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FAR > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

Asset

A

resources controlled by the company as a result of past events and from which future economic benefits are expected to flow to the entity

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2
Q

Liability

A

obligation of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity

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3
Q

equity

A

represent the owners’ residual interest in the company’s assets after deducting its liabilities

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4
Q

Equity in the B.s

A

BS is mixed measured (historical cost, fair value)
- BS is a static document

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5
Q

IFRS BALANCE sheet

A

from the least liquid to the higher liquid

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6
Q

GAAP B.S

A

from the higher liquid to the last liquid

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7
Q

classified balance sheet

A

balance sheet with separately classified current and non-current asset and liabilities

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8
Q

Current asset

A

asset expected to be sold, used up, or otherwise realised in cash within one year or one operating cycle of the business, whichever is greater, after the reporting period

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9
Q

Non current asset

A

asset not classified as current. also know as long-term or long-lived asset

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10
Q

current liabilities

A

liabilities expected to be settled within one year or within one operating cycle of the business

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11
Q

non current liabilities

A

all liabilities not classified as current

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12
Q

working capital

A

the excess of current assets over current liabilities

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13
Q

cash equivalent

A

highly liquid, short term investments that are so close to maturity that the risk of significant change in value from changes in int.rates is minimal

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14
Q

trade receivable

A

amounts owed to a company by its customer for products and services already delivered. also referred to A/R. typically reported at net realisable value

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15
Q

measurement base of current asset
GAAP

A

lower of cost or market
Market defined as replacement cost with a floor (NRV- profit margin) and a ceiling
NRV defined as estimated selling price less estimated cost of completion and sale
REVERSAL OR PRIOR WRITE-DOWNS are not allowed
yes LIFO

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16
Q

Measurement base of current asset under IFRS

A

lower cost or NRV
NRV defined as estimated selling-price estimated cost of completion and sale
reversal of prior write-downs can be made and recognise in Income
No LIFO

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17
Q

PP&E

A

Tangible asset that are mused in company operations over make than one fiscal period

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18
Q

PP&E under cost model

A

is reported at historical cost - any accumulated depreciation and less impairment losses

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19
Q

PP&E under the revaluation model

A

is reported at FAIR value at the date of te revaluation - ACC.deprecation

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20
Q

PP&E GAAP

A

permit only the cost model for reporting pp&e
reversal of prior impairment losses are not allowed

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21
Q

PP&E IFRS

A

permit either cost model or revaluation model
reversal of impairment losses are permitted

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22
Q

impairment

A

occur when a business asset suffers a deprecation in fair mkt value in excess of the book value of the asset on a company’s financial statement

23
Q

book value formula

A

cost - depreciation

24
Q

fair value is equal to

A

mkt value

25
Q

intangible asset

A

non monetary asset without physical substance (trademarks, licenses..)

26
Q

intangible asset IFRS

A

allow either cost model or revaluation model

27
Q

intangible asset GAAP

A

allows only the cost model

28
Q

intangible asset with indefinite useful life

A

do not amortise but asses for impairment (annually ifs; only after qualitative assessment us GAAP)

29
Q

int asset with limit useful life

A

Amortize over useful life and asses for impairment when indicated

30
Q

goodwill

A

arise when a company acquires another company for a price in excess of fair market value of net identifiable asset acquired

31
Q

goodwill is equal

A

purchase price of business less mkt value of net asset acquired

32
Q

goodwill is recorde

A

only when there is an exchange transaction that involves the purchase of an entire business

33
Q

goodwill is amortised?

A

no, but assessed for impairment 2

34
Q

accounting goodwill

A

represent the positive difference between the amount that was actually paid for asset and the book value of those assets when purchased in a business acquisition

35
Q

economic goodwill

A

more than subjective value of the intangible advantages a company has over its competitors such as excellent reputation, strategic location, business connections and would represented in its higher mkt value if the company asset were sold

36
Q

common type of current liabilities

A

trade payables
notes payable
accrued expenses
deferred income

37
Q

trade payables

A

also know as account payable
amounts that a company owes its vendors for purchases of goods and services

38
Q

notes payable

A

financial liabilities owed by a company to creditors, including trade creditors

39
Q

accrued expenses

A

expenses that have been recognized on a company income statement but have not yet been paid as of the B.S date

40
Q

Deferred income

A

arise when a company receives payment in advance of delivery of the goods and services associated with the payment

41
Q

common type of non current liabilities

A

long-term financial liabilities
deferred tax lablites

42
Q

long term financial liabilities

A

loans and notes or bond payable
usually reported at amortises cost on the BS
in some cases, liabilities such as bonds, ar reported at fair value

43
Q

deferred tax liabilities

A

amount of income taxes payable in future periods with respect of taxable temporary differnces
result from temporary riming differences btw a company’s income as reported for tax purpose and income as reported for financial statement purpose

44
Q

component of shareholder equity

A

capital contributed by owners
preferred shared
treasury shares
retained earnings
ACC.OCI
non controlling interest

45
Q

liquidity analysis on the B:S

A

company’s ability to meet its short term financial commitments
the ability to convert assets to cash and pay fo operating needs

46
Q

solvency analysis on the B:S

A

ability to meet it’s financial obligations over the long term
ability to pay long-term financing obligations

47
Q

current ratio

A

current asset/current liability

48
Q

quick ratio

A

cash + mkt securities + receivables/ current liability

49
Q

cash

A

cash + mkt securities/curr.liabilites

50
Q

long term deb to equity

A

tot long term debt/to equity

51
Q

debt to equity

A

tot debt/tot equity

52
Q

debt to asset

A

total debt/tot asset

53
Q

debt to capital

A

total debt/(total debt + total equity )

54
Q

financial leverage

A

tot asset/tot equity

FAR (16 decks)

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