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FAR My Flashcards > Chapter 1 Conceptual framework and IFRS > Flashcards

Chapter 1 Conceptual framework and IFRS Flashcards

1
Q

Roger Is PC

Fence-Faithful Representation

A

Relevance

Predictive Value

Confirmatory Value

Materiality

FENCE

Free From Error

Neutral

Completeness

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2
Q

CUT like an AV-

A

Comparablity

Understandablity

TImeliness

Verifyablity

Constraint

Cost/Benefit

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3
Q

IDEA

A

I: Income from continuing operations
D: Income from discontinued operations
E: Extraordinary items
A: Accounting principle changes (to retained earnings)

IDE are in the income statement

A is in retained earnings

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4
Q

Changes in Accounting Estimate

A

Prospective approach. Affects Current and future income from continued operations. Adjustments are made in current and future accounting periods. They do not affect previous periods. EX. Change in Useful life change in salvage value Etc.,

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5
Q

Change in Accounting entity

A

Retrospective Application (IFRS does not include the concept change in entity)

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6
Q

Change in Principle

A

GR-NON GAPP to Gaap=Error

Cahs Basis to accrual basis-(Error)-Retrospective

Restate prior years. COmmon Method is to change retained earnings

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7
Q

Based on Revenue Recognition a revenue is recognized when

A

A binding agreement exists Services Rendered or delivery has occurred fixed or determinable price exists Collection is reasonably assured

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8
Q

What are the eceptions to General rule

A

When we change to LIFO and change in in depreciation method prospective

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9
Q

Authoritative Literature Included int he codification is GAAP-FED PRIA

A

FASB Emerging issue task force Derivative implementation of group issues Principles board opinion Accounting Research Bulletins Accounting interpertations AICPA

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10
Q

Future operating losses

A

Are expected to be incurred as part of an exit or disposal activity are recognized in the periods they incur.

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11
Q

Five elements of Present Value Measurement

A

Estimate future cash flow Expectations about timing variations of future cash flows Time value of money The price of bearing uncertainty Other factors( Liquidity issues and market imperfections)

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12
Q

Historical Cost

A

What you would pay for

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13
Q

Faithful Representation-Reliable

A

Completeness Neutral free from error

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14
Q

Criteria for liability recognition

A

An obligating event has occurred The event results in a present obligation to transfer assets or to provide services in the future The entity has little or no discretion to avoid the future transfer of assets or providing of services

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15
Q

FASB Accounting standerd Codification Topics

A

Presentation 200-299 Assets- 300-399 Liablities 400-499 Equity 500-599 Revenues 500-599 Expenses 700-799 Broad Transactions 800-899 Industry 900-999

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16
Q

Does the SEC support IASB/FASB Convergence project

A

YES

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17
Q

Enhancing Qualitative Charecteristics

A

Comparability Understandablity Timeliness Verifyablity Constraint-Cost/effect

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18
Q

what does general purpose framework consist of

A

GAAP and IFRS

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19
Q

Relevance

A

Passing confirms money-Predictive Value, Confirming Value,Materiality

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20
Q

Three valuation techniques to measure an item at fair value

A

MIC-Market, Income or cost approach

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21
Q

To measure in monetary terms

A

Historical Cost, Replacement cost,FMV-THe price that we recd to sell an asset or transfer a liablity at a particular date,NRV,PV

22
Q

Gains and losses

A

Not part of core business

23
Q

SEC

A

Frames accounting principles

24
Q

10 Key elements that make up all financial statements

A

Assets,Liabilities,Equity,Investments by owners, Distribution to owners, Comprehensive Income, Revenue,expenses,gains and losses

25
Q

Basis of all FASB Pronouncements

A

SFAC

26
Q

Under IFRS when an entity applies an accounting principle retrospectively or makes retrospective statements of accounts the entity must at a minimum present three balance sheets,(end of current period, end of prior period )

A

US GAAP does not have a three balance sheet requirement

27
Q

Change in Accounting Principle

A

Retrospective Application that are inseparable from a change in estimate (e.g., a change from the installment method to immediate recognition method because uncollectible accounts can now be estimated)

28
Q

Error Corrections

A

Error Corrections requires retroactive restatement but adjusting the beginning balance of retained earnings, net of tax in the earliest year presented. UNDER IFRS when it is impracticable to determine the cumulative effect of an error the entity required to reinstate prospectiviily. US GAAP

29
Q

Revenues and expenses

A

operating

30
Q

presentation order of the major components of an Income and retained earning statement

A

IDEA-mnemonic I-Income from Continuing operations-Gross and net profits Income from Discontinued operations Extraordinary Items Change of Accounting Principle_GR-(IF it presents more fairly old method)

31
Q

Financial reporting Objective

A

Disclose Entity’s performance.

