CFAS Flashcards
PAS 1 or PFRS 18?
Presentation of financial statement
Are those statements that cater to the common needs of a wide range of primary external users?
General purpose financial statement
The statement of financial position may be presented either showing current or non-current distinction (classified) or based on liquidity. PAS 1 encourage__?
Classified presentation
These are always presented as non-current items in a classified statement of financial position
Deferred tax asset and deferred tax liability
Does PAS 1 prescribe order or format in which an entity present items?
No
Income and expenses may be presented?
A. Single statement of profit or loss and other comprehensive income or
B. Two statements income statement and a statement presenting comprehensive income
OCI comprises items of income and expenses including reclassification adjustments that not recognize in P/L . Other comprehensive income include:
A. Changes in revaluation surplus
B. Remeasurements of the net defined benefit liability asset
C. Unrealized gains and losses on FVOCI investment
D. Translation gains and losses on foreign operation
E. Effective portion of gains and losses on hedging instrument in a cash flow hedge
__ are amounts classified from OCI to profit or loss
Reclassification adjustment
OCI may be presented __
Net or gross of related taxes
Total comprehensive income includes __
All non-owner changes in equity. It comprises profit or loss and other comprehensive income
True or false
Presenting extraordinary items in the financial statements including the notes is prohibited
True
Expenses may be presented using either:
Nature of expense or function of expense. Additional disclosure is required when function of expense is use
Dividends are disclosed either in the
Statement of changes in equity or in the notes
PAS 2?
Inventories- include goods that are help for sale in the ordinary cost of business in the process of production for such sale and in the form of materials and supplies to be consumed in the production
Inventories are measured at the
Lower of cost and net realizable value
The cost of inventories comprises all?
Cost of purchase cost of conversion and other cost incurred in bringing the inventories to the present location and condition
True or false
Trade discounts rebates and other similar items are deducted in determining the cost of purchase
True
The following are excluded from the cause of inventory
Abnormal cost
Storage cost unless necessary
Administrative cost
Selling cost
The cost formulas permitted under pas2 are
Specific identification - use in inventories which are not ordinarily interchangeable
Fifo
Weighted average
It is the estimated selling price in the ordinary course of business less the estimated cost of completion and estimated cost necessary to make the sale
Net realizable value
True or false
Raw materials inventory is not written down below cost if the finish good in which they will be incorporated are expected to be solved at or above cost
True
True or false
Reversals of inventory write downs shall not exceed the amount of the original write down
True
PAS 7?
Statement of cash flow- shows historical changes in cash and cash equivalents during the period.
It assess entities ability to generate cash and cash equivalent the timing and certainty
Differentiate cash flows
A. Operating activities- include transaction that enter into the determination of profit or loss
B. Investing activities- include transaction that affect non-current asset and other non-operating asset
C. Financing activities- include transaction that affect equity and non operating liabilities
True or false
Only transaction that affected cash and cash equivalents are included in statement of cash flows, non cash transaction are excluded and disclones only.
True
Interest and dividends may be presented as:
Interest income receive- operating or investing
Interest expense paid- operating or financing
Dividend income received- operating or investing
Dividend paid to owners- financing or operating
Cash flows from operating activities may be reported using?
Direct method - show major class of gross cash receipts and gross cash payments
Indirect method- profit or loss is adjusted for effects of non cash items and changes in operating assets and liabilities
PAS 8?
Accounting policies,changes in accounting estimates, and errors
Two types of accounting changes are:
- Change in accounting policy- adapted by an entity in preparing and presenting is financial statement
- Change in accounting estimate
When it is difficult to distinguish a change in accounting policy from a change in accounting estimate that change is treated as
Change in accounting estimate
Voluntary change in accounting policy is accounted for by
Retrospective application
Change in accounting policy- change in measurement basis
Accounting treatment
A. Transitional provision
B. Retrospective application
C. If impracticable prospective application
Effect of adjustment :
On the beginning balance of retained earnings if accounted retrospectively
Change in accounting estimate- changes in realization of expected inflow or outflow of economic benefits from asset or liabilities
Accounting treatment
A. Prospective application
Effect of adjustment:
In profit or loss of current and future period if the change affects both
Correction of prior period error- misapplication of principles oversight or misinterpretation of facts and mathematical mistakes
Accounting treatment
A. Retrospective restatement
B. If impracticable prospective application
Effect of adjustment:
On the beginning balance of retain earnings if accounted retrospectively
PAS 10?
Events after the reporting period- events that occur between the end of the reporting period and the date when the financial statement are authorized for issue
Are events that provide evidence of condition that existed at the end of the reporting period this require adjustment and financial statement
Adjusting events after the reporting period
-Settlement after reporting period of court case (entity has present obligation at end of reporting period)
-asset was impaired at end of reporting period (bankruptcy, sale of inventories after reporting period evidence to their NRV)
- legal or constructive obligation at end of reporting period to make profit sharing or bonus payments
-discovery of fraud or errors
Our events that are indicative of condition that arose after the reporting period. This do not require adjustment but disclose if they are material
Non adjusting events after the reporting period
- changes in fair values foreign exchange rates interest rates or market prices after reporting
- casualty losses ( fire,storm, earthquake) after reporting period before authorized for issue
PAS 12?
Income taxes
The varying treatments of economic activities between the pfrs and tax laws results to
Permanent differences - those that do not have future tax consequences
Temporary differences- are either taxable temporary differences or deductible temporary differences
It arise when financial income is greater than taxable income or the carrying amount of an asset is greater than its tax base
Taxable temporary differences
It arise when financial income is less than taxable income or the carrying amount of an asset is less than its tax base
Deductible temporary differences
True or false
Taxable temporary differences result to deferred tax liabilities while deductible temporary differences result to deferred tax asset
True
If the increase in deferred tax liability exceeds the increase in deferred tax asset the difference is
Deferred tax expense
- opposite, the difference is deferred tax income or benefit
Income tax expense or benefit is computed using pfrs it comprises:
Current tax expense and deferred tax expense income or benefit
Current tax expense is computed using
Tax laws
True or false
Deferred tax asset and liabilities are discounted
False
PAS 16?
Property plant and equipment
PPE are initially measured at
Cost-
A. purchase price plus non-refundable tax minus trade and cash discount.
B. Direct cost.
C. Initial estimate of dismantlement removal and restoration cost
PPE acquired in exchange with commercial substance is measured at
A. First value of asset given up
B. Fair value of asset receive
C. Carrying amount of asset given up
If exchange lack commercial substance ppe acquired is measured at carrying amount of asset given up
Recognition of cost in the carrying amount of item of ppe stop or ceases when
the time is in the location condition necessary for it to be capable of operating in the manner intended by the management
Subsequent measurement of ppe
A. Cost model -
B. Revaluation model
Shall apply the policy to an entire class of ppe
It is the systematic allocation of the depreciable amount of an asset over its estimated useful life
Depreciation
Changes in depreciation method useful life or residual value are treated as change in
Accounting estimate
An asset is fully depreciated when it’s
Carrying amount is zero or equal to residual value
True or false
Depreciation does not cease when the asset becomes idle or is retired from active use
True
