1

Question 1

Oci items will not be reclassified to pl in future

Answer 1

Changes in reval surplus
Remeasurement component
Remeasurements of inv in equity

Question 2

OCI items may be reclassified to pl in future

Answer 2

FX exchange gains or losses on translation of foreign operation
Gains/losses on cash flow hedge
Remeasurements of investments In debt instruments

Question 3

What is a discontinued operation?

Answer 3

Component sold or held for sale and is ..
Separate line of business
Part of a plan to dispose of separate line of business
Sub acquired solely for purpose of resale

Question 4

Presentation of discontinued op?

Answer 4

Single amount on spl comprising of:
Profit/loss on operation
Profit/loss on disposal, or any loss on classification as held for sale

Question 5

What is the 5 revenue recognition step

Answer 5

1. Identify contract
2. Identify separate perf obligations
3. Transaction price
4. Allocate trans price to perf obligation
5. Recognise revenue when perf obligation satisfied

Question 6

What is a contract (rr1)?

Answer 6

Contract = agreement between 2 parties that creates rights and obligations

Question 7

Revenue recognition in a contract criteria

Answer 7

1. Parties have approved contract and each party’s rights can be identified
2. Payment terms can be identified
3. Contract has commercial substance
4. Probable selling entity will receive consideration

Question 8

Define performance obligations

Answer 8

Promise to transfer distinct goods/services to a customer

Question 9

Nature of performance obligations

Answer 9

Providing goods/services itself = principal
Arranging for goods/services to be provided by another entity = agent

Question 10

What is the transaction price?

Answer 10

Variable consideration
Financing
Consideration payable to customer
Non cash consideration

Question 11

Ias16 reval gains and losses

Answer 11

Gains go to oci because we don’t actually care if it goes up that’s not part of our business model
Loss go to pl as we want to be prudent and so realise losses

Question 12

Where does reval gain/loss of investment property go

Answer 12

Goes to pl because that’s part of our business model so we want there to be a gain

Question 13

What is a financial instrument?

Answer 13

Anything which will give rise to financial asset in books of 1 party and a financial liability/equity in books of another party

Question 14

Ias 32 - what is financial equity?

Answer 14

Fixed number of own equity in exchange for any financial asset or cash

Question 15

Ias 32 - financial liability

Answer 15

Variable number of own equity in exchange for any financial asset or cash

Question 16

What are the 2 types of financial asset?

Answer 16

Debt instruments and equity instruments

Question 17

Financial assets - debt (Amortised cost)

Answer 17

Initial measurement: record at fv

Subsequent measurement:
Amortised cost –> opening asset + effective rate of interest - cash received = closing asset
Closing asset - spf
Effective rate of interest - spl income
Cash received - sfp

Question 18

Financial assets - debt (fvoci)

Answer 18

Initial measurement: fv

Subsequent measurement:
Amortised cost table
Opening assets + interests earned on cost - cash received = closing asset
Take closing asset to fv and gain/loss goes to oci

Question 19

Financial assets - debt (fvpl)

Answer 19

Initial measurement: fv
Subsequent measurement: fv each year - gain or loss goes to pl

Question 20

Tests to decide which model for financial assets

Answer 20

1. Business model test
2. Contractual cash flow test

Question 21

Business model test for financial assets

Answer 21

What is intention behind holding the asset:
Hold to maturity = Amortised cost
Not sure, if favourable might sell = fvoci
Short term = fvpl

Question 22

Contractual cashflow test

Answer 22

Where you receive interest in cash.
Not met in case of convertible debentures (some cash, some shares)
Ccf test not met then keep under fvpl no matter what business model it is

Question 23

Financial assets - equity instruments

Answer 23

Fvoci or fvpl
Usually fvpl but use
Fvoci is when you make a irrevocable choice to opt for it when initially recorded and intend to keep asset for long time.

Question 24

What is a derivative?

Answer 24

Anything settled at a future date which has no initial value or very little initial value and which depends on an underlying factor

Question 25

Recording derivative

Answer 25

Record under fvpl
Gain/loss goes to pl

Question 26

What is an embedded derivative?

Answer 26

Within a contract there’s a small contract that is a derivative
Host contract is not derivative- don’t class and separate out small derivative and measure at pl
Host contract is derivative - entirely contract
If economic situation is different
Entire instrument is not measured at fvpl

Question 27

2 different share based payments

Answer 27

Equity settled and cash settled

Question 28

Equity settled - share based payment

Answer 28

Dr. Expense
Cr. Equity
Fv at grant date

Question 29

Cash settled- share based payment

Answer 29

Dr. Expense
Cr. Liability
Fv at each reporting date

Question 30

Net assets acronym

Answer 30

Someone really ordered fried donkey s**