CPA FINANCIAL REPORTING NOTES

FINANCIAL REPORTING



PART 2




om
a.c
ny
CPA SECTION 3




ke
ea
m
.so
w
w
w




STUDY TEXT



www.someakenya.com Contact: 0707 737 890 Page 1

,KASNEB SYLLABUS
PAPER NO. 9 FINANCIAL REPORTING

GENERAL OBJECTIVE
This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable
him/her to prepare financial statements for various entities and account for specialised transactions in
both the public and private sectors

9. 0 LEARNING OUTCOMES
A candidate who passes this paper should be able to:
 Account for various assets and liabilities
 Prepare financial statements including published financial statements for various types of
organisations
 Account for specialised transactions
 Prepare group financial statements
 Apply International Financial Reporting Standards (IFRSs) and International Public Sector
Accounting Standards (IPSASs) in preparing non-complex financial statements.

CONTENT




om
a.c
ny
9.1 Assets and liabilities




ke
ea
m
.so
- Assets and liabilities covered in Paper No.1: Financial Accounting still examinable (in




w
w
the context of published financial statements)




w
- Non- current assets held for sale
- Borrowing costs
- Investment property
- Financial instruments (presentation, recognition, classes, measurement, de-recognition and
disclosures) (excluding impairment, hedging and embedded derivatives)
- Leases (all aspects including dealers and sale and leaseback)
- Income tax (current and deferred tax but not deferred tax in the case of groups)
- Provisions, contingent liabilities and contingent assets
9.2 Further aspects of partnerships

- Dissolutions (including piece-meal)
- Conversion of a partnership into a company
9.3 Specialized transactions

- Contracts with customers (revenue recognition): Hire Purchase/ Installment sales (split of
hire purchase profit into interest and gross profit and using actuarial method and sum of digits



www.someakenya.com Contact: 0707 737 890 Page 2

, to account for interest); sale of goods; construction contracts and real estate, provision of
services.
- Government grants

9.4 Financial statements of various types of organizations

- Farming
- Insurance
- Banks
- Professional firms (lawyers and accountants)
- Independent local, dependent and foreign branches
- Co-operative societies
9.5 Published financial statements

- Presentation of financial statements (income statement, statement of comprehensive incomes,
statement of changes in equity, statement of financial position and the notes to financial
statements)
- Accounting policies, changes in accounting estimates and errors (prior period errors)
- Events after the reporting period
- Discontinued operations (exclude disposal of subsidiaries)
9.6 Subsidiaries (groups), associates and jointly controlled entities

- Accounting for one subsidiary (consolidated income statement, consolidated statement of




om
a.c
financial position and a statement of cash flows - group financial statements); consolidated




ny
ke
ea
statement of cash flows also covers associate companies and jointly controlled entities but




m
.so
excludes acquisition and disposal of subsidiaries during the year




w
w
w
- Accounting treatment of associate companies
- Jointly controlled entity

9.5 Financial statements of public sector entities
(Provisions of the following IPSAS (emphasis on distinctions with equivalent IASs/IFRS)
- Presentation of financial statements
- Accounting policies, changes in accounting estimates and errors
- Borrowing costs
- Consolidated and separate financial statements
- Investments in associates
- Interests in joint ventures
- Events after the reporting date
- Construction contracts, leases and inventories
- Provisions, contingent liabilities and contingent assets

9.8 Emerging issues in financial reporting




www.someakenya.com Contact: 0707 737 890 Page 3

, TABLE OF CONTENTS

TOPIC PAGE

Topic 1: Assets and liabilities…....................................................................................................4

Topic 2: Further aspect of partnerships….....................................................................................86

Topic 3: Special transactions................................................................................…....................133

Topic 4: Financial statements for various types of organisations….............................................168

Topic 5: Published financial statements.........................................................…...........................235

Topic 6: Subsidiaries (groups), associates and jointly controlled entities.....................................266

Topic 7: Financial statements of public sector entities………………………………………......333




om
a.c
ny
ke
ea
m
.so
w
w
w
Revised on: June 2016




www.someakenya.com Contact: 0707 737 890 Page 4