02.04- IFRS: Current Assets and Current Liabilities Flashcards
When are ASSETS classified as CURRENT on a BALANCE SHEET in IFRS? (2)
- The asset will be used or sold in 12 months or the normal operating cycle
- The asset is primarily held for trading
When are LIABILITIES classified as CURRENT on a BALANCE SHEET in IFRS?
- Liability will be settled during the operating cycle or within 12 months of the reporting period
- The liability is held for the purpose of trading
What is the definition of a FINANCIAL INSTRUMENT under IFRS?
Any contract that gives results in a FINANCIAL ASSET OF ONE ENTITY and a FINANCIAL LIABILITY OR EQUITY INSTRUMENT OF ANOTHER ENTITY.
What are the four types of FINANCIAL ASSETS under IFRS?
- Cash
- Equity instrument of another entity
- A contractual right
- Contract that will be settled in the entity’s own equity instruments
What are two types of FINANCIAL LIABILITIES under IFRS?
- A contractual obligation
- A contract that will be settled in the entity’s own equity instruments
What are the two types of CONTRACTUAL OBLIGATIONS for a FINANCIAL LIABILITY?
- To deliver cash or another financial asset to another entity
- To exchange financial assets or liabilities with another entity with unfavorable terms
What are the two types of CONTRACTUAL RIGHTS for a FINANCIAL ASSET?
- To receive cash or another financial asset from another entity
- To exchange financial assets or liabilities with another entity with favorable terms
What two conditions are necessary for a FINANCIAL ASSET to be measured at AMORTIZED COST?
- The entity plans to hold the asset to collect scheduled cash flows
- Cash flows are for payment of principal and interest to be paid on specific dates
If a FINANCIAL ASSET isn’t measured at AMORTIZED COST, what is it measured at?
Fair Value
What are FINANCIAL LIABILITIES generally measured at? What is the exception?
- Amortized costs
- Sometimes it is measured at Fair Value, but only when it will result in more relevant information
