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The directors of Paradigm have strong views on the usefulness of the financial statements after their...

The directors of Paradigm have strong views on the usefulness of the financial statements after their move to the International Financial Reporting Standards (IFRSs). They feel that the IFRSs implement a fair model. Nevertheless, they are of the opinion that IFRSs are failing users of financial statements as they do not reflect the financial value of an entity.

Required:

Discuss the directors' view as above as regards the use of fair value IFRSs and the opinion that IFRSs do not reflect financial value of an entity.

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Answer #1

International Financial Reporting Standards (IFRS) implement fair model .Assets & liabilities are recognized at fair value.

Usefulness of IFRS

  • Financial statement prepared using IFRS standards help investors better to make decisions regarding investment in company.
  • It invite foreign investment by creating confidence in mind of foreign investors that financial statement comply with GAAP.
  • It provide high quality financial information by providing transparency.
  • It improve the comparability of entities.  

Hence it can't be said that IFRS do not reflect financial value of entity.

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