Underlying Assumptions Essay

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.

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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 sustainability?