32
Q

Assets

A

Propable future economic benefits

33
Q

Depreciation

A

do it pro respectvily

34
Q

Liablities

A

Probable future sacrifices

35
Q

Comprehensive Income

A

All Changes in equity other than owner resources-These Items affect Comp.Income but not net income(DENT): Derivative Cash Flow Hedges Excess Adjustment of Pension PBO and FV of plan assets at year end Net unrealized gains or losses on “available for sale securities” Translation adjustment of foreign currency

36
Q

Reliability-Faithful Representation-Fence

A

Free From Error Neutral Completeness

37
Q

Exit or Disposal activities

A

Costs associated with exit and disposal activities include: Involuntary employee termination benefits Costs to terminate a contract that is not a capital lease Other costs associated with exit or disposal activities including costs to consolidate facilities or relocate employees.

38
Q

Accountancy rules and Concepts

A

Consistancy,conservatism, Cost/Benefit, Matching,Allocation full disclosure Recognition and reliazation

39
Q

What is Comprehensive Income

A

gain on trading securities

Non-Owner Transactions. They dont go on income statement . They go direct to equity. Comprehensive income should not be on per share basis. Statement of Comprehensive income could be either one or two statement approach.

Excludes owners income. If they buy ore stock and we give them sahres of stock in excahnge for cash that is not net income.

COmeprehensive income is the sum totoal of Net Income and other comprehensive income. The four main parts of other comprehensive income include,Pension changes in funded status due to gains/losses,prior service costs, and net transition assets/obligations. Unrealized gains and losses onand unrealized holding and losses on debt securities transffered from held to maturity for available sale classfication available for sale securities Foreirn currency items including translation adjustments. The minimum pension liablity adjustment is no longer required under US. GAAP.Comprehensive income is reported under Interim reporting too. Unrealized gain on trading securities is not included in IFRS

40
Q

How do you show Income Tax Benefit

Change in Accumulated balances

A

In the foot notes

The change in Accumulated balances may be shown on the face of the financial statements or in the notes of the financial statements.

41
Q

IFRS VS US GAAP

A

IFRS requires disclosure of judgements and estmates that management made int he process of appyling accounting policies that have significant effect on the financial statements. US GAAP require disclosure of significant estimates but does not require the disclosure of judgements made.

42
Q

What are reportable segments of the company

A

10% Size Test-Must meet only One

Revenue-A segment must meet the size test of its reported revenue including both sales to external customers and intersegment sales or transfers (but excluding income on advances and loans to other segments), is 10% or more of the combined revenue, internal and external of all operating segments. Operating profit by segments is based onthe measure of profit reported to the chief operating decision maker.

Profit and loss

Assets

43
Q

What is all other segment

A

Any reporting activity that is not included in the 10% will be lumped together and will be reported in all other segment.

44
Q

Balance Sheet

A

BS must be 3 and all others must be 2

End of Current period,end of prior period begining of prior period

45
Q

PUFER mnemonic

A

Represents the five commonly tested sources of other comprehensive income.
P: Pension adjustments
U: Unrealized gains and losses on AFS securities
F: Foreign currency translation item
E: Effective portion of cash flows hedges
R: Revaluation surpluses (gains) recognized when intangible assets and fixed assets are revalued under IFRS

46
Q

What are the conditions to be met for held for sale Entity

A

All of the conditions must be present:

Management commits to plan to sell the component

THwe component is for slae in its present condition

An Active program to locate an buyer has been initiated

The sale of component is propable nad the sale is expected to be completed in one year

The sale of component is actively marketed

Actions required to ocmplete the sale make it unlikely that significiant changes to the plan will be made or the plan will be withdrawn

47
Q

The only party releated transaction which requires disclosure is

A

loans to officers

Under IFRS Loans to officers and Key management compensation requires disclosures

48
Q

When to record expected loss

A

When the loss is propable and estimable the loss must be recorded in that quarter full

49
Q

What is the appropirate methodology to record interim income tax

A

The appropriate methodology is to calculate the incometax for the whole year and reduce the expenses recorded in the previous quarter .

50
Q

Form 20-F

Form 10-K

Form 3.

Form 11-K

A
51
Q

Forms 20-f

Forms 10K

Form 3

form 11K

A

Form 3 is required to fill by officers directors or beneficial owners of a class of equity securities of a registered company

Form 10k is the annual report of a us registered company and would contain financial statements

Form 20-F is the annual report of a US non registrant and would contain finnacial statements.

Form 11 k is the annual report of an employees benefit plan and would contain finnacial statemnts of the benefit plan

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