Chapter 3: Statement of Income/ Comprehensive Income

Question 1

Asset Criteria

Answer 1

1. Future benefit
2. Currently controls the asset/benefits.
3. Results from past transaction

Question 2

What is allowed under OCI?

Answer 2

1. Unrealized gains and losses FVTOCI financial assets
2. Gains/losses on derivatives held as cash flow hedges
3. Gains and losses resulting from translations form foreign subsidiaries
4. Actuarial gains/losses on pensions
5. Change in the revaluation surplus
6. Change in credit risk for financial liabilities

Question 3

Does ASPE have OCI?

Answer 3

NO

Question 4

ASPE: What is Asset Criteria

Answer 4

1. Presents future benefit
2. Costs of asset can be measured
3. Results from past transaction

Question 5

What type of disposal is this, and what is the criteria. “Walks away from the asset but still owns it”

Answer 5

This is ABANDONMENT
Must depreciate and write-down the asset to recoverable amount which is the HIGHER of Value in Use (FV less costs to sell)

Question 6

What happens if the asset is IDLE, meaning it will be used another time

Answer 6

Nothing, still continue to depreciate

Question 7

What is the criteria to trigger a HELD-for-SALE

Answer 7

To be classified as HELD-FOR-SALE must meet
1. Asset is available for immediate sale in present condition
2. Sale is highly probable if ALL are met
a. Price reasonable
b. Active program find buyer
c. Management committed
d. Unlikely offer to sell is withdrawn
e. Sale is expected within 1 year

Question 8

How do you measure the asset after meeting the criteria for HELD-FOR-SALE

Answer 8

1. Re-measurement
   a. Stop depreciation
   b. Remeasure asset
   c. Reverse the impairment loss if any, if gain record on FVTPL
2. Re-classify
   a. Current Asset

Question 9

What are the conditions to meet Discontinued Operations and how is it recorded

Answer 9

Conditions to meet:
1. Operating segment of a company that has either been (distinguishable from other cash flows must be separate)
a. SOLD
b. Meets criteria of held-for-sale.

Discontinued ops are net of tax (after-tax)
- Separate line item on balance sheet

Components:
- Net profit or loss (net tax)
- Write-down of assets/ any realized gains & losses on disposal (net tax)

Question 10

What is the criteria to record a restructuring expenses (2)

Answer 10

Conditions to meet: (significant alteration)
1.Program planned and controlled by management
2. Program significantly alters either
Way business conducted or
Scope business in which company is engaged

Question 11

What costs are allowed/ not allowed to be put into restructuring expense

Answer 11

Costs to include:
-Direct expenditures
-Future costs, only if a constructive obligation

Costs to exclude:
-Retraining and relocation costs or any costs related to continuing activities of company

Question 12

Criteria to record a provision for restructuring (4)

Answer 12

1.Detailed plan materially alters scope or manner of business
2.Begun implementing the plan
3.Timeline complete within reasonable period
4.Cost/liabilities estimated reliably

Question 13

Can you include costs related to a constructive obligation for restructuring, if so what is the criteria

Answer 13

Constructive obligation is a liability of uncertain timing and amount that results from past practices

To record a constructive obligation, communicate plans publicly and has taken steps to implement