Omega Ltd. is preparing its financial statements. A transaction is covered by a specific Accounting Standard, but the finance manager believes that…

CA Intermediate · Advanced Accounting · MTP · September 2026
Omega Ltd. is preparing its financial statements. A transaction is covered by a specific Accounting Standard, but the finance manager believes that a different treatment appears more consistent with the Framework. What should Omega Ltd. do?
(A) (i) Follow the Framework because it provides the fundamental principles.
(B) (ii) Follow tax law treatment in all cases.
(C) (iii) Ignore both and follow management judgment.
(D) (iv) Follow the specific Accounting Standard because the Framework does not override Accounting Standards.

Suggested Answer and Working Notes:

Correct Answer: Option (D)

(iv) Follow the specific Accounting Standard because the Framework does not override Accounting Standards.

Topics: AS 10, Preparation of Financial Statements

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