Epsilon, a company with a year end of 30 September 20X7, is listed on a securities exchange. A director of Epsilon has a number of questions relating to the application of International Financial Reporting Standards (IFRS® Standards) in its financial statements for the year ended 30 September 20X7. The questions appear in notes 1–3.

Note 1 – Inconsistencies
I have recently been appointed to the board of another company which is growing very quickly and will probably seek a securities exchange listing in the next few years. As part of my familiarisation process, I’ve been reviewing their financial statements which they state comply with IFRS Standards. I have been comparing them with the financial statements of Epsilon. There appear to be some inconsistencies between the two sets of financial statements:

– The financial statements of the other company contain no disclosure of the earnings per share figure and there is no segmental analysis despite this company having a number of divisions with different types of business. Epsilon gives both of these disclosures.

– Both Epsilon and this other company have received government grants to assist in the purchase of a non-current asset. We have deducted the grant from the cost of the non-current asset. They have recognised the grant received as deferred income.

Please explain the apparent inconsistencies to me. (7 marks)

Required:
Provide answers to the questions raised by the director in notes 1–3. You should justify your answers with reference to relevant International Financial Reporting Standards.

Note: The mark allocation is shown against each of the three notes above.