SECTION B Question 1 I. An important aspect of the International Accounting Standards Board's conceptual framework for preparing financial reporting is that transaction should be recorded on the basis of faithful representation Required Explain why it is important that financial statements should show faithful representation, and describe circumstances where the recognition criteria for assets and liabilities may differ from the passing of legal title over items. (5 marks) II. Your assistant has been reading the IASB's conceptual framework for financial reporting and as part of the qualitative characteristics of financial statements under the heading of relevance he notes that the predictive value of information is considered important. He is aware that financial statements are prepared historically (i.e. after transactions have occurred) and offers the view that the predictive value of financial statements would be enhanced if forward-looking information (e.g. forecasts) were published rather than backward-looking historical statements. Required By the use of specific examples, provide an explanation to your assistant of how IFRS presentation and disclosure requirements can assist the predictive role of historically prepared financial statements