cash & receivables

Question 1

Cash equivalents

Answer 1

Term deposits (mature less than 3 mos), investment in money markets, t bills( less than 3 mos), cq account, overdraft (deduction from cash),

Not included: Foreign currency with limited market, publicly traded shares, publicly traded bonds

Question 2

AR under IFRS

Answer 2

Amortized cost

1. Record at FMV (transaction amount)
2. At each reporting period update to amortized using effective interest rate less impairment

Question 3

IFRS Handbook

Answer 3

IFRS 9

Question 4

Criteria to use amortized cost (IFRS)

Answer 4

A. The objective is to hold financial asset in order to collect contractual cash flows.
B. The terms of the contract have dates that are solely for payments of interest and principal

Question 5

If payment discount given i.e 2/10

Answer 5

2% if paid in 10 days.
At payment:
dr. Cash
dr. Contra revenue 
cr. A/R

Question 6

Collection over one year

Answer 6

Calc PV

dr. AR
cr. Revnue - At discounted amount

record payment:

dr. Cash
cr. interest revenue
cr. A/R

Question 7

Impairment

Answer 7

AFDA - amount to be received is now less than amount on books.

AR on book
- PV of future cash flows
= Loss ( bad debt expense)

Question 8

How to deal with a credit loss

Answer 8

IFRS 9.5 credit loss is measured as:

• Probability of possible outcomes
• time value of money
• reasonable and supportable info of future economic conditions

= AFDA

Question 9

AFDA

Answer 9

Calculate the expected losses in current year

Adjust the balance of the AFDA on the bs to agree to expected amount of uncollectible amounts