What is the difference between objective of an asset and purpose of an asset. I am so confused between these two as International Auditing Standards state the purpose and objective differently. Does it mean that purpose and objective are two different things? // < !]> Although the terms objective and purpose are mostly used [...]

  What is the difference between a complex asset and a cash generating unit. Both appears to be the same thing as addition of many to be considered as one asset. Isn’t it? Please explain to me the difference with example // < !]> To keep things simple, complex asset (or also known as separate [...]

Please explain what is double declining balance method of depreciation and how and when it is applied and how it is different from simple declining balance method. Also clarify whether this method is allowed under International Accounting Standards or not. // < !]> Before we discuss Double Declining Balance method, lets have a review of basic Declining [...]

What are different types of standards under standard costing and what is the purpose of different types of standards under cost and management accounting. Also describe how each type is different from the other and which type of standard should be selected // < !]> Standard in simple words is a measure of what is expected to take [...]

What is backcasting technique? What are its benefits and how is it different from forecasting technique? // < !]> Backcasting is what can be understood as the opposite of forecasting and is one of the techniques to manage uncertainties and risks pertaining to future just like forecasting. However the way backcasting and forecasting approaches “the future” [...]

What is detection risk in auditing? How detection risk is reduced by management and auditor conducting an audit? What is the relationship of this risk with other types of risk in audit engagement and its importance? // < !]> According to International Auditing Standards detection risk is defined as follows: The risk that the procedures performed by [...]

  What is profit loading and how this concept is used or applied in business? I have scarce idea that it is something related to insurance companies or insurance business. Please explain // < !]> The purpose of every business activity is to earn profits and insurance business is no exception to this. Just like all [...]

  What is the framework of financial statements analysis? Why analysts need financial analysis framework? Who provided this financial analysis framework and what are the steps involved in the framework of financial analysis? I will be glad if the answer is also explained in terms of CFA’s learning outcome/objective 29(f) “describe the [...]

What is control risk in auditing? And how control risk is connected with auditor’s work? Who is responsible for managing control risk is it management or auditor? What are the possible reasons for control risk? What are the responsibilities of the auditor towards control risk? // < !]> Control risk has been defined under International Standards [...]

  What is meant by LIFO liquidation? How come inventory method be liquidated. Please explain the concept behind this terminology so that it can help me in my CFA exam preparation // < !]> Before we discuss LIFO liquidation, lets review how LIFO works in relation with economy which can either be inflationary (period of [...]

  Please explain specific identification method to value the inventory or stock. Is is permitted under IAS 2? Also state how it is different from FIFO and weighted average methods allowed under IAS 2 Inventories. // < !]> Specific identification method is just another method to value ending inventory of the business to be reported [...]

  What is meant by accelerated depreciation method? When such method is used and how many types are there for this method? And what is the position of accounting standards on such depreciation method? // < !]> As the name suggests, the accelerated depreciation method accelerates the the recognition of depreciation charge in the profit [...]

  What is the difference between inception of lease and commencement of lease? Do these terms really make a difference or can they be used interchangeably? // < !]> IAS 17 distinguishes between Inception and Commencement of lease and the two terms represent two different instances of time which may be occurring at different or [...]

  How can we determine that a particular lease agreement is a finance lease agreement or an operating lease agreement? What are the conditions to conclude a lease contract as a finance lease or operating lease contract? // < !]> The core principle to distinguish or differentiate finance lease agreement from operating lease agreement is that [...]

  What is the difference between a Finance lease and an Operating lease? How the two are different from in their accounting treatments? // < !]> According to IAS 17 two types of leases are identified namely Finance lease and Operating lease . The distinction between the two primarily resulted from the implications of one of the important accounting concept Substance [...]

  Is it possible that cost of the asset include any amount of tax? Can we capitalize tax as cost of the asset at the time of purchase or in a carrying amount of the asset when asset is upgraded during its useful life? // < !]> According to IAS 16 the purchase price of [...]

  In IAS 16 it is stated that any cost that is directly attributable to the asset shall be added as cost of the asset i.e. capitalized. Why training cost is not capitalized if it is incurred especially for training the staff to use a particular asset? // < !]> First of all not every [...]

  Please explain the difference between assurance engagement and attestation engagement? What are the purposes and objectives of assurance service and attestation service? // < !]> Before we discuss the answer to this question, it will be good if we discuss the two famous sets of auditing standards. One set of auditing standards is the one [...]

  In IAS 2 Inventories LIFO is not permitted to be used to prepare financial statements under international accounting standards. Why is that? What are the potential causes for prohibiting LIFO whereas FIFO which is another cost assumption is allowed. Why LIFO is prohibited in IFRS i.e. IAS2 // < !]> After the revision of [...]