Ch3

Question 1

Indicators of going concern uncertainty

Answer 1

1. Lack of cash and eq
2. Major debt repayments within 12 months
3. Increase level of overdrafts or short term borrowings
4. Negative cash flows, especially relating to operating activities
   5.disclosures or provisions relating to material legal claims
5. Large impairment losses
6. A rise in payable days
   8.increased levels of gearing

Question 2

What means presenting disclosures in systematic order

Answer 2

1. Giving prominence to the most relevant areas
2. Grouping items measured in similar ways, such as assets held at FV
3. Following the order in which items are presented in SPL and SFP

Question 3

Accounting policies are likely to be material if

Answer 3

1. Entity changed it’s accounting policy during the reporting period or
2. Entity chose it’s policy from one or more portions, or policy was developed in the absence of specific IFRS standard
3. The policy relates to an area where significant judgements are required,or
4. The accounting treatment of transactions is complex

Question 4

Source of uncertainty

Answer 4

Must disclose key sources of estimation uncertainty that may cause material adjustments to assets and liabilities within the next year

Question 5

NCA held for sale and discontinued operations

Answer 5

DO is component of entity that is sold or which is classified as held for sale and which is
1. Separate line of business ( BC it has different operations or location)
2. Part of a plan to dispose of a separate line of a business
3. A subsidiary acquired colelt for the purpose of resale

Held for sale if it’s carrying amount will not be recovered principally by continuing operation

Question 6

Presentation of discontinued operation

Answer 6

1. A single amount presented in SPLOCI: 1. post tax profit or loss of discontinued oepration
2. Post tax gain or loss on the measurement to FV- costs to sell or on disposal of dO
3. Analysis of the single amount
4. If decided to DO before FS issuance but after year end it is non-adjsuting event and disclosed in the notes

Question 7

Discuss judgement when selecting accounting polciy

Answer 7

1. Entities should select and apply their accounting policies consistently for similar transactions
2. If specific IFRS permits different policies for categories of similar items and appropriate policy should be applied for.each category. Ex different classes of PPE, some maybe at FV and some at HC
3. Conceptual framework = guidance when an accounting standard offers a choice of measurement base. Preparers should ensure that measurement base should provide relevant information and offer a faithful representation of underlying asset. To provide RI- consider nature of A or L and how it generates CF. A m. Base that has a very high level of measurement uncertainty maynot provide a faithful representation. Such decisions involve exercise of judgment

Question 8

What if no transitional arrangements

Answer 8

Changes in accounting policy should be applied retrospectively. The entity adjusts the OB of each affected component of equity, and the comparative figures are presented as if the new policy had always existed

Question 9

Estimate

Answer 9

Monetary amounts that involve degree of measurement uncertainty

Question 10

Change in accounting estimate

Answer 10

Must be recognised prospectively

Question 11

Choice of depreciation method

Answer 11

Is an estimate