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ACCA Financial Reporting > 11: Other standards > Flashcards

11: Other standards Flashcards

1
Q

What is IAS 8?

A

ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS

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2
Q

What is described below?

The specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting the financial statements

A

Accounting policies

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3
Q

What does prudent mean?

A

Showing the worst case scenario.

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4
Q

What are the two instances where we change an accounting policy?

A
  • If it is required by a change to an IFRS standard

- It will provide the users with more reliable and relevant information

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5
Q

When changing an accounting standard do we change it retrospectively?

A

Yes

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6
Q

What do we mean by retrospectively changing the statements? 2

A
  • Restatements of opening balances and comparatives

- Prior period adjustment shown in the statement of changes in equity

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7
Q

For a change to be truly a change in accounting policy it must affect any one of the following…

A
  • recognition,
  • presentation; or
  • measurement
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8
Q

Are changes to depreciation policy changes?

A

No

They are changes in estimates

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9
Q

Inherent uncertainties will result in what needing to be made?

A

Revisions of estimates

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10
Q

Give an example of things that result in changes in estimations.

A
  • Economic useful life of assets
  • Residual amount of asset
  • Method
  • Warranty provisions
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11
Q

How to we apply changes in estimates?

A

Prospectively

Current year adjustment

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12
Q

How do we treat prior period material errors?

A

Retrospectively

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13
Q

What is IFRS 13?

A

FAIR VALUE MEASUREMENT

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14
Q

What are level 1 inputs?

A

Observable market prices

Accurate fair value measurements from active market. Asset values are readily available.

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15
Q

What are level 2 inputs?

A

Observable - Market for similar assets.

Use as benchmark. May make adjustments to valuation to ensure its more accurate.

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16
Q

What are level 3 inputs?

A

Unobservable inputs - Use best information we have available to measure

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17
Q

What are the consideration on measurements?

A

Condition and location

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18
Q

What is IAS 2?

A

Inventories

Inventories should be measured at the lower of cost and NRV

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19
Q

What does IFRS 13 not apply to?

A

Leases
IAS 2 Inv
IAS 8
IAS 36

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20
Q

What is cost?

A
  • Costs of purchase
  • costs of conversion; and
  • other cost incurred in bringing the inventories to their present location and condition
21
Q

What does cost of purchase comprise of?

A
  • Purchase price
  • Import duties
  • Irrecoverable taxes
  • Transport
  • Handling

and other costs directly attributable to the acquisition of finished goods, materials and services.

Both trade discounts and expected (probable) settlement discounts are deducted.

22
Q

What does cost of purchase comprise of?

A
  • Purchase price
  • Import duties
  • Irrecoverable taxes
  • Transport
  • Handling

and other costs directly attributable to the acquisition of finished goods, materials and services.

Both trade discounts and expected (probable) settlement discounts are deducted.

23
Q

What does cost of conversion comprise of?

A

Costs directly related to the units of production, such as direct labour.

24
Q

What are excluded from conversion cost?

A

abnormal costs, storage costs, administration costs and selling costs

25
What is NRV?
Selling price less: costs to sell
26
What is IAS 41?
AGRICULTURE
27
What is agricultural activity? 3
- The management by an enterprise - of the biological transformation of biological assets for sale, - into agricultural produce, or into additional biological assets.
28
What is a biological asset?
A biological asset is a living animal or plant. An example of biological assets would be cows or sheep. Wheat, sugar cane or trees.
29
What is Harvest?
A harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life process.
30
How do we treat harvested products?
Under IAS 2 Inventories
31
What is Agricultural produce?
Agricultural produce is the harvested produce of biological assets. After produce has been harvested IAS 41 ceases to apply.
32
What are bearer plants? 3
- A living plant in production or supply of agricultural produce - Expected to produce for more than one period. - Accounted under IAS 16 (PPE)
33
A biological asset or agricultural produce should only be recognised when, and only when:
- The company controls the asset as a result of past events. - It is probable that the future economic benefits will flow to the entity; and - The fair value or cost of the asset can be reliably measured.
34
How should biological assets be measured initially at each reporting date?
FV - Cost to sell
35
How should biological assets be shown on the statement of financial position?
Separately on the face of FS
36
How should harvested products be measured?
At FV - Cost to sell
37
How should harvested products be classified?
IAS2 Inventories
38
Costs to sell in relation to biological assets and harvested produce include...
- Commissions charged on sale - Levies charged by the local agricultural authority. It does not include transport!!!
39
Where should any gains or losses generated by remeasuring to fair value be recognised?
Immediately in the income statement.
40
What is IAS 37?
Provisions and Contingencies
41
When should a provision be recognised?
▪ an entity has a present obligation, legal or constructive, as a result of a past event; ▪ it is probable that an outflow of resources will be required to settle the obligation; ▪ a reliable estimate can be made of the amount of the obligation
42
What do we mean by legal or constructive?
Legal - Required due to legislation/Law Constructive - Is an obligation because of something you have or have not done
43
What does a legal obligation derive from?
- A contract | - Legislation
44
Is a contingent liability probable or possible?
Possible
45
Why is a contingent liability not recognised?
- it is not probable that an outflow of resources will be required to settle the obligation - the amount of the obligation cannot be measures with sufficient reliability
46
How is a contingent liability recognised in FS?
NOT as liability It is included in the notes
47
Is a contingent asset probable or possible?
Probable (not possible like liability)
48
What is disclosed in the note for a contingent asset?
- The nature of contingency - The uncertainties that will effect the ultimate outcome - An estimate of the potential effect.

ACCA Financial Reporting (17 decks)

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