Chapters 1-2 Flashcards
3 purposes of the financial reporting framework
Assist IASB to develop IFRS’s
Assist accounts preparers to develop accounting policies if IFRS does not aid them
Assist all parties to understand IFRS Standards
who are the primary users of financial reporting
existing and potential investors, lendors and other creditors
definition of relevance
relevant info is capable of making a difference in the decisions made by users
definition of materiality
if ommitting or misstating info could influence decisions of the users
definition of faithful representation
complete, neutral, free from error
what are the enhancing qualitative characteristics
comparability
verifiability
timeliness
understandability
what is IAS 1
If there is an option to roll forward a loan it must always be considered a NCA even if the entity is likely going to pay it within 12 months
definition of an asset
a present economic resource controlled by an entity as a result of past events
definition of an economic resource
a right that has the potential to produce economic benefits
definition of a liabilty
a present obligation of the entity to transfer an economic resource as a result of past events
definition of equity
the residual interest in the assets of the entity after deducting all of its liabilities
definition of income
increases in assets, or decreases in liabilities that result in an increase in equity
definition of expenses
decreases in assets, or increases in liabilities that result in an decrease in equity
when does recognition occur
when an item meets the definition of an element and is helpful to the users of FS
when does derecognition occur
for an asset - when control is lost
for a liability - when there is no longer a present obligation
2 main measurement bases
historical cost
current value
what is fair value
the price that would be receieved to sell an asset or paid to trf a liability
what is value in use
PV of cash flows that an entity expects to derive from an asset
what is fulfillment value
PV of cash that entity expects to be obliged to trf a liability
what are the 5 fundamental principles
integrity objectivity professional competence and due care confidentiality professional behaviour
5 threats to fundamental principles
self interest self review intimidation advocacy familiarity
what does IAS 1 say in regards to fair presentation
compliance with IFRS must be disclosed and can only be described as complying if they comply with ALL IFRS Requirements
what is a related party
a person or entity that is related to the entity that is preparing its FS
what is considered close members of family
children, spouse, partner, step children
what is ias 24
related party disclosures
what does ias 24 mean
you must disclose name of parent and if different, the UCP
key management personnel compensation
if the entity has related party transactions
what exemptions do government related entitys get
dont need to disclose every transaction, but do need to disclose individual significant transactions
definition of accounting policies
the specific principles, bases conventions, rules and practices applied by an entity in preparing and presenting FS
how should management use judgement to develop an accounting policy?
giving consideration to :
IFRS standards dealing with similair issues
the conceptual framework definitions of elements and the recognition criteria
pronouncements of other nations GAAP and accepted industry practice
when is a change in accounting policy permitted
its required by IFRS
results in FS providing more reliable and relevant info
how should a change to accounting policy for estimates be applied
prospectively
examples of accounting estimates
depreciation, fair value, warrantys
how should prior period errors be corrected
retrospectively, by restating comparatives and opening balances
criteria to be an asset
a present economic resource controlled by the entity as a result of past events
criteria to be a liability
a present obligation of the entity to transfer an economic resource as a result of past events
