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Frosted Plc - Essay Example

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Undergraduate
Essay
Miscellaneous
Pages 12 (3012 words)

Summary

The qualitative characteristics of information as stated in the International Accounting Standards Board Framework are understandability, relevance, materiality, reliability, substance over form, and comparability (Tiffin 2004, p. 205-206).
Understandability means that information should be presented in a way that is easily understandable by users who have a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently (IASB framework n.d.)…

Extract of sample
Frosted Plc

135). To be understandable, the company has to distinguish between basic earnings per share and diluted earnings per share. Basic earnings per share should be calculated by dividing the net profit or loss for the period attributable to ordinary shareholders, by the weighted average number of ordinary shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit attributable to ordinary shareholders and the weighted average number of shares outstanding should be adjusted of the effects of all dilutive potential ordinary shares. If the number of ordinary or potential ordinary shares increases as a result of capitalisation, bonus issue, share split or other reasons, the calculation of earnings per share and diluted earnings per share should be re-calculated retrospectively (Tiffin 2004, p. 137).
Materiality means that insignificant amounts should be ignored. ...
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