in financial statements
Solutions 15.7, 15.8 and 15.9 28
Chapter 16 Statement of cash flows
Solutions 16.8, 16.9 and 16.10 34
Chapter 17 Financial reporting in hyperinflationary economies
Solution 17.5 39
iii
© 2025 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 18 Groups of companies (1)
Solutions 18.6 and 18.7 40
Chapter 19 Groups of companies (2)
Solutions 19.5 and 19.6 45
Chapter 20 Associates and joint arrangements
Solution 20.5 51
Chapter 21 Related parties and changes in foreign exchange rates
Solution 21.4 53
Chapter 22 Ratio analysis
Solutions 22.5, 22.6 and 22.7 54
Chapter 23 Earnings per share
Solutions 23.6, 23.7, 23.8 and 23.9 59
Chapter 24 Segmental analysis
Solution 24.6 61
iv
© 2025 Pearson Education Limited. All Rights Reserved.
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards (and IAS® Standards) might include:
(a) Application of the international standards should ensure that the company's financial statements
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
(b) Furthermore, adoption of the international standards should allow Baxen to obtain a listing on stock
exchanges around the world, most of which now require listed companies to comply with these
standards. This would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use international standards. This
should help Baxen to compare its own financial statements with theirs and perhaps to identify foreign
companies that might be suitable candidates as prospective subsidiaries. Baxen would also be able to
compare its own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
the financial statements of the group members into a single set of consolidated financial statements
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
another. This would certainly reduce staff training costs.
1
© 2025 Pearson Education Limited. All Rights Reserved.
