Worksheet to Explain Underlying Assumptions

Worksheet Two
To briefly explain the underlying assumptions for the presentation of group as well as parent accounts we need to look at the following elements:
Entity: it shows the activities of the parent company as well as the activity of the group as a whole.
Accrual Basis: shows the transactions that occurred in both the parent and group accounts.
Materiality: The information provided in the report for the group as well as the parent company, affects the decision making.
Money Measurement: Items that are expressed in the report can be expressed in monetary terms
Going Concern: It is assuming that the entity will still exist in the future.
Measurement Basis: information in the statement can be measure as of the following: * Historic coast: the cost of fair value at purchase including all purchases and preparations. * Replacement Coast: the cost to replace an asset. * Realisable Value: the amount in which the assets could be exchanged. * Present Value: what today’s money will be worth in the future with a fixed rate?
The reason to show both the group and parent figures for a previous year as well as this year is to be able to look at the financial health of the company and compare how well they are doing. Also, it gives more meaningful information.
The Underlying assumptions in the context of sustainability are
Relevance: issues around sustainability are seen to be very relevant.
Reliability: information about sustainability is hard to measure its reliability.
Comparability: what would you compare sustainability with?
Understandability: there are many definitions of sustainability and many ways to understand it.
Entity and going concern: how would you identify the accountable entity of