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Prudence principle in generally accepted accounting systems
Tichá, Veronika ; Krupová, Lenka (advisor) ; Strouhal, Jiří (referee)
This master's thesis is focused on a prudence principle under International Financial Reporting Standards (IFRS) a US Generally Accepted Accounting Principles (US GAAP) in accounting of a reporting unit. In the first part I described the prudence principle (conservatism principle) in the general way. In the second part of this thesis I introduced impairment testing, recognition of impairment of assets and reversal of previously recognized impairment of assets under IAS 36 Impairment of Assets. It is obviously focused on recoverable amount as a fair value less costs to sell and value in use, methods of the fair value valuation, computing value in use and identifying the appropriate discount rate to apply expected future cash flows. Third chapter of this master's thesis, named "Provisions under IAS 37", is dealing with relation between provisions and contingent liabilities, initial liability measurement and subsequent applying IAS 37. There are also stated disclosure requirements under IAS 37 (as well as under IAS 36). Within the scope of this part are in detail described Exposure Draft ED/2005 and Exposure Draft ED/2010/1 published from International Accounting Standard Board IASB in 2005 and 2010 as proposal to improvement of current version of standard IAS 37. This thesis is also focused on differences between accounting principles of prudence principle in IFRS and US GAAP. Finally, in the last chapter I analysed 15 annual reports of airlines companies in the world, which present their financial statements under IFRS. The results according to impairment of assets including goodwill, provisions and disclosures of contingent liabilities are presented in the charts. This master's thesis, named "Prudence principle in generally accepted accounting systems" is completed with practical insights and cases in each of chapters.
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