Ch. 3- Cash and Receivables

Question 1

A/R Other Comprehensive Income (FVTOCI)

Answer 1

Collect contractual cash flows but ALSO TO SELL
When you will amortize it (multiple transactions)
IFRS 9

Question 2

Cash and cash equivalence- EXCLUSIONS

Answer 2

• foreign currency
• T-bills maturity date> 3m
  -term deposits maturity date > 3m
  anything that cannot be converted to cash or risks changing value

Question 3

Restricted Cash

Answer 3

-min balance requirements for bank
-funds held for escrow
-donations provided to NPO
on B/S assets portion

Question 4

A/R Fair Value through profit or loss

Answer 4

Holding receivables to ACTIVELY sell them as a part of a portfolio
Not going to amortize it (no multiple transactions over time)
IFRS 9

Question 5

Payment discounts

Answer 5

LESS THAN A YR if more then effective interest rate discunting
“discount amount in % / period must be paid in for the discount to apply NET total amount of period it is due in”

inital sale
Dr AR Full Amount
CR Sales rev Full Amount

Payment date
DR cash Discount Amount (if discount)
Dr Sales Rev Difference
Cr AR Full Amount

Question 6

Derecognition of A/R

Answer 6

AR will not be collectible - company went bankrupt
Dr bad debt
Cr AR

Question 7

AFDA - Allowance for doubtful accounts

Answer 7

New years balance = percentage of uncollectible * current yr AR
If there is a previous years balance, just forget it, it just goes up to the new year’s balance
Dr Bad Debt (Previous Years balance- new years balance)
Cr ADFA (Previous years balance - new years balance)

Question 8

IFRS VS ASPE - AFDA

Answer 8

IFRS- valued at the expected amount at beg of the yr

ASPE - valued at the end of the yr according to a triggered event