CH3 Reporting Financial Performance

Question 1

If you change an accounting POLICY, is it retrospective or prospective?

Answer 1

Retrospective

Question 2

If you change an accounting ESTIMATES (HOW we estimate the value of an asset/liab accroding to the accounting policy we are using) , is it retrospective or prospective?

Answer 2

Prospectively

Question 3

If you change an accounting PRIOR PERIOD ERRORS, is it retrospective or prospective?

Answer 3

Retrospectively

Question 4

Should you restate the comparatives when you change from historical cost to revaluation model?

Answer 4

No - you can’t get a reliable FV

Question 5

What is a discontinued operation?

Answer 5

A component of an entity that has either been disposed of or is classified as held for sale.

Question 6

What criteria must be met for an operation to be classified as discontinued?

Answer 6

1. Major separate line of business operations
2. Part of a single co-ordinated plan to dispose of a separate major line of business
3. Is a subsidiary acquired for exclusively with a view to resale

Question 7

What is the ‘discontinued operations’ (one line) in the SPL composed of?

Answer 7

1. Loss (probably) AFTER tax made by the discontinued op
   PLUS
2. Gains/losses made as we have been selling off its assets
   These thigs will not recur in the future so we want to show them separately for the s/hs.