2021 Flashcards

1
Q

what is investment property?

A

property held to earn rentals / capital appreciation, rather than for use in prod / supply of g&s, admin, or sale in ordinary course of business

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2
Q

investment property examples?

A
  • generates cash flows independently
  • land held for cap app. or undetermined future use
  • building leased out by the entity
  • property constructed / dev for future use
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3
Q

portions of investment property?

A

if portions can be sold separately, account for separately. otherwise no.

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4
Q

what is an intangible asset?

A

an identifiable non-monetary asset without physical substance. not held for sale in ordinary business course.

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5
Q

what must intangible assets have?

A
  • identifiability
  • existence of future EB
  • control over a resource
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6
Q

when is an asset identifiable?

A

if it is separable and arises from legal/contractual rights. no impact on bus continuity to exist.

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7
Q

measurement on intangible assets?

A

cost + import duties, non-ref taxes, etc

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8
Q

classifications for int-generated intangible assets?

A
  • research phase
  • development phase
    (if indistinguishable, treat it as research phase only)
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9
Q

if intangible asset in research phase?

A
  • not recognized
  • will be P/L= an expense
  • cannot demonstrate that an asset that will produce EB exists
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10
Q

useful life of intangible assets?

A
finite = amortize
indefinite = not amortized, review EUL annually
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11
Q

pv of annuity for leases?

A

pmt x [1 - 1/(1 + i/m)^nm] / (i/m)

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12
Q

what is a financial instrument?

A

any contract that gives rise to a financial asset of one entity and a financial E/L in another

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13
Q

deciding accounting policy for financial assets?

A
  • contractual CF = amortised costs

- realize FV changes = P/L and OCI (only OCI if we don’t trade frequently)

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14
Q

new conceptual framework liability definition?

A

a present obligation of the entity to transfer an economic resource as a result of past events. no practical ability to avoid duty. must be potentially occurring.

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15
Q

IAS 37 liability definition?

A

present obligation resulting from a past event from which future EBs are expected to flow from the entity. recognize L if possible and measurable.

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16
Q

probability of outflow?

A

if probable and certain of timing = L

if uncertain timing = provision

17
Q

when do we recognize a provision?

A
  • obligation is result of past event
  • transfer of FEBs probable
  • amt estimated reliably
18
Q

what is a provision?

A

a liability with uncertain timing or uncertain amount

19
Q

contingency?

A

not recognized as either because it is not measurable and/or not probable. possible occurrence, will only be confirmed with future event not controlled by the entity.

20
Q

recognition of contingent L?

A

notes only

21
Q

contingent A recog?

A

only if receipt is probable – disclose in notes

22
Q

commitment?

A

when the comp commits to buy an asset at a future date and they will have a future obligation. we give a note disclosure.

23
Q

if no current obligation at year end?

A

commitment, not contingent L

24
Q

PPE vs non-current assets?

A

used in more than one period vs used in more than 12months period

25
restoration costs for PPE?
create a provision on initial recognition that increases annually with interest. include the initial price of restoration costs in PPE costs on initial recognition.
26
subsequent expenditure for PPE?
capitalize if enhancing | expense if maintenance/repair
27
how does revaluation work?
- gains go through OCI -- "revaluation gain" and closed off to "reval surplus" - losses reduce "surplus" and once it dips below og cost, you make an impairment expense
28
costs of conversion?
costs directly related to units of production
29
recognizing a provision for sales returns?
``` DR revenue (P/L) CR provision for returns (L) DR right to return of asset (A) CR COS exp (P/L) ```
30
recognizing a provision for warranty expense?
DR inventory repairs / COS (P/L) | CR provision for warranty (L)
31
recognizing a provision for a lawsuit settlement to be paid in future?
``` DR lawsuit expense (P/L) CR provision (L) ``` inc annually: DR finance costs (P/L) CR provision (L)
32
contingency?
not measurable | not probable
33
if we offer the customer a settlement discount?
DR Accs rec (A), CR Revenue (P/L) (as normal) DR Revenue, CR Allowance for settlement discount (A) (remove portion of rev amount that was allowed as a discount)
34
if the customer pays meets requirements of settlement discount?
DR Bank DR Allowance for settlement discount CR Accs receivable
35
if the customer does not meet requirements of settlement discount?
DR Bank, CR Accs rec | DR Allowance, CR Revenue
36
capitalization issue?
``` DR dividends (E) (closed off to RE) CR share election reserve (E) (close off to stated cap) ```
37
share repurchase?
DR Stated cap, DR RE, CR Bank | DR Stated cap, CR Bank
38
share issue costs?
DR stated capital | CR bank
39
disposing of financial assets? (shares)
at year end, reduce current value to value of sale for all shares. remove shares sold. return to FV at end of year